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Friday, October 28, 2016

Saving the Post Office from financial ruin might seem nearly as hopeless as running for president on the Green Party ticket — but this time Ralph Nader, lifelong consumer advocate and perennial presidential candidate, has the numbers on his side.

While Congress considers closing post offices and drastic cutbacks in mail service because the United States Postal Service appears to be going bankrupt, Nader insists that the real cause of the agency’s distress is fiscal discrimination embodied in a 2006 law requiring the USPS to “prepay” 75 years of health benefits for its workers by 2016. “People were never informed about these huge prepays,” he told The National Memo. “No corporation is ever prepaid like that. No government agency ever prepays like that. The federal government owes the USPS $80 billion. And now we’re on the brink.”

Misconceptions about the Postal Service abound, according to Nader, who notes that the agency been fiscally independent since the old Post Office was reorganized as the U.S. Postal Service more than 40 years ago — and forced to rely solely on stamps and postage for revenues. “It hasn’t taken a dollar in tax money since 1970,” notes Nader. “What private corporation can say that? What Wall Street corporation can say that? What oil company can say that?”

The Postal Service confronts an immediate shortfall of $5.5 billion, which must be contributed to its healthcare fund by September 30 — money that Nader says the USPS would have readily available, were it not for those burdensome prepayment requirements.

What Nader does not mention is that the Postal Service has seen a decline in mail volume over the last two decades, owing mainly to email and other technologies that allow bills to be paid online and messages to be received digitally. And that decline seems likely to accelerate in years to come.

“I believe the postal service has passed a tipping point in terms of falling revenues,” said R. Richard Geddes, associate professor of policy and management at Cornell University and an expert on postal issues. “That’s because of the increasing use of and comfort with electronic document delivery over the Internet. The Postal Service’s mail volume has dropped almost 25 percent since its peak in 2006. That’s an enormous decline in mail volume we haven’t seen since the Great Depression. I believe we’re in a period of fundamental structural change, where its mail volume and revenues are going to continue to decline.”

In fact, the 2006 law was meant to shore up financing by relieving the USPS of some pension liabilities while providing for a smaller annual contribution toward eventual retirees’ health benefits. But the recession that quickly followed led to a massive drop in postal revenue.

So the Postal Service has structural problems — a declining revenue stream as fewer use regular mail and especially first-class postage — and competitors springing up left and right that face fewer restrictions on their ability to innovate as private corporations. But the immediate crisis is indeed a result of the 2006 Postal Accountability and Enhancement Act and its unprecedented financial requirements, which postal union leaders believe were designed to conceal massive federal deficits of the Bush years.

“The federal government has used the USPS as a means of hiding its deficit by implementing the 2006 law to prefund,” said Sally Davidow, spokeswoman for the American Postal Workers Union. “The whole purpose is to make the federal deficit look smaller,” she said, by transferring revenue into federal coffers from an independent agency.

By removing the burdensome prepayment requirement, Congress could lift the USPS out of its immediate fiscal hole, and prevent the regressive pain that might be inflicted as a consequence. Some Americans depend on the USPS far more than others, as Nader also points out. Ending Saturday delivery and closing regional offices, for instance,”hurts rural people, hurts the poor, hurts the elderly who aren’t Internet-connected,” he said.

As the second largest civilian employer in the country, moreover, the Postal Service is “the main source of decent middle class wages with security for minorities,” said Nader.

Yet to critics, the Postal Service appears to be an antiquated institution operating in a radically new media landscape — and one that hasn’t always changed with the times, for worse and in some ways for better. “The USPS has a universal service obligation, has to serve everybody. That’s part of the deal,” said the APWU’s Davidow. “They have to deliver to rural areas, poor areas where people don’t have other communication. UPS and FedEx aren’t required to go to sparsely populated areas.”

The Obama administration reportedly will seek additional time beyond Sept. 30 for the USPS to make its $5.5 billion annual payment for future beneficiaries. But Rep. Darrell Issa, the California Republican Chairman of the Oversight Committee in the House, wants legislation to renegotiate collective bargaining agreements in order to remove worker protections and make way for some 200,000 layoffs and additional office closures — which Postmaster General Patrick Donahue has said will be necessary for the USPS to remain viable.

“I firmly believe a big part of what’s going on here is that this is part of the assault on public workers,” Davidow said, referring to collective bargaining restrictions legislated in several states since the Republican sweep in the 2010 midterm election. “And there are people who would like to privatize the Postal Service. The potential for profits is in certain specific areas where there’s a high population concentration and high volume.”

To resist the proposed layoffs, postal workers rallied nationwide at regional Congressional offices on Tuesday. But this may only be the beginning of a long and bitter battle between Congressional Republicans and one of the largest forces of unionized workers in the United States.

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Copyright 2011 The National Memo
  • kurt.lorentzen

    I had never heard about the pre-pay requirement prior to reading this article. The premise is preposterous considering the USPS is the ONLY entity with such a requirement. On the other hand, if you don’t recognize that the USPS is just another of the latest technology-surpassed dinosaurs, I’d like to talk to you about a great opportunity in the video rental store business 🙂

  • EddieKittle

    Congress needs to change the law of 2006 it was put into place to break this Union. When will we govern again with sense? Rome is burning while the people just play with our toys and hope it will change or get better. Don’t count on it.

