Mr. Mayor, Show Us the Money!

 

220px-Rahm_Emanuel,_official_photo_portrait_colorRespectfully submitted by Lawrence E. Rafferty (rafflaw) Weekend Contributor

I guess you don’t have to be from Chicago or Illinois to know who Rahm Emanuel is.  The current Mayor of the City of Chicago, Rahm Emanuel is the former chief of staff to President Obama and a former Congressman. He is also a former investment banker.  It has been alleged that this former investment banker has been crying poor since he entered office and proposing that city workers must pay more into their pension funds and get less pay and benefits.

“If you’ve read the financial news out of Chicago the last few weeks, you’ve probably heard that the city faces a major pension shortfall, supposedly because police officers, firefighters, teachers and other public workers are selfishly bleeding the city dry.

You’ve also probably heard that the only way investment banker-turned-mayor Rahm Emanuel can deal with the seemingly dire situation is to slash his public workers’ retirement benefits and to jack up property taxes on those who aren’t politically connected enough to have secured themselves special exemptions.” Pandodaily 

I guess the idea that a politician would want to claim that union workers and municipal workers are destroying the city’s finances is not a new claim.  It is one of the favorite dog whistles of politicians of various stripes.  You recognize the claim.  The pensions are in trouble because the workers have demanded too much over the years.  That audacious, and false claim has been made repeatedly in recent years. We have discussed the pension shortfalls before.

The most amazing part of this latest claim that pensions are destroying the City of Chicago’s finances is the disclosure that Mayor Emanuel may be hiding a large trove of cash from the public eye.  Enough money to pay the yearly pension payment.

“Chicago is the iconic example of all of these trends. A new report being released this morning shows that the supposedly budget-strapped Windy City – which for years has not made its full pension payments – actually has mountains of cash sitting in a slush fund controlled by Mayor Rahm Emanuel. Indeed, as the report documents, the slush fund now receives more money each year than it would cost to adequately finance Chicago’s pension funds. Yet, Emanuel is refusing to use the cash from that slush fund to shore up the pensions. Instead, his new pension “reform” proposal cuts pension benefits, requires higher contributions from public employees and raises property taxes in the name of fiscal responsibility. Yet, the same “reform” proposal will actually quietly increase his already bloated slush fund.

But it gets worse: an investigation by Pando has discovered that Emanuel has been using that same slush fund to enrich some of his biggest campaign contributors.” Pandodaily

That is an amazing claim, but I am not surprised that a politician would hide money to benefit his campaign contributors.  However, in light of the latest Supreme Court decision in McCutcheon vs. FEC that removed most of the campaign donation limits,  the Supreme Court Majority would be shocked that a politician might be serving his/her campaign contributors at the expense of the citizens!

To be fair to Mayor Emanuel, this secret slush fund was not his idea.  It was started years ago, but Mayor Emanuel seems to have welcomed the idea with open arms.

“The new report, from the taxpayer watchdog group Good Jobs First, shows how Chicago’s roughly 150 “tax increment financing” (TIF) districts divert property taxes out of schools and public services and into what is now known as Chicago’s “shadow budget.” That’s a slightly nicer term for what is, in practice, Emanuel’s very own sovereign wealth fund.

Living up to his billing as “Mayor 1%,” Emanuel has used the fund to (among other things) offer up $7 million of taxpayer cash for a new grocery store, $7.5 million for a proposed data center, $29 million for an office high rise and $55 million for a huge new hotel (and that latter project is on top of $75 million more in tax money Emanuel has offered up to build a private university a new basketball stadium). And these are just a few of the corporate subsidy proposals in a $300 million spending spree Emanuel has championed at the very moment he has pled poverty to justify pension cuts, property tax increases and the largest school closure in his city’s history.

Contrary to the story of public employees bleeding taxpayers dry, the Good Jobs First report proves that the slush fund is the root of the city’s true fiscal problem. As the municipal budget figures show, over the last 14 years Chicago refused to make its necessary pension contributions. Yet, at the same time, the city’s TIF-based “shadow budget” skyrocketed. In effect, more and more public revenue that was contractually obligated to pensioners was being diverted by politicians to fund TIF subsidies, many of which go to subsidize wealthy corporations.” Pandodaily

I recommend that you review the “shadow budget” article linked above for a full description of how the funds are channeled into its deep pockets controlled by the Mayor and mostly hidden from voters, and even alderman.  Mayor Emanuel has kept the shadow budget hidden from the media and has even claimed that he has diverted some of it towards schools.

