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USPS Reports $15.9 Billion Loss, Asks Congress For Help

Posted by Soulskill on from the write-a-letter-to-your-representative-but-don't-mail-it dept.

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."

27 of 473 comments (clear)

  1. Mass Mail by Anonymous Coward · · Score: 5, Insightful

    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.

    1. Re:Mass Mail by Shining+Celebi · · Score: 5, Insightful

      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.

    2. Re:Mass Mail by Shining+Celebi · · Score: 5, Informative

      I meant to include this link - the USPS has a 13 billion dollar surplus sitting in its retirement accounts.

    3. Re:Mass Mail by samkass · · 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.

      --
      E pluribus unum
    4. Re:Mass Mail by Anonymous Coward · · 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".

    5. Re:Mass Mail by operagost · · Score: 5, Informative

      Most people still get at least some of their bills on paper. Having only one delivery a week would definitely cause some billing problems for customers, besides the fact that carrier routes would have to be redone to account for the volume-- because now he has a week's worth of mail. Know what your mailbox looks like if you go away for a week and place a hold on it? Yeah, it's going to be like that every week. And people's mailboxes, especially in apartments, are not going to be able to hold that stuff. Losing Saturday delivery is reasonable; going to weekly delivery is not.

      --

      Gamingmuseum.com: Give your 3D accelerator a rest.
    6. Re:Mass Mail by jjohnson · · 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.

      --
      Anyone who loves or hates any language, platform, or manufacturer, doesn't know what they're talking about.
    7. Re:Mass Mail by orthancstone · · Score: 5, Insightful

      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.

      This. Pundits love to ignore the fact that the same Congressional tools that whine about USPS' inefficiency are typically the ones preventing USPS from enacting changes that would help its bottom line and potentially save it from needing massive loans.

    8. Re:Mass Mail by Sir_Sri · · Score: 5, Insightful

      Actually it's the rare but important stuff sent via the mail that you need to subsidize and why there are massive government postal programmes at all. If you can't check your bank balance online, if you need to send legal documents, contracts, bill etc. all of that needs to be accessible to people. Your voter registration any government correspondence etc. is all doable through mail. And mail services guarantee package delivery to the entire country usually (I'm not 100% sure how this works for the US with things like the republic of marshall islands or the like, which are sort of overseas independent dependencies of the US government, but not full blow territories like puerto rico).

      All of the junk mail crap is there to subsidize the actually important stuff. The effective monopoly postal services had on junk mail was an indirect subsidy, and I can't imagine Fed Ex wanting to go door to door delivering pizza coupons, but who knows. Even things like magazines, which, yes, people actually buy and read, would be seriously inhibited if they had to pay significantly more for delivery costs.

      Obviously, the basic problem all postal services have is their regulatory requirements don't line up with their financial ones in a changing market. Government needs to take a bit of a heavy hand in any industry where the goal is to actually reduce your workload. Medical providers should be looking for ways to reduce their number of people getting sick, police should be looking to reduce the amount of crime, the post office should be looking for ways to reduce paper mail, but at the same time you do need reliable cross country (cross world actually) mail delivery - because some of what is sent via mail is both important and needs to be kept inexpensive. If you want to spend 8 bucks to mail a letter to arrive tomorrow rather than 50 cents for it to arrive in 3 days fine, but for the people who cannot afford the extra 7.50 or whatever it is you don't want to lock them out of communication, most especially if they are your customers.

      As to the specific problem though, of mail employees being necessarily treated like career people and not minimum wage disposables, and all of that stuff, I don't really know. If the government is going to mandate they provide a service without a way to pay for it (e.g. saturday mail delivery) that's going to have to change or the government is going to have to step in financially.

    9. Re:Mass Mail by Mullen · · Score: 5, Interesting

      No, paying the benefit when you promise it is one thing, paying it 75 years in advance is another. Yes, they are paying for retirement benefits for people who are not even born yet.

      Look deeper into this problem instead of yelling "OMG, GUBER'MENT IS BAD".

      --
      Linux O Muerte!
    10. Re:Mass Mail by tlhIngan · · Score: 5, Interesting

      Not quite. If all the retail stores are going broke because everyone is buying stuff off the internet, then USPS should be doing a roaring trade in package deliveries.

