US Postal System to default on health care for it's retirees.

[NVRBDR]

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.

"The country's looking for the Congress to get things done, the president to get things done, especially get things done that actually saves jobs and creates jobs. And there's some 7 or 8 million jobs that currently depend on the postal service," Sen. Tom Carper (D-Del.) Congress' lead Democratic voice on postal reform, told Yahoo News Wednesday. The default, Carper argued, "simply undermines confidence in those who use the post office services, especially the larger mailers," potentially hurting business and much-needed holiday sales.

The postal service has reported multi-billion dollar losses in part due to the current economic climate and a decrease in mail. Additionally, the service is required by law to pre-pay billions in health care benefits every year into a retiree health benefit fund. The postal service wants Congress to help lower this pre-fund burden and help them via other avenues, but Congress doesn't appear to be acting anytime soon.

In April, the Senate passed a bipartisan bill, cosponsored by Carper, to help save the postal service by advocating for cost-cutting measures including restructuring the pre-fund. At the time, House Republicans widely panned the bill, labeling it a $33 billion bailout; they argued it delayed but failed to solve the postal service's financial woes. Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight, co-sponsored with Rep. Dennis Ross (R-Fla.) a bill in the works, but it has yet to be brought to the House floor.

The postal service and other interested parties as well as Republicans criticized the Senate bill once it passed. But Carper said Wednesday the House is holding back opportunities to move forward and make adjustments.

"The House simply has to do what they've been saying they're going to do all along and that's to pass a bill so that we can then go to conference, work out our differences, come up with a compromise between the Senate bill and the House bill," Carper said, adding "our bill's not perfect... but until we have the House act, we can't come up with that final compromise."

House Minority Leader Nancy Pelosi (D-Calif.) also pointed a finger at House Republicans Wednesday. "To manufacture yet another crisis, the Republican leadership refused to allow consideration of postal reform legislation that passed the Senate with a strong bipartisan majority months ago and that would have easily prevented a default," Pelosi said in a statement. "Instead, Republicans have shown no interest in offering meaningful solutions-- including a path to address the Postal Service's unique requirement to prepay retiree health benefits."
But Republicans say the House bill is still on the table and leaders are actively working on it.

"While timing for the consideration of postal reform legislation has not been set, the legislation has the necessary support,"Ali Ahmad, Communications Adviser for the Oversight and Government Reform Committee, said in a statement to Yahoo News Wednesday. Ahmad said Issa remains committed to modifying the legislation to ensure that "meaningful reforms not only win House approval, but are ultimately signed into law by the President."
The Republican bill allows for more drastic and immediate cuts, such as switching to five day delivery, cluster box instead of door-to-door delivery, more liberal branch closings and the renegotiation of labor contracts.

As for the current defaults, select House Republicans say it's just more of the same from the failing entity.

"The default by the Postal Service on its obligation to its own employees and retirees follows decades of mismanagement, and a willful blindness to fundamental changes in America's use of mail," Issa said in a statement Tuesday. "The Postal Service continues to fail to do all it can under current law to cut costs."

The House plans to begin recess at the end of this week through the Labor Day holiday, although some congressional leaders have threatened to keep lawmakers in town to finish select business. This would push potential action on the House postal reform bill into the fall. Some lawmakers believe the bill won't come up until the lame duck session or even later.

Saving the postal service is a tricky issue for a number of lawmakers. Many rural voters, seniors and others rely on the postal service, forcing lawmakers who advocate fiscal conservatism to potentially displease some of their constituents by taking sides on government intervention for the postal service.

The postal service's future is often brought up on the campaign trail and at forums and town halls, appearing from time to time in campaign literature.

"Rehberg refuses to explain why he doesn't support Montana's post offices," the campaign for Montana Democratic Sen. Jon Tester wrote Tuesday of Republican opponent Rep. Denny Rehberg. "His failure of leadership may result in post office closures and service cuts across Montana."

In Missouri, the campaign of Democratic Sen. Claire McCaskill cast her Republican opponents in July as threats to the future of the postal service.

