Member
As much as it warms my heart to know my tax dollars are subsidizing the junk mail I get 6 days a week, I'll have to point out that the post office is not as important as police and armed forces.Originally Posted by Joel Goodman
Privatization is not a good idea for everything, but it's about 100 years overdue for the postal service.
Member
None of your tax dollars goes to the USPS.
Measure twice, cut three times, start over. Repeat as necessary.
Member
I think Steve was answering Joel, and the quoted passage from Joel was questioning why USPS doesn't get tax dollars.
As far as the claim that somehow USPS is being required to fund some extraordinary future retirement benefit, I'm not sure that is the way I read it. See http://www.prc.gov/Docs/63/63987/Ret...0Study_109.pdf. Private companies operate under GAAP was well, and it seems not unfair to require that the USPS fund its pension fund with the same kind of assumptions relative to increasing medical costs that private companies use. Failing to do so would mean, if I'm interpreting correctly, not having sufficient future reserves to meet expected pension benefits, much like the existing Social Security nightmare. Given that liability would likely fall on the taxpayers, I'm not sure I disagree with the law forcing them to use GAAP for future pension liability.
Member
Steve was claiming he gets all warm and fuzzy knowing his tax dollars subsidize the junk mail he receives six days a week. I was merely setting the record straight.
As for whether or not we need a postal service, I say absolutely yes. But with the trend these days to throw the whole thing out because it isn't perfect, the ambivalence toward the USPS is not surprising.
The USPS is being required to create a fund that won't have to begin paying out for decades. It is a problem certainly, but not insurmountable. The way this mandate was implemented was ham fisted at best and certainly was not GAAP.
Last edited by Greg Peterson; 09-07-2011 at 9:29 AM.
Measure twice, cut three times, start over. Repeat as necessary.
Member
As I read things, OPEB comes from GASB, which is responsible for GAAP. So what if the liabilities don't get paid for decades. You could make the same argument that because Social Security liabilities don't get paid for decades that we can ignore them. We know where that leads.
Member
We'll have to agree to disagree.
Measure twice, cut three times, start over. Repeat as necessary.
[OP]
Contributor
The USPS is being required to cover approximately 75 years worth of retiree health benefits over a 10 year period. The federal government doesn't have this burden nor do public or private companies who offer retiree health benefits. Money is typically allocated to pay retiree health benefits in the year in which the benefits are paid. Retiree health care usually doesn't have a fund like a pension.
Congress is using this money from the USPS to lower the deficit so they don't want to reduce or eliminate the payments.
Guest
I don't know the history of that act, but there must be a reason that they are forced to set aside cash for future benefit accruals. Probably because they are contractually obligated to provide the benefits and have no reasonable expectation of getting out of them. A non-contracted corporate retiree health benefit is generally not funded in cash, but the company is required to recognize the total future unfunded expected liability on the books (on its balance sheet) for the plan as written, even if future trend in costs makes it so that the sponsor would never actually offer benefits at levels they are projected to reach.
The trend in the corporate world is for those benefits to disappear, I think partially due to current cash requirements, but much more so because you can wipe out balance sheet liability and amortize the effect through the income statement if you cut benefits. In my opinion, that's wrong (the accounting requirements, not the right to eliminate non-contract benefits). It encourages behavior that goes only one way (cuts), to make the books look better.
But, anyway, there must've been a demographic study of what the retiree medical benefits would be for the postal service, and the projections scary enough at the time to make someone believe that the post office would have no chance of meeting those obligations (I don't know how their contract works, but contractual terms are a lot more sticky then general non-union non-contracted corporate benefits), and still have no flexibility to get out of them.
Stuff I have floating around suggests that as soon as there is wiggle room, the state and local (public employers) trends are going toward trying to tie benefits for employees (and risks, which is the big poorly understood factor - not just the level of benefits, but the volatility of the level) to the working lifetime of the employee that receives them. The accounting rules are already headed that way, public and quasi public cash requirements I'm not that familiar with. I used the term intergenerational inequity here for something similar to this and got chewed out, but it is true intergenerational inequity when a current working population is forced to take on funding the liabilities and holding the bag for the volatility of those liabilities to benefit a group of people who have zero chance of bringing in any revenue. And you can hardly understate the leverage that volatility can create, regardless of the funded level for the benefits when a future recipient leaves the workforce.
