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The U.S. Postal service has announced a net loss of $8.5 billion for fiscal 2010. Since 2006, the USPS has lost $20 billion, and the organization is close to maxing out its $15 billion line of credit with the U.S. Treasury. Although the USPS has achieved some cost savings, they haven’t been enough to overcome a large drop in revenue due to the recession and the greater use of electronic alternatives by the public.
The USPS is required to make substantial annual payments to pre-fund retiree health care benefits. Last year, Congress allowed the USPS to postpone $4 billion of its fiscal 2009 into the future. However, Congress did not provide similar relief on this year’s required payment of $5.5 billion.
Critics of the retiree health care pre-funding requirement argue that no other federal agencies or private companies face such obligations. The argument is largely irrelevant for two reasons. First, the federal government’s financial practices are nothing to emulate. Second, very few private sector workers even receive retiree health care benefits.
In 2008, only 17 percent of private sector workers were employed at a business that offered health benefits to Medicare-eligible retirees, down from 28 percent in 1997. The actual number of private sector workers receiving these benefits is even lower as not all employees employed at the 17 percent of businesses that offers retiree health benefits are eligible to receive them.
The retiree health care benefit pre-funding requirement has become a rallying cry for the postal unions, as any threat to USPS solvency is a threat to the excessive compensation and benefits they’ve been able to extract from the postal service for their membership over the years.
Policymakers should properly view the retiree health care benefit as a symbol of postal labor excess, which continues to weigh the USPS down like an anchor. Therefore, they should avoid allowing the USPS to further postpone these payments into the future, which could lead to a taxpayer bailout. Instead, policymakers should recognize that the USPS’s financial woes require bolder action: privatization.
cross-posted from Cato-at-Liberty
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Jeff –
You're ignorant, I'm sorry to say.
Stones are being thrown at government monopolies promising more than they can afford to promise that give in to unrealistic union demands. The private sector has been figuring that out. It's a shame that such an inefficient entity as the USPS is able to suck from the public coffers as long as it is able to …
<sigh>
Race to the bottom?!? Pfft!
Nonsense.
I see we have another clueless person who has not bothered to study trends in wealth and income distribution in America over the last few decades. "They can't afford it." It's a laughable proposition. You might do some studying and bone up on what they can really afford. It might surprise you.
"In 2008, only 17 percent of private sector workers were employed at a business that offered health benefits to Medicare-eligible retirees, down from 28 percent in 1997."
This is one of the major signs of the problem this country faces. While we engage in a race to the bottom, we throw stones at anyone who still enjoys a vestige of yesterday's prosperity. I think we should recognize that there is a more serious issue than whether middle-class workers get benefits that used to be more widely available decades ago.