"And while Claire worked across the aisle to protect Missouri's rural post offices, [Rep. Todd] Akin, [former state treasurer Sarah] Steelman and [businessman John] Brunner all said they would prefer to let the U.S. Postal Service go bankrupt and privatize its services instead," Spokesman Erik Dorey wrote in a press release

 

[NVRBDR]

Employing over a half million people and operating the world?s largest vehicle fleet, the United States Postal Service is the country?s third largest employer. The only other two employers that are bigger are our own grandiose Federal Government and of course Wal-Mart. While the Postal Service does get small subsidies, they are mostly funded by shipping and handling charges and stamp sales. Of course, they also sell insurance if you want to make sure that your letter or parcel is delivered to the correct destination safely (which most people think is what we?re paying for when we pay for stamps).

Oh, and they do borrow billions of dollars from another quasi-government agency, the Federal Reserve, which is taxpayer-funded through inflation. And they don?t have to pay property taxes or deal with sales taxes or vehicle registration fees for their massive fleet. They can also seize property through eminent domain if they want to. Now they have to cut back on services.

They announced in December of 2011 that they will be eliminating 28,000 jobs and closing thousands of branches and replacing some of them with smaller and more basic ?village post offices? inside grocery stores and drug stores. They?ve also been halting Saturday deliveries and cutting daily operating hours from 8 hours to 4 hours. For the past several years, the Postal Service has been experiencing declining revenues and record losses, mostly because of our desire to get away from ?snail mail? and go toward e-mail.

 

[Big Smoothy]

Not good, me thinks.

 

[LAM]

Employing over a half million people and operating the world?s largest vehicle fleet, the United States Postal Service is the country?s third largest employer. The only other two employers that are bigger are our own grandiose Federal Government and of course Wal-Mart.

there's about 2 dozen economic reports out there from the IMF and other highly cited economists that explain why government grows as the economy of a country becomes more open and trade is liberalized. this has been observed in every single country in the world and the US is one of the most populated country's in the world and has the MOST LIBERALIZED TRADE and LABOR policy's out of any country in the OECD. US workers are the least protected in the OECD.

Page 9. A. OECD countries

http://www.oecd.org/els/employmentpoliciesanddata/43116624.pdf

 

[ebn2002]

They should get rid of the postal service. The government is way too stupid to run a business, it should be left to UPS, fedex, DHL, etc... Most likely they will just throw a bunch of monopoly money at the situation and push it off a couple years costing taxpayers big.

 

[Big Pimpin]

1.) They need to raise the full pension age to at least age 62 and/or 35 years of service vs 55 and 30 years of service.

2.) Hundreds, if not 1000's of branches need to close along with applicable layoffs/firings.

3.) They need to go to 5 day service and I say they close on Wednesday vs Saturday so they are like banks...never closed 2 days in a row with the exception of holidays.

4.) Future new hires are hired on a B-scale making 20-25% less than the current scale.

5.) In addition to closing various sorting/distributions centers, those ops are to be privatized.

 

[NVRBDR]

the postal service is perfect example of how the government runs a business into the hole, but is allowed to keep the doors open with ZERO changes made that actually fix the problems.

I can hardly wait for you obama cheerleaders to visit your doctors office in 2014, It'll resemble a fucking SS office inside and out, and you'll get to enjoy more of his "hope and change"

 

[LAM]

the postal service is perfect example of how the government runs a business into the hole, but is allowed to keep the doors open with ZERO changes made that actually fix the problems.

I can hardly wait for you obama cheerleaders to visit your doctors office in 2014, It'll resemble a fucking SS office inside and out, and you'll get to enjoy more of his "hope and change"

you guys need to stop learning econ from politicians....the US post office is not funded by tax payer money it operates on it's own budget and keeps it's revenue separate from over fed gov operations. it was in the black until Congress raided it's profits in the mid 2000's as it has been doing since the 70's.

don't you guys talk to your mail carriers? ask them what the problem is....

 

[Swiper]

if we get rid of the govt postal system it would have to be done with a constitutional amendment, as it is in the constitution. but now a days the constitution means nothing so...........

