Skip to comments.Post Office Nears Historic Default On $5-Billion Payment
Posted on 07/31/2012 4:55:31 AM PDT by blam
Post Office Nears Historic Default On $5-Billion Payment
Jul. 31, 2012, 6:59 AM
WASHINGTON (AP) The U.S. Postal Service is bracing for a first-ever default on billions in payments due to the Treasury, adding to widening uncertainty about the mail agency's solvency as first-class letters plummet and Congress deadlocks on ways to stem the red ink.
With cash running perilously low, two legally required payments for future postal retirees' health benefits $5.5 billion due Wednesday, and another $5.6 billion due in September will be left unpaid, the mail agency said Monday. Postal officials said they also are studying whether they may need to delay other obligations. In the coming months, a $1.5 billion payment is due to the Labor Department for workers compensation, which for now it expects to make, as well as millions in interest payments to the Treasury.
The defaults won't stir any kind of catastrophe in day-to-day mail service. Post offices will stay open, mail trucks will run, employees will get paid, current retirees will get health benefits.
But a growing chorus of analysts, labor unions and business customers are troubled by continuing losses that point to deeper, longer-term financial damage, as the mail agency finds it increasingly preoccupied with staving off immediate bankruptcy while Congress delays on a postal overhaul bill.
Postmaster General Patrick Donahoe has described a "crisis of confidence" amid the mounting red ink that could lead even once-loyal customers to abandon use of the mail.
(Excerpt) Read more at businessinsider.com ...
Maybe the check got lost in the post.
Barry will just bail out the post office just like he did GM & Chrysler. Buying more votes......
She went ballistic on me. "We're not the government! We're a private business! The government has nothing to do with the post office!"
And I've had freepers on other threads try to express the same sort of idea. My question: If the Post Office isn't the government, then why is Congress looking at a Post Office Overhaul bill? Why does a deadlock in Congress matter to this private business?? If they have a $5B shortfall, where is that money going to come from? I bet I know.
I really hate this stuff like the Federal Reserve, where it both is the government and it is also not the government simultaneously. That's called having your cake and eating it too and outside of politics, the world does not work that way.
It may be legally due but it's not one of the expenses the Postal Rate Commission can allow to be computed into rate making. And besides, the FUTURE RETIREES are 75 years in the future ~ no one currently employed by USPS will get a dime of the money.
This is, as it were, a STAMP TAX.
She went ballistic on me. “We’re not the government! We’re a private business! The government has nothing to do with the post office!”
UNITED STATES POSTAL SERVICE
FEDERAL CRIME to interfere with MAIL DELIVERY
FEDERAL CRIME to interfere with MAIL DELIVERY
Exactly what I was thinking... is it a federal crime to interfere with the delivery of a FedEx package?
Free enterprise is the only acceptable answer.
Open mail delivery to competition and the post office will either become profitable on its own, or it will be replaced by a competitor that is.
“Look here, the situation is the Postal Service is BAILING OUT THE US GOVERNMENT.”
What the hell is $5 billion going to do for the US government. Don’t they spend that much in like 20 minutes or something? You obviously know more than me about it. I was only making a comment.
#1. Elect a new president. Concentrate on fuel costs. How much a day is spent on fuel? #3. Focus on benefits and then #4.....union contracts.
Upgrade tracking equipment and anything that can increase efficiency and compete with fex x and ups. It can be done, the employees just have to believe they are going to get a return bang for their buck if they give concessions.
All revenues were to come from POSTAGE ~ and they did that quite successfully over 3.5 decades.
Then one day Olympia Snow proposed that one way to balance the federal budget would be to TAP USPS in a way that would meet legal requirements (no tax on postage) and yet not seem to interfere with postal ops.
The idea was to claim that the 5.3 billion bucks per year ripped out of the hide of the Postal Service was actually a necessary contribution to OPM for "future" medical insurance costs for postal employees. That way the Postal Rate Commission would need to raise postage rates to cover that cost ~ since it was all germane to USPS operations.
Well, it didn't work out at all. The "postal employees" who would be covered were 75 years in the future ~ that's 3/4 of a century!
Not a one of them was actually employed by USPS in the here and now.
The PRC simply refused to authenticate the legitimacy of what amounted to a tax on postal operations ~ to wit, a STAMP TAX.
I think we fought a war on the issue and this funny little foreign woman sitting in the Senate of course has no memory of it (even though she looks old enough to have been a cannon ball carrier for Molly Pitcher herself).
The other senators thought that was all peachy keen because, lo and behold, it was all invisible and the Republicans then running the Senate couldn't possibly be accused of RAISING TAXES!
Alas, they not only raised taxes, they forgot to fix the rest of the law so that they could be collected. The consequence is the collector of those taxes ~ if they were ever collected ~ the USPS ~ was directed to start paying up!
That spent them right into near bankruptcy and then the Great Obama Recession happened, business fell off the planet, business' advertising went with business, and USPS mail volumes dropped like a rock.
At the same time the law prohibited USPS from closing facilities.
So, although USPS is hardly in a position to bail out the entire government, it's doing more than its share, and eventually, they run out of money and need to shut down.
At the same time Department of Education, which wastes more money than it costs USPS to run nationwide and serve everyone, is UNAFFECTED by any of this.
Your money you pay for stamps isn't really going to move your mail. It's going into the US Treasury and being given to Kathleen Sebalius to persecute the Catholics and Baptists.
USPS is set up to exercise a Constitutional Clause. I’d suggest you get rid of some of the non-Constitutional agencies first ~ EPA, Department of Energy, Department of Education, Department of Labor, etc. There’s a bunch of them, and many of them waste more money that USPS needs to run.
it’s an independent executive establishment. not a business
It is not even a government-owned business.
It is an independent agency of the Executive Branch, like the FCC in communications, the FTC in trade, the FEC in elections.
The USPS is managed by a board of governors, who are all government appointees.
It has its own law enforcement arm, whose members are considered federal agents.
“Congress deadlocks on ways to stem the red ink.”
Having Congress try to balance an agencies budget is like having pedophiles try to rehabilitated troubled children in juvenile hall.
If an employee of the FCC, FTC, FEC were to tell us "I'm not part of the government" ...
We'd all laugh in his face.
Or just say "bullcrap!"
The money is a payment on the employee Cadillac pension. Who do you think should pay for that?
Very interesting! I did not know all of that!
Now, may I ask, are you prepared to pay your own medical insurance 75 years from now?
I'll give you a while to think about that.
Regarding "cadillac pension", what do you think a federal pension is? I want to hear ~ that's so I can LMAO again.
The USPS business model is broken. It’s reason for existing is evaporating. And politicians, unions, and the board are incapable of making any meaningful change.
Cry and laugh and rant all you like. This is the fact of the matter.
A study I did as early as 1976 said we needed to shut down 28,000 buildings and change all the customers of those offices over to rural delivery.
Then, through time, we'd get rid of the surplus postmasters and PTF clerks at those offices.
The savings were enormous.
Congress has no interest in closing those buildings. Congress is not a business. It is not a business model.