Submitted by Elaine Magliaro, Guest Blogger
Here are some questions for you:
– Do you know how the United States Postal Service (USPS) is funded?
– Do you know why the USPS is having such serious financial problems?
– Would the closing of more than 200 postal processing centers and more than 3,000 post offices across this country, eliminating Saturday mail delivery, and cutting more than 100,000 postal jobs be the best way to save the USPS?
– Would slowing down mail delivery help the USPS to take in more revenue?
– What would happen to rural communities if their post offices were closed?
– What do you know about the Postal Accountability and Enhancement Act of 2006?
– Have you heard about H.R. 1351?
Yes, the USPS is experiencing serious financial problems. I’ve heard on the news and read in the papers that drastic measures must be undertaken in order to save this great American institution. I think that it’s important to understand the causes of those problems and to know what could happen to the US Postal Service unless Congress solves them without severely impacting the institution and the services it provides to Americans.
Josh Eidelson’s Salon article Congress’s war on the post office: The Postal Service faces a threat greater than email or economics: Politics (March 14, 2012) helps provide some information on the issue:
The U.S. Postal Service is at risk of defaulting on healthcare obligations or exceeding its debt limit by the end of the year. Last month, USPS management unveiled a “Path to Profitability” that would eliminate over a hundred thousand jobs, end Saturday service and loosen overnight delivery guarantees. The Postal Service also proposes to shutter thousands of post offices. “Under the existing laws, the overall financial situation for the Postal Service is poor,” says CFO Joe Corbett. Republicans have been more dire, and none more so than Oversight Committee Chairman Darrell Issa, who warned of a “crisis that is bringing USPS to the brink of collapse.”
Listening to Issa, you’d never know that the post office’s immediate crisis is largely of Congress’s own making. Conservatives aren’t wrong to say that the shift toward electronic mail – what USPS calls “e-diversion” – poses a challenge for the Postal Service’s business model. (The recent drop-off in mail is also a consequence of the recession-induced drop in advertising.)
But even so, in the first quarter of this fiscal year, the post office would have made an operational profit, if not for a 75-year healthcare “pre-funding” mandate that applies to no other public or private institution in the United States.
Warren Gunnels, aide to Sen. Bernie Sanders, calls that mandate “the poison pill that has hammered the Postal Service … over 80 percent of the Postal Service deficit since that was enacted was entirely due to the pre-funding requirement.”
This death hug was part of the Postal Accountability and Enhancement Act, which was passed on a voice vote by a lame duck Republican Congress in 2006…
As reported by CNN, the USPS has claimed that a number of its difficulties were caused BY the federal government “– through a law governing how the agency funds workers’ retirement health benefits.” It has also been reported that prior to 2007—when the mandated prefunding of healthcare benefits began—the Postal Service actually generated a small profit.
The act/law referred to above required that the USPS prefund retiree healthcare benefits for workers for the next 75 years…in just ten years (2007-2016). That means the USPS has to continue to cough up $5.5 billion annually to meet the funding mandate for another five years. No other government entity or agency has been required to do the same by Congress. Why has the Postal Service—an institution that provides valuable services to businesses and to millions of Americans—been singled out?
Allison Kilkenny thinks that the people who are working to destroy the USPS as we know it are motivated by a desire to bust the strongest union in the country and to help pave the road to privatization. She wrote the following in a Truth-out article titled Postal Workers: The Last Union:
The recent attacks against the United States Postal Service (USPS) are more than signs of desperate times – a natural sunset moment for a service rendered archaic by FedEx and UPS. Rather, the Postal Service has been under constant, vicious assault for years from the right, who views this as an epic battle with the goal of finally taking down the strongest union in the country, the second largest employer in the United States (second only to Wal-Mart,) and a means to roll the country ever closer toward the abyss of privatization. The Postal Service, which is older than the Constitution itself, stands at a precipice. If this great institution, which provides one of the oldest, most reliable services in the country, is permitted to fall and Congress kills its great union, then truly no collective bargaining rights, no worker contract, no union will be safe within the United States.