 

[Swiper]

8.7 To establish post offices and post roads;

 

[hoyle21]

In 2006, Congress passed the Postal Accountability and Enhancement Act. This law requires the Postal Service to do something that no other business or government agency has to do–pre-fund its FUTURE retiree health care benefits. This is a 75 year liability that has to be paid in 10 years. The Postal Service makes a payment of approximately $5.5 billion on September 30 at the end of every fiscal year to meet this obligation. The Post Office has been paying these benefits the past four years into a trust fund for employees who have not even been born yet. This is the burden that is creating the “financial crisis” for the Post Office. The recession that has gripped America the past few years has undoubtedly affected the Postal Service, but even in the worst economic times since the great depression, the USPS has had a net profit of $611 million dollars. Unfortunately, the red ink associated with the post office is the mandated pre-funding since 2006.

 

[LAM]

In 2006, Congress passed the Postal Accountability and Enhancement Act. This law requires the Postal Service to do something that no other business or government agency has to do?pre-fund its FUTURE retiree health care benefits. This is a 75 year liability that has to be paid in 10 years. The Postal Service makes a payment of approximately $5.5 billion on September 30 at the end of every fiscal year to meet this obligation. The Post Office has been paying these benefits the past four years into a trust fund for employees who have not even been born yet. This is the burden that is creating the ?financial crisis? for the Post Office. The recession that has gripped America the past few years has undoubtedly affected the Postal Service, but even in the worst economic times since the great depression, the USPS has had a net profit of $611 million dollars. Unfortunately, the red ink associated with the post office is the mandated pre-funding since 2006.

that's not even the worst part. per 39 USC ? 2401 - Appropriations and 5 USC ? 8909a - Postal Service Retiree Health Benefit

"(c) The Secretary of the Treasury shall immediately invest, in interest-bearing securities of the United States such currently available portions of the Fund as are not immediately required for payments from the Fund. Such investments shall be made in the same manner as investments for the Civil Service Retirement and Disability Fund under section 8348. "

THE US GOVERNMENT IS USING PROFITS FROM THE POST OFFICE TO BUY DEBT IN THE FORM OF INTEREST BEARING SECURITIES

 

[NVRBDR]

sounds a lot like extortion^^^

 

[Bowden]

They should get rid of the postal service. The government is way too stupid to run a business, it should be left to UPS, fedex, DHL, etc... Most likely they will just throw a bunch of monopoly money at the situation and push it off a couple years costing taxpayers big.

The only problem is that for profit companies will not deliver first class mail to thinly populated rural areas as the cost of business outweighs the profit potentials.
The postal service does so at a loss.

 

[Bowden]

you guys need to stop learning econ from politicians....the US post office is not funded by tax payer money it operates on it's own budget and keeps it's revenue separate from over fed gov operations. it was in the black until Congress raided it's profits in the mid 2000's as it has been doing since the 70's.

don't you guys talk to your mail carriers? ask them what the problem is....

Congress due to political considerations will not allow the managers of the postal service to manage it like a business.
Congress forces the postal service to provide postal services like a 6 day delivery week and delivery to rural areas, both are services that operate at a loss.

 

[oufinny]

that's not even the worst part. per 39 USC ? 2401 - Appropriations and 5 USC ? 8909a - Postal Service Retiree Health Benefit

"(c) The Secretary of the Treasury shall immediately invest, in interest-bearing securities of the United States such currently available portions of the Fund as are not immediately required for payments from the Fund. Such investments shall be made in the same manner as investments for the Civil Service Retirement and Disability Fund under section 8348. "

THE US GOVERNMENT IS USING PROFITS FROM THE POST OFFICE TO BUY DEBT IN THE FORM OF INTEREST BEARING SECURITIES

This shit is getting out of hand. Every party and every person is corrupt as hell. Get rid of them all.

