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The Real USPS Crisis
Posting Date: 05/04/2012
I am a rural carrier with the Mesquite Post Office. I started in 1996. When I started there were over 850,000 employees. Today there are just over 574,000. The Postal Service has been downsizing for the past decade. This has been achieved through attrition and early retirements, not by lay offs. I love my job and I am proud to work for the United States Postal Service (USPS).
You can hardly go a week with out hearing about the dire predicament the USPS faces. Declining mail, mountains of debt and an ever-growing threat of a digital future have dominated the headlines for the past couple of years. The USPS is now looking at eliminating Saturday delivery and with it will go 90,000 jobs. They are also looking at closing thousands of post offices and hundreds of processing plants and with that will go hundreds of thousands of jobs. Not to mention that customers will no longer have easy access to mailing and shipping services. Plus, with the closing of processing plants, mail service will truly be at a snail’s pace. Many believe this is necessary and many believe that they should have done this many years ago. But there is more to this story that seems to get lost in the news and in the many op-ed’s.
First, the previous Postal Department and the current USPS were designed to be a non-profit public service for society. Somewhere along the way, this has been lost and some are pushing the USPS to be “profitable.” All other government agencies, except the USPS, rely on tax dollars for their operations and all operate as non-profits. In 1971, the Postal Department was reformed and became the United States Postal Service. Since then, they have been self-reliant and the price of stamps pays for the operation, wages, benefits and services that USPS offers.
In 2006, the mailing industry was an $8 billion per year industry employing over 8 million people and almost 9% of GDP. In 2006, the USPS had record volumes of mail. Yes, 2006 was a banner year for the USPS in the midst of the Internet age. The record declines we have seen started in 2007-2008 at the onset of the recession. The last time the USPS saw declines that steep was during the great depression. However, in the past those volumes rebounded without any problem. With online bill pay, those volumes are indeed unlikely to return (nor are the tens of thousands of jobs that have been eliminated at those companies that customers used to send a check to).
Something else happened in 2006 that hardly ever gets talked about. Congress passed the Postal Accountability and Enhancement Act (PAEA). This was supposed to modernize
the USPS.In many ways it did, they can now offer reduced pricing on postage to large customers as in “sales”. They have the ability to be more flexible in their pricing but are forbidden from raising prices above inflation. It also returned about $48 billion back to the coffers. The Postal Service had been saddled with paying retirement benefits for military agencies. For example, if you worked for the military for 15 years then the post office for 15 years, you would have 30 years of service for retirement. The military should pay 50% and the USPS 50% right? Well the USPS had been paying 100% and this bill corrected that. However, the money was put into an account and they were told they could not use they money. It would be there for future use. So, they have billions of dollars on hand but can’t spend any of it to help in their financial crisis.
The real problem lies in the bill’s requirement that they pre-pay future retiree health benefits. The bill requires them to fully fund a 75-year liability in 10 years time. This has added around $5.5 billion annually to cost of operating the USPS. No other government agency or private sector is “required by law” to do this.
Only a handful of private companies had been doing any pre-funding and they have all scaled back or quit since the start of the recession. The USPS said they have lost $20 billion in the last 4 years. They have paid over $20 billion for the pre-funding obligation. To add insult to injury, in order to pay this, they have borrowed from the general treasury (tax payers dollars) in the form of a loan. How crazy is this! They have $48 billion on hand that they are forbidden from using so they get a loan from taxpayers to pre-pay for benefits 75 years out. Crazy!
The law passed in 2006 is forcing the USPS into bankruptcy, forcing the USPS to close thousands of post offices, hundreds of processing plants and eliminate delivery service on Saturday. The USPS will still need to make changes and continue to downsize but it does not have to be at the cost of layoffs and service to our customers.
Congress has been pushing the can down the road and has not acted to reverse this tragedy. The Senate recently passed S.1789. However, the House of Representatives have yet to act. Time will tell if we lose this still vital public service. Congress created this mess and they can fix it if they so choose and citizens who depend upon the USPS should be pushing for the right solution to this mess.
Rural Carrier USPS
Posted Date: 05/04/2012 Thank you Karen! I've been planning a column about the post office and the unfair demands made on what, as you so aptly point out, is supposed to be a public service. Only Congress can fix this and they should. Do you think we, as electors, can put enough pressure on our representatives to take the proper action? I hope they will listen because we all want the post office to survive. By: Terry Donnelly
Posted Date: 05/04/2012 Karen, you hit the nail on the head in my opinion. The U.S.P.S. needs to revert back to the non-profit organization it was designed to be 225 years ago. In this day of high speed internet and instand communication, the answer is certainly NOT to step back to the delivery standards of the 19th century. Sadly, the public is not likely to accept this change without some excellent P.R. I believe most Americans are not aware of the requirement to offer low rates to non-profit mailers, to provide deep discounts to periodical mailers and to deliver to EVERY house in the nation regardless of cost. By: David Lake
Posted Date: 05/04/2012 Great letter Karen – and factual to the point. One thing you didn’t point out was that the bill requiring the 75 year pre-funding was passed in the lame-duck session at the end of 2006 after the Republicans had lost control of the House of Representatives but while they were still in power because the new congress had not yet been sworn in. It was basically a “party-line” vote by the Republicans who want to kill the postal service for a couple of reasons. One, they are doing the hatchet job for their big political donors (yes, UPS and FedEx would just LOVE to eliminate the competition) and two, they HATE businesses that are unionized. Thus the postal service is being intentionally driven out of business in an unfair and unethical manner so that the Republicans can hand another gift to greedy business interests. Will FedEx or UPS deliver a letter for 50 cents? NOPE! Will they deliver to far-out rural destinations that are not profitable – NOPE! Really folks – is there any way you can justify requiring any business to pre-fund the healthcare and retirement costs 75 years in advance? This means they are supposed to be funding estimated costs for employees who have not even been born yet! This is blatant unethical political payback at the expense of all of us. Demand that your representatives fix this wrong! By: John
Posted Date: 05/04/2012 I have been intrigued for some time as to the why's of the real story. The USPS has been perceived by postal authorities and companies worldwide as the leader in mail processing considering the sheer volume that the USPS does process daily. To see the USPS be brought down to its' own knees, a US institution having no recall and all these people losing their jobs. The postal world does work, it is just that we are also being told that everyone needs something the next day and you know, we don't. 2 -3 days is fine and there are exception but truly the courier business next day or 2 day for triple the price of the a US stamp..are we nuts. Let's look at the ways in which we send parcels and mail and if you think that the general public is going to save it isn't. The USPS is an amazing organization and it has served many over years..why is it just in 6 years it has been destroyed...we need to look at ways to get people to use the people's method of delivery, the one that was set up for all Americans. This is the USPS and we need to get back on track. By: Lorraine
Posted Date: 05/07/2012 Thank you for telling the truth about the situation. In 2006, USPS was debt-free and profitable. Now, it is on the brink of bankruptcy, due to Congress' chicanery. Congress created the problem, and Congress needs to fix it, ASAP, by eliminating the prefunding of future retiree health benefits and refunding the Postal Service's overpayments to its retirement programs: $50-$75 billion to the Civil Service Retirement System and $11 billion to the Federal Employee Retirement System. By: Grannybunny