As the USPS spirals toward default, the historically uncontroversial mail service system has suddenly become a hot-button issue. It’s an unlikely organization to inspire such hysteria. The Postal Service isn’t paid for by taxpayer dollars, but rather fully funded by the sale of stamps. It’s easy to forget what a marvel this is – that today, in 2011, one can still mail a letter clear across the country for less than 50 cents. And if the impressiveness of that feat still hasn’t sunk in, attempt this brain exercise: consider what else you can buy for $0.44.
It was only a few years ago that the USPS was considered not only stable, but thriving. The biggest volume in pieces of mail handled by the Postal Service in its 236-year history was in 2006. The second and third busiest years were in 2005 and 2007, respectively. But it was two events: one crafted during the Bush years and another supervised by House Oversight Committee Chairman Darrell Issa that would cripple this once great institution.
Allison Kilkenny Talks with Sam Seder about the USPS on Countdown (9/9/2011)
Cliff Guffey, president of the American Postal Workers Union, believes that the law would do more than “cripple” the USPS. He believes it was designed “by those people who hate government … to destroy the Postal Service. And that’s what they did.”
In addition to requiring the Postal Service to prefund retiree healthcare benefits, Josh Eidelson said that the law also limits the institution’s capacity to change and grow with the times: “The new law also restricted the Postal Service’s ability to raise postage rates, or to provide ‘nonpostal services’ that, in an e-diversion era, could be key to its future.”
Matt Taibbi wrote on his Rolling Stone blog that barring the USPS from offering “nonpostal services” means that it can’t “open up a bank, or an internet cafe, or come up with any new entrepreneurial ideas to generate new income, as postal services do in other countries.”
Like Kilkenny, Taibbi thinks that the purpose of the law—pushed by lobbyists—“was to break a public sector union and privatize the mail industry.” Taibbi added, “Post offices also have a huge non-financial impact: In a lot of small towns, the post office is the town, and shutting them down will basically remove the only casual meeting place for people in mountain areas and remote farming villages and so on…This is a classic example of private-sector lobbyists using the government to protect its profits and keep prices inflated.”
From a special report on the USPS post office closings published by Reuters earlier this year:
Some of America’s poorest communities – many of them with spotty broadband Internet coverage – stand to suffer most if the struggling agency moves ahead with plans to shutter thousands of post offices later this year, a Reuters analysis found. Nearly 80 percent of the 3,830 post offices under consideration are in sparsely populated rural areas where poverty rates are higher than the national average, demographic data analyzed by Reuters shows…
The Postal Service is not studying the economic impact on communities where post offices are slated to close, spokesman David Partenheimer said. But in the 3,004 rural communities across 48 states where post offices may close, many residents fear the impact will be pronounced.
About 2.9 million people live in the rural communities where the post office that may close is either the only one or one of two post offices serving their zip code area. For many rural residents, that would translate into longer drives to mail packages, pay bills or buy stamps.
According to Postal Reporter News, in February the USPS “informed tens of thousands of employees that it plans to close mail processing facilities. The decisions are not final. No closings will occur before May 15. Postmaster General Patrick Donahue agreed to that timetable under moratorium proposed by Sen. Bernie Sanders to give Congress time to act.” Sanders said the USPS’s plan is “deeply flawed” and that Congress must change it. He said that he expected “comprehensive postal reform legislation to be on the floor of the Senate within the next few weeks.” He added, “At a time when the Postal Service is competing against the instantaneous delivery of information from email and the Internet, slowing down mail delivery service will result in less business and less revenue, and will bring about a death spiral for this institution which is so vitally important for all Americans.”
