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.
“Conservatives seem to not understand or want to be a part of our community. Their philosophy dooms America to enslavement by corporations. Is that worse than an “over-sized federal government”? Yes, by a mile. A government CAN be reigned in by the people. A government can be voted out by the people. Not so with coporations. Just because conservatism has made a deal with the devil doesn’t mean we have to go to hell with them.” (rcampbell)
Well said.
“Privatization” is a word the plutocrats use when they want to plunder the 99% some more.
this comments section sounds an awful lot like the comments section of Pravda.
“this comments section sounds an awful lot like the comments section of Pravda.”
Nick,
Congratulations for a superbly stupid statement that works on many levels. First on the fact that Pravda under the current Russian Government is a mouthpiece for the runaway capitalism that is in effect in Russia. Secondly, for its’ mimicking of a cliche that was tired 60 years ago regarding what makes one a “communist”. Thirdly, for exposing in 13 words how uninformed you real are and that no doubt comes from the fact that your reading comprehension is minimal. You wouldn’t know a communist if it they you, but then anyone like you who would gladly march to strains of “Deutschland Uber Alles”, sees communists everywhere.
Bron:
During the 1800s and early 1900s, many Americans (maybe 25-30% of them) lived on farms. Of those who were employed in factories, many lived miserable, dangerous lives — the workers were not protected by safety regulations nor were they protected by a financial safety net if they lost a hand or an arm in one of the factory machines. Workers in that period had no paid vacations, no compensated sick leave, no pensions, and were paid a wage that would barely support a family in any standard we would consider acceptable today. It was not until the labor movement used the collective strength of its members to push protective legislation through Congress that the quality of their lives improved.
In the 40-50 years following the New Deal, American workers were protected by New Deal legislation and regulations that provided a safer workplace, a decent wage, unemployment insurance, sick pay and a pension plus Social Security for their old age. None of those protections were common in your favorite Age.
Yeah, let’s go back to the days of unsafe workplaces like the sweat shops and coal mines, so the wealthy can be more wealthy.
You first.
http://www.salon.com/2012/05/07/europes_austerity_revolt/singleton/
Monday, May 7, 2012
Europe’s austerity revolt
The message from France and Greece this weekend was clear. Will President Obama and Republicans listen?
By Robert Reich
Who’s an economy for? Voters in France and Greece have made it clear it’s not for the bond traders.
Referring to his own electoral woes, Prime Minister David Cameron wrote Monday in an article in the conservative Daily Telegraph: “When people think about the economy they don’t see it through the dry numbers of the deficit figures, trade balances or inflation forecasts — but instead the things that make the difference between a life that’s worth living and a daily grind that drags them down.”
Cameron, whose own economic policies have worsened the daily grind dragging down most Brits, may be sobered by what happened over the weekend in France and Greece – as well as his own poll numbers. Britain’s conservatives have been taking a beating.
In truth, the choice isn’t simply between budget-cutting austerity, on the one hand, and growth and jobs on the other.
It’s really a question of timing. And it’s the same issue on this side of the pond. If government slices spending too early, when unemployment is high and growth is slowing, it makes the debt situation far worse.
That’s because public spending is a critical component of total demand. If demand is already lagging, spending cuts further slow the economy – and thereby increase the size of the public debt relative to the size of the overall economy.
You end up with the worst of both worlds – a growing ratio of debt to the gross domestic product, coupled with high unemployment and a public that’s furious about losing safety nets when they’re most needed.
The proper sequence is for government to keep spending until jobs and growth are restored, and only then to take out the budget axe.
If Hollande’s new government pushes Angela Merkel in this direction, he’ll end up saving the euro and, ironically, the jobs of many conservative leaders throughout Europe – including Merkel and Cameron.
But he also has an important audience in the United States, where Republicans are trying to sell a toxic blend of trickle-down supply-side economics (tax cuts on the rich and on corporations) and austerity for everyone else (government spending cuts). That’s exactly the opposite of what’s needed now.
Yes, America has a long-term budget deficit that’s scary. So does Europe. But the first priority in America and in Europe must be growth and jobs. That means rejecting austerity economics for now, while at the same time demanding that corporations and the rich pay their fair share of the cost of keeping everyone else afloat.