“The scheme has gotten so out of control that, according to Good Jobs First, annual TIF revenues now far exceed the annual cost of funding the city’s pension systems. The report shows that in 2013 Chicago’s pension costs were $385 million whereas Emanuel’s slush fund that year received $457 million.

For his part, Emanuel has insisted that roughly a third of TIF funding goes into schools (at his sole discretion, of course). Yet, his slush fund is so opaque there’s little way to verify this claim. Indeed, Chicago’s local public radio station WBEZ recently noted that it “has repeatedly requested a breakdown of all current TIF-funded projects, but [the Emanuel administration] has not yet provided it.” ‘ Pandodaily

Can any so-called public servant be any more arrogant and corrupt than when he cries poor and hides a multi-million dollar slush fund and refuses to disclose how much is in that fund and how he disburse monies from that fund?  What do you think should be done to force the Mayor to disclose the shadow budget?

How can any city or state administration be trusted in their claims that the money isn’t available to pay pensions and to keep schools open, when so-called Shadow Budgets are controlled by politicians, corporate and institutional beggars and wealthy contributors?

Mayor Emanuel, while you probably don’t read this blog, I challenge you to show us the money.  Show the citizens of Chicago the money.  Show the media the money and let them see the books.  Just stop showing the money to your corporate sponsors and controllers!  Mayor Emanuel, we will be waiting for your response!

The whole world is watching!  Well, maybe not the whole world!

Respectfully submitted by Lawrence E. Rafferty (rafflaw)-Weekend Contributor

 

“The views expressed in this posting are the author’s alone and not those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays or art are solely their decision and responsibility.”

 

 

 

 

 

 

128 thoughts on “Mr. Mayor, Show Us the Money!”

  1. From above, “If the Postal Service were allowed to immediately cease making these catch-up payments, it would have an unfunded liability of nearly $100 billion by 2017.”

    That is coming from the committee in charge of oversight.

  2. I found this link to the Postal Oversight Committee, which explains that the USPS has a large, unfunded liability for retiree healthcare benefits. The catch-up payments were required to pay down this liability, and hopefully avoid a large taxpayer bailout. I believe this is separate from FERS, the retirement system.

    http://postal.oversight.house.gov/postal_surplus.html

    Take a look and tell me what you think.

  3. Hi Eddie:

    I think that you are right that the condensed repayment schedule needs to be addressed. That was the only part of the reform bill, that I noticed, that I disagreed with. I would like to find out why it was included with such a tight schedule. You also mentioned other issues which have caused a loss of revenue with the USPS, I believe to the tune of $20 billion. A high payment schedule combined with revenue loss is a bad combination.

    And we do need mail and package delivery to every address in the US.

    Annie:

    I am sympathetic to anyone whose job, pay, or benefits are in jeopardy. And I would hope to try to save anyone from losing their job unnecessarily, especially veterans. I am a “military brat” and my family has a long history of serving in the military.

    I have several points to add. Sometimes government bureaucracies become bloated with union employees. In a downturn economy, government jobs are the highest area of job growth. However, since the government runs on “other peoples’ money” rather than as a private business, it sometimes does not make decisions based on efficiency, cost-effectiveness, quality, etc. It is possible that government employee unions employ a great many veterans. However, if a local government employes 30 people for a job that can be done by 10, as a taxpayer paying those salaries, I would not want to keep those jobs just for the sake of keeping them. All of us here in the private sector face job loss, layoffs, workforce reductions, hour reductions, and all the other risks that are especially concerning in a bad economy. I do not believe that it is fair that government workers be insulated from the risks faced by those who pay their salaries. Make every effort to save jobs, but if a department is bloated, then either trim it back or transfer staff to areas that are short-handed.