Sanders continued, “A critical weakness of the current Postal Service plan is that it ignores the onerous financial burden being placed on the Postal Service by $5.5 billion a year in pre-payments for future retiree health benefits. According to the Postal Service inspector general, those payments are no longer necessary because of the $45 billion which that account already has accumulated. The Postal Service needs to be reformed not by massive cuts, but by a new entrepreneurial business model which expands the products and services the post office can sell in the 21st century digital age.”
In the following video, Senator Sanders speaks about ways in which the USPS could be modernized and provide additional services to customers that it doesn’t provide today:
There are other members of Congress like Sanders who are trying to find ways to help save the USPS. One of them is Rep. Stephen Lynch of Massachusetts. On April 4, 2011, he—on behalf of himself and Elijah Cummings of Maryland— introduced H.R.1351: United States Postal Service Pension Obligation Recalculation and Restoration Act of 2011. This bill would “amend the provisions of title 5, United States Code, relating to the methodology for calculating the amount of any Postal surplus or supplemental liability under the Civil Service Retirement System, and for other purposes.”
From the NALC FACT SHEET (National Association of Letter Carriers):
Lynch’s bill once again takes a big step toward making sure the Postal Service is treated in a fair and equitable manner, allowing it to overcome the very difficult financial challenges it currently faces. In addition to addressing the CSRS overcharge, H.R. 1351 also deals with the more recent finding regarding another overcharge to the USPS related to the Federal Employees Retirement System (FERS). Even so, H.R. 1351 only addresses the CSRS and FERS overcharges and does not repeal the onerous, legally mandated, annual pre-funding payments into the Postal Service Retiree Health Benefit Fund (PSRHBF)…
H.R. 1351 does not address the legally mandated pre-funding payments into the PSRHBF beyond the FY2011 payment, which costs the USPS $5.5 billion annually. Rather, it simply fixes the massive over-funding to the postal CSRS and FERS accounts. Additional legislation would be necessary to repeal the future scheduled pre-funding payments to the PSRHBF.
Mark Anderson wrote the following in The Daily Cougar last September: “Currently, a 44 cent stamp will get a letter from Houston to New York in two to three days. According to the FedEx website, two-day delivery of a similar letter to the same destination will cost between $20-30 dollars.”
Shock Doctrine at U.S. Postal Service: Is A Manufactured Crisis Behind Push to Privatize? (Democracy Now)
How the Right Wing Destroyed the U.S. Postal Service (Majority Report with Sam Seder)
I wonder if most Americans would prefer to send mail via the USPS—or by FedEx. I wonder if most Americans would like to see our Postal Service privatized. I wonder how many Americans would like to see post offices in their cities and towns shuttered. I wonder how many Americans would like our elected representatives to find solutions to the problems facing the USPS that won’t include drastically reducing the number of postal carriers, post offices, and processing centers in this country–and slowing down the delivery of our mail.
SOURCES & FURTHER READING
Postal Workers: The Last Union (Truth-out)
Postal Service pleads for help as losses continue (CNN)
Is benefits law dragging down the Postal Service? (CNN)
Don’t Let Business Lobbyists Kill the Post Office (TAIBBLOG)
Privatization of US Postal Service could be costly (The Daily Cougar)
Republicans pushing to privatize USPS (Coloradoan)
Post Office is vital, hamstrung by Congress (Daily Review Atlas)
ALEC/Koch Cabal Pursuing Privatization of the US Postal Service for UPS and FedEx… (Voters legislative Transparency Project)
Special Report: Towns go dark with post office closings (Reuters)
Post office closings may increase rural isolation, economic disparity (Washington Post)
Senate Passes Postal Reform (Senator Bernie Sanders, Vermont)
Is Your Post Office Closing? USPS Is Studying Shuttering 3,700 Locations (NPR)
USPS Closings Could be Averted With Senate Bill (Christian Post)
H.R. 6407 (109th): Postal Accountability and Enhancement Act
Rain, Snow, Sleet and Congress (New York Times)
Shock Doctrine at U.S. Postal Service: Is a Manufactured Crisis Behind Push Toward Privatization? (Democracy Now)
USPS Postal Service Countdown Clock (Senator Tom Carper, Delaware)
NALC FACT SHEET (National Association of Letter Carriers)
Sen. Sanders Calls Postal Service Plan ‘Deeply Flawed’ (Postal Report News)
Co-sponsors of HR 1351 (PopVox)
So is your post office on the chopping block? The Postal Service released this state-by-state list of retail locations that could be affected.
