Congress forces Postal Service into default.

[techs]

http://www.huffingtonpost.com/2012/07/31/postal-service-default_n_1725263.html

Postal Service To Default On $5.5 Billion Payment As Congress Heads Into Recess

At midnight Wednesday, the U.S. Postal Service is expected to default on a multi-billion dollar payment owed to the Treasury, highlighting financial struggles that could affect not only mail service but hundreds of thousands of jobs.

The agency's failure to make good on a $5.5 billion payment toward retiree health benefits comes as no surprise, and the default won't have any immediate effects on the postal service's day-to-day operations, the agency assured in a statement. But the missed payment -- reportedly the first of its kind in the post office's history -- will no doubt ramp up the debate over how best to address the agency's growing red ink.

On Tuesday, some proponents of reform blamed not the postal service but Congress itself for the default, citing a controversial 2006 law that increased the agency's financial obligations and lawmakers' failure so far to pass legislation this session that would address the agency's problems.

Under the law passed in 2006, the postal service must pay at least $5.5 billion a year into a retiree health benefit fund, a steep "prefunding" requirement that doesn’t apply to normal corporations. Although the agency has suffered a significant drop in first-class mail over the last five years, the prefunding payments have accounted for most of the postal service's losses in recent quarters.

To help the agency right itself, the postal service's postmaster general, Patrick Donahoe, has asked that Congress lighten the prefunding burden, as well as allow the agency to undergo significant cuts to address the decline in mail due to web transactions. Those cuts include the phasing out of 150,000 jobs, the elimination of Saturday delivery and the closing of roughly half the agency's mail-processing facilities -- measures largely opposed by postal unions.

In a statement issued Monday, the postal service urged Congress to get moving on legislation. "[C]omprehensive postal legislation is needed to return the Postal Service to long-term financial stability," the agency said. "We remain hopeful that such legislation can be enacted during the current Congress."

Earlier this year, the Senate passed a bill that would address the pre-funding burden, free up money for the agency to eliminate roughly 100,000 jobs and limit overnight delivery in some areas. The move to Saturday delivery, meanwhile, would be delayed for at least two years.

The House, however, has not yet produced any legislation. Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, has championed a bill more austere than the Senate's, allowing for the phasing out of around 150,000 jobs and facilitating a faster move to five-day delivery. The bill would also bar no-layoff clauses in union contracts and establish a commission tasked with cost-cutting if the postal service didn't meet its own goals. But nothing has come to the House floor for a vote.

 

[Jaskalas]

This prefunding requirement for employee benefits is merely bringing bankruptcy to the forefront sooner rather than later. It's still going to be a disaster, but without the 2006 bill you can simply kick the can down the road.

 

[Pr0d1gy]

So bailout the huge corporations but let the services that provide for the people to fail? Yeah, this is getting bad.

And, go figure, the Republican's plan is to cut 150,000 jobs. Total horseshit.

 

[corwin]

I hope this doesn't slow down the junk mail I get

 

[Genx87]

So bailout the huge corporations but let the services that provide for the people to fail? Yeah, this is getting bad.

And, go figure, the Republican's plan is to cut 150,000 jobs. Total horseshit.

What decade do you live within?

 

[cybrsage]

So bailout the huge corporations but let the services that provide for the people to fail? Yeah, this is getting bad.

And, go figure, the Republican's plan is to cut 150,000 jobs. Total horseshit.

The Postal Service itself recommended the 150,000 job cut.

To help the agency right itself, the postal service's postmaster general, Patrick Donahoe, has asked that Congress lighten the prefunding burden, as well as allow the agency to undergo significant cuts to address the decline in mail due to web transactions. Those cuts include the phasing out of 150,000 jobs, the elimination of Saturday delivery and the closing of roughly half the agency's mail-processing facilities -- measures largely opposed by postal unions.

I realize that blaming republicans is something you were told you must do by your masters, but please try to be less stupid about it. You are embarrassing your masters.

 

[JimKiler]

So bailout the huge corporations but let the services that provide for the people to fail? Yeah, this is getting bad.

And, go figure, the Republican's plan is to cut 150,000 jobs. Total horseshit.

Either way The Post Office and Corporations that give pensions will need to be funded (by the government IMO) so the sooner we end pensions and switch people to 401k's the better.

I hope no new employee's get pensions and I hope everyone with a pension is planning for when they will not get some or all the money they were promised. Not nice to deny promised benefits but if people want to survive they will need money.

