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Postal Service And Congress – A Lesson In The Tying Of Hands

Well, I sincerely hope you aren’t especially enamored with getting letters and junk mail on Saturday. If all goes according to the plan announced by Postmaster General Patrick R. Donahue, Saturday delivery of everything except packages will be eliminated in early August. As you can imagine, the outcry is no small thing. Neither was the outcry small when the USPS announced preliminary plans to close a number of smaller post offices in 2011. That outcry seems to have worked, as all the post offices are still open. This is due mainly to the refusal of Congress to allow the Postal Service to manage its own affairs. Imagine that, Congress interfering with what is basically a company that receives no taxpayer dollars and is still trying to become, and remain, profitable.

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Postal ServiceI have written a couple of times about the woes of the Postal Service. Admittedly, they are trying to manage a change in very trying times. With the advent of electronic communications, email, instant messaging, text messaging, Voxer, etc., the basic mail service of the Postal Service has drastically changed. Speaking for myself, I rarely send anything through what is commonly called “snail mail”. It’s just much quicker and more efficient to send it via the Internet. That isn’t the fault of the Postal Service, but they are still charged with changing with the times and trying to become profitable.

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Okay, so the Postal Service has to change. No big deal, many companies and corporations are having to change the way they do business to meet financial challenges. Again, these are times that have a knack for rapid change. Therein lies the real kicker for the Postal Service. Their hands are almost completely tied by Congress, who is charged with overseeing their operations. Besides not allowing the Postal Service to make the changes that would allow them to become more streamlined and hopefully, more profitable, Congress is also guilty of placing a huge financial burden squarely in the middle of their shoulders. This is a financial burden that no other corporation has to deal with.

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(Washington Post) But change is not the biggest factor in the agency’s predicament — Congress is. The majority of the service’s red ink comes from a 2006 law forcing it to pay about $5.5 billion a year into future retiree health benefits, something no other agency does. Without that payment — $11.1 billion in a two-year installment last year — and related labor expenses, the mail agency sustained an operating loss of $2.4 billion for the past fiscal year, lower than the previous year.

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Let’s look at the Postal Accountability and Enhancement Act of 2006 and see what onerous requirements Congress has placed on the Postal Service.

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(Wikipedia) The PAEA stipulates that the USPS is to make payments of $5.4 – $5.8 billion into the Postal Service Retiree Health Benefits Fund, each year, from 2007 to 2016 in order to prefund 75 years of estimated costs. This requirement also explicitly stated that the USPS was to stop using its savings to reduce postal debt, which was stipulated in Postal Civil Service Retirement System Funding Reform Act of 2003. This is in addition to deductions from pay for federal contribution to social services. This pre-funding method is unique to the USPS. In June 2011, the USPS had to suspend its weekly payment of 115 million into the fund because it had reached 8 billion dollars in debt and the retirement plan had a surplus of 6.9 billion dollars. The schedule rate of payment has been changed and the USPS is currently expected to make a payment of 5.6 billion no later than September 30, 2012.

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Far be it from me to claim the mantle of a financial or budgetary expert, but it seems to me that the requirement of PAEA that the Postal Service pay in $5.4-$5.8 billion into a retirement fund for future employees is more than a little questionable. Does this not amount to an unfunded mandate of the worst kind? Individual states in our union have long complained how the federal government places mandates in their court, with little or no federal funds to help them meet those mandates. A lot of requirements and no money to help fulfill those requirements. Where’s the wisdom in that?

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Make no mistake, the Postal Service needs to make some changes to become financial stable. Dare I say the word, profitable? Taking into consideration the requirements of PAEA, there isn’t a chance of that happening in the near future. Even if stopping Saturday delivery saves a couple of billion dollars, they will still be in the red, due to the $5.5 billion they are paying in every year to the retirement fund of employees that aren’t even born yet. I ask again, where is the wisdom in that? How can we expect the Postal Service to rectify its financial situation, if Congress continues tying its hands at every turn?

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Speaking of Congress, PAEA was passed by a Republican Congress and signed into law by President George W. Bush. I would like to know what they were thinking when they allowed this legislation onto the floor of Congress and out of the White House as the law of the land. Maybe they weren’t thinking at all? Nah, that couldn’t be it.

About LD Jackson

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LD Jackson has written 2053 posts in this blog.

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Founder and author of the political and news commentary blog Political Realities. I have always loved to write, but never have I felt my writing was more important than in this present day. If I have changed one mind or impressed one American about the direction our country is headed, then I will consider my endeavors a success. I take the tag line on this blog very seriously. Above all else, in search of the truth.

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  • Jim at Asylum Watch

    The constitution requires the federal government to provide postal service and postal roads. Why not out-serivce the postal service to all of the courier services, like FedEx. by paying them each one dollar per year?

    • I’m not so sure the other courier services would like the one dollar per year bit.

  • Why shouldn’t the post office have to fund its pension plan? If anything their deficit shows us the moral bankruptcy of expecting taxpayers to fund these ridiculous public employee pensions. As for Saturday service, who will miss it?

    • The point is that the payments are for the benefits of future employees. That’s the point that I do not understand, that they are being required to fund 75 years of benefits for future employees. It doesn’t make financial sense for them to have to do that.

      • It’s as simple as this: End the government employee pensions that current post office employees are entitled to. Replace it with the government version of 401k’s and that takes care of this deficit. Rather than do that, Congress and the Post Office would rather have endless budget deficits.