Unlike the federal government as a whole, and state and municipal
governments across the country, the Postal Service funded retirement
obligations as they were incurred. My annuity is paid by the Civil Service Retirement System (CSRS). The Postal
Service’s share of the CSRS is funded one hundred percent (actually more at one point, the Postal
Service overpaid by tens of billions of dollars as a result of gross
incompetence by the billing and actuarial functionaries at OPM). As of the time I retired, the Postal Service
was timely in funding its retiree healthcare obligations.
I like to think, we as group of hard working and
dedicated colleagues in the Postal Service’s finance function, played significant
roles in the organization’s success, even if we did manage to piss people off
by designing, proposing and implementing unpopular rate increases, by
fighting unions to hold down labor cost increases, by supporting automation
programs that “cost” the Postal Service hundreds of thousands of jobs, and by differentiating
product offerings to eliminate cross-subsidies (creating winners and losers)
among mailers. But the mind set, and the commitment to these principles
started slipping during the Bush administration and went totally to hell in the
world of Obama.
The Postal Service announces today that it
is dropping Saturday delivery. The
explanation is the need to reduce cost. The complaint
focuses on funding retirement benefits.
The financial losses for the fiscal
year ending Sept. 30 were more than triple the $5.1 billion loss in the
previous year. Having reached its borrowing limit, the mail agency is operating
with little cash on hand.
The
agency's biggest problem — and the majority of the red ink in 2012 — was not
due to reduced mail flow but rather to mounting mandatory costs for future
retiree health benefits, which made up $11.1 billion of the losses. Without
that and other related labor expenses, the mail agency sustained an operating
loss of $2.4 billion, lower than the previous year.
The
health payments are a requirement imposed by Congress in 2006 that the post
office set aside $55 billion in an account to cover future medical costs for
retirees. The idea was to put $5.5 billion a year into the account for 10
years. That's $5.5 billion the post office doesn't have.
No
other government agency is required to make such a payment for future medical
benefits. Postal authorities wanted Congress to address the issue last year,
but lawmakers finished their session without getting it done. So officials are
moving ahead to accelerate their own plan for cost-cutting.
Oh yes, not at all due to “reduced mail flow”. Sure.
Right. High margin, high revenue
per piece First-Class Mail volume is down more than 30 percent from its 2001
peak. Total mail volume dropped from 213
billion pieces in 2007 to 160 billion pieces last year. I told the bureaucracy prior to the 2008 financial
meltdown that the Postal Service wouldn’t recover from the next recession, let alone
find a growth path needed to fund service to the growing delivery network. But inside the Postal Service there was no more
paying heed to anyone who was not a politician, no more commitment to earning its
keep. Congress will not let the Postal
Service go out of business I was told. It's a slippery slope. The
spinners are in charge. Economic reality
and facts lost weight in the era of Bush and mattered not at all in the world
of Obama.
But, we are always reminded, look at the equities of it. Let’s race to the bottom. Why should current mail users and postal ratepayers fund the
retirement of today's Postal Service employees when those expenses can be
pawned off on your children and grandchildren?
That’s the next step in postal reform.
That’s what stands in for fairness in the world of Obama.
I like your picture and love this part of Montana. I wonder if the old red colored house is for rent? LOL!
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