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USPS Reports $15.9 Billion Loss, Asks Congress For Help
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."
The only people using mail anymore are junk mailers. And they get an ENORMOUS discount to send out thousands of flyers and coupons. So let's raise our taxes even more to prop up a bunch of spammers. If you don't, the union gets angry and leans on politicians. That's just good policy.
Another F-22 crashed recently, and that's about the same value...
If telephones are outlawed, then only outlaws will have telephones.
a republican clutches the constitution and screams bloody murder, kindly ask them to stop wiping their jackboots on it. The postal service is in the constitution as well. Lets go back to bush junior, or as i like to call him, the acid reflux republicans just cant keep down:
H.R. 6407; The Postal Accountability and Enhancement Act was passed in the Republican-controlled Senate two days after it was introduced in the Republican-controlled House. It was subsequently signed into law by Republican George W. Bush. One of the provisions in this hastily passed law requires the USPS to prefund ALL of it's retirees health benefits 75 years into the future. That's right. The USPS is supposed to set aside money for the future health benefits for people that haven't even been born yet.
Good people go to bed earlier.
The ridiculous retiree benefits mandate handed down from congress is pretty much the sole reason for this unnecessary debacle.
No other organization is required to provide such an absurd level of retiree benefits payment so why is this insanity allowed to persist in light of the fact it could potentially doom the USPS?
in other places like Canada they don't have that any more.
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/
We will not see a competitor unless you are lucky enough to get profitable service.
Anyone deemed not profitable will have only a USPS that is in even worse shape. Thus will continue the mantra "Privatize the profits, socialize the losses".
And what about the people who live in places that are too expensive for privatized couriers to make a profit serving?
What are they to do, take a flying leap?
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."
even using the highest estimate of F-22 cost I could find we'd need to give them 44 F-22s. Raise rates on mass mailers perhaps? The only reason I check my mail anymore is to get information the government wants me to know about, car registration, voter registration, jury duty etc. If I could give an email address to uncle sam, I would be more than happy to do away with my mail address. Let it die.
refactor the law, its bloated, confusing and unmaintainable.
It'd be better to just sub contract the postal service out to UPS and FedEx at that point. ZOMG privatizing the postal service! If they cut delivery dates, that limits my options and makes me even less likely to use them, especially if I need timely delivery of something like say a rent check or a bill payment (believe it or not, there are landlords and rental companies, as well as utilities and such that still only accept payment in person or a check in the mail as opposed to paying online) If they raise rates, that makes them less competitive with their private industry counterparts. If they were to do both, private industry would eat their lunch.
The whole point of the insane prefunding mandate (what is ridiculous isn't the retiree benefits, it is the mandate to prefund them 75 years into the future) is to doom the USPS. Its not allowed to persist in spite of the fact it could doom the USPS, it is allowed to persist because it will doom the USPS.
You're a fucking nincompoop. USPS has been gutted by corrupt politicians who have been paid off by private interests.
The entire "public is less efficient than private" lie that had been repeated so often that everyone now believes it is just that. A lie. The reality is that private industry is far more efficient at corrupting and side stepping morality issues in the quest for a dollar. That *seems* like it's more efficient at first glance, but it actually incurs a giant negative externality that is not accounted for.
Now think very carefully before you reply with some hilariously stupid straw man argument.
So, based on your numbers, if we did that they'd 'only' have made a $10,400,000,000 loss.
Presumably you can explain how to 'simply' fix that part.
The health plan mentioned in the blurb is what did this, not the Internet. The 2006 Postal Accountability and Enhancement Act forces USPS to put 75 years of healthcare benefits into an account within 10 years, something which was noted as ridiculous when the law passed. Also, this law is filled with provisions that say the USPS is *not* allowed to modernize in this era of the Internet. The law was pushed by lobbyists from companies like UPS and FedEx. It makes no sense to blame this on the Internet, since the direct cause of this massive shortfall was the 2006 law which caused the shortfall, a law which also prevents the USPS from modernizing. A postal service is one of the few "socialist" government nationalized enterprises mandated by the U.S. constitution, the Republicans and private mail carriers are doing all of this to try to do an end run around the constitution they supposedly love so much.
1. Cut delivery in most areas, definitely the rural ones to every other day. M-W-F and T-Th-Sa. This will cut number of mail carriers and fuel and vehicles needed, as 1 carrier now will get two routes. Express mail has it's own carrier so that will be unaffected for the people that pay for it.
2. Offer to take UPS and FedEx packages at the post office. People who want package for stuff they don't want delivered at home (theft, gifts, adult purchases, etc) have to rent a box at UPS or Fedex location at exorbinant rates. Let them rent a cheaper USPS box, get their mail and packages in one spot, come in, and bring some more business.
3. Consider offering an electronic mail service, where you can send certified/registered mail or even purchase money orders and send them right off online - and have USPS print them out and deliver them like normal letters. Premium services without ever going to the counter. Lawyer offices rejoice?