Do you know why I hate Republicans?
Because of crap like this.
They love the Constitution, though, and yet….once again prove how LITTLE they know or understand it, since the USPS is actually mandated in the Constitution. Do they care? NO! All they care about is privatizing everything and destroying unions. FEDEX uses the USPS to deliver some ot its packages! I’ve had problems with UPS, but NEVER with the post office!
The US postal service is cheaper and more reliable than any private entity. Small wonder the Republicans hate it. It’s yet one more example of our government actually working.
Curious,
I had read about the privatizing of Chicago’s parking meters some months ago. I had considered writing a post about it. It’s a truly interesting story about the negative aspects of privatiziation.
*****
Chicago parking meter company wants more money; mayor balks
BY DAN MIHALOPOULOS AND CHRIS FUSCO
Staff Reporters May 4, 2012
Chicago Sun-Times
http://www.suntimes.com/news/watchdogs/12299030-452/chicago-parking-meter-company-wants-more-money-mayor-balks.html
Excerpt:
The private investors who run Chicago’s parking meters are doing better than expected, and now they’re demanding an additional $14 million they say they’re owed under obscure provisions of the wildly unpopular 2008 deal that privatized metered parking and caused rates to soar, records show.
Disputing the claim, City Hall says Chicago Parking Meters LLC is seeking a “windfall to which it is not entitled.”
The $14 million bill stems from parking revenues the meter company says it lost when the city took meters out of service last year because of street repairs, festivals and other city-sponsored activities, according to documents obtained by the Chicago Sun-Times.
This is the second time in a year that the company has hit City Hall with a claim for a big parking tab. The Emanuel administration already is in arbitration over a $13.5 million claim over free parking that Chicago Parking Meters says it provided to people displaying disabled-parking placards or license plates in 2010.
That makes the total disputed amount more than $27 million.
The parking meter company took in more than $80 million from meters across Chicago in 2011, according to documents it filed this week with city officials.
Chicago Parking Meters’ financial performance last year slightly exceeded projections of Wall Street analysts, who have rated the company a smart investment, said Matthew Hobby, an analyst with the Standard & Poor’s ratings agency.
For $1.15 billion, paid upfront, the City Council approved a plan championed by then-Mayor Richard M. Daley in 2008 that privatized Chicago’s 36,000 meters for 75 years. In a deal that was widely criticized for selling taxpayers short, Chicago Parking Meters was given the right to keep all meter revenues until 2084. Drivers have since seen sharp increases in parking rates under the deal.
After leaving office a year ago, Daley, along with his former corporation counsel and two top press aides, went to work for Katten Muchin Rosenmann LLP, the law firm that handled the parking meter deal for the city.
Since the meter deal took effect, city officials have paid the parking meter company more than $2 million in what they call “true-up adjustments” to make up for parking spaces taken out of service.
The amount billed for those adjustments skyrocketed in the first nine months of the 2011 budget year, to $14 million — a sum Emanuel is refusing to pay. The company hasn’t submitted its claim for the last three months of the year yet.
Elaine:
Points well taken.
And for what it’s worth, I believe we would be better off as a nation, if the government were about half of what it is today.
But one area I do believe they should manage, is the postal service.
Not everything that can be privatized, should be.
Elaine,
Legislation recently passed in the Senate that will help considerably. Of course it is the House that should scare us. I found this on the Senate Bill:
**********************************^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
In its current form, S.1789 protects all post offices from potential closure or consolidation for at least another year.
