Voice of the People: Congress Manufactured Postal Crisis

James J. Devine

James J. Devine

By James J. Devine

Postmaster General Patrick Donahoe said the U.S. Postal Service (USPS) was forced to default in August on a $5.5-billion pre-funding bill for retiree health benefits, because it did not have sufficient cash to afford the payment.

Thurgood Marshall Jr., chairman of the Postal Service’s board of governors, has been urging Congress to pass legislation that would allow it to eliminate Saturday mail delivery and reduce the annual health payment.

U.S. Sen. Rand Paul (R-KY) has some other ideas. He asserts, “Privatization would be great but… I can’t find anybody who’s interested in buying the Post Office” while promoting bankruptcy protection as an alternative that would allow the service to renegotiate labor contracts, and put the onus for unfair Congressional mandates on the back of working people.

“Maybe if they were to have bankruptcy and renegotiate all of their labor contracts, they would have a chance,” said Paul.

The mail agency said it is being hurt significantly by mounting expenses for future retiree health benefits.

Those expenses, mandated by Congress in 2006, made up $3.1 billion of the post office’s quarterly loss, while workers compensation tacked on another $1.1 billion in expenses.

The Treasury was already overpaid by $11-billion for prefunded employee retirement funds, but Republicans in Congress are not talking about letting the USPS have that money back.

The agency’s operating loss was $1 billion, mostly due to declines in first-class mail.

Reducing the current six-day operating schedule down to five days would reportedly save $2.7 billion per year.

The Postal Service, an independent agency of the government, does not receive tax dollars for its day-to-day operations but is subject to Congressional control.

Overall, the post office had operating revenue of $15.6 billion from April through June, the third quarter of its 2012 fiscal year.

That was down a fraction from the same period last year but quarterly expenses this year climbed to $20.8 billion, almost entirely driven by the congressional mandates.

A Republican-controlled Congress manufactured this crisis when it recklessly passed the Postal Accountability and Enhancement Act of 2006 (PAEA).

Under PAEA, USPS was forced to “prefund its future health care benefit payments to retirees for the next 75 years in an astonishing ten-year time span” — meaning that it had to put aside billions of dollars to pay for the health benefits of employees it hasn’t even hired yet, something “that no other government or private corporation is required to do.”

As consumer advocate Ralph Nader noted, if PAEA was never enacted, USPS would actually be facing a $1.5 billion surplus today.

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