Many people are confused about what is causing the so-called postal financial crisis. The PENSIONS are NOT the problem except for the fact that they are overfunded!! The pensions (CSRS and FERS) and the Retiree Health Benefits Prefunding are different things.
The Retiree Health Benefits Prefunding, which was created under the Postal Accountability Enhancement Act of 2006, caused a HUGE burden on the United States Postal Service. Unlike any other public or private entity, under the 2006 law, the U.S. Postal Service must pre-fund retiree health benefits 75 years into the future in a ten year window! That means USPS is paying for people who don’t even exist!!
While USPS must pay today for benefits that will not be paid out until some future date, other federal agencies and most private sector companies use a “pay-as-you-go” system, by which the entity pays premiums as they are billed. Shifting to such a system would equate to an average of $5.65 billion in additional cash flow per year through 2016, and save the Postal Service an estimated $50 billion over the next ten years.
There are different reasons why this UNIQUE requirement was imposed on the United States Postal Service. The main one is that they (President Bush, Congress and Corporate America) knew the postal industry is very lucrative. VERY!! As in it is a trillion dollar a year industry! USPS generates about $65 billion in revenues a year! And they wanted to tap into that.
You see, in 2002, the Office of Personnel Management came to a surprising conclusion — the Postal Service was actually overfunding its obligations to the Civil Service Retirement System — possibly by as much $100 billion. So was FERS. (As of Sept. 2013, the surplus was estimated at $12.5 billion).
In response to the pension overfunding, Congress passed legislation in 2003 reducing the amount of money that would be required from the Postal Service for its annual contribution to the federal CSRS. The 2003 Act did not, however, reduce Postal Service payments to the newer “Federal Employees’ Retirement System” (the system that covers those who began government work — including Postal Service work — in 1984 or later).
Then, Congress instructed the pension savings — estimated to grow to about $5 billion per year by 2006 — should be temporarily held in escrow. Why? Because although the Postal Service, as an independent entity, achieved permanent “off budget” status in 1989, its contributions for its retiree obligations remain “on budget.” Just as salient, its revenue and expenses remained part of the “unified federal budget,” a broader measure that is intended to provide a picture of all government transactions with the public.
In simpler terms, the pension money from the USPS that is generated from the sale of stamps and services, NOT THE TAXPAYERS, goes into the General Treasury Fund and is used to make the National Debt appear smaller than what it is.
Congress worked hand in hand with the private, FOR PROFIT mailing industry and all of their lobbyists (ALEC, Williams and Jensen, PricewaterCooper, Coalition for the 21st Century Postal Service, etc.) and they came up with the Retiree Health Benefit Prefunding and made it into law under the PAEA of 2006.
This way the government does not have to return the overpayments to USPS, it makes the national deficit appear smaller, they create a manufactured financial crisis that will then be used to fool the American people into believing the Postal Service is broke and in need of a bailout, and then corporations like FedEx, UPS, Pitney Bowes and others can swoop in and take over the profitable parts of this amazing network, leaving the unprofitable parts, the rural areas, the poor and the elderly without SERVICE.
But that’s not the worst part: the cherry on the top of the Great Postal Heist is that these companies can claim the RHBP fund (it has about $50 billion already) as profits!!! Remember, this money is for people who aren’t even born yet. Once privatized, this money is up for grabs.
It’s all a big scam. USPS is not broke and it’s not obsolete. The postal pensions are overfunded. USPS does not need a bailout. USPS needs a Congress that isn’t bought and controlled by the 1% and Corporate America. And America needs a Public Postal Service.