    The USPS is mainly self-sustaining, aside from a few small subsidies. So if it has too many distribution centers than are needed, according to the study referenced in the bill, then that is contributing to its costs. Even if the repayment schedule were loosened, the USPS is still losing money in other areas, and needs to get in the black. I would like to see the USPS run more like a competitive business.

    So I disagree with the point of the article that the USPS should not face layoffs simply because 17% of their workforce are veterans. Veterans essentially comprise a percentage of the workforce in any company. If the USPS is short handed, and already spread too thin, however, layoffs would make no sense.

    I believe the reform bill set a goal for the USPS to cut costs, and strive for efficiency and quality. If there are additional means to do so, then of course I support that, especially if it can save some jobs.

  4. Thanks Darren for your valuable insight. The vast majority of Chicago gun shootings and deaths in recent years is due to gang problems that still plague the city.

  5. The thugs in Washington continue to overwhelm the USPS.

    Postal ServiCe plans to slash rural service
    Rural Blog – Because the U.S. Postal Service will change its staffing policies in September, as many as 3,300 postmasters could lose their full-time jobs. The policy involves shortening post-office hours and providing more part-time positions and fewer full-time ones. “By October, the institution of the small-town career postmaster will become a thing of the past at almost half the country’s post offices,” says SavethePostOffice.com.

    Around 8,800 post offices have already cut some hours during the past year and one half, 300 have scheduled public meetings and 3,900 have not scheduled a meeting or implemented any such changes. “If implementation continues at the current rate (about a hundred a month), some 600 of these post offices will have their hours reduced during the spring and summer,” SavethePostOffice says.

  6. Larry:

    You bring up a point with the CPL law and crime. It is too early to tell in this case. There is a difference between Corelation and Cause.

    I don’t know what the reduction in Chicage murders was caused by but as you are aware usually it is much more nuanced than just one or two reasons. Yet, there are trends caused by convergences of many factors.

    Recently I researched for myself Law Enforcement deaths due to gunfire and those related to automobile crashes. I studied the numbers for 100 years. In the latter fifty the automobile fatality rate held fairly consistent, despite the number of vehicles and LEOs increasing. The gunfire deaths revealed from 1972 to 1982 was the worst 10 year period since 1933 to 1923. The latter time period was nearly four times greater than from 2004 to 2014. These were in raw numbers not per capita so the proportion of 1930’s deaths if the lower populatoin is factored in it would have been much more significant.

    Social issues and crime rates in general tended to be more reflective of LEO firearms deaths. From my studies in the past I firmly believe the reduction in firearms deaths starting after 1982 is closely related to the much better training LEOs receive in safety and tactical, which was very lacking in the past. When crime rates generally began to peak up in 1990 there was not such a large trend of LEO firearms fatalities.

    The states having shall issue CPL permissions directly related to assaults are difficult to show true cause, are controversial and subject to interpretation. But on an individual basis it can be meaningful. There are those who are reasonable with concealed pistols and there are those who loose cannons. I’ve had a CPL for over 25 years and there are times when I do carry for specific situations. But the guys who live and breath CPLs are most likely the ones who you got to wonder about.

  7. eddie, You might like Nichol’s book, Dick: The Man who is President. He researched Cheney well, including his years @ UW in Madison. Nichols can’t, and doesn’t try to hide, his contempt. It is a polemic you might consider.

  8. old fox, Great comment and bad news for our Chicago resident and 2nd amendment hater, rafflaw. This dynamic occurs everywhere good people, who follow the law, are given a fighting chance against shitbirds who don’t.

  9. Chicago’s Chicken-Littles are Coming Home to Roost:

    More Guns–Less Crime in Chicago. Finally!

    “Illinois was forced to adopt “shall issue” concealed carry by the courts, and began accepting applications for permits in early January.

    The Sun-Times is now reporting that something else seems to have started happening—actually, not happening—at roughly the same time:

    Chicago’s first-quarter murder total this year hit its lowest number since 1958, police say.

    The first three months of the year saw 6 fewer murders than the same time frame in 2013–a 9 percent drop–and 55 fewer murders than 2012, according to a statement from Chicago Police.

