US Postal Service defaults on $5.6B and will be insolvent by mid-2013!

[JEDI]

http://finance.yahoo.com/news/postal-default-again-114400807.html

At the end of this month (Sept), the U.S. Postal Service takes another step toward insolvency.
It will miss a $5.6B payment to fund health care benefits for retirees.

Come Spring 2013, the agency may not have enough to pay mail carriers and subcontractors!


The current postal legislation is stalled, and the Republican lead House has taken the entire month of Oct off for re-elections. (WTF?!)
Thus legislation may not happen until a new Congress takes over in January.

 

[HomerJS]

http://finance.yahoo.com/news/postal-default-again-114400807.html

At the end of this month (Sept), the U.S. Postal Service takes another step toward insolvency.
It will miss a $5.6B payment to fund health care benefits for retirees.

Come Spring 2013, the agency may not have enough to pay mail carriers and subcontractors!


The current postal legislation is stalled, and the Republican lead House has taken the entire month of Oct off for re-elections. (WTF?!)
Thus legislation may not happen until a new Congress takes over in January.

Yeah Republicans did a good job screwing over the USPS required them to fund pensions out 75 years in advance!

 

[Fenixgoon]

Yeah Republicans did a good job screwing over the USPS required them to fund pensions out 75 years in advance!

bingo. that's just retarded.

 

[berzerker60]

Also barring them from setting their own service hours, or ever selling anything BUT postage, envelopes, etc. - in other countries, the postal service makes use of its many many locations and build-in delivery system to sell various goods and services, including cell phones and plans. But since Republicans here believe that government can't be efficient/cost-effective, they go out of their way to make sure that's always the case. Then they go campaign saying, "Hey, the post office has debt! See how inefficient government is!"

 

[Texashiker]

At the end of this month (Sept), the U.S. Postal Service takes another step toward insolvency.
It will miss a $5.6B payment to fund health care benefits for retirees.

The problem is not the post office, its the federal government.

The post office has no reserve bank account, as the feds take all of the profit the post office earns.

 

[the DRIZZLE]

Yeah Republicans did a good job screwing over the USPS required them to fund pensions out 75 years in advance!

Please stop posting this nonsense. You obviously have no grasp of finance or accounting so let me make this clear. First, they must only fund the PRESENT VALUE of FUTURE LIABILITIES for PAST and CURRENT employees. This means that if they owe a pension payment of $1000 in 20 years and they think that the pension fund will see an annual return of 5%, that they would have to put $377 into the system today. This is prudent and is exactly the way pension plans are supposed to work.

Furthermore, the 75 year requirement only applies to the calculation of liabilities for accounting purposes. The law only requires funding for past and current employees.

bingo. that's just retarded.

No, you are retarded because you don't understanding basic concepts like the time value of money.

 

[Charles Kozierok]

This is prudent and is exactly the way pension plans are supposed to work.

The article referenced suggests otherwise. Is it wrong?

 

[lotus503]

Please stop posting this nonsense. You obviously have no grasp of finance or accounting so let me make this clear. First, they must only fund the PRESENT VALUE of FUTURE LIABILITIES for PAST and CURRENT employees. This means that if they owe a pension payment of $1000 in 20 years and they think that the pension fund will see an annual return of 5%, that they would have to put $377 into the system today. This is prudent and is exactly the way pension plans are supposed to work.

Furthermore, the 75 year requirement only applies to the calculation of liabilities for accounting purposes. The law only requires funding for past and current employees.



No, you are retarded because you don't understanding basic concepts like the time value of money.

Sorry pal pre funding 75 years worth of pension payments over a 10 year period is the current requirement.

One that no private company or public agency has ever been required to do.

The current default is specifically caused by this. To pretend otherwise is retarded.

 

[the DRIZZLE]

The article referenced suggests otherwise. Is it wrong?

The only parts of the article that contradict what I wrote are the descriptions of the union's position and the quote from the union president. While I am not an expert on pension funding regulations, I do disagree with the way that they are characterizing the issue. The union president's quote is particularly telling.

"This 'default' is not a crisis. The Postal Service already has set aside $45 billion for future retiree health benefits -- more than any other organization in America and enough to pay for decades of future retiree healthcare"

He completely ignores the only relevant issue which is whether or not the pension is fully funded. If it's underfunded then they should makeup the shortfall. This will have to be done at some point no matter what the union says.