 

[LAM]

slush fund

 

[hagan]

Everyone knows the story: the rise of e-mail, online bill paying, and so on, have cut deeply into Americans? use of first class mail, which peaked in 2006. Last year, the Postal Service reported losses of more than $5 billion ? even though Congress allowed it to defer its annual prefunding of retiree health benefits. With or without the prefunding, the post office was eventually headed toward a crisis.
On the other hand, that prefunding requirement is an absolute killer. It has cost the post office more than $20 billion since 2007 ? a period during which its total losses amounted to $25.3 billion. Without that requirement, the post office would still likely be struggling, but it would have a lot more wiggle room ? and a lot more cash. (Its pension obligations are also overfunded by around $11 billion.) Not since the debt crisis has there been such an avoidable fiscal mess.
It is a little startling when you first hear about the prefunding requirement. It seems to make no sense, and, as many have noted, it is something that is demanded of no other company or government agency. So why does it exist? It turns out to be one of those things that only Congress could cook up.
Since the 1970s, the Postal Service has been self-sufficient, generating money by selling stamps and offering services ? and not dependent on the taxpayer. It is thus considered ??off budget.?? Yet part of its operations ? including its health and retiree benefits ? have continued to be part of the federal budget, and thus count against the federal deficit.
In 2002, it was discovered that the Postal Service was wildly overpaying its retirement obligations to the tune of $71 billion. Not surprisingly, it soon began advocating for ways to use some of that excess. One bill passed that did almost nothing to solve the problem. Later bills that would have fixed the problem, however, all ran into the same stumbling block: They would have ostensibly added to the deficit. And the Bush administration was adamant that it would veto any bill that wasn?t deficit-neutral.
Thus it was that a new fund was established in 2006 ? for the prepayment of health benefits for future retirees, with the Postal Service agreeing to pay between $5.5 billion and $5.8 billion annually. The money simply goes into an escrow account, where it is invested in special issue Treasury securities. Thus does it somehow magically help with the deficit. Also, of course, no sooner did the bill become law than first class mail began to fall off the cliff. The prefunding requirement became a noose around the Postal Service?s neck.
Incapable of simply letting the Postal Service go free ? imagine what that would do to the deficit! ? Congress continues to micromanage it, offering various ways for it to cut costs and raise revenue. The Postal Service, for instance, wants to cut Saturday delivery to save money; a Senate bill passed in April defers that decision for two years. But at least the Senate bill offers some relief from the absurd prefunding of health benefits. It would also return some of the excess retirement funding.
The postal reform bill that has emerged from the Republican-led House of Representatives, however, does no such thing. Rep. Darrell Issa, the chairman of the committee that oversees the Postal Service, talks fiercely about the need to lower labor costs, while describing the Senate bill as a ?bailout.? What he is doing, of course, is using the fact that the Postal Service is going broke to impose a slash-and-burn approach ? while ignoring the central reason the post office is running out of money: Congress itself. Meanwhile, the bill that emerged from Issa?s committee has never been brought to a vote on the House floor. Nor will there be a vote anytime soon. After all, the Congressional recess starts next week.
The post office insists that the default will not affect its ability to deliver the mail. Maybe not now. But several postal experts told me that at the rate things are going, it will be out of money sometime next year. Maybe then Congress will start taking seriously the crisis it created.
Read more here: Congress is behind Postal Service’s woes - Other Views - MiamiHerald.com

 

[LAM]

Congress due to political considerations will not allow the managers of the postal service to manage it like a business.
Congress forces the postal service to provide postal services like a 6 day delivery week and delivery to rural areas, both are services that operate at a loss.

your 100% incorrect. the US post office is making a profit, read the dam legislation and stop listening to politicians and the media.