President Obama and the Democrats should set a clear trigger — say, 6 percent unemployment and two quarters of growth greater than 3 percent — before whacking the budget deficit.
And they should set that trigger now, during the election, so the public can give them a mandate on Election Day to delay the “sequestration” cuts (now scheduled to begin next year) until that trigger is met. (end of Reich article)
Bron:
The best economic times in this country were the 40 or 50 years following FDR’s New Deal. The great American middle class came to be during those years, and even the rich did well.
I think you’ve been reading too many flyers from the right-wing universe.
The top marginal tax rate during those 40-50 years was much, much higher than it is now, and there were many more regulations on Wall St. investment houses and on the banks. There were no financial meltdowns in that period like the ones that occurred once the wealthy right-wingers managed to do away with many of those protective regulations — regulations that protected American taxpayers from the greedy, dishonest brokers and bankers.
You can see a chart of the “Top Marginal Income, Corporate Tax Rates: 1916-2010” at: http://tinyurl.com/3pjnton
Excellent article, Elaine M. Thank you.
SM:
no, France voted bankruptcy and future misery in.
frank:
there are still hundreds of thousands of regulations on the books across all industries. Getting rid of a handful isnt going to do anything and quite possibly it would make things worse if the regulations were not peeled back slowly and with more thought than with which they were made.
FIREFLY:
real wages of workers doubled in the 19th century. Can you say the same about the 20th century?
A cup of coffee and doughnut or bagel cost $0.10 in 1940. Have real wages increased at the same rate as in the 19th century? So that adjusting for inflation the coffee and bagel would cost the equivalent of $0.05?
That is what happened in the 19th century. Buying power increased 200%. A worker paying $0.25 for dinner in 1840 paid $0.125 in 1890 in equivalent terms.
firefly. They already have.
Bron:
– – – – –
They had a saying at the end of the 19th century: “Rags to riches to rags in 3 generations.” ???
– – – – –
That’s a cute saying but the Rockefellers, Fords, etc. are still doing fine — haven’t noticed any of them in the breadlines looking for handouts.
The rich NOW know how to hold onto and protect their money from taxation and depletion. If they don’t, they have the financial means to hire lawyers to do it for them.
The Golden Age of the late 1800s was great for the wealthy (had cheap labor to do the work for them), and the wealthy are hoping to produce that Age for themselves again.
Bron, are you serious? We have had 40 years of deregulation here in the US and the rich have gotten much richer and the rest fallen further behind. Meanwhile the marginally socialistic nations of Europe and Scandinavia currently have less poverty, more income equity, greater social mobility and a higher standard of living for the vast majority of their population. If your mistaken belief were correct how would you explain that?
I think we could get even bigger savings by forbidding ALL Congressional travel. Reimbursement for “essential” trips could be put up for an annual vote by a district’s or state’s voters. If the voters vote not to reimburse, the legislator has to pay for the trip out of his or her own pocket. That way we’ll see just how “essential” most of these trips are.
Plus Rule Two: No “staffers” or “spouses” get to go on those trips, and meals are reimbursed at the same rate we pay for homeless people to eat in shelters, which probably comes to about $5.00 per meal.
Now, THAT is how we’ll get some real savings — plus the legislators would be available for more face time (at their Congressional offices) with their constituents.
France just voted austerity out.
We had a postal system here in America before we had a Congress.
The Continental Congress named Benjamin Franklin the first Postmaster General in 1775. We didn’t even declare our independence from England until a year later (1776), and it wasn’t until 1789 that we established Congress.
Delivery of the mail is a government service that should NOT have to make a profit anymore than Congress is expected to make a profit.
Oh yes, the Members of Congress makes lots of profit FOR THEMSELVES — but nowadays they don’t do much good for the rest of us.
Message to Congress: Leave our Post Office mail delivery alone and get your savings from forbidding Congressional junkets.
Deranged, I name no names, but my opinion is firm; unlike the reasoning given.
