Congress won’t rescue postal service as it defaults on health care benefits

Zxereus

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Mar 2, 2012
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Congress won’t rescue postal service as it defaults on health care benefits


Congress is sitting idly by Wednesday as the U.S. Postal Service prepares to default on $5.5 billion in retiree health care payments.

The postal service confirmed in a statement Monday that it would default on its payment to the U.S. Treasury due at midnight on Wednesday. It is also prepared to default on a $5.6 billion tab due Sept. 30 to pre-pay retiree health benefits "absent legislation enacted by Congress."

The postal service stressed that the defaults would "have no material effect on the operations of the Postal Service," which would continue to be fully funded, as would services.

But this first-ever default marks the decline of the postal service, illuminating just how precarious its financial position remains without congressional intervention. Some lawmakers believe that such postal poverty threatens Congress' reputation as well as the future of the mail service and the nation's economic health.

Congress won
 
Post office goin' the way of the buggy whip?...
:eusa_eh:
Postal Chief: Delayed Service Cuts Threaten Iconic Institution
February 08, 2013 - The head of the U.S. Postal Service has dismissed union calls for his removal, saying his controversial plan to reduce Saturday mail service is necessary to prevent one of America’s oldest institutions from suffering the same demise as other iconic industries.
Postmaster General Patrick Donahoe said in an interview Friday that cutting service from six to five days would be only a “short-term solution” to address the USPS’s $20 billion deficit, but that he couldn’t wait any longer for Congress to make long-term legislative changes to ease the burden. Postmaster General and CEO Patrick Donahoe at U.S. Postal Service headquarters, Washington, Feb. 6, 2013. ​“Time is money. If these issues would have been dealt with in 2008 or 2009, we would have been in much better shape financially,” he said, acknowledging it’s not a “happy decision politically.”

A witness to industrial decline

Donahoe, who grew up in Pittsburgh, Pennsylvania, once the steel capital of the world, says that industry’s steady decline left an impression on him. As the mills closed, he recounts, the newly unemployed would say, “I never thought management would let that happen to us.” Now, as head of the Postal Service, Donahoe says he’s not going to let his postal workers suffer the way Pittsburgh’s steel workers did. “We’re not going to kick the can and not do what we have to do and jeopardize this great organization that’s great for America, that’s great for American business, that’s great for employees,” he said. “We’ve got to make the right decision.”

Big labor weighs in

But cutting service is the wrong decision, according to some members of Congress and labor unions, two of which are calling for Donahoe’s removal. “He did not get the stakeholders of the Postal Service together to make this decision,” said Jeanette Dwyer, president of the National Rural Letter Carriers' Association. “He let the unions know less than 24 hours before the announcement was made.”

Dwyer questions Donahoe’s assertion that his plan could save $2 billion annually, and says costs to remote communities would outweigh the benefits. Part-time letter carriers who’ve spent years doing Saturday service to in order to get full-time jobs will be cut, she says, and rural residents not connected to the Internet will be more isolated than ever. “There are competitors out there that would like that mailbox for any of those six days,” Dwyer said. “I believe this could be the beginning of the postal service losing business.” But the postal service has been losing business for a long time. It reported a $15.9 billion net loss for the 2012 fiscal year—three times the 2011 loss.

Changing times
 
Granny gonna order a bullet-proof postal bra...
:redface:
Cash-strapped Postal Service to launch new clothing line
February 20, 2013 : On the heels of announcing the end of Saturday mail delivery, the U.S. Postal Service said Tuesday it plans to launch a new line of clothing and accessories next year.
The cash-strapped agency has signed a license agreement with Wahconah Group, a Cleveland-based fashion apparel company, to support its new "Rain Heat & Snow" brand, Postal Service corporate licensing manager Steven Mills said in a news release. “This agreement will put the Postal Service on the cutting edge of functional fashion,” Mills said. “The main focus will be to produce Rain Heat & Snow apparel and accessories using technology to create ‘smart apparel’ — also known as wearable electronics.”

The Postal Service plans to establish a showroom in New York City's garment district to showcase its new products, which will be available initially only for men, the news release states. The goal of the new product line, according to Mills, is to eventually sell Rain Heat & Snow products "in premier department and specialty stores." The Postal Service is in the midst of a major restructuring throughout its retail, delivery and mail processing operations. Since 2006, it has cut annual costs by about $15 billion, reduced the size of its career workforce by 193,000 or by 28 percent, and has consolidated more than 200 mail processing locations, officials say.

The agency in November reported an annual loss of a record $15.9 billion for the last budget year and forecast more red ink in 2013, capping a tumultuous year in which it was forced to default on billions in retiree health benefit prepayments to avert bankruptcy. The financial losses for the fiscal year ending Sept. 30 were more than triple the $5.1 billion loss in the previous year. Having reached its borrowing limit, the mail agency is operating with little cash on hand.

Read more: Cash-strapped Postal Service to launch new clothing line | Fox News
 
A Manufactured 'Crisis': Congress Can Let The Post Office Save Itself Without Mass Layoffs Or Service Reductions | ThinkProgress

But what has been lost in the political debate over the Post Office is why it is losing this money. Major media coverage points to the rise of email or Internet services and the inefficiency of the post model as the major culprits. While these factors may cause some fiscal pain, almost all of the postal service’s losses over the last four years can be traced back to a single, artificial restriction forced onto the Post Office by the Republican-led Congress in 2006.

At the very end of that year, Congress 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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