    There were 90 fewer shootings and 119 fewer shooting victims, drops of 26 and 29 percent respectively, according to police statistics. Compared to the first quarter of 2012, there have been 222 fewer shootings and 292 fewer shooting victims.”

  10. I correspond w/ Nichols and have shared coffee w/ him. He writes mostly in a coffee shop in Madison. He’s not bad for a Commie.

  11. The Capital Times folded in 2008. Dave Zweifel was @ the helm. They are now only online and even more irrelevant than when they were in print. All facts.

  12. Dave Zweifel is a moron and ran the Capital Times into the ground. It was so far left and biased it didn’t even sell in Madison.

    1. Wow Mike, did you skip something today? I’ve read with relish the Capital and John Nichols for years……………..

      Associate Editor John Nichols has been with The Capital Times since 1993 and has become one of Wisconsin’s best-known progressive voices. He is the author of seven books on politics and the media and also writes about electoral politics and public policy for The Nation magazine.

  13. “The U.S. Postal Service has been a favorite whipping boy in recent years of many Republicans in Congress.

    Congressman Darrell Issa, the scorched-earth California Republican who chairs the House Oversight and Government Reform Committee, is quite open about his determination to end the USPS as Americans have come to know it.

    He and many of his GOP colleagues believe the service is too expensive, that its practice of delivering mail to every American address — residential or commercial — six days a week needs to be cut back so that it can relieve itself of a good share of its employees, who account for about 80 percent of expenses.

    What the anti-post office politicians probably don’t know is that the U.S. Postal Service has long been and still is a major employer of American veterans.

    The American Legion magazine last month did a major story about this phenomenon of which few American politicians are aware. Instead, the legislators blindly call for dismantling a system that would throw tens of thousands of yet more Americans — among them many veterans — out of work instead of making fixes that could help the Postal Service better compete in this age of email and the Internet.

    The biggest hit to the USPS is well known by now. Back in 2006 Congress mandated that the Postal Service prepay retiree health care benefits for 75 years into the future, a requirement that no private corporation or other governmental unit faces. As a result, before it delivers its first letter in any fiscal year, the Postal Service must shell out $5.5 billion to cover health care benefits that won’t be collected for decades. Interestingly, the service fell short of breaking even in the 2013 fiscal year by about $6 billion.

    According to the legion’s magazine, the Postal Service and the country’s veterans have long been a team. The USPS, directed by federal law, has given hiring preference to veterans in the form of five- or 10-point bonuses on their entrance applications.  But even disregarding the extra points, former military members and the Postal Service have been a good fit, the legion article reported, right down to the outdoor environment and the uniforms.

    But because veterans have typically represented roughly 17 percent of all postal workers, recent cutbacks have hit them hard. In fiscal 2011, for example, veterans totaled 125,926 of the USPS’ 616,000 employees. That dropped to 104,700 in fiscal year 2013, a 4.3 percent decline. And if some of Issa’s goals should become law, roughly 60,000 veterans could lose their jobs with the post office.

    The magazine article suggests there are other ways for the Postal Service to cut costs and produce new revenue, including a recently signed contract with Amazon.com to deliver packages on Sundays.

    U.S. Sen. Bernie Sanders, I-Vt., and Rep. Peter DeFazio, D-Ore., have introduced legislation to counter Issa’s attack on the USPS. And Wisconsin Congressman Mark Pocan, D-Madison, has joined them in an effort to revitalize the Postal Service and save jobs — including jobs for those who served their country in some trying times.”

    Dave Zweifel is editor emeritus of The Capital Times. dzweifel@madison.com and @DaveZweifel

    Read more: http://host.madison.com/news/opinion/column/dave_zweifel/plain-talk-no-one-hires-vets-like-the-postal-service/article_cf9bba5a-6c24-5bc4-a021-f065d1664628.html#ixzz2yF9HTeIt

  14. Here’s something about the pre-funding problem:

    http://en.wikipedia.org/wiki/Postal_Regulatory_Commission

    It looks like the USPS lost something like $20 billion over the past 4 years. Didn’t they propose legislation at one time to allow the USPS to pay down more of its debts, or address the pre funding issue?

