The word “default” sounds ominous, but Wednesday’s failure by the Postal Service to make a $5.5 billion payment toward pre-funding future postal retiree health benefits—a so-called “default”—is really a default on the part of Congress.
As you well know by now, it was Congress that in 2006 imposed a burden on the Postal Service that no other public agency or private company in America faces—the obligation to pre-fund future retiree health benefits. And Congress made this unaffordable by requiring the Postal Service, which doesn’t receive a dime of taxpayer money, to pre-fund 75 years into the future.
It is this unique burden that the USPS is “defaulting on”—while in fact Congress has defaulted on its responsibilities by not addressing the mess it created. How big of a mess is it? According to USPS financial reports, pre-funding accounts for 85 percent of all of the Postal Service’s red ink since 2007, 94 percent of this year’s.
Rather than fixing this problem it created, Congress wants to degrade the world’s most affordable delivery network by reducing services to the American people and to America’s businesses, which will only worsen the financial problems by driving our customers away and reducing revenue.
Besides bringing the Postal Service to the financial precipice, pre-funding also has prevented the agency from doing what it has done for 200 years: adapt to an evolving society. Instead, this artificial political crisis has focused all of management’s energy on a desperate attempt to pay bills that no one else has to pay.
If Congress would remove the sense of panic, the USPS could develop a forward-looking plan to address the structural challenges—and opportunities—that we acknowledge exist. For example, while first-class mail is declining, the e-commerce market is exploding. The USPS chief financial officer announced earlier this year that the agency’s $200 million operational profit for that fiscal quarter was attributable to a sharp rise in delivering Internet-ordered packages. Much more could be done to tap that market.
The ultimate irony about tomorrow’s so-called “default” is that the Postal Service already has $45 billion set aside for future retiree health benefits—more than any other organization in America. And yet, Congress wants to drain still more from the USPS. It even seems that some in Congress would rather cut key services to Americans than give the Postal Service a real chance to thrive in the 21st century.
So make no mistake: When you read about this so-called “default” on pre-funding future retiree health benefits, the default isn’t being committed by the Postal Service, but by Congress.
Click here to read our press release on the so-called “default.” And rest assured that we are working hard to make sure this issue gets fair coverage in the news media.
Fredric V. Rolando, President
National Association of Letter Carriers