As new funding and accounting rules come out over the next several years, I think we're going to see a lot less generous benefits, and I hope (but I doubt) some changes in the way benefits that are not contractually obligated are reflected on the books of private employers. If there aren't some changes in what can be provided and how it's booked, there just won't be those benefits for retirees.
But, to this topic, if the USPS absolutely can't cope with funding (on an interest discounted basis, right?) future benefits with the employees who will receive them, then they probably need to sit down and renegotiate what those benefits are.
Last edited by David Weaver; 09-08-2011 at 2:46 PM.
Member
If anyone really wants to read about what is going on, try this Congressional Research Service report: http://www.fas.org/sgp/crs/misc/R40983.pdf starting at p. 7. For the GAO view on the accounting practice change, look at this Comptroller letter: http://www.gao.gov/new.items/d02916r.pdf. As usual, the rhetoric seems to be overstated--even the the Postal Rate Commission thinks they should ante up $3.4B/year, so the real question isn't $5.4B or zero, its $5.4B or $3.4B. Notably, the liability in 2009 was reduced from $5.4B to $1.4B by an act of Congress, so they haven't met the funding requirement before and you could argue that even if the right peg was the PRC's $3.4B/year, they are already $2B behind. While the USPS says this is an extraordinary requirement public and private companies aren't required to meet, that seems like a half-truth -- the reason it is being done is because the USPS is supposed to be self-funding, unlike other gov't agencies and, if I read correctly, whether private companies do this or not depends upon certain accounting guidelines and the GAO determined that the USPS fell on the wrong side of an accounting principle.
Member
Anyone see 'Colbert Report' a couple of nights ago? He talks about the USPS. To paraphrase, 'So the USPS is controlled by Congress but receives no money from them. They should be like Halliburton, tons of money from Congress and no control'
It would be funny if it weren't so true.
[OP]
Contributor
It seems like about every other day we see another news story about the USPS problems. It pains me to see how many people comment on these stories and say the USPS should just go away and that they don't need it. I think it still serves a useful function, but fundamental reform needs to take place. Union work rules would be a good start. We hear all the time about postal workers filing grievances because a member of management or another union worker moved a cart and it isn't in that person's jurisdiction. Am I really taking away your job by pushing a cart out of the way?
There is a huge industry worth billions of dollars that is dependent on the USPS. Direct mail advertising obviously nets a positive return or the advertisers wouldn't do it. If the USPS goes away so do a million or more jobs. It is highly unlikely another package delivery service would do the same work for the same cost. Some advertisers may hire private drivers to deliver, but it has to cost more if each company has to have a fleet of drivers.
[OP]
Contributor
Another thing about the Post Office that gets me is all the complaints about closing rural Post Offices. In one case they closed a Post Office and moved the PO boxes and basic functions to a local store. Residents have to go to a full service Post Office in another town to mail packages without postage and such. Oh gee, they have to drive FOUR whole miles to another Post Office.
I live in a large metro area. My Post Office serves 30,000 or more people. I have to drive at least four miles just to go pick up anything at the office. That office is only the Postal annex and I have to drive another 1/2 mile to the retail post Office if I need any services. Do I complain? No, but rural people can't be bothered to drive 4 miles to another town for Postal services. Most of them live in small enough towns that they drive long round trips once a week to do their weekly shopping.
Contributor
If every town in America were 4 miles from the next town, you might have a point. Would you feel the same way if the distance to the nearest post office was 40 miles - or 80 miles? I think if you to check a map you wouldn't find too many towns within 4 miles of its neighbor.
"A lot of people are afraid of heights. Not me, I'm afraid of widths."
-Steven Wright.
Member
The closest Oregon towns to me are approximately 20 miles either direction in the state. The 'closest' town would be in Washington state. Unless they could allow us to keep our Oregon address (my case PO box), then we'd end up getting taxed as Washington residents. Oregon and Washington state politics don't get along already lol
Member
There are four USPS offices in a 14 mile stretch of Highway 4 from Arnold to Murphy's Ca. Kinda redundant. None closing, empty boxes at the two bigger offices.
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