This illustrates the contempt of conservatives and their philosophy for what America is–or was–or was supposed to be. They have no sense of, or perhaps even a distaste for, building and being part of a nation or community. They don’t recognize a commonality of needs of a society. Everything is a private for-profit opportunity. They don’t accept that fact that this is a nation, not a corporation. We are a society and as such we are willing to band together and provide certain services for the benefit of us all. From big things like the Hoover Dam to the USPS to Social Security. These are things we have and must continue to provide for each other. They and our roads and police/fire protection are part of “the commons”. Conservatives seem to not understand or want to be a part of our community. Their philosophy dooms America to enslavement by corporations. Is that worse than an “over-sized federal government”? Yes, by a mile. A government CAN be reigned in by the people. A government can be voted out by the people. Not so with coporations. Just because conservatism has made a deal with the devil doesn’t mean we have to go to hell with them.
eLAINE:
We have a good deal of socialism and fascism in this country. But then it is almost universally understood that the rich fair better in a socialist economy so I am not sure why this is a surprise.
I keep saying that if you move toward free markets and deregulation, you will punish the rich harder than government can. When you make them actually stand on their own 2 feet and compete freely, there will be a lot of former rich people who had used government to eliminate competition and evade the necessity of being efficient and using their capital properly.
If you want to really punish rich people make them earn their money.
They had a saying at the end of the 19th century: “Rags to riches to rags in 3 generations.”
Now that is a dynamic system. The rich didnt like it and so started using government to protect their wealth. Been doing it ever since.
How Corporate Welfare Nearly Destroyed the Post Office
By Ben Cohen
The Daily Beast
April 27,2012
http://www.thedailybanter.com/tag/us-postal-service/
Excerpt:
If you’re looking for a clear example of how the United States government is used to protect the interests of the rich while leaving the rest of society to suffer the consequences of the free market, look no further than the debacle surrounding the U.S Postal Service.
For a variety of reasons, the Postal Service is in severe trouble. The business model is somewhat outdated and it is being seriously challenged by the exponential increase in the use of email. However, as Matt Taibbi points out, the U.S Postal Service was in fact slightly profitable before politics and big business played a very large part in its downfall, and was highly competitive with private postal services. He writes:
“In 2006, in what looks like an attempt to bust the Postal Workers’ Union, George Bush signed into law the Postal Accountability and Enhancement Act of 2006. This law required the Postal Service to pre-fund 100 percent of its entire future obligations for 75 years of health benefits to its employees – and not only do it, but do it within ten years. No other organization, public or private, has to pre-fund 100 percent of its future health benefits.
“’No one prefunds at more than 30 percent,’ Anthony Vegliante, the U.S. Postal Service’s executive vice president, told reporters last year.
“The new law forced the postal service to come up with about $5.5 billion a year for the ten years following the bill’s passage. In 2006, before those payments kicked in, the USPS generated a small profit. Not surprisingly, the USPS is now basically broke.
“The 2006 law also bars the Postal Service from offering ‘nonpostal services,’ which means the USPS can’t, say, 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.
“The transparent purpose of this law, which was pushed heavily by industry lobbyists, was to break a public sector union and privatize the mail industry. Before the 2006 act, the postal service did one thing, did it well, and, minus the need to generate profits and bonuses for executives, did it cheaply. It paid for itself and was not a burden to taxpayers.”
Dismantling a government run entity that actually works and attempting to privatize it was a hallmark of the Bush Administration and the Republicans in general. They tried for years to destroy social security, falsely arguing it was close to insolvency and claiming the only way to save it was by privatizing it and encouraging people to put their money into the stock market (thankfully they failed – just imagine what would have happened if everyone had invested their money before the crash in 2008).
The Republicans would like to do the same thing to the USPS – not because it doesn’t work, but because there is a way to squeeze more profit out of it for big business. By privatizing an essential service like the post, you would guarantee that prices would go up when the sole motive is making profit. The government runs the Postal Service with the primary objective of providing an actual service. Private businesses are legally obliged to make a profit and will squeeze customers if necessary to increase the bottom line. We’ve seen this played out in the horrific private health insurance market where the industry works to make money, not cover the most people. As a result, the health care industry is massively inefficient at actually providing people health care, and massive efficient at lining its own pockets. There would be no reason to assume any other outcome from the postal service.
The Republicans have played a clever trick by taking a functioning, profitable government run industry, and restructuring it so that it cannot work. They have then claimed it is in inherently inefficient and led the way in destroying it – all in the name of giving big business a captive market and unlimited profits. This is a classic example of how government is used to promote the interests of the rich, or in lay mans terms, corporate socialism.