5 USC ? 8909a - Postal Service Retiree Health Benefit?

(a) There is in the Treasury of the United States a Postal Service Retiree Health Benefits Fund which is administered by the Office of Personnel Management.
(b) The Fund is available without fiscal year limitation for payments required under section 8906 (g)(2)(A).
(c) The Secretary of the Treasury shall immediately invest, in interest-bearing securities of the United States such currently available portions of the Fund as are not immediately required for payments from the Fund. Such investments shall be made in the same manner as investments for the Civil Service Retirement and Disability Fund under section 8348.
(d)
(1) Not later than June 30, 2007, and by June 30 of each succeeding year, the Office shall compute the net present value of the future payments required under section 8906 (g)(2)(A) and attributable to the service of Postal Service employees during the most recently ended fiscal year.
(2)
(A) Not later than June 30, 2007, the Office shall compute, and by June 30 of each succeeding year, the Office shall recompute the difference between?
(i) the net present value of the excess of future payments required under section 8906 (g)(2)(A) for current and future United States Postal Service annuitants as of the end of the fiscal year ending on September 30 of that year; and
(ii)
(I) the value of the assets of the Postal Retiree Health Benefits Fund as of the end of the fiscal year ending on September 30 of that year; and
(II) the net present value computed under paragraph (1).
(B) Not later than June 30, 2017, the Office shall compute, and by June 30 of each succeeding year shall recompute, a schedule including a series of annual installments which provide for the liquidation of any liability or surplus by September 30, 2056, or within 15 years, whichever is later, of the net present value determined under subparagraph (A), including interest at the rate used in that computation.
(3)
(A) The United States Postal Service shall pay into such Fund?
(i) $5,400,000,000, not later than September 30, 2007;
(ii) $5,600,000,000, not later than September 30, 2008;
(iii) $1,400,000,000, not later than September 30, 2009;
(iv) $5,500,000,000, not later than September 30, 2010;
(v) $5,500,000,000, not later than August 1, 2012;
(vi) $5,600,000,000, not later than September 30, 2012;
(vii) $5,600,000,000, not later than September 30, 2013;
(viii) $5,700,000,000, not later than September 30, 2014;
(ix) $5,700,000,000, not later than September 30, 2015; and
(x) $5,800,000,000, not later than September 30, 2016.
(B) Not later than September 30, 2017, and by September 30 of each succeeding year, the United States Postal Service shall pay into such Fund the sum of?
(i) the net present value computed under paragraph (1); and
(ii) any annual installment computed under paragraph (2)(B).
(4) Computations under this subsection shall be made consistent with the assumptions and methodology used by the Office for financial reporting under subchapter II of chapter 35 of title 31.
(5)
(A)
(i) Any computation or other determination of the Office under this subsection shall, upon request of the United States Postal Service, be subject to a review by the Postal Regulatory Commission under this paragraph.
(ii) Upon receiving a request under clause (i), the Commission shall promptly procure the services of an actuary, who shall hold membership in the American Academy of Actuaries and shall be qualified in the evaluation of healthcare insurance obligations, to conduct a review in accordance with generally accepted actuarial practices and principles and to provide a report to the Commission containing the results of the review. The Commission, upon determining that the report satisfies the requirements of this subparagraph, shall approve the report, with any comments it may choose to make, and submit it with any such comments to the Postal Service, the Office of Personnel Management, and Congress.
(B) Upon receiving the report under subparagraph (A), the Office of Personnel Management shall reconsider its determination or redetermination in light of such report, and shall make any appropriate adjustments. The Office shall submit a report containing the results of its reconsideration to the Commission, the Postal Service, and Congress.
(6) After consultation with the United States Postal Service, the Office shall promulgate any regulations the Office determines necessary under this subsection.

[1] So in original. Probably should be ?Benefits?.

 

[hagan]

This is all about outsourceing to private companies who in return pay top officials to run the mail in reyurn a few get rich and they pay employees nothing. End of story.

 

[hagan]

oh and for all you so called patriots the postal service is as as American as apple pie. please. Stop believeing the bullshit

 

[LAM]

This is all about outsourceing to private companies who in return pay top officials to run the mail in reyurn a few get rich and they pay employees nothing. End of story.

the post office makes plenty of profits, enough to fund it's pension obligations. the problem is that Congress has decided it's better to use the profits to purchase government debt, essentially paying down the deficit...

 

[hagan]

the post office makes plenty of profits, enough to fund it's pension obligations. the problem is that Congress has decided it's better to use the profits to purchase government debt, essentially paying down the deficit...

Exactly taking funds from the post office and then saying their broke its a lie but I believe they want to let in private companies to take over some of their duties and privatize a big chunk of the post office.

 

[oufinny]

As I understand it UPS and FedEx ship a lot for the post office already.

 

[hagan]

As I understand it UPS and FedEx ship a lot for the post office already.

It will be even more especially to rural routes and so on priv]ces will go up imagine how much more profit they would make just my opinion

 

[Dale Mabry]

The only problem is that for profit companies will not deliver first class mail to thinly populated rural areas as the cost of business outweighs the profit potentials.
The postal service does so at a loss.

That's fine, most of the people in those areas are against handouts anyway.