    It sounds like there is a lot going on with the USPS. I’m thrilled at any attempt to cut government waste and inefficiency, but wonder why they put in the pre-funding clause.

    1. The deep hole of debt that is currently facing the U.S. Postal Service (USPS) is entirely due to the burdensome prepayments for future retiree health care benefits imposed by Congress in the PAEA. By June 2011, the USPS saw a total net deficit of $19.5 billion, $12.7 billion of which was borrowed money from Treasury (leaving just $2.3 billion left until the USPS hits its statutory borrowing limit of $15 billion).3 This $19.5 billion deficit almost exactly matches the $20.95 billion the USPS made in prepayments to the fund for future retiree health care benefits by June 2011. If the prepayments required under PAEA were never enacted into law, the USPS would not have a net deficiency of nearly $20 billion, but instead be in the black by at least $1.5 billion. Should the Postmaster General’s predictions4 of a nearly $10 billion loss by the end of the year prove accurate, the USPS would have a net deficit of almost $24 billion. However, it would also have been required to make a total of nearly $26.5 billion in prepayments in accordance with PAEA by that point. Eliminating these prepayments, in this scenario, would allow the USPS to be in the black by $2.5 billion — instead of seeing a net deficit of $24 billion.

      It is clear that these prepayments for future retiree health care benefits are — at this point — the primary reason for the U.S. Postal Service’s financial crisis. In fact, simply looking at the numbers reveals that the Postal Service’s “financial crisis” is in fact an entirely manufactured “crisis” precipitated by the ill-advised schedule of prepayments for future retiree health care benefits mandated by the 2006 PAEA passed by Congress and signed by President Bush.(snippet)

      The Manufactured “Financial Crisis” of the U.S. Postal Service
      by Ralph Nader

      September 21, 2011

      Senator Joseph Lieberman
      Chairman of the Homeland Security and Governmental Affairs Committee
      United States Senate
      SH-706 Hart Senate Office Building
      Washington, D.C. 20510-0703

      Congressman Darrell Issa
      Chairman of the Oversight and Government Reform Committee
      House of Representatives
      2347 Rayburn House Office Building
      Washington, D.C. 20515-0549

      If the U.S. Postal Service were forced to default and start to shut down, the consequences would be dire. Americans would lose a service that is essential to many people and which has bound our nation together. A shutdown would also cause great damage to our economy. Senator Carper has said that such an unspeakable event could “effectively shut down the U.S. mailing industry that depends on the Postal Service. . . A shutdown of an industry of its magnitude, with some 7 million employees and more than $1 trillion in revenue, would be catastrophic to our fragile economy.”1 For these reasons, as Congress considers ready solutions to the financial woes of the U.S. Postal Service, I hope you will examine the viable options with a full understanding of how the U.S. Postal Service (USPS) came to be in such a deep fiscal hole and how they might start to climb out of it.

      In 2006, the United States Congress passed the Postal Accountability and Enhancement Act of 2006 (PAEA). This bill required that the USPS prefund its future health care benefit payments to retirees for the next 75 years in an astonishing ten-year time span.

      Under the PAEA, USPS is required to make $103.7 billion in payments by 2016 to a fund that will pay for future health benefits of retirees of the next 75 years. This health benefit prefunding mandate covers not only current employees that will retire in the future, but employees yet to be hired who will eventually retire. On top of this, none of the money that the USPS contributes to this fund can be used to pay for current retiree health benefits. So the USPS must make payments for current retirees’ health benefits in addition to its required health benefit prepayments for future retirees. This is something that no other government or private corporation is required to do and is an incredibly unreasonable burden.

      Furthermore, a July 2009 report2 from the U.S. Postal Service’s Office of Inspector General reveals not only that the prepayments for future retiree health care benefits required by PAEA bear no relationship to the USPS’s future liabilities but also that they aren’t actuarially calculated. The Office of Inspector General’s report even questions the basic assumptions the Office of Personnel Management (OPM) uses to calculate the USPS’s retiree health care obligations and suggests that they are likely unreasonable. OPM assumes health care cost inflation significantly higher than industry accepted standards. OPM assumes health care cost inflation of 7 percent, while the standard used across government and private corporations is around 5 percent. All of this means that the unreasonable requirements under PAEA are even more perverse in that they may result in an overpayment of nearly $13.2 billion by 2016 — funding the future retiree health care obligations by 115 percent.