4. Call an international Postal Office congress. Get a cheap international tracking number and while at it, standardize all customs forms and registered form and other forms the world over with symbols. Too many packages get lost, too many registered packages with funny foreign postal languages go unheeded and the cheapest tracking number (unreliable) is with Express mail or Fedex/UPS with around $150 minimum ridiculousness, less for a business but still). Domestic tracking is like 0.75 cents. Even if they charge $5 for intl tracking, would be way cheaper than what's out there now and an untapped market. Especially for eBay sellers and the like.
5. On the eBay sellers front, try to break down customs barriers, especially with the EU. It's ridiculous.
Competition for postal services in a big country won't work. It's only profitable to deal with the high population centers because low population areas would hit profits too much to be worth doing.
Kind of like a cable infrastructure for internet in a way.
Was it the Union or Congress?
I thought it was Congress that mandated that they prepay it all for the life of an employee when hired.
When U.S. Postal Service (however they were called back then)
The Constitution calls it "Post Offices and Post Roads".
If I have been able to see further than others, it is because I bought a pair of binoculars.
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.
Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
This is not about mail volume or heath costs. Try funding 75 years of pension value in 10 years. ..public or private entity.
"Unlike every other governmental agency, the Postal Service is required to fund 75 years of retiree health benefits over just a 10-year span."
Yep.... would not want the government to be successful at anything..except war and destruction. Oh and let us not forget....printing money for the rich.
http://www.democracynow.org/2012/8/1/as_us_postal_service_faces_default
Was it the Union or Congress?
I thought it was Congress that mandated that they prepay it all for the life of an employee when hired.
The "crisis" is entirely manufactured by Congress. Yes, Congress. They (and by "they," I mean mostly Republicans who seem to want to drive the post office into bankruptcy) required that the Post Office prepay pensions to the extent that no other business is required to do.
Lest you doubt this statement: The Postal Accountability and Enhancement Act of 2006 required the USPS to prepay pensions for all employees for 75 years in advance within 10 years.
That's right, 75 years. The USPS is required to prepay pensions for the next 75 years. Let that sink in.
Is there any other business you can think of that is required to stash away the pension funds now for its employees not yet born?
I am not a crackpot.
According to TFA, the pension funds account for 11 billion of the 15 billion shortfall:
Give me Classic Slashdot or give me death!
It can be cheaper! See the painting contractor actually bought paint sprayers instead of using an old fashioned brush. Of course it's not going to be cheaper if all you do is paint one house, but it allows the contractor to use 1/4th the man hours in actually doing the paint work. He can pass on these savings through lower costs than if you did it yourself.
Now it doesn't always work out that way, but it can, and sometimes does. Outsourcing/contracting isn't always the correct answer, but sometimes it really is.
If they cut delivery dates, that limits my options and makes me even less likely to use them, especially if I need timely delivery of something like say a rent check or a bill payment (believe it or not, there are landlords and rental companies, as well as utilities and such that still only accept payment in person or a check in the mail as opposed to paying online).
You're free to spend $13 to FedEx your rent check right now (get your quote here - I picked slowest/cheapest option to send an envelope across town). By what factor would first class postage rates need to increase to be "uncompetitive" with that?
I am not a crackpot.
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."
While your notion of privatizing postal service seems expedient, it ignores practicality. FedEx and UPS do not operate on the same model as the postal service. They deliver only to locations and they sometimes receive shipments at a location. The Postal Service must send carriers to on routes for every single mailbox in case there is mail to be picked up. Neither FedEx nor UPS want this job.
Well, there's spam egg sausage and spam, that's not got much spam in it.
You seem to forget that most municipalities (and much of the Federal government) has huge pension shortfalls. Why? Because the gov't agency involved does have a pay-as-you go system. Pension funds are not funded until they are being withdrawn. That is one of the reasons we are in such a f**king mess.
Say an employee is to get a salary (s) and pension (p). Every pay period the government agency should pay salary and place the appropriate pension payment into an account. We are not funding our pensions.
I haven't read the link you provided - there may have been excess in those bills - but before laughing and ridiculing them out of hand maybe you should reserve a little frustration for the agencies that do not pay pensions and expect later generations to fund them.
If you're scared of your govt then you need to further restrict its powers
Vote 3rd Party in 2016 and beyond
The pre-funded pension is only one part of the problem (also, accounting does not work as simply as you seem to think). The problem is threefold (at least):
1. The pension mandate (from Congress), as already mentioned;
2. The USPS is forced by Congress to run unprofitable postal offices and routes;
3. The USPS cannot set its own rates (they are set by, surprise surprise, Congress).
Either the USPS is a public service, in which case it should be reintegrated into the government and divorced of the need to make a profit, or else it is a business and it should be able to set its own rates and terms for doing so.
You cannot have it both ways and get everything you want, which is exactly what Congress has done to them.
The extra $10B comes from defaulting on the two previous $5B bills they had to pay. Again, for paying pension and benefits for retirees that may exist in the future at 100%.
Well said. And I noticed there are quite a few people here saying that the employees shouldn't get pensions at all. It's as if they don't understand that a pension is deferred compensation--it's money you earned while working but your employer promised to pay it to you later. It's not a "freebie" that workers unfairly feel entitled to. It is part of their compensation package.