      Not sure why USPS don't seem to be able to leverage off all that traffic to make a profit.

      They are making tons through parcel deliveries. The problem is, congress prevents them from adapting.

      USPS is required to be revenue neutral and non-profit (i.e., they make as much money as they need). Congress controls how much a stamp costs (and other basic services - so their income is hobbled), and congress controls how much they're required to pay out (e.g., USPS is required to pre-pay retirement for 75 years over the next 10. Yes, that means they're paying NOW for a retirement package for employees who have not even been hired yet).

      In fact, because of changes signed in by George Bush (notably, USPS was running a pretty damn tight ship until 2006 when the requirement mandate kicked in.).

      http://spectrum.ieee.org/telecom/internet/email-isnt-killing-the-post-office

      Basically, the government has set up USPS to fail as an example of "government inefficiency" by making it have obligations that go above and beyond what any company has to provide, including USPS' competitors.

      Then again, I suppose it's better paying $8 to have FedEx send a letter across the US than 50 cents.

    11. Re:Mass Mail by chartreuse · · Score: 5, Informative

      Gilbert, meet Wikipedia: https://en.wikipedia.org/wiki/Usps

      "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.)

  2. The next time by nimbius · · Score: 5, Informative

    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.
    1. Re:The next time by oursland · · Score: 5, Insightful

      THANK YOU! I wish more people knew that Congress decided to make demands on the USPS that no company could ever meet. And to think that the Republicans frequently politic on "running the government like a business" yet they make actions to ensure the government business fails.

    2. Re:The next time by Nimey · · Score: 5, Interesting

      I strongly suspect the reason for that is because the Republicans don't like the idea of

      1) some part of the government actually working, because it puts the lie to their ideology, and
      2) some part of the government competing with the private sector, to wit UPS, FedEx, etc, even when those carriers aren't that interested in first-class mail.

      --
      Hail Eris, full of mischief...

      E pluribus sanguinem
    3. Re:The next time by h4rr4r · · Score: 5, Interesting

      This is because they believe "The government can't do anything right". When they get elected they make sure that statement is true. Why anyone would want to elect someone who believes this I cannot understand. It would be like going to an interview and telling them that you can't do the job and their business will soon fail.

  3. Riduculous Retiree Benefits by scarboni888 · · Score: 5, Insightful

    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?

  4. The big lie by Anonymous Coward · · 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/

  5. Re:It's time to end the monopoly... by scarboni888 · · Score: 5, Insightful

    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?

  6. Re:Cuts by Anonymous Coward · · 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."

  7. Re:Cuts by Anonymous Coward · · Score: 5, Insightful

    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.

  8. How I would fix the post office by rolfwind · · Score: 5, Interesting

    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.

  9. Re:Cuts by Rob+the+Bold · · Score: 5, Insightful

    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.
  10. Re:Cuts by Rob+the+Bold · · Score: 5, Insightful

    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.
  11. Re:not quite by jythie · · Score: 5, Informative

    Sadly, they would not. Besides the retirement account issue, one of the restrictions the USPS runs under is they are not permitted to compete in the more lucrative areas because that would be 'unfair to the free market'. So they are essentially forced to both be self sufficient AND only offer services with thin or negative margins.

  12. Re:not quite by Darth+Snowshoe · · Score: 5, Insightful

    THIS. Congress tinkers with the mandate of the USPS, and then complains that its not making a profit. Don't you get it? It's not allowed to compete in ways that allow it to make a profit.

    Pretty much all the people around at the founding of the nation recognized the value of reliable, efficient, post service available for all. It's essential infrastructure. It's one of the reasons why business works in America. 'Based on the Postal Clause in Article One of the United States Constitution, empowering Congress "To establish post offices and post roads", it became the Post Office Department (USPOD) in 1792. ' - Wikipedia

    Geez, try sending essential items to your buddy on Peace Corps assignment in Africa, and you will quickly come to understand the value of a trustworthy, efficient and transparent postal service.

    And you can't just eliminate the USPS with a wave of your hand. Just figuring out how to do that would be a tremendous amount of work. Many laws and much legal precedent rely on the existence of the USPO, for instance. And still, weirdly, there are lots of things that cannot be sent over a wire.

  13. Re:Not health insurance... by jjohnson · · Score: 5, Interesting

    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.