Here is a report from the Congressional Research Service that discuss the issues in detail.
http://www.fas.org/sgp/crs/misc/R41024.pdf

 

[db]

The point is that this is another example of greedy assholes trying to eliminate a government service which serves everyone equally and replace it with a for-profit service that will cost more and make the new owners even wealthier than they are now.

 

[lotus503]

The point is that this is another example of greedy assholes trying to eliminate a government service which serves everyone equally and replace it with a for-profit service that will cost more and make the new owners even wealthier than they are now.

It's akin to telling someone you have 10 years to fund your retirement and oh by the way were going to garnish your wages for the amount required to do so, leaving you cash strapped now.

 

[the DRIZZLE]

The point is that this is another example of greedy assholes trying to eliminate a government service which serves everyone equally and replace it with a for-profit service that will cost more and make the new owners even wealthier than they are now.

Yeah why let the facts get in the way of a good story? It's because of people like you that we can't have effective government. This is one case where the government is actually acting responsibly and not kicking the can down the road and what happens? Partisan hacks like you just shit all over it. We get the government that we deserve.

 

[lotus503]

Yeah why let the facts get in the way of a good story? It's because of people like you that we can't have effective government. This is one case where the government is actually acting responsibly and not kicking the can down the road and what happens? Partisan hacks like you just shit all over it. We get the government that we deserve.

Sure if you consider implementing unattainable pension plan metrics responsible. 75 years prefund in 10 years is insanity, which is how we know it's being done to actually hurt solvency.

People like you who fail to acknowledge the obvious are a big part of the problem.

Why no 75 year prefund plan over 50 years? Why did they force 10?

 

[the DRIZZLE]

Sure if you consider implementing unattainable pension plan metrics responsible. 75 years prefund in 10 years is insanity, which is how we know it's being done to actually hurt solvency.

People like you who fail to acknowledge the obvious are a big part of the problem.

Why no 75 year prefund plan over 50 years? Why did they force 10?

Please read my post above.

1. There is no 75 year funding requirement, that is only for reporting of liabilities on the USPS financial statements. The actual funding requirements only apply to the expected life span of current and past employees. You are factually wrong.

2. It's not prefunding. It's not prefunding. It's not prefunding. It's matching the current assets to THE PRESENT VALUE OF FUTURE LIABILITIES. This is how all pension and insurance programs work. If they are not matched, the pension fund is insolvent by definition.

3. 10 years seems to me to be a reasonable amount of time to play catch up to fund the pension for past and current employees.

 

[lotus503]

Please read my post above.

1. There is no 75 year funding requirement, that is only for reporting of liabilities on the USPS financial statements. The actual funding requirements only apply to the expected life span of current and past employees. You are factually wrong.

2. It's not prefunding. It's not prefunding. It's not prefunding. It's matching the current assets to THE PRESENT VALUE OF FUTURE LIABILITIES. This is how all pension and insurance programs work. If they are not matched, the pension fund is insolvent by definition.

3. 10 years seems to me to be a reasonable amount of time to play catch up to fund the pension for past and current employees.

They are being asked to include money to cover the liabilities for 75 years, over 10.

Spin that how you want, those are the facts.

 

[the DRIZZLE]

They are being asked to include money to cover the liabilities for 75 years, over 10.

Spin that how you want, those are the facts.

No, those aren't the facts. You are wrong about the actual requirements laid out in the law, and wrong on a conceptual level about what it means. If you are going to be willfully ignorant, I see no point in continuing this discussion.

 

[lotus503]

No, those aren't facts. You are wrong about the actual requirements laid out in the law, and wrong on a conceptual level about what it means. If you are going to be willfully ignorant, I see no point in continuing this discussion.

Quote me sections of the legislation that disproves the need to deposit money over 10 years to reach solvency over 75 years.

Until then your trying to spin your way out of the obvious.

I understand pension funding and also understand no pension private or public has ever had a similar burden.

