The Big Lie About Postal Bankruptcy


The ‘Big Lie’ about postal ‘bankruptcy’

Yesterday, in a mandatory stand-up talk, Postal Service management all across the country told letter carriers:

“If we were a private company, we would have already filed for bankruptcy and gone through restructuring—much like major automakers did two years ago.”

The Service repeated this claim in a press release distributed to the nation’s news media as well.

Of course, it’s not true. But the USPS seems to think that if it repeats this “Big Lie” often enough, most people—and especially members of Congress—will think it’s true.

So, let’s set the record straight: If the Postal Service were a private company, it would not have to file for bankruptcy because it would not be subject to a USPS-specific congressional mandate to pre-fund future retiree health benefits. As it is, it is the only federal agency required to do so: It must pre-fund these benefits some 75 years into the future on a massively accelerated schedule.

This postal-only mandate, which costs the USPS $5.5 billion per year, accounts for 100 percent of the Postal Service’s $20 billion in losses over the past four years. It also accounts for 100 percent of the rise in the Postal Service’s debt in recent years. Without the mandate, the USPS would have been profitable over the past four years and it would have significant borrowing authority to ride out the bad economy. It would not have had to file for bankruptcy.

In fact, no private company in America is required to pre-fund future retiree health benefits, either by law or private-sector accounting standards. The $47 billion the Postal Service has deposited into its retiree health fund over the past four years would have been available for operating costs. And those companies that voluntarily do pre-fund would never have adopted a crushing schedule to pre-fund 80 percent of future retiree health costs in just 10 years. Nor would they mindlessly stick to such an onerous schedule in the middle of the worst recession in 80 years.

Congress, aided and abetted by the Office of Personnel Management and the General Accountability Office, mandated the destructive pre-funding policy in 2006. The common-sense solution is obvious: Let the Postal Service use the massive surpluses in its pension plans, found by two independent audits, to cover the cost of pre-funding. Indeed, 181 members of the House—from both parties—have co-sponsored legislation to adopt this solution (H.R. 1351). But thanks to the dysfunctional nature of Congress, the bureaucratic blindness of OPM and the Office of Management and Budget, and the single-minded stubbornness of the Congressional Budget Office, which “scores” any change in the pre-funding provisions as increasing the deficit even though no taxpayer funds are involved, the Postal Service now faces a financial crisis in September when the next $5.5 billion payment is due.

Don’t believe the “Big Lie.” The Postal Service is not going bankrupt. Rather, Washington politics is killing it.

12 Responses to "The Big Lie About Postal Bankruptcy"

  1. Matt   August 13, 2011 at 10:09 am

    Good idea….let’s treat it like Social Security. That’s obviously working out well for the country, let’s try it here too. How about this? Disband the USPS and let the private sector take care of it more efficiently and effectively.

  2. jeff   August 13, 2011 at 7:07 pm

    Sadly, the provision for prefunding our healthcare liability was in the Postal Reorganization bill. My union (NALC) not only lobbied for this bill but hailed it as the savior of the postal service. If I remember correctly the prefunding was actually the brainstorm of NALC. On the last matter be mistaken, but If you read the complete reorg bill under healthcare, it clearly lays out the frefunding payments year to year through 2016

  3. Jeff S.   August 15, 2011 at 6:11 am

    The government is already treating us like social security. That’s the problem. They’re holding $60 to $80 billion in USPS money hostage that they had no business laying their hands on to begin with.
    As for the ‘private sector’, UPS and FedEx don’t have the fleet or manpower necessary for universal delivery; nor do they have the infrastructure or network capability to process the sheer amount (we do in a day what they do in a year) of 1st, periodical and business class mailings we routinely handle with award winning customer satisfaction and efficiency.
    We’re as big as WalMart and Microsoft combined. That’s after a 25% reduction in staffing over the last decade. Manpower reductions have far outpaced the decline in mail volume. We dwarf FedEx and UPS. What you propose is akin to asking one man to do the work of a backhoe with a shovel.

    You may be thinking of this, “It would also repeal the Postal Service’s obligation to make a $3 billion per year contribution to an escrow account while reversing the unfair allocation of military pension costs to the USPS.” Yes, NALC was a huge proponent of the 2006 Postal Accountability and Enhancement Act.

  4. bob   August 17, 2011 at 3:45 am

    thank the great Bush for most of this mess

  5. Tom Worley   August 21, 2011 at 2:19 am

    Don’t let the USPS be destroyed. Sign the petition at

    If USPS were private, they would raise prices to cover expenses, stop giving discounts that exceed costs avoided.

    If private, it would could decide not deliver to Alaska or Wyoming, or to 3500 isolated small towns: provide no service except to Hoover up wealth for the owners.

    It’s a public service. A service for the public, not for the big mailers.

    Stop the destruction.

  6. postal   August 21, 2011 at 9:41 am

    Tom – PEN and Rick Owens started just such a petition way back in 2002. Here it is:

  7. Worley Dervish   August 21, 2011 at 6:12 pm

    postal — So was the petition ever sent? What happened? For the petition, we’re hoping in the next few months to collect at least 120,000 signatures–the same as the number of layoffs they want. We’ve collected more than 500 signatures in just a few days.

    Worley –
    Yes, the petition was sent. What happened? nothing – not even a response from anyone – although it is not my wish, that is exactly what I predict for your petition…no results whatsoever. I, we, wish you great luck with your petition – we also share your postal beliefs.

    BTW – PEN does not post links to personal sites through our blog. Links such as the petition is an exception.

