Postal Service Set To Default On Multi-Billion Dollar Retiree Payment
Today, the United States Postal Service (USPS) takes one step closer toward a taxpayer bailout. The blame falls squarely on the shoulders of the current do-nothing Congress. Instead of cutting bait (privatizing the USPS), Congress has decided to keep fishing to the dismay of most interested parties.
For months, it has been clear the postal service could not afford to pay its upcoming $5.5 and $5.6 billion payments for future retiree health benefits to the United States Treasury. Yet, Congress refuses to act. Even worse, the last bill to reform the USPS, the Postal Accountability and Enhancement Act of 2006 (PPA), caused the current fiscal crisis.
Sally Davidow, the spokesperson for the American Postal Service Union, comments on the PPA financial implications, “Before Congress passed this, the postal service enjoyed a modest surplus, this pre-payment program is the fundamental cause of this crisis, and it needs to be repealed.”
Now even President Obama’s former director of the Office of Management and Budget Peter Orszag, is calling for the release of USPS from Congress’ control. He cites the Postal Service’s well-known structural deficiencies: Congress, the Internet, labor unions, and a down economy.
Orszag’s analysis paints a stark landscape of the quasi-government agency’s finances, “Over the past five years alone, mail volume has fallen more than 20 percent, and revenue has declined 12 percent. The post office lost $25 billion from fiscal year 2007 to fiscal year 2011. It now has less than $1 billion in cash, a dangerously small amount for a service with weekly operating expenses of almost $1.5 billion. Of the roughly 32,000 local post offices across the country, fewer than 7,000 generate enough revenue to cover their costs.”
Even according to USPS management and the postal service unions, more flexibility from less government would increase profitability. But instead, elected officials continue to debate the merits of two bills that do not protect taxpayers from bailing out the USPS or give the organization the flexibility to become profitability. Congress’ legislative solutions simply add bureaucracy or transfer the Postal Service’s financial liabilities to taxpayers.
For almost a year, Congress has promised to tackle the postal service’s fiscal problems. Nevertheless, nothing has been accomplished. The only positive aspect, another bill from Congress to reform USPS most likely will rapidly increase the odds of a taxpayer bailout.