 

[Jaskalas]

So bailout the huge corporations but let the services that provide for the people to fail? Yeah, this is getting bad.

Don't even talk about bailouts, with the last official number at $29 trillion those bailouts were just shy of proving each and every household in this country with $275,000. Forget the mail service, that's a pretty nice house they could have bought ALL of us.

Our currency is being manipulated maliciously. The 'rich' should have fallen flat on their assess, the people provided for, but instead we got the opposite. That's the real crime with what we've done since 2008.

 

[Pr0d1gy]

Either way The Post Office and Corporations that give pensions will need to be funded (by the government IMO) so the sooner we end pensions and switch people to 401k's the better.

I hope no new employee's get pensions and I hope everyone with a pension is planning for when they will not get some or all the money they were promised. Not nice to deny promised benefits but if people want to survive they will need money.

Yeah, let's take their security and put it in the hands of the thieves that robbed the rest of the nation.

So you say the USPS is recommending cutting 150k jobs? I wonder if they asked the workers if they agreed with that or if that was the recommendation from the leaders.

Actually, I don't.

 

[EagleKeeper]

So bailout the huge corporations but let the services that provide for the people to fail? Yeah, this is getting bad.

And, go figure, the Republican's plan is to cut 150,000 jobs. Total horseshit.

Postal service wants to cut 150K jobs.

They do not have the customer base to support those extra jobs and congress will not allow them to operate at a loss.

Run it like any business.

 

[cubby1223]

I saw a bumper sticker that read "Lick a Stamp, Save a Job".

And I was like, what arrogance is that?

It is not my responsibility to pay for a service that I do not need. The money rightfully should be diverted towards providing jobs in a different service that I do need.

 

[nextJin]

Yeah, let's take their security and put it in the hands of the thieves that robbed the rest of the nation.

So you say the USPS is recommending cutting 150k jobs? I wonder if they asked the workers if they agreed with that or if that was the recommendation from the leaders.

Actually, I don't.

Well at least you maintain your proworker attitude outside the private sector. Fortunately for people who understand economics know that layoffs happen.

 

[nehalem256]

Don't even talk about bailouts, with the last official number at $29 trillion those bailouts were just shy of proving each and every household in this country with $275,000. Forget the mail service, that's a pretty nice house they could have bought ALL of us.

Our currency is being manipulated maliciously. The 'rich' should have fallen flat on their assess, the people provided for, but instead we got the opposite. That's the real crime with what we've done since 2008.

The $29 Trillion number is sensationalist BS. It would basically be like saying that if you take out a $200,000 mortgage for 30 years that the bank gave you a loan for $6 million.

It should be obvious that the $29 Trillion number is impossible since it is around twice the yearly GDP of the US.

 

[cybrsage]

So you say the USPS is recommending cutting 150k jobs?

The postal service's postmaster general, Patrick Donahoe, says the USPS is recommending cutting 150k jobs. It is right there in the short article, and quoted specifically by me.

You are embarrissing your masters still.

 

[Pr0d1gy]

Postal service wants to cut 150K jobs.

They do not have the customer base to support those extra jobs and congress will not allow them to operate at a loss.

Run it like any business.

Fair enough, I don't know enough about the USPS to know if that is true or not. This is going to hurt the economy though, that much I do know. Losing those jobs is not good right now.

 

[LegendKiller]

Either way The Post Office and Corporations that give pensions will need to be funded (by the government IMO) so the sooner we end pensions and switch people to 401k's the better.

I hope no new employee's get pensions and I hope everyone with a pension is planning for when they will not get some or all the money they were promised. Not nice to deny promised benefits but if people want to survive they will need money.

The pre-funding goes further than any other company on the planet. What it really is is a way for Congress to permanently suck the USPS dry of every penny so they can use the funds in a front-end loaded manner. They then shackle it so it cannot run more efficiently. The USPS would be far better off if Congress let it make its recommended changes and stop the 100%+ pre-funding.

 

[Brovane]

Postal service wants to cut 150K jobs.

They do not have the customer base to support those extra jobs and congress will not allow them to operate at a loss.

Run it like any business.

I agree with this 100%. Trying to have Congress run your business is a recipe for success.

Congress needs to decide on how the USPS is going to be treated.

#1- You allow it to be run like a business and cut costs etc as needed to at least break even.

