Emails (excerpted), Steve Hutkins, blogger, Save the Post Office, Aug. 5-8, 2013

4:29 pm

Aug. 5, 2013

As you'll see from the financial statements, the Postal Service has been running at close to breaking even for many years now, in spite of the Recession and the Internet.  That's how it is supposed to operate.  If it were actually showing a profit, the big mailers would complain and want a rate decrease.

 

The only reason the Postal Service is posting such huge losses is because it is required to transfer massive amounts of money to the US Treasury in the form of pension payments and pre-funding of retiree health benefits for the next 75 years.  If these payments were reduced to a level that makes sense (i.e., one that is line with what other businesses and government entities do), the Postal Service would be showing significant profits.

 

I would recommend that you take a look at a the USPS OIG reports on the pension payments and retiree health benefit payments.  They show just how overfunded these funds are.

 

If you look further, you will of course find reports that contest these the OIG's finding, but they generally come from think tanks with an agenda to downsize government and from government agencies that have their own agenda, like the GAO and the OPM, which like to see all that money going from the Postal Service to the Treasury because it helps out with the federal deficit.

 

In fact, the main reason Congress requires the Postal Service to pay $5.6 billion a year into a fund for future retiree health costs is that in 2002 it was discovered that the Postal Service was on course to overfund its pension fund by $70 to $100 billion.  To remedy that problem, legislators needed to reduce the annual pension payments, but due to the way budget scoring works, that would have added to the federal deficit.  So Congress came up with the pre-funding requirement and the ten-year payment schedule; a 40-year schedule was rejected because the annual payments wouldn't have been big enough to offset the reduction in the pension payments.  In other words, the pre-funding was a way to keep the money flowing into the Treasury.  Now those payments are causing a huge but largely imaginary deficit, which is being used as an argument to degrade postal services for millions of Americans.

 

For further reading:

 

http://www.uspsoig.gov/sites/default/files/document-library-files/2013/FT-MA-10-002.pdf

 

http://www.savethepostoffice.com/fun-numbers-postal-service-losing-25-million-day-and-other-spurious-memes

 

http://www.savethepostoffice.com/bailout-bs-darrell-issa’s-misinformation-campaign-about-postal-retirement-funds

 

http://www.savethepostoffice.com/how-postal-service-began-prefunding-retiree-health-care-and-fell-deep-hole

 

And if you really want to get into it, read this book:

 

http://postcom.org/public/2006/Peoples%20Post%20Office4.pdf

 

I'd be happy to talk to you further about all of this.  Just say when.

 

Best,

Steve Hutkins

New York University

Save the Post Office

4:06 pm

Aug. 6, 2013

The fact that there were subsidies for ten or so years in the beginning of the Postal Service isn't very relevant.  The funding was not because the Postal Service was running deficits or something.  It was about making the transition to a self-sustaining footing possible.  The main point is that the Postal Service is not subsidized by taxpayers, and it hasn't been for a long time.

3:24 pm

Aug. 8, 2013

...over the decades, the Postal Service has had years when it shows a profit, years when it shows a deficit.  It hovers around breaking even.  If the profits get too big, the mailers say rates are too high; if the deficit gets too big, Congress presses for cuts; when the cuts get too big and service goes down, customers and citizens complain, and Congress tells the Postal Service to find a middle ground.  It's always about rates vs. service.