  • Indy 60

    Once again Republicans have caused a problem by passing a ridiculous bill putting the USPS in jeopardy of default. But, rather than fix the problem (repeal the law) they decide to lay-off thousands of workers, shut down postal branches and cause the American people more pain. It will help their plan against Pres. Obama by raising the unemployment figures (just as laying off thousands of Federal employees did) and they can claim USPS is antiquated. Ask yourself – when did the unemployment rate go up? Answer: after Republicans controlling House got in. Why? Thousands of Federal employees laid off. Layoff that many people and you will naturally have a downgrade in demand. Less demand causes further layoffs, economy to decline and Wall Street to go down. It’s all a part of the grand plan to “get rid of Obama” no matter the cost while promoting (and literally causing) a smaller government. The harm caused to those laid off, the American people, business, and the Country is just collateral damage to obtain what they want. Until the American people wake up and actually see the “Grand Plan” for what it is, America will continue going downhill. Yesterday: Federal Employees, tomorrow: USPS employees. We’re making gov’t smaller, what the he** if America goes down with it!

  • DanielIrvin

    Republicans put the requirement into place in 2006 that the USPS would have to have it’s retiree health benefits prepaid for 75 years by 2016. No other company or government agency has this requirement. Relying soley on postage as revenue this puts the USPS in a bind as usage drops. Now the Republicans want to restrict the collective bargaining rights (kill the union), limit deliverys, and lay off thousands of workers. Part of their “…make Obama a one term president” efforts.

  • Dik

    Mr. Taylor;

    You fail to mention that the average pay for postal workers is $52,000. This does not include benefits. Sounds like a pretty good deal to me.

    Dik Thurston
    Colorado Springs

  • C2

    Indy60 hit the nail on the head as to the reasons behind this dilemma. The Republicans with emphasis on Tea Party will financially ruin this country if they get their way in 2012. Look what they’ve done so far this year.

  • KennRich2

    In response to Mr. Thurston’s comment about postal workers making $52,000 per year. So, they make a living wage. Should they be forced into sweatshop wages so they can struggle on less? Do you think postage costs too much (it cost 4 to 6 times as much and is unreliable in most countries)? Should no one but the rich be paid a comfortable wage? Just what do you think an appropriate middle class wage should be?

    Teachers, police, fire fighters and postal workers are not riding in limousines on these “huge” wages. They are struggling to keep a middle class ranch house, a 4 year-old car and send their kids to college.

    This seems on the surface to be part of a strategy by the Republicans representatives and their big campaign contributors to tear down the middle class by first busting public employee unions, reducing the workforce and wages, then moving to attack private unions with legislation like the euphemistically named “right to work” bill (which should more accurately be called the “right to slave” bill.) What is this idea to reduce everyone’s else’s pay so the rich can have even more and pay less taxes? The middle class has lost ground on wages and hours for over 40 years now. Republicans are right when they called this class warfare, but the middle class is the group being attacked, not vice-versa. And it seems that the some Republicans are actually trying to continue this downturn so Obama can be blamed and bounced out of office by a Republican candidate. This is a risky tactic (not to mention an unconscionable one) that could backfire badly.

    I know many Republicans are well-meaning and believe these are the reasons we have a massive deficit. And there are areas where they are exactly right and we need to route out waste and patronage no matter who it benefits. But the tactics extreme right-wing senators and house members are not going to fix the problem. We have a military budget that is more than all the other countries in the world combined, some $750 billion dollars per year, and we have a revenue collection problem on top of that. We are spending billions to build infrastructure in Iraq and Afghanistan, but we won’t spend money on our own crumbling roads, tunnels, bridges and public facilities. Corporations hire armies of lawyers to find ways around tax laws with loophole that the Republican house won’t even consider plugging. These are loopholes, not tax policy. Even if we could compromise and not raise taxes, we could at least enforce the intention of the tax laws that are on the books and close these loopholes instead of punishing middle class workers and creating more unemployment.

    Route out waste, close the loopholes, reign in the military budget by using proper threat assessment and appropriate spending to keep us safe and solvent at the same time, clean up social programs so they serve the truly needy, not scofflaws, end the wars, take care of our veterans and put people back to work building America.

    Put us back on the map as having the best education, public facilities and roads in the world. If that is liberal thinking, then I guess I am a liberal, but I think the truth is not on the extreme right or the extreme left, the truth is always in the middle. That is American thinking has alway been about and these are all good ideas that even that presidents from John Kennedy to Ronald Reagan or for that matter, Senator Barry Goldwater could have supported. And they guys, not even JFK, were not liberals.

  • ATSF616

    “…the average pay for postal workers is $52,000”

    No, it’s not. That is near the top range, with significant seniority, and new labor contracts adopted last year pay starting workers substantially less.