    Rick Owens

  8. MICHAEL   September 4, 2011 at 9:47 am

    Read the dam constituion to go private they would have to change the constituition which requires the states to ratify

  9. JILL MARIE   September 16, 2011 at 4:26 pm

    I realize that many legal documents must be hand delivered to ALL locations on the map….using the Postal Service is invaluable and saves businesses and citizens money in the long run. Very good for a handwritten love letter and card to someone about to pass away. Emails never get that effect!

    This is another greedy plot. I believe we will win!

  10. Tim   November 18, 2011 at 4:58 pm

    Well thanks beit to the funding of mailboxes unlimited. The New Pony express.Founded and funded when?There is the electronic E stamp fund aswell.5.5 billion a year.WOW.Privatelize and Bankrupt??????Well I personaly Believe that will be the Day when the Sun tabloid seizes to go to print aswell.Yep We Deliver for You.
    I bielieve the United States Postalservice has only LOST its grip on the Reality that there are in Fact other Currior and Delivery Companies that can more than HONESTLY out perform and pro~form the U.S.Postalservices in the #1 GOAL that Postal Management has failed in.HEY after all a Company is only as good as the people that represent it.Call the postal service with a few simple issues about the quality of service and record the conversation on a recorder.
    A person can opt an experiment by going out to dine at a fine reastaraunt.This being in person face to face vs over the phone.I go dressed just like I am.A hobo,,lol,and i get better service from the STAFF at the fine restraunt than DEALING with P.O.STAFFERS.ATTITUDE spells GET what you pay for.
    I went to all the HONOR our Veterans diners this past holiday.I noticed that despite attire,clothes and such,because thats the SOCIAL NORM.That no matter how people were dressed.The Staff of those places treated everybody like a million bucks.
    I see FEDERAL EXPRESS and UPS as 2 organizations that not much negativity is draw towards in the aspect of Quality,Service,and Perfessionalism.Oh might I add I only worked for the Postal Service as a career Employee nine years.I was forced into an early out retirement.However I was a non carreer employee for nearly seven years prior to becoming a temp career employee .
    During those years I served as the Shop Stewart and health rights coordinator.Now I am into my fifth year of retirement and studying the possibilities of a medical carreer.Something in the lines of nursing school since I am only forty years of age and healthy.

  11. paul   July 15, 2012 at 3:53 pm

    I have read Matt’s ignorant comment of letting the private sector handle and secure the mail because as Matt states “let’s treat it like Social Security”. Well dumb ass Matt the private sector would have taken over the USPS long ago but the private sector could not cherry pick where to deliver. I would also add that when ever the argument comes up the private sector has been given their chances but only pick the lucrative services and products that their friends in Congress will give them so that the American Citizen can be bleed and sucked dry by the vampires. Wake up and look at the winks and nods taking place in the halls of congress and the thieves on the payroll. Please do not believe that the companies who would take over the delivery of the mail would take the profit and have the government deliver to the rural and less profitable areas of the country.

  12. fedup   July 18, 2012 at 4:18 am

    I think it’s silly to go back and forth about any of this. It comes down to simple money management. The entire system is flawed. There are things in place that were set up so many years ago that most don’t even know why they are there anymore.
    How much money does the USPS spend to follow Carriers around? How much money does USPS spend on Postmasters salaries ( I had one who spent her days shopping and getting her nails done, she use to brag about it). How much money does USPS spend on maintaining and fixing vehicles? In my are vehicles are taken to local garages (at one point a vehicle came back from being inspected and there was evidence that it was never even looked at, turn signals and flashers weren’t working). How much money does the USPS s[end on the training of their “management” and what are they actually training them to do? How much money does the USPS spend on providing “work” vehicles for “management” to drive around? How much money does the USPS spend on the serious mishandling of Workers Comp claims? They repeatedly create extremely unsafe working conditions and they end up spending twice as much money then if they were to just CARE about their employees.
    The list goes on and on. The internet is nothing new and even the most uneducated person could have seen years ago that the technology was just going to keep growing and that it would eventually affect services that we provide. They spent billions of dollars on equipment to sort mail and at the same time was complaining about not having the mail volume to run through those machines. How much money did they spend on training people for this new equipment, how much money did they spend on the overtime that was necessary while TRYING to implement these new and unnecessary procedures in offices across the country. There was more then enough time and resources for the Postal Service to prepare themselves for the issues they are facing right now (technology). The system, if you can call it that, is flawed in every way and needs to be looked at and changed starting from the top down. Why they start at the bottom makes no sense to me. If I had a business and saw the financial problems rising I would start with my highest payed employees and make sure their salaries can be justified as far as what they contribute to the revenue of my business. It’s simple math.
    To sit and go back and forth about the blame there needs productive conversation. Our Unions need to their part too, if neither side of this is willing to bend when necessary then it will just break.
    As employees we are just as much to blame. Look at all of the Carriers being caught on the clock doing absolutely nothing for hours. How often do you call them on it? How often do we speak up when we should? How often do you yourself spend the companies time and money doing things that you shouldn’t be doing? I know what the mentality is, stick it to them to get back at the way they treat us, which is disgusting to say the least. As a Government Agency they should be leading by example, they should be creating jobs and not destroying them. They should be setting the bar for workplace tolerance and environment. Instead we are at the bottom and probably one of the most unhealthy environments in the United States. That’s pretty damn bad.
    We are all responsible for the situation (some more then others) that we are now all faced with. I know during my time as a Carrier there were many days I took slack from my fellow Carriers for completing too much work too fast, or for not staying on the clock just for the sake of staying on the clock. Hearing things like, you should slow down or don’t do them any favors cause they don’t give a shit about you. And I will not argue that fact at all. I am now injured and dealing with more nonsense then anyone should ever have to.
    The point is it will take everyone doing their part in order for anything to actually change. It really is as simple as if you are not part of the solution then you are part of the problem.

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