USPS Loses $3.3B, Warns of Cash Drain

[hal2kilo]

You guys realize that the USPS makes money every year, right? The reason why it has posted these huge deficits each year is due to a 2006 congressional decision to have them pre-pay into a fund for retirement benefits.

No other company in the world has this requirement. It's not that the USPS doesn't have a lot of problems going forward, but their losses are largely caused by a unique set of circumstances.

EDIT: Sorry, they actually lost money in the middle of the recession. Generally though, they would have been quite profitable in recent years without this requirement.

Guess why congress did that? Let me guess, something to do with having one of the largest unions still in existence in this country. No the Republicans (cough Koch bros) have no agenda to destroy every last union in the country.

 

[the DRIZZLE]

It's not misinformation at all, it's 100% factual, and it has nothing to do with understanding accounting. It's not the objection to the pension fund at all, it is that they are being forced to provide 75 years worth of payments in 10 years. That's a recipe for disaster. Proponents of such a thing are people who don't understand how public policy works.

No, they aren't providing 75 years of payments in 10 years. The fact that you keep using that language makes me question if you understood a word I wrote. For example, for $1 of payments due in year 75 they will only need 1.2 cents today assuming they expect a 6% return in the next 74 years. I don't know the state of their pension system when the law was enacted so I can't comment on whether 10 years is was a reasonable amount of time or not.

edit: You are also 100% wrong when you claim that no other companies are required to do this. There are several federal laws that require private employers to fully fund their pension plans.

 

[Genx87]

So how far underfunded was their health care plan that congress felt it necessary to fund it a rate of 5.5 billion a year for a decade?

 

[fskimospy]

No, they aren't providing 75 years of payments in 10 years. The fact that you keep using that language makes me question if you understood a word I wrote. For example, for $1 of payments due in year 75 they will only need 1.2 cents today assuming they expect a 6% return in the next 74 years. I don't know the state of their pension system when the law was enacted so I can't comment on whether 10 years is was a reasonable amount of time or not.

edit: You are also 100% wrong when you claim that no other companies are required to do this. There are several federal laws that require private employers to fully fund their pension plans.

Yes, I know what interest is. They are being required to submit funding to cover payments for the next 75 years of payments in the next 10 years. Yes, this is less than the total value of them. Nowhere did I argue that, but more importantly that is entirely irrelevant to my point. This accelerated payment schedule is an indisputable fact, and I'm not really sure what the argument is.

Can you provide me with a link to another governmental entity (or even a private one) that has been mandated to meet such a large requirement in such a short time frame? There might be a few private ones that have come under such a hurdle, but I am quite certain this is unique among federal agencies.

This is basic public policy, such a requirement was foolish.

 

[the DRIZZLE]

Yes, I know what interest is. They are being required to submit funding to cover payments for the next 75 years of payments in the next 10 years. Yes, this is less than the total value of them. Nowhere did I argue that, but more importantly that is entirely irrelevant to my point. This accelerated payment schedule is an indisputable fact, and I'm not really sure what the argument is.

Can you provide me with a link to another governmental entity (or even a private one) that has been mandated to meet such a large requirement in such a short time frame? There might be a few private ones that have come under such a hurdle, but I am quite certain this is unique among federal agencies.

This is basic public policy, such a requirement was foolish.

What was the state of their pension system before the new rules? I can't given you a comparison until I know how significant the change was and how much the actual shortfall was.

The 2004 Pension Funding Equity Act apparently provides a table for schedule of contributions to private companies to make up shortfalls but I can't find the actual table online.

 

[momeNt]

Are the funding deferments still factored into the $3.3B loss? Or would it have been a $7+B loss?

Wasn't able to find the info online just that there have been deferments in the funding of the pensions.

 

[peonyu]

Why don't we just allow private companies to deliver mail?

I would dread that, for the simple reason that Fed-Ex and UPS are already over charging as it is. The saving grace for USPS is with light weight items, $1 can still ship small items there...Fedex / UPS would ask you for $10.

 

[Craig234]

The Republicans clearly sabotaged the USPS with the unprecedented 75 year demand.

Why? I suspect a combination of the union issue and wanting to not have the USPS around as an example of a 'government' operation showing efficiency contradicting them.

And if they get it destroyed, the private companies who are ready to step in and profit (at consumer expense) no doubt know who to donate to to thank.

Just speculation, but the sabotage is a bad thing.

 

[Genx87]

The Republicans clearly sabotaged the USPS with the unprecedented 75 year demand.

Why? I suspect a combination of the union issue and wanting to not have the USPS around as an example of a 'government' operation showing efficiency contradicting them.

And if they get it destroyed, the private companies who are ready to step in and profit (at consumer expense) no doubt know who to donate to to thank.

Just speculation, but the sabotage is a bad thing.

Why didnt democrats block it?

 

[Brovane]

The biggest issue that I see with the USPS is that they are not free to make strategic business decisions. Congress dictates to them how to essentially run the business from a strategic stand-point. Want to stop Saturday delivery, close low traffic volume post offices, raise stamp prices? You have to get approval from Congress. Basically congress needs to either fish or cut bait with the USPS. If congress wants USPS to be self funding then they need to get their hands off the USPS and allow the USPS to run itself and make strategic business decisions. The only thing that Congress should tell the USPS is that they have to deliver mail to every address in the US, that is it. If the USPS wants to close offices or stop Saturday delivery then they should be free to do this. If Congress wants to have the current control over the USPS that they currently exert then they need to understand that the USPS will need subsidies from other parts of federal revenue in order to operate in the black. Having Congress trying to dictate how to run a business is not a recipe for profitable business.