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Larry Wellborn: Scaling back on postal services

March 23, 2013|By LARRY WELLBORN

The Postal Service has been in the news a lot lately, and for good reason. The Postal Service has lost billions of dollars while losing market share to electronic forms of communication. But this is not entirely the fault of the Post Office or the Internet. In 2006, Congress passed the Postal Accountability and Enhancement Act (PAEA), a bill that was supposed to help the Post Office compete with private delivery services and be more responsive to public needs.  Unfortunately, many provisions in the bill have been the source of the problems the Postal Service is now facing.

No other facet of this bill has hurt the Post Office more than a mandate to fund future retirees’ health benefits 75 years out in a 10-year window.  This quite literally means that during the worst recession in 80 years, the Postal Service has been required to put aside $5.5 billion each year into a fund to pay benefits for people who might not even be born yet, and to do this in 10 years. A full 80 percent of all the red ink the Postal Service has incurred is due to this mandate that no other federal agency faces, and no rational private company would even consider. As of February 2012, the retiree health care fund had reached 49 percent of current projected liability, according to David Williams of the Office of Inspector General, an independent overseeing agency. If no other funding is provided, this account would be fully funded on accrued interest in 20 years. To put this into context, the federal government does not prefund health care liabilities at all and the military is only prefunded at 35 percent. Of the 38 percent of Fortune 500 companies who do prefund, median funding for those is 37 percent. Also of note is that while the Postal Service and its pensions are not part of the federal budget, all prefunded health care dollars are on the federal budget, making the federal deficit appear smaller than it is. While pension funding and retiree health care funding are accounted separately, it should be noted that there has been dispute as to how overfunded the Postal Service’s two pension programs are. In January 2010, the Office of the Inspector General (OIG) released a report titled “The Postal Services Share of CSRS Pension Responsibility.” In this report, the OIG finds that “the current system of funding the Postal Services Civil Service Retirement System (CSRS) pension responsibility is inequitable and has resulted in the Postal Service overpaying 75 billion dollars to the pension fund.” Another report by the independent Postal Regulatory Commission (PRC), in June of the same year, found the number to be between $50 billion and $55 billion. Also overfunded is the newer Federal Employees Retirement System (FERS), which was estimated by Office of Personnel Management in 2011 to be overfunded by $11.4 billion.

Another provision of the PAEA is the use of the Consumer Price Index to control increases in postage. While there is an absolute need to regulate postage, a more accurate method is needed. In the last four years, the price of diesel fuel has gone up 60 percent while the Consumer Price Index has gone up only 1.7 percent. 

The Post Office delivers 160 billion pieces of mail every year, almost half of the world’s mail. The Postal Service does this for less postage than 80 percent of the industrialized world, and has enjoyed 13 straight quarters of increased productivity. In the years between 2000 and 2010, the Postal Service has slimmed down by 200,000 employees, almost 25 percent, and continues to shrink. The Postal Service is at the center of a $1.1 trillion industry that employs 8 million people nationwide. The Postal Service is older than the country itself and is mandated by the Constitution.

 It is time to let Congress and Postmaster General Patrick Donahoe know that plundering postal revenues while scaling back on essential services, including Saturday delivery and the closing of rural Post Offices, cannot be tolerated. Please take time to call your representatives in support of Senate Bill 316 and House Bills 630 and 30.

Larry Wellborn is steward for the National Association of Letter Carriers Hagerstown Branch 443.

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