      The deep hole of debt that is currently facing the U.S. Postal Service (USPS) is entirely due to the burdensome prepayments for future retiree health care benefits imposed by Congress in the PAEA. By June 2011, the USPS saw a total net deficit of $19.5 billion, $12.7 billion of which was borrowed money from Treasury (leaving just $2.3 billion left until the USPS hits its statutory borrowing limit of $15 billion).3 This $19.5 billion deficit almost exactly matches the $20.95 billion the USPS made in prepayments to the fund for future retiree health care benefits by June 2011. If the prepayments required under PAEA were never enacted into law, the USPS would not have a net deficiency of nearly $20 billion, but instead be in the black by at least $1.5 billion. Should the Postmaster General’s predictions4 of a nearly $10 billion loss by the end of the year prove accurate, the USPS would have a net deficit of almost $24 billion. However, it would also have been required to make a total of nearly $26.5 billion in prepayments in accordance with PAEA by that point. Eliminating these prepayments, in this scenario, would allow the USPS to be in the black by $2.5 billion — instead of seeing a net deficit of $24 billion.

      It is clear that these prepayments for future retiree health care benefits are — at this point — the primary reason for the U.S. Postal Service’s financial crisis. In fact, simply looking at the numbers reveals that the Postal Service’s “financial crisis” is in fact an entirely manufactured “crisis” precipitated by the ill-advised schedule of prepayments for future retiree health care benefits mandated by the 2006 PAEA passed by Congress and signed by President Bush.

      In addition to providing its retirees with health care benefits, the U.S. Postal Service takes part in the federal government’s retirement system in order to provide retirees with pensions. The system for current employees is the Federal Employees Retirement System (FERS), which replaced the Civil Service Retirement System (CSRS) in 1987. To understand just how much this crisis has been manufactured, we only need to look at two reports by the U.S. Postal Service’s Office of the Inspector General that examine the payments the USPS has made to these funds.

      A January 2010 report5 reveals that from 1972 to 2009, the U.S. Postal Service overpaid the Civil Service Retirement System (CSRS) by about $75 billion and proposes that this be paid back to the Postal Service immediately. On top of this, an August 2010 report6 projected that the USPS had overpaid the Federal Employees Retirement System (FERS) by about $6.8 billion by the end of FY 2009. Combined, these overpayments amount to about $82 billion.

      It has been suggested in these reports that these overpayments to the federal pension systems be refunded and credited toward the U.S. Postal Service’s retiree health benefit prepayment requirements under PAEA. Having funded about $38 billion of their $103.7 billion obligation under PAEA, an $82 billion refund would allow the USPS to fully fund these retiree health benefit prepayments and end future payments. It would even allow them to pay down a significant portion of their debt: leaving about $16.3 billion left over to pay any remaining obligations.

      Critics of the U.S. Postal Service will say that declining mail volume has been a result of the internet age and a move toward digital communications. One cannot deny that the USPS has lost mail volume or that costs have grown over the years due to increases in energy prices and the total number of delivery points that must be met as the U.S. population increases. These factors combined with declining revenues have certainly impacted the USPS’s net income, but they aren’t the chief drain on the USPS’s financial resources. Those that would claim otherwise simply distract from the true culprits already mentioned. The most significant problems impacting the USPS’s net income are the unreasonable burdens placed on it by PAEA and by its overpayments to the CSRS and FERS funds. And most of the loss of volume has happened from 2007 to today, due to the financial crisis and the subsequent recession. In fact, the largest declines in mail volume and revenue came between 2008 and 2009 — at the peak of the most recent financial crisis and recession.