#2- You decide that the USPS needs to meet certain obligations. IE Saturday delivery, keeping post offices open that are not profitable. If you are going to run it like this you need to realize that the USPS will probably never be profitable and realize that you will need to subsidize it.

Basically Congress wants the USPS to run like option #2 but don't subsidize it. This isn't a recipe for success.

 

[cubby1223]

Larry the Liquidator's opinion on the subject:

http://www.youtube.com/watch?v=MfL7STmWZ1c

It's the exact same situation here.

There is no point pumping money into propping up a service that is increasingly not needed, and headed towards obsolescence, instead of diverting the money into something that builds the future.

 

[Brainonska511]

Larry the Liquidator's opinion on the subject:

http://www.youtube.com/watch?v=MfL7STmWZ1c

It's the exact same situation here.

There is no point pumping money into propping up a service that is increasingly not needed, and headed towards obsolescence, instead of diverting the money into something that builds the future.

The postal service gets no money from the government. How are we 'pumping money into it'?

 

[Matt1970]

This just shows you how good government is at running a business.

 

[Pr0d1gy]

This just shows you how good government is at running a business.

Yeah, it really shows you that government doesn't get the fact that public funding should equal lower prices. When your public funded institution charges as much as a private business such as FedEx, then you are screwing up or screwing people over....probably the latter.

 

[theevilsharpie]

The postal service gets no money from the government. How are we 'pumping money into it'?

Err....

At midnight Wednesday, the U.S. Postal Service is expected to default on a multi-billion dollar payment owed to the Treasury...

In case your not aware, the Treasury == government.

 

[bfdd]

The USPS is hugely bloated right now, it sucks that so many are going to lose their jobs, but if we want to keep that service around we need to. Sadly to many people are on the Government dole be it as employees(military or civilian) or accepting welfare to pay for school, shelter and food we simply can't afford it all without paying more in taxes or cutting back. I personally would like to see a shift in how we're taxed(as I believe income tax[not all forms of taxation though] to be unconstitutional) and see cuts, while encouraging more people to grow some of their own food or participate in community gardens/farms. Get people doing small business with each other etc etc. We need to think smaller so we can rip the power to destroy us from the few rich elites.

 

[fskimospy]

Err....

​

In case your not aware, the Treasury == government.

errr, that doesn't mean it gets money from the government. It's not repaying a loan.

That payment to the treasury is from a congressionally mandated pre-payment into pension programs of a sort that no other federal agency is required to do.

 

[1prophet]

Postal service wants to cut 150K jobs.

They do not have the customer base to support those extra jobs and congress will not allow them to operate at a loss.

Run it like any business.

Unless the post office is allowed to make a profit it can't be run like any business.

Post office makes a profit Congress won’t let it keep
Editor, Times-Dispatch:
Robin Beres’ Commentary column eloquently discussed the value of the U.S. Postal Service but incompletely depicted its financial status. Let me provide some context about an agency that doesn’t use a dime of taxpayer money and hasn’t for more than a quarter-century. Its revenue comes from selling its products and services.


USPS financial problems have little to do with delivering the mail. In the four fiscal years since 2007, despite the worst recession in 80 years, despite Internet diversion, revenues from postal operations exceeded costs by $611 million.


The problem lies elsewhere: the 2006 congressional mandate that the USPS pre-fund future retiree health benefits for the next 75 years, and do so within a decade — an obligation no other public agency or private firm faces. The more than $5 billion annual payments since 2007 — $21 billion total — are the difference between a positive and negative ledger. That’s the elephant in the room . . . not Saturday mail delivery, not labor costs — which have been declining for years. Postal management has consistently praised the unions for their cooperation.


Remove this onerous pre-funding and the Postal Service would have been profitable even during this economic downturn. But we’re not even asking that it be removed. What USPS management, unions and key Republican and Democratic legislators seek is to let the Postal Service stop depleting its operating funds to make these payments and instead allow an internal transfer of funds from its pension surpluses. This transfer, with zero taxpayer involvement, would leave pensions and retiree health benefits fully funded while restoring the USPS budget to financial soundness.


While waiting for Congress to act, letter carriers will continue the dedication that has led the country to name us the most-trusted federal workers six years in a row.
Fredric Rolando,
President, National Association of Letter Carriers

And for you Fedex / UPS is the answer out there, those companies use the post office to deliver many of their packages that otherwise would not be profitable for them.