It also protects Saturday delivery for two years, expands services to include the shipping of wine and beer, and ends the practice of prepaying employee pension funds, among others.
According to a 2006 federal law, the USPS is required to prepay employee healthcare and pension benefits to the tune of $5.5 billion a year.
If passed by the House and signed into law by President Barack Obama, the 21st Century Postal Service Act could return more than $11 billion in overpayments to the USPS and reduce other prepayment responsibilities to $3.5 billion annually.
More than 25 amendments were also considered during the weeklong debate. Bennet and Sen. Mark Udall, D-Colo., sponsored two of the amendments that were passed and added to the bill, both of which are aimed at protecting rural post offices.
Among Bennet’s amendments to S.1789 are provisions to expand USPS retail services to include the issuance of Social Security cards and the sale of hunting and fishing licenses.
It also provides rural post offices with an opportunity to obtain a non-paid advocate should closure studies resume at the end of the one-year moratorium extension.
****************************************************************************
This post office “crisis” is completely manufactured and is just a naked effort to privatize US mail (and conveniently break a union).
Let me tell you about the latest kink in Chicago’s parking meter privatization deal done by Daley. Seems as though the contract calls for the city to pay for meters that are out of service when a street is closed for maintenance/re-surfacing or when a street is closed for a summer street fair. I can’t recall the precise figure of the invoice that has been presented to the city but it was more than a “million”. I’m not so crazy about Rahm who seems a little “authoritarian”, but I’ll give him this – he is refusing to pay. I sure hope that works out for us. You may have heard, our finances are in deep doo-doo. And it’s gonna get worse. I hear the teachers are going to strike. Rahm has decided that the school hours are to be extended (1 1/2 hrs?) but has no plan or money with which to compensate the teachers.
Elaine wonderful piece….. But for this being quasi governmental it would be a Milliken dream….
This is an important and timely article Elaine and you’ve done a great service to the public by so thoroughly researching it and bringing this scourge of perfidious union busting to light.
Unfortunately the re-election of Obama will do absolutely nothing to reverse the status quo ante of the ruling class which is to kick the unions while they’re down and ultimately stomp them into a mouldered corpse.
From their ashes however a new union movement must inexorably be born so long as this peculiarly iniquitous social arrangement know as capitalism divides people into distinct classes with ever widening income gaps.
Class antagonism is after all the motor of history and so long as it’s the objective interest of the employer to extract the most amount of labor for the least amount of wages it will naturally be the employee’s objective interest to extract the most amount of wages for the least amount of work.
Res ipsa loquitur
USPS is great. My letter carriers’ trucks are wrecks but the mail arrives on time every day. And raf is right about all the rural locations that would be SOL.
Lower than herpes? Is that even possible?
Does anyone really need an explanation as to why Congress ranked lower than herpes in a recent popularity poll?
Without the USPS, many rural locations wil be SOL. This 2006 bill was a blatant anti-union bills in our history. What company would survive with the same pension requirement?
Great article Elaine!
ElaineM,
Me neither, I thought it was kind of spooky scary, especially the main one downtown. Most of the service windows were closed, views blocked by opalescent glass, and it echoed so terribly at each step, even my small ones.
You’re not old enough to remember savings stamps and liberty bonds during WW2, I guess.
This is one very good example where the U.S. Congress DID NOT do the work of the people. The USPS is what the best bargains in town and needs every American citizen to work to keep it that way. Congress is doing the bidding of the corporate enemies of the USPS. Vote out all Republicans in this next election or this country is going to be just a memory to us oldsters.
USPS is one of the best deals going. Congress, on the other hand, rightly deserves its very low poll numbers.
bettykath,
The same postal guys who deliver mountains of ads, brochures, etc also have a small pouch for addressed mail.
Of course there are at least 3 other private firms competing for that service, centrally contracted with large mailers such as bank statements, bills, etc.
