News Release

Postal Service Crisis Brought on by Bizarre Law

AP reports: “Saturday mail may soon go the way of the Pony Express and penny postcards. The Postal Service said Wednesday that it plans to cut back to five-day-a-week deliveries for everything except packages to stem its financial losses in a world radically re-ordered by the Internet. …

“But change is not the biggest factor in the agency’s predicament — Congress is. The majority of the service’s red ink comes from a 2006 law forcing it to pay about $5.5 billion a year into future retiree health benefits, something no other agency does. Without that payment — $11.1 billion in a two-year installment last year — and related labor expenses, the mail agency sustained an operating loss of $2.4 billion for the past fiscal year, lower than the previous year.”

JEFF MUSTO, [email]
Musto is researcher and spokesperson for the Center for Study of Responsive Law, founded by Ralph Nader. Nader wrote in response to the Post Office’s announcement: “Postmaster General Donahoe would have us believe that this is one of many tough decisions that must be made to save the USPS, but nothing could be further from the truth. These are the decisions that are made by a leader without a clue and without a sense of what it takes to right the ship. He has ignored calls to implement ways of expanding postal services, many of which have been urged by the Postal Regulatory Commission.

“The USPS’s financial crisis has primarily been caused by a congressional mandate, coming from the Postal Accountability and Enhancement Act of 2006, that the USPS prefund the next 75 years of retiree health benefits in just a decade, by 2016. This is something that is not required of any other federal government agency or private corporation. Not to mention that there is no actuarial justification for such an accelerated schedule to prefund this future obligation. PAEA effectively forces the USPS to prefund retiree health benefits for some of its future employees who haven’t even been born yet!

“As a result, the USPS pays at least $5.5 billion each year into a fund for 75 years of future retiree health benefits in addition to paying $2.6 billion for the employer’s share of insurance premiums for the Postal Service’s current retirees. On top of this, according to reports from the USPS’s Inspector General, the USPS has overpaid $80 billion dollars to the Civil Service Retirement System and the Federal Employees Retirement System which the federal government refuses to return.

“If Congress were to reverse PAEA and return the billions owed to the USPS, the U.S. Postal Service would not be facing a financial crisis.”