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.