USPS Reports $15.9 Billion Loss, Asks Congress For Help 473
New submitter Gaildew2 writes with news that the embattled United States Postal Service has posted a $15.9 billion loss over the past fiscal year, more than three times the amount it lost the previous year.
"The USPS, which relies on the sale of stamps and other products rather than taxpayer dollars, has been grappling for years with high costs and tumbling mail volumes as consumers communicate more online. In September, the Postal Service hit its $15 billion borrowing limit for the first time in its history. That leaves it with few options if it suffers an unexpected shock, such as a slowdown if lawmakers are unable to prevent the year-end tax increases and spending cuts known as the 'fiscal cliff.' ... Postal officials want Congress to pass legislation that would allow the agency to end Saturday mail delivery and run its own health plan rather than enrolling USPS employees in federal health programs, among other things."
Comment removed (Score:5, Informative)
end Saturday mail delivery (Score:5, Informative)
in other places like Canada they don't have that any more.
The big lie (Score:5, Informative)
USPS is failing because it's been "grappling for years with high costs and tumbling mail volumes"?
No. The truth is that the GOP has been trying to kill USPS by mandating the prefunding of all USPS benefits for the next 75 years!
The Post Office would be solvent if it had reasonable requirements placed on it, but the GOP wants the public to think that is impossible.
See: http://jonathanturley.org/2012/05/06/going-postal-in-washington-d-c-the-usps-the-postal-accountability-and-enhancement-act-of-2006-union-busting-and-paving-the-road-to-privatization/ [jonathanturley.org]
Re:Cuts (Score:5, Informative)
It's even simpler than that.
1. Stop requiring the post office to fund pensions for future employees that aren't even born yet.
In 2006, Congress passed a law requiring the Postal Service to wholly pre-fund its retirement health package – that is, cover the health care costs of future retirees, in advance, at 100%. The Postal Service, which is a corporation owned but not funded by the federal government, is the only government-related agency required to prefund retirees' health benefits.
"(The requirement is) so ridiculous, Congress doesn't do it. No other government agency does it. No private businesses do it," she said. "It's $5.5 billion a year, every year, for 10 years. That's what is causing the problem.
"The law was passed in 2006 and lo and behold, ever since 2007, the Postal Service has been suffering a tremendous debt."
Re:Riduculous Retiree Benefits (Score:3, Informative)
Not due to the Internet (Score:4, Informative)
Re:It's time to end the monopoly... (Score:3, Informative)
People who live in places that are too expensive for door-to-door mail delivery can pick up and send their mail at the nearest post office. Consider it part of the cost of living far from society.
Re:Mass Mail (Score:5, Informative)
And they get an ENORMOUS discount to send out thousands of flyers and coupons
Mailing companies don't get enormous discounts. They actually do the majority of the USPS's work themselves. They take care of the presorting and processing of all the mail, and will even do drop shipments of the presorted mail to the delivery facilities directly. The only real part that the USPS does is take the sorted mail and have their carriers deliver it. It removes a large portion of the process, such as address analysis and routing processing. USPS also get revenue from the mandatory quarterly software updates used for sorting and processing of the mail.
Re:Mass Mail (Score:5, Informative)
I meant to include this link - the USPS has a 13 billion dollar [federalnewsradio.com] surplus sitting in its retirement accounts.
Re:Mass Mail (Score:5, Informative)
The USPS doesn't run on taxes, they are self-sufficient. That's why they're not asking for a bailout, but for an end to Saturday mail delivery and other USPS cost saving measures. At the same time, the USPS is generally hobbled by Congressional requirements that they do this or that and overfund their retirement obligations and all sorts of other things.
Exactly. They are the only agency required to pre-pay all the retirement accounts in full rather than make regular installments into an interest-bearing account. Congress hobbled them with this, along with requirements to keep all rural post offices open and keep delivering on Saturdays, but provided them no way to recoup those costs. Almost all of the $15B is due to the retirement pre-payment requirements.
Re:Cuts (Score:5, Informative)
This is exactly their modus operandi for pretty much every government agency these days. Cut funding where possible, demand crazy requirements on spending, saving, oversight, personnel, etc., and then when a cash-strapped agency burdened with the bureaucracy necessary to follow those requirements and things like pre-paying pensions 75 years in advance fails to perform, decry the inefficiency and waste of the government and demand that the function the agency performs be privatized.
It's called "starve the beast."
Re:Mass Mail (Score:4, Informative)
Re:not quite (Score:5, Informative)
Re:The next time (Score:4, Informative)
Absolutely. If reality doesn't fit your political dogma, then when given the opportunity you simply change either reality or peoples' perception of it.
It has already worked for a long, long time.
Re:Mass Mail (Score:2, Informative)
The retirement account money is just sitting there because Congress passed a law under Bush requiring they fun employee pensions fully for 50 years. No company does that, even when pensions were the norm the funds weren't required for that length of time.
The letter carriers union fought against this law because they knew what a hardship it would be. So, instead of getting all small government on something that doesn't even rely on taxes, why not suggest to your congresspersons that they repeal the pension mandate and have it set at a more sane funding level.
Re:Mass Mail (Score:5, Informative)
THIS is important. Basically, Congress is making the USPS prepay pensions so many years out, that the beneficiaries of it haven't even started working for the USPS yet!
Of course they're doing badly, no other company on earth is required by government to do that. Combine that with they're required to maintain postage rates which are under cost for the library system despite big, heavy books, and that it's legal for UPS and FedEx to use USPS for last-leg delivery*, congress has been working very hard to set up the USPS to fail.