  • TheGodmother1

    Excellent reporting here – just becoming aware of this bill that passed in a lame duck session in 2006 which is now creating extreme financial hardship for the USPS in an era where its income is declining from high tech competition. Good points today made by Ed Shultz on his radio program – include that fact that privately owned competitive companies (Fed Ex and UPS) do not have to serve low population rural areas. If the Republicans through this maneuver are successful in their long term goal to privatize this governmental agency service (which operates at no cost to the taxpayer by the way) the profitability of even Fed Ex and UPS would decline as they would have to deliver then to the less profitable areas of the country. Additionally, many small businesses that depend on USPS – mail order, catalog, etc. could fail if this service is not available at a reasonable cost. The President and Democrats need to bring this message to the public in a strong way and immediately seek to undo this legislation. The damage done by the previous administration and Congress lives on. I am one terrified American at the thoughts that the Republicans could gain complete control in 2012 and continue to work to eliminate not only the middle class and the institutions (like unions) that helped it to grow and mature – but to undermine all governmental services that help us to live in a healthier and safer environment.

    Added thought: Even if the “average” wage was $52,000 (which I doubt it is) keep this in mind: I personally know people who worked for governmental agencies out of college and made $45,000 who are six years later doing the same job for private contractors (paid by our tax dollars) who are making $150,000 and have said to me “now, does that make sense?” Where is the savings, folks?

  • kurt.lorentzen

    Yes, it does. If government employees can go out and find work in the private sector for more money, that’s exactly what they should do. It means that the private company who pays the $150K has found that the contribution of their skills in that application generate revenue for the company that justifies that salary. And now when that worker pays his/her taxes, it actually contributes to the coffers (doesn’t just offset a small portion of the expense of their former government paycheck). I’ll stand beside you on the unfairness of the pre-pay requirement, and I’ll work along with you to get rid of it. But government’s responsibility includes getting the most bang for the buck as they possibly can when spending tax dollars. The private sector should rightfully offer the most lucrative employment opportunities. That means the government is doing its job, the economy is rolling as it should, and revenues are being used optimally.

  • marianne perham

    The Postal Service can save money by diffrent means then closing their plants and smaller stations.
    Maybe, when these problems were occuring,management should have stopped ordering new machines that were insufficient,adding additions to buildings, or sending
    mail to other facilities to be worked thus being delayed and dropping the approval rate of our customers.
    Christmas premium pay, needs to be curtailed.
    Yes we need to save the Postal Service, and 120,000 jobs, but, we also need the
    satisfaction of knowing our mail will be at our doors.

  • Paxjesu

    Our service is the best in the world and needs to continue not only for American but Internationally as well. I am sure Obama will be blaimed but note the “massive deficit” state about the Bush admnistration. Our problems did not occur overnight nor with Obama!

  • aconnelly

    I agree that a prepay agreement is ridiculous unless there are no funds set a side to meet the retirement and pension requirements of the workers which is the case in many private and public organizations and is one of the largest financial hits to General Motors. That being said, I do also believe the USPS is being mismanaged regardless of whether it is profitable or not. For instance, I live in an area with 50,000 people and there are two full post offices and one Kiosk station plus there are four additional PO’s within 18 miles to serve four additional small communities of less than 10,000 population. While it may add some degree of inconvenience to travel 15 to 18 miles to get to a PO, that is not a hardship in an area like ours with light traffic. This issue needs to be studied in every area of the country and we need to eliminate unneeded PO’s even if that precludes eliminating personnel the savings on rent and maintenance alone is a pretty good hunk of change.

  • jwozniak

    I live in a rural community in Pennsylvania. A large proportion of our citizenry are elderly and, for various reasons, are not computer literate. What can the average person due to save the Postal Service? Are there clueless pols to whom I might address a blistering email, or two? I’m up for a boisterous protest of some kind.

  • rumpunch

    Rural communities need their post offices. PERIOD I use the USPS and would not mind paying a few cents more for a stamp in order to keep a necessary service. Why don’t any of the cost cutting ideas these jokers come up with start at the top with audits of administrative costs and expenses rather than with cutting services? It’s postal SERVICE which is what the business is all about. Every business could save money if they just shut their doors. That cuts way back on overhead and the expense of those darned ol’ employees.

  • Dennis

    How much could the post office save if they cut out the television advertisements for the priority mail? Everyone know all this by now! Save money by cutting out your TV ads! If you have no money, why keep getting yourself farther in debt by advertising?

  • BrandonSimmons

    What is all of this BS about the Republicans? The House vote was “Passed 410-20, 3 not voting”, and all 20 of the disenting votes were Republicans. Only one Democrat failed to vote Yes on the bill, George Miller (CA) simply failed to vote.

  • chuckgnh

    Actually, R. Nader specifically mentioned the decline in first class mail, but gave very specific reasons why the USPS should be saved, could easily be, and basically put some common sense into this arguement that hasn’t previously been addressed. To the reporter, Mr. Taylor, I suggest you check your facts before you “report” the news. You owe it to your readers!

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