      From 2007 to 2010, USPS’s annual revenue fell by nearly $8 billion, representing about a 10.5 percent drop from its 2007 peak revenue of about $75 billion. A ten percent drop is certainly significant — but not to be unexpected in the midst of a straining financial environment that forces consumers to cut back spending. To provide some perspective: even Fortune 500 companies in the top 10 in 2011, like General Electric, Ford Motor Company, and Exxon Mobil have all seen annual revenue drop by even greater margins. Ford saw its annual revenue fall from its 2007 peak of $169 billion to about $129 billion in 2010 — almost a 24 percent drop.7 Exxon, similarly, saw its annual revenue fall from a 2008 peak of $460 billion to $370 billion in 2010 — an almost 20 percent drop.8 And General Electric saw a 17 percent drop in annual revenue from 2008 to 2010.9

      The U.S. Postal Service has already responded to these declining revenues by cutting nearly 110,000 jobs in four years10 through attrition and closing hundreds of post offices. Since much of this lost volume and revenue may be a result of the financial crisis and recession, many of these permanent closures may be unwarranted. Mail volume usually recovers once the economy begins to recover, relatively speaking. Despite the fact that the U.S. Postal Service has already taken action to account for the effects of the current economic conditions, it is still looking at ways to cut service and jobs — considering cutting service from 6 to 5 days per week, closing more post offices, and cutting more jobs.

      Any reform that Congress passes must maintain the U.S. Postal Service’s universal mandate. The USPS is required by law to provide a maximum level of service to all citizens of the United States. The U.S. Postal Service also must fulfill an, at times, competing mandate of remaining self sufficient and fiscally sound. Unfortunately, in order to balance these sometimes competing objectives, the Postal Service has resorted to closing thousands of Post Offices throughout the United States, reducing its workforce, and cutting back on the quality of service provided to its patrons. Together, raising rates and reducing services are a suicidal prescription for further decline.

      The Postal Service recently began studying 3,652 more post offices for closure. Originally it claimed that this initiative could save nearly $1 billion. However, more recently the U.S. Postal Service has provided estimates of cost savings from this effort — without noting the substantial community benefits that are wiped out by the loss of a Post Office — that only amount to $200 million. And it would only save that much if all of the 3,652 post offices are ultimately closed — something they have stated they do not intend to do. Either way, $200 million only represents two percent of the $10 billion deficit projected by the Postmaster General for this year, assuming no refund of the USPS’s overpayments to federal pension systems. What is the sense in closing such a large number of post offices and cutting back on the service and the sense of community to millions of U.S. citizens in exchange for such a pittance of cost savings — especially when there are other much larger ways, noted earlier, that can be adopted to put the Postal Service back on financially sound footing? Not to mention the Postmaster General’s declaration last year about starting aggressive sales promotion under his watch.

      Remember, too, that especially during times of natural disasters and national security concerns, there are people who rely on the USPS for critical emergency supplies and medicine. Cutting services further could impair these citizens’ ability to gain access to these necessary provisions at times of peril.

      In light of the challenges and burdens facing the Postal Service, Congress should do its best to pass reforms that will eliminate the manufactured financial crisis that the USPS faces in a way that minimally impacts patrons of the USPS. To reiterate, the prepayment of retiree health benefits for the next 75 years (in a period of 10 years, by 2016) required by PAEA is overly burdensome and something that no other government agency or private corporation is required to do.

      Congress should not only ensure that the $82 billion in overpayments the USPS made to federal pension systems, identified by the U.S. Postal Service’s Office of Inspector General, be refunded, but that the provisions of PAEA that require the USPS to prefund its retiree health benefits at such an accelerated schedule be repealed.

      This would ensure that the USPS returns to solid financial footing and do so in a way that prevents more post offices from being closed, more jobs from being cut, and the quality of service from deteriorating further. Such an outcome would be favorable to the people in this country that rely on the post office to bind their community together, to do their business, to receive precious communication from a distant friend or relative, to pay their bills, or to receive their medicine, among many other things. Otherwise, those who are most vulnerable in our society will feel the harshest effects of further post office closings and service cuts.

      Remember Ben Franklin’s vision.

      1 McElhatton, Jim. “Post Office Seeks a Federal Review of Pension Fund.” Washington Times. June 22, 2011. Accessed September 16, 2011.