It was basically a trick to make USPS be the poster boy for government inefficiency: they get to make headlines every quarter about their financial woes.
* UPS Mail Innovations, FedEx Smart Post, and some other services are products those companies sell which provide cheap shipping. Delivery is expensive, and these low-price options are offered at a cheap price because they remove the last leg of delivery, actually delivering to unique addresses. They handle most of the shipping themselves hitchhiking on other shipping methods when they have extra room and, when they get to the depot, just get offloaded to the local USPS hub and pay them a fraction of what they get paid to finish the delivery. This is the perfect textbook example of "Socialize the Costs, Privatize the Profits".
Re:Mass Mail (Score:5, Informative)
Re:Mass Mail (Score:5, Informative)
I think it's the former
And you'd be wrong. It's not only legally required to operate without receiving tax funds, it's by law not allowed to raise the price of stamps, or determine its own service hours, and it has incredibly onerous restrictions placed on it to fund its retirement and medical benefits for decades more than any private corporation would ever consider doing. In other words, Republicans set it up to fail so they could point to it as an example of inefficient government.
Re:Mass Mail (Score:5, Informative)
Gilbert, meet Wikipedia: https://en.wikipedia.org/wiki/Usps [wikipedia.org]
"The USPS has not directly received taxpayer-dollars since the early 1980s with the minor exception of subsidies for costs associated with the disabled and overseas voters. Since the 2006 all-time peak mail volume,[5] after which Congress passed the "Postal Accountability and Enhancement Act",[6] (which mandated $5.5 billion per year to be paid into an account to pre-fund retiree health-care, 75 years into the future—a requirement unique to this agency), revenue dropped sharply due to recession-influenced[7] declining mail volume,[8] prompting the postal service to look to other sources of revenue while cutting costs to reduce its budget deficit.[9]"
I’m sure that like most of us in the country the USPS also benefits from using roads and sidewalks and highways and water and electricity systems that were built for us by all those socialists between the 1930s and 1980, back when the personal tax rates were three times higher. (No doubt you have built your own alternative transportation system, perhaps jetpack-based.)
Re:Mass Mail (Score:4, Informative)
Look deeper into this problem instead of yelling "OMG, GUBER'MENT IS BAD".
Who exactly imposed the 75-year rule?
Q.E.D.
Going Postal (Score:5, Informative)
That one is easy: because they are required to serve everyone.
If they were run as a normal company, they would not want to run rural routes because they're not cost-effective. Fedex does not deliver to rural Alaska. USPS does.
Government agencies are better when (a) the service being provided falls into the category of "natural monopoly", and (b) when coverage is required to be universal. Especially (b) because as long as you have to serve everyone, you should probably be accountable to everyone. That whole "by the people, for the people" thing, as opposed to "by the employees, for the shareholders" thing.
I'm not a big fan of having a universal tax for the benefit of the shareholders of some company.
You can disagree with the necessity of having a good postal system, but (a) as you mention, the Founders did not, and (b) I'd suggest you try living in someplace that does not have a well-run postal system.
I've lived in rural Alaska. It's a lot like frontier America in 1776: the USPS was often the only way to get things. I've also lived in rural Costa Rica, and the inability to get anything by mail was a sharp and unpleasant contrast.
Honestly, I see the USPS as being an excellent example of how government services should be run, although I would rather they be subsidized a bit more heavily. Service charges should be designed to prevent (or recoup the costs from) overuse; the majority of operating funds should come from taxation. Charges on services with a universal mandate are a form of hidden taxation: I'd rather be up-front about it. The idea of government agencies being run as for-profit businesses is actually a severe misunderstanding of what government is for.
Re:Mass Mail (Score:3, Informative)
They receive a lot of discounts because they do the USPS's work for them. They only receive discounts if the mail is all pre-sorted, bagged and tagged with endpoint route destinations, so the USPS can easily deliver the mail as a bunch to the individual local (and even individual carrier route) without inspecting any of it. It's cheaper because they are using much less of the actual service. And a significant amount of work goes into managing the pre-sorting, barcoding and permit management.
So, the "cheaper per-item rate' mail isn't simply a giant weight dragging down the system. It's far more complicated than that.
Re:Mass Mail (Score:4, Informative)
Thinking fail. You haven't ever received a mail in rebate, an ebay package, a small business online order, a care package from grandma, letters from the bank, local catalogues from small businesses, cheques from contract work, reminders about doctor visits, city forms, etc.. recently?
And besides all that, do you really think that the destruction of a carrier will stop or decrease the levels of spam? HA! all that money there, UPS and fedex would be more than happy to enter that market. I doubt you would see even a one day drop in spam volumes. Someone like UPS would buy up the usps business and then charge the average person $7 to send a letter. The volume discounts would likely not change and you would be at the same place you started, except on the rare occasion when you do need to use the service and then you would personally pay a lot more.
Its hard for me to believe that the federal government doesnt own the post office as a government service. Its one of those businesses that should not be run as "for profit". They are providing a service at a low cost to everyone in your country and should be protected.
Nice try there sparky, but here's a fun arithmetic fact. 10000 items at 5 cents per item is vastly MORE MONEY than 1 grandmas letter at 2 dollars or whatever. Obviously the advertising industry drives the post office's revenue. You can argue that this is wasteful, environmentally unfriendly and therefor the federal government should really probably pay for the post office to prevent these sorts of spamvalanches, but you are not doing that. You seem to be saying that snail mail is obsolete, which i think is demonstrably false. There is quite a high premium to send things by fedex or ups, thus creating a good niche for USPS, albiet evidently not a profitable one. Should near universal access to a communication tool be profitable? thats the question.