Thursday, August 04, 2011

Informative article about the state of the US Postal Service

This two "click" pages article by Philip Rubio from the Washington Post is compelling and interesting reading. One paragraph stood out among the others:

The USPS’s current $8 billion deficit is mainly a result of a 2006 congressional directive that the USPS pre-fund all retiree benefits for the next 75 years within 10 years, a financial burden no other agency shares. This imposed deficit has prompted some people to question the need for universal postal service as authorized by the Constitution.

If this is true, and apparently it is true (and there is evidence the pensions are already over-funded!), the attack on the Post Office is surely misguided and wrong.* It is far better to allow the US Postal Service to pre-fund retirement benefits in a more reasonable timeline.

The Post Office is very important to our society, and should remain a public trust. For those who can't stand to read public policy articles or books, then one may wish to enjoy oneself and read "The Postman," a really wonderful sci-fi book about the importance of a government entity that delivers the mail.

* Heck, even the Cato Institute admits this set of facts, despite its conclusion for privitization, which is simply part of their overall libertarian ideology:

A significant portion of USPS costs stems from PAEA, which requires the USPS to prefund its future retirees' health benefits at an accelerated rate of about $5.4 billion per year for the first 10 years of the 50-year liability; any remaining obligation is to be amortized over the subsequent 40-year period. Prefunding health benefits is unique to the USPS within the public sector, and it is not required in the private sector. The effect of this massive accounting charge is to temporarily increase the total costs of the USPS by 9 percent a year. As mail volume and revenue have declined in recent years, the USPS has experienced a cash shortage and has been on the verge of not being able to fulfill this accounting obligation. As a temporary solution, the federal government enacted legislation in 2009 that allowed the USPS to reduce its payment to its retiree health-benefits fund by $4 billion, from $5.4 billion to $1.4 billion, for the year 2009. However, the USPS must repay this sum after fiscal year 2016. As for fiscal year 2010, there is significant uncertainty as to whether or not the USPS will have the cash required to fulfill its prefunding obligation for retiree health benefits (Kosar 2010).

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