 

[Phokus]

Please stop posting this nonsense. You obviously have no grasp of finance or accounting so let me make this clear. First, they must only fund the PRESENT VALUE of FUTURE LIABILITIES for PAST and CURRENT employees. This means that if they owe a pension payment of $1000 in 20 years and they think that the pension fund will see an annual return of 5%, that they would have to put $377 into the system today. This is prudent and is exactly the way pension plans are supposed to work.

Furthermore, the 75 year requirement only applies to the calculation of liabilities for accounting purposes. The law only requires funding for past and current employees.



No, you are retarded because you don't understanding basic concepts like the time value of money.

Except no other business or government entity does this.

 

[the DRIZZLE]

Except no other business or government entity does this.

More lies! The Pension Protection Act of 2008 gave all private sector companies 4 years to fully fund their defined benefit plans. What else do you have?

 

[lotus503]

More lies! The Pension Protection Act of 2008 gave all private sector companies 4 years to fully fund their defined benefit plans. What else do you have?

first it was 2006 act not 2008, second it allowed government contractors to recoup entire pension costs over 4 years from the government creating a huge government liability.

http://www.defensenews.com/article/...1/New-Accounting-Rule-Could-Cost-DoD-Billions

http://www.govtrack.us/congress/bills/110/hr7327

http://www.dol.gov/ebsa/pdf/HR7327JCTTechnicalExplanation.pdf

 

[Balt]

The USPS seems to have been put in an impossible position by the government. On one hand, Congress tells them to remain solvent without government assistance. On the other hand, Congress raises bloody hell when the postal service talks about cutting Saturday service and shutting down the underused facilities that are a huge financial drain.

Either jump in with both feet or get out completely, imo.

 

[Hacp]

The USPS seems to have been put in an impossible position by the government. On one hand, Congress tells them to remain solvent without government assistance. On the other hand, Congress raises bloody hell when the postal service talks about cutting Saturday service and shutting down the underused facilities that are a huge financial drain.

Either jump in with both feet or get out completely, imo.

Get rid of the pensions. That'll solve it. It wasn't put in an impossible position.

 

[boomerang]

http://finance.yahoo.com/news/postal-default-again-114400807.html

The current postal legislation is stalled, and the Republican lead House has taken the entire month of Oct off for re-elections. (WTF?!)
Thus legislation may not happen until a new Congress takes over in January.

If we'd had a Democrat lead House they would still have taken off the month of October.

Grow-the-fuck-up.

The childlike mind of the progressive left on display. Blameless for anything and everything that happens. It's sad. Arrested development on display. Kicking and screaming to get what they want. Blaming anyone but themselves when something goes wrong. Never boring, but always tiring.

 

[randomrogue]

It's time for people to take personal responsibility for their mail. DELIVER IT YOURSELF YOU LAZY ASSES AND STOP DEPENDING ON THE GOV'T TO DO IT FOR YOU!

 

[MrColin]

Please read my post above.

1. There is no 75 year funding requirement, that is only for reporting of liabilities on the USPS financial statements. The actual funding requirements only apply to the expected life span of current and past employees. You are factually wrong.

2. It's not prefunding. It's not prefunding. It's not prefunding. It's matching the current assets to THE PRESENT VALUE OF FUTURE LIABILITIES. This is how all pension and insurance programs work. If they are not matched, the pension fund is insolvent by definition.

3. 10 years seems to me to be a reasonable amount of time to play catch up to fund the pension for past and current employees.

From the article

The financial crunch is due to a law passed in 2007 that only Congress can fix. Congress ordered the prefunding of retiree benefits, as a way of easing federal deficits. Neither of the bills moving through Congress completely undo that mandate -- they just prolong or delay it.

But unions, in particular, blame Congress and the prefunding mandate for the default, which they call "bogus" and "manufactured." They want Congress to repeal the mandate.

"This 'default' is not a crisis. The Postal Service already has set aside $45 billion for future retiree health benefits -- more than any other organization in America and enough to pay for decades of future retiree healthcare," said National Association of Letter Carriers President Fredric Rolando. "The payment in question results from an unnecessary congressional mandate -- an obligation not required of any other company or agency in the country."

I'm not really familiar with the books of the USPS, but it sounds to me like the law that specifically applies to the retirement program of the USPS required full, not present value funding, in order to make the federal government look more solvent. The article isn't really clear on this and I haven't looked at the numbers myself.