If history is any guide, Republicans will definitely try to further weaken and privatize the U.S. Postal Service (USPS). As per their usual strategy, they will claim the Postal Service is losing money, even though those losses are due to a Congressional mandate that USPS must fund the next seventy-five years of retirement benefits over a ten year time period–something no private mail carrier could possibly due (it’s all the more absurd because USPS has been overcharged already by at least $50 billion on pensions). The most recent installment of this chicanery (boldface mine):
The U.S. Postal Service delivers to 155 million homes and businesses from coast to coast, six and increasingly seven days a week. It’s based in the Constitution, is consistently rated the public’s most-trusted federal agency, and delivers 47 percent of the world’s mail.
It’s also the centerpiece of the $1.3 trillion national mailing industry, which employs 7 million Americans in the private sector, including 966,901 Californians.
Yet, there is a surprising amount of public misunderstanding about this American treasure, such as the notion of an agency losing billions of dollars a year because of the Internet, making it the victim of ineluctable technological progress….
For starters, the Postal Service actually is operating in the black. USPS revenue exceeded operating expenses by $610 million in Fiscal Year 2016, bringing its total operating profit the past three years to $3.2 billion. Bear in mind that this is all earned revenue; by law USPS gets no tax dollars….
There is red ink but it has nothing to do with the mail and everything to do with congressional politics. In 2006, a lame-duck Congress mandated that the Postal Service pre-fund future retiree health benefits.
No other public agency or private company has to do this even one year in advance; USPS must pre-fund these benefits decades into the future. That $5.8 billion annual charge not only accounts for the ‘red ink’, it disguises the actual profits postal operations have been generating for years.
One of the casualties of this Republican-led effort could be postal workers’ salaries and their unions. Democrats sure as hell better fight for these workers.
mikethemadbiologist
It’s a two-fer: the $335b set aside is ripe for pillaging by a privateer. The pre-funding requirement creates the perception that the USPS is incompetent. Once privatized the requirements will suddenly be relaxed and the fund drained to the benefit of the privateer. The USPS is operationally profitable and their pension fund is already much better funded that other federal employee pension funds, including military retirement.
I think a cut and paste of my comment on your 2013 post (which you linked to above) is always in order:
I think that every time this comes up it’s important to point out that it’s not only being forced into a unique pre-funding period’ but is also forced to invest that pre-funding only in government bonds. Any sensible pension strategy invests in a broad mix of stocks and bonds, but the Post Office has been forced to not use a sensible pension funding strategy by Congress.
I pointed this out to a financial planner friend a couple of years ago and he was literally slack-jawed with astonishment.
You are forgetting one important point: the USPS employs a lot of minorities and women– groups the deplorables deplore.
I saw a photo exhibit recently. One part had pictures of long-decommissioned rural PO’s in the South, closed “to save money”. It chilled me to think what damage it must do to rural economies to lose such a reliable source of steady work.
Reblogged this on The Most Revolutionary Act and commented:
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Contrary to Republican claims, the Postal Service is operating in the black. US Postal Service revenue exceeded operating expenses by $610 million in Fiscal Year 2016, bringing its total operating profit the past three years to $3.2 billion. This is all earned revenue – by law USPS gets no tax dollars.
The 2016 reduction in the first class rate from 49c to 47c was required by law – because the Post Office was making too much money. So the USPS can run a loss, and make too big a profit, at the same time. Amazing. [By the way, it just went back up to 49c.]