The U.S. Postal Service wants to save $2.2 billion by ending Saturday mail service except for package deliveries.
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That and consolidating post offices will help it reduce the nearly $16 billion it lost last year. Somewhere along the way it might have actually made a profit or surplus, except that Congress in 2006 required it to prefund its retiree health care obligations instead of paying expenses as they occurred. The prefunding expense is $5.5 billion annually. It missed a payment last year. It is locked into this for 75 years.
A General Accounting Office report noted that the Postal Service Retiree Health Benefits Fund is about 49 percent funded out of a total accrued obligation of $94 billion at the end of federal fiscal year 2012. The unfunded liability over the next 44 years was $48 billion, according to the GAO.
The postmaster general would like to drop out of the Federal Employees Health Benefits Program and set up a separate program for the Postal Service. He would also like to have Congress refund an $11 billion overpayment to the pension program.
The Postal Service is a somewhat schizophrenic entity. It is supposed to be something of a corporation with a goal of making money. But it evolved out of a government entity and remains quasi governmental, with its employees on federal pension and health benefits. Congress gets to have the final word on whatever it wants to say about the Postal Service because that is one of Congress’ enumerated powers. The Constitution says “Congress shall have the power: 7. To establish post offices and post roads …”
So, whatever Congress wants the Postal Service to do, it better come up with the money to do it.
Our take on it is that a lot of businesses are closed on Saturday anyway. For retailers, package delivery would likely be what they would most appreciate on Saturday as opposed to junk mail and bills. Ditto for residences.
A more rational retiree health care plan would cover postal retirees until they reached the age to qualify for Medicare and then switch the postal retiree health plan to a Medicare supplemental insurance plan. But don’t expect rational from Congress and don’t expect the postal unions to worry about the taxpayers’ money and the 21st century future of an operation that began in the 18th century, with Benjamin Franklin as the first postmaster in 1775. The Postal Reorganization Act eliminated the Post Office as a cabinet level department in 1971. A private board of governors now selects the postmaster general. The only thing Congress has done since the Nixon administration is the 2006 act of Congress requiring the Postal Service to prefund the retiree health obligation.
As noted by other commentators, this prefunding requirement can be considered a direct cause of the discontinuance of Saturday mail service. The pre-retirement account currently has $44 billion in hand. That’s a lot of money anyway you cut it. It’s certainly enough to build a lot of “post roads.”