If an organization defaults on their pension obligations, they've essentially reneged on earnings the employees are fully entitled to.
Now, the requirement the new hires at USPS have their pensions 100% funded from day one may be (and probably is) excessive and unnecessary. But any organization that offers deferred compensation pensions absolutely needs to make sure they are funded so that the money is there to be paid out when employees retire.
Check out my world simulator thingy.
How America survives to this day with people this fucking stupid going out to vote, just astounds me.
You fucking idiot: A pension just is an employer-run plan WHERE YOU PUT ASIDE A PORTION OF YOUR EARNINGS INTO RETIREMENTS SAVINGS. THAT'S WHAT A PENSION IS!
Your salary isn't the entirety of your compensation, it's your salary plus benefits, which partly means pension. For decades employers have been offering (and unions accepting) lower salaries plus guaranteed pension benefits. You didn't have to save out of your salary because it's structured into your employment--they withhold part of your money, invest it, and pay it out later to you. Besides the benefits of large pension fund investing rather than a single small investor, you get professionals managing your retirement money, not some coal miner or factory worker who doesn't understand investing.
It's at the point now where I'd tell my kids "never accept a pension deal because someone dickhead down the road is going to blame you for budget problems and steal it back. Demand your money up front."
Anyone who loves or hates any language, platform, or manufacturer, doesn't know what they're talking about.
The Postal Service must send carriers to on routes for every single mailbox in case there is mail to be picked up. Neither FedEx nor UPS want this job.
It amazes me that folks do not understand this point. UPS and FedEx would never take on First Class postal responsibilities. It's extremely inefficient.
The United States Postal Office was created by the Second Continental Congress in 1775, became, the US Post Office Department in 1792, and remained a cabinet-level government department until 1971, when the Postal Reorganization Act moved it out of the regular structure of government into a government-directed corporation.
As much as I agree with the problems congress saddled on the post office, it doesn't need to me repeated 20 times in the same comment section and modded to +5 insightful every time. Repeating something louder and more often only serves to irritate, people who didnt get it the first or second time have their head in the sand anyway.
the USPS is part of the essential infrastructure our country, our civilization we know it even, relies on to exist.
imagine if UPS or fedex or both went out of business. the why of it doesnt matter, just imagine they did. important/essential communication that we rely on no longer flows through them. now also imagine that someone had the bright idea, lets ditch the USPS....oops. Now instead of having something that garunteed communication across the country, even if industry failed (and there were private couriers that operated alongside usps before ups), there's nothing. sure someone would step into the gap eventually. but after how long?
businesses grow, they merge, they split, they buy each other out....its the life cycle of business. it happens. and sometimes those businesses make bad decisions and die. Look at Hostess and the coming twinkie shortage.
when those businesses are part of the essential infrastructure of the nation, when we have become dependent upon them, and they die....its never good. Its happened before. It will happen again. Killing the USPS is not a good idea.
If it had been up to private industry nearly a third of the nation still wouldnt have phone lines.
If it had been up to private industry, many small towns wouldnt even have paved roads. (and those debates still happen, where residents of big cities say "why should we pay a tax to help build a road thru a town of 20 people?")
If it had been up to private industry, the last 5% of the population still wouldnt have internet access.....oops. That one is still true.
The guy who said the election was rigged won the presidency with the second-most votes.
All criticisms aside, it seems to me that the immediate problem can be addressed with a price adjustment on retail services. This PDF provides some interesting rough figures to play around with on page 4. I am specifically looking at the first figure ($66B in revenue), the second figure (167.9B "pieces of mail" delivered), and comparing with the reported $15.9B loss. Adding $66B revenue (all spent cash) plus the additional $15.9B loss gives us a total of $81.9B operational expenses.
Now divide $66B in revenue by 167.9B pieces of mail delivered and we get an average revenue of about $0.39 per piece of mail delivered - that is less than the current price of a "forever" stamp which is $0.45. That means that some amount of mail is being handled for less than $0.45 which is averaging down the revenue per piece of mail by almost 14%. If we divide our total operational cost of $81.9B by167.9B pieces of mail, we get about $0.49 actual average cost per piece of mail. If we correct for the 14% averaging down, that brings us up to $0.56 per piece of mail.
So I propose raising the base price of the forever stamps from $0.45 to $0.56 and proportionately for other lesser cost mail as well (e.g.post cards, flyers, etc.) Is 11 cents really all that much to ask? This doesn't seem like that big of a problem to me. Furthermore, I think this spoiled new generation of citizens has become so accustomed to their daily conveniences that it takes a hurricane Sandy to remind them of the value of a payphone. Will it take a collapsed postal system to realize the value of mail delivery? How much would it cost you to deliver the same piece of mail via an alternative commercial carrier? (hint: a lot more) How much would it cost you to personally deliver it and use none of them? (hint: unbearably more)
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.
Those who advocate genocide deserve every protection afforded by law, and none afforded by common human decency.
Either that, or get subsidized mail service and then be referred to as moochers who refuse to take responsibility for their lives.