      2 Corbett, Joseph. “Final Management Advisory Report — Estimates of Postal Service Liability for Retiree Health Care Benefits (Report Number ESS-MA-09-001(R)).” U.S. Postal Service Office of Inspector General. July 22, 2009.

      3 United States Postal Service. Form 10-Q for the Period ended June 30, 2011. Filed August 5, 2011.

      4 Postmaster General Patrick Donahoe. “Statement of Postmaster General/CEO Patrick R. Donahoe Before the Committee on Homeland Security and Governmental Affairs United States Senate.” September 6, 2011. Accessed on September 16, 2011.

      5 U.S. Postal Service Office of Inspector General. “The Postal Service’s Share of CSRS Pension Responsibility (Report Number RARC-WP-10-001).” January 20, 2010.

      6 Corbett, Joseph and Marie Therese Dominguez. “Management Advisory — Federal Employees Retirement System Overfunding (Report Number FT-MA-10-001).” U.S. Postal Service Office of Inspector General. August 16, 2010.

      7 Ford Motor Company. Form 10-k for the fiscal year ended December 31, 2010. Filed on 2/28/2011. Accessed on September 16, 2011.

      8 Exxon Mobil Corporation. Form 10-k for the fiscal year ended December 31, 2010. Filed on 2/25/2011. Accessed on September 16, 2011.

      9 General Electric Company. Form 10-k for the fiscal year ended December 31, 2010. Filed on 2/25/2011. Accessed on September 16, 2011.

      10 Mintz, Jessica. “Postal Service Mulls Closing 3,700 Post Offices.” MSNBC.com. July 26, 2011. Accessed September 20, 2011.

  15. Eddie:

    My greatest hope for fixing our procurement cesspool is to shine the light of public scrutiny.

    I’m not familiar with the Postal Accountability and Enhancement Act. This is what I was able to find:
    http://scimath.unl.edu/MIM/files/research/LaFleurKelly_AR_final_LA.pdf

    It looks like it requires all non-postal services to be reviewed annually for public demand and if there is a private supplier. It also has objectives to:
    -maximize incentives to reduce cost and increase efficiency
    -increase transparency in rate setting process
    -streamline distribution network to bring down excess costs
    -bonuses and salary of any officer or employee may not exceed that of the USPS Vice Pres
    -The Commission’s funding is appropriated out of the USPS fund, with a request sent to Congress for payment
    -the Commission will review progress towards these goals at the 10 year mark (!) and make modifications if necessary
    -A report is to be made on the postal monopoly
    -A report is to be done on postal workplace safety and injuries
    -A report on recycled paper
    -A report on the extent that women and minorities hold management and supervisor positions
    -Assessment of future business model
    -By 2007 any Postal surplus shall be transferred to the Postal Retirement Fund
    -By 2007 any Postal liability will be put into an amortization plan to liquidate the debt

    “in section 8906(g)(2)(A), by striking `shall be paid by the United States Postal Service.’ and inserting `shall through September 30, 2016, be paid by the United States Postal Service, and thereafter shall be paid first from the Postal Service Retiree Health Benefits Fund up to the amount contained in the Fund, with any remaining amount paid by the United States Postal Service.'”

    And then funding is addressed for each subsequent year.

    It sounds like Congress tried to make the USPS run more like a cost/benefit conscious privately held business.

    I am not a finance expert. I can’t find where the USPS has to repay health benefits. Was the bill amended, or am I just missing it. (I skimmed some areas.) If you read that section, are they trying to get a report showing that they know where they’re going to fund retirement and health care funds so they don’t end up in underfunded pension crisis?

    I see where the USPS has to pay into its retirement fund $5.4 or $5.6 billion a year, but isn’t that to keep their pensions from running out of money? Isn’t the Post Office supposed to be self-supporting? I thought the big change was that the retirement fund went from “being paid by the USPS” to “being paid by the “Postal Service Retiree Health Benefits Fund”. Is the amount that they are demanding very much greater than the need for solvency?

  16. Black males do much better in gender specific classes. An all male charter school was proposed, but racist Madison wouldn’t allow it because it was “sexist.” That is what Mary Burke ran for Madison school board and is now running for governor of Wi. She is a big education reformer.

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