Vast Majority of USPS 2Q Losses from Pre-Funding Burden
You’ve probably read a panicked story or two today about the U.S. Postal Service’s second quarter losses totaling $3.2 billion.
But what you most likely didn’t read is that 96 percent of those quarterly losses come from the unnecessary 2006 mandate that USPS pre-fund its future retiree health care benefits for the next 75 years – in just ten short years. That is: the Postal Service is being required by Congress to fund health care benefits for people who aren’t even born yet, on an accelerated schedule, instead of pursuing thoughtful postal reform to ensure USPS’s ability to serve Americans long into the future.
This Congressional mandate is expected to cost USPS $11 billion this year.
Unfortunately, the Senate’s recently passed postal legislation doesn’t go far enough in reducing this onerous burden. And the House’s pending legislation, H.R. 2309, just doubles down on this flawed strategy, rather than offering Americans a real solution to the Postal Service’s problems.
As is explained in-depth in Postal Facts and in a fact sheet, pre-funding has caused almost all of the Postal Service’s red ink since 2007. It is something no other public agency or private company is required to do. And, according the USPS Inspector General, the Postal Service is currently already funded at 49 percent of its estimated liability. This mandate is not necessary, and it is crippling the ability of the Postal Service to adapt to the 21st century.
The Postal Service has called for reductions in service, such as getting rid of Saturday and door-to-door delivery. But as National Association of Letter Carriers President Fredric Rolando notes:
It would be absurd to start to dismantle the universal network and degrade service to the American people and America’s businesses – when almost all of the red ink has nothing to do with the costs of those services but stems directly from a burden that Congress imposed and Congress could fix overnight.
USPS faces real challenges to adapt to a new economy, but it cannot do so with this burden hanging around its neck. Congress should get rid of this debilitating requirement and pursue a thoughtful restructuring of the Postal Service.