I suggested to one of the young men that they should fix him up with a donkey instead of the bike. Better companionship, I suggested. He did not have time for the idea. Silly me. Harassed young workers have no time for jokes unless it is part óf the job.
Patric,
One doesn’t have to lick stamps these days. I can’t remember the last time I licked one. They are self-adhesive. I’d suggest you change the wording of Question #2. BTW, I didn’t go to the post office very often when I was a kid.
Sorry. Make that 3 questions.
I am currently involved in a project here in So Cal that includes asking 16-19 year-olds a series of questions.
At the end of the questionaire, I added two questions of my own:
1. Do you ever wear a watch?
2. Have you ever licked a stamp?
3. Have you been to a post office in the past two years?
Of the 721 teens, the results so far look like this:
80% don’t ever wear a watch
75% have never licked a postage stamp
91% have not been to a post office in this decade.
In old days I’d have said that the proof is in the pudding.
Unfortunately, they don’t “do pudding,” either.
idealist707,
How do you get your mail?
First for disclosure. From 1967 until my sister and I moved out to attend college, the Postal Service was our family’s bread and butter. My dad worked 37 years for them, 36 on graveyard shift. He is now retired. His employment provided us with a very stable livelihood and we never were without the necessities of life. I am grateful for this along with the rest of us.
That said taking all the family history with this agency aside and looking at this as objectively as possible. Congress allowing the Post Office to move to the edge of collapse before seriously talking about reform is yet one of the many examples of our elected government’s reckless games of brinkmanship. Aside from the obvious cultural association American’s have with their Post Office, it provides our economy with exceptional communication fluidity. Say what some will about the big influx into e-Mail, if the Post Office shut its doors the American economy would collapse within days. Even if half of payments were electronic, imagine half of all bills being locked away from payment. The issue that FEDEX and USPS being able to take over first class mail, even if steller efforts were made by both companies it would be impossible to conjure the infrastructure needed to service this need in less than many years in the future assuming they even possessed the capital to do so. Moreover sending a letter for 45 cents by either of these companies is financially not going to happen.
Certainly there are exceptions, but considering 200 billion pieces USPS delivers yearly we don’t worry for the most part of the mail being delivered. I have been in countries where the mail delivery was poor and it greatly affects Commerce. Why do business remotely when you cannot be assured your payment or invoice will even arrive. Believe me if you have experienced this you know what I am talking about.
Another issue is that there exist tough laws to protect the mail you are not afforded with if you send via UPS or Fedex. The federal Government has two Law Enforcement Agencies that handle the mail. The US Postal Inspection Service and the Office of The Inspector General, USPS. Both oversee the integrity of the mail outside and within the USPS. Think your mail is safe at at a private mail service where employees are paid just above minimum wage with no federal oversight or regulation? You would be gravely mistaken.
Finally, the United States Code provides for emergency measures to be enacted should the USPS come under a major labor unrest, which despite employees being prohibited from taking a general strike, in the event it happened the US Military is selected as the back up. Now, if that is what would be required to restore a fraction of service in the event the workers were not available does anyone seriously believe the private sector, as fragmented as it is, could even possibly take up the task?
Again, this is mostly congresses making. Sadly it would be congress to fix this accounting trickery that has hampered the USPS ever since. Let’s not allow them to ruin another good part of life in America.
Over here, in Sweden, the revolution has already happened in the cities. There áre in practice no post offices, package pickup and posting is done at commerce points (grocery stores ,etc.). The young delivery personnel are equipped with specially designed bicycles (no putt-putts here) for carrying the load of un-adddressed advertisement which are technically not classed as mail. The money aspects have been absorbed gratefully by commercial services, while banks close everywhere. So far there is only one post office, intended for commercial servicing, and one cash bank in the whole of Södermalm, an area with about 200,000 residents and day time employees.
Good luck, America.