GOP Behind the U.S. Postal Service Crisis

Posted on Thursday, 29th September 2011 @ 11:11 PM by Text Size A | A | A

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Republicans, with the support of the Postmaster General, are scheming to end the U.S. Postal Service (USPS) as we know it.  They’re demanding service cuts and layoffs since the USPS is unable to fund the $5.5 billion due on September 30 to pre-fund its federal retiree health fund. The expected layoff of 100,000 workers, in addition to exacerbating an already grim national unemployment picture, will hit African-Americans and veterans particularly hard.  That will be a crushing blow to an economy already deep in recession. But apart from the employment issue, we need recognize why the USPS is in such dire straits in the first place.

The biggest budget problem facing the USPS is the mandate placed on it by an outgoing Republican Congress in 2006, requiring the Postal Service to pre-fund, over a decade, its employee pensions for 75 years.  The USPS is among a handful of employers still offering a defined benefit pension plan that provides security to retirees after a lifetime of work.  The pre-funding requirement was and remains a poison pill for the postal service. No other pension plan, either public or private, is required to pre-fund for 75 years into the future. Without this burden, the USPS would be in the black today. The cost of pre-funding has exceeded $20 billion over the past 4 years – an amount that roughly equals USPS losses for that period.

There are a number of ways to resolve the postal service budget crisis, but certainly the continued pre-funding required under the 2006 postal reform law should be curtailed. It is unreasonable. But even barring this, there are other options. The Inspector General has determined that the Postal Service overpaid into the federal retirement system – between $50 and $120 billion! Those funds could be redirected to the USPS pension fund, allowing it to meet the extreme pre-funding mandate. That, of course, would require commonsense action by the current Congress which is controlled by Tea Party conservatives bent on decimating government services, including the delivery of mail.

The shuttering of 4,000 mostly rural Post Offices and proposed reduction of service will create real hardship for communities across America. Unlike private, for-profit delivery companies like Fed Ex, the USPS has a mandate to serve every American, wherever they live. The private delivery services do not have to deliver to rural regions where it is not profitable, unlike the USPS. In fact, the private companies use the USPS to deliver to some rural areas, because it is cheaper for them to pay the Post Office than to deliver to these areas themselves. Clearly, the private sector will not rush in to provide service when the USPS pulls up stakes in small-town America.

Republican calls for the USPS to “operate like a private business” is undermined by the pre-funding mandate they forced on the agency in 2006, and is unreasonable given the longstanding and laudable USPS mandate to serve all Americans. Instead of calling for layoffs, reductions in service, and the closing of thousands of Post Offices, we ought to be talking about repealing the pre-funding requirement and even subsidizing the Post Office for providing the public good of rural delivery to areas that the private sector finds unprofitable to serve.

The current USPS crisis is a wholly manufactured one caused by conservatives who have wanted to eliminate the USPS and allow private corporations to pick up the profitable parts of the service while forgetting the rest. We must not let that happen.

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