GAO to Postal Service: Sorry, Taxpayers Aren't Responsible for Fixing Your Fiscal Problems

Facing massive shortfalls, the U.S. Postal Service has already gone negative on the Internet. It also did the accounting equivalent of looking for change buried under the couch cushions. And lo and behold it found some convenient accounting errors to justify pressing another government agency for about $75 billion—all of which would have to be financed by taxpayers. 

Like so many of Washington's money troubles, it all comes down to an argument about accounting. The Postal Service now claims that its fiscal problems can be substantially reduced if the Civil Service Retirement System just returns $75 billion or so in "overpayments" that the Postal Service says it has made to its employee pension fund. CSRS administrators don't think much of the Postal Service's claims, and, according to a report released earlier this month, neither does the Government Accountability Office: 

Some have referred to “overpayments” that USPS has made to the CSRS fund, which can imply an error of some type—mathematical, actuarial, or accounting. We have not found evidence of error of these types....Congress considered that USPS was to be self-sustaining and that the federal government, which had no control over USPS pay increases, should not be liable for pension benefits attributable to those increases. 

Cato's Tad DeHaven argues that the USPS is effectively asking for a bailout. The GAO report backs him up:

...Finally, the cost of USPS’s CSRS pension allocation based on the 1974 law has already been reflected in postal rates for most of the past four decades. The key impacts of transferring assets out of the CSRS fund to USPS based on the current proposals would be to increase the federal government's current and future unfunded pension liability by an estimated $56 billion to $85 billion. This liability would then be funded by the federal government using tax revenue, borrowing, or both. 

Read Reason columnist Greg Beato on the post-Postal society here

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  • Post Office is Constitutional||

    Post-Postal = Post-Constitional?

  • Blight Engine||

    Privatize post office functions. If people want to move around little pieces of paper, let UPS, FedEx, etc. compete for the business.

  • hobags||

    You have no fourth amendment protections with UPS, Fedex, etc.

    statist silver linings.

  • ||

    That will leave rural America out in the cold. The private delivery companies don't want to deliver packages there now much less documents or letters.They hand off packages to the USPS for the last mile.

  • Spencer||

    A post office is constitutional- that has nothing to do with propping up the USPS.

  • robc||

    Also, the constitution doesnt MANDATE a post office, it merely allows one.

    We can constitutionally choose to shut the fucker down.

  • Rob||

    Here, here. GAO fuck yourself, USPS.

  • ||

    curiously, however, there was nothing in the Constitution about how to run the USPS, about enacting hyper-generous pension and benefit packages to be subsidized by the taxpayer, about failing to remain competitive in a changing world, etc.

    THIS is what pisses folks off about govt. The USPS clings to its original business model. Social Security is largely unchanged in 80 years, Medicare/Medicaid in nearly 50. No private industry would survive with that approach.

  • Red Rocks Rockin||

    The USPS clings to its original business model. Social Security is largely unchanged in 80 years, Medicare/Medicaid in nearly 50. No private industry would survive with that approach.

    On one of the UK episodes of Kitchen Nightmares, Gordon Ramsey took the kitchen staff to the Rolls-Royce factory and showed them how the company had, in his words, "moved with the times." This was a restaurant/hotel that had been REALLY successful in the 70s, but was deader than disco because it hadn't evolved at all.

    The Post Office reminds me of that restaurant--they've been relying on a business model that passed it's due date years ago, and never figured out how to adapt. They're running a 1970s union-style business model in a 21st century world, and it shows.

  • ||

    Call your Conressman/Senator they hold the USPS by the thumbs. USPS can't change their business model without Congressional approval for everything.

  • Your Mailman||

    Bring the hate!

  • sevo||

    Your Mailman,
    Learn to read.

  • Your Mailman||

    No, you learn!

  • sevo||

    Your Mailman,
    Oh, all the neighbors can read just fine, re-distributing the mail you've stock in random mail boxes.
    We have a good time, laughing over how 1537 /= 1357 and wondering what the requirements are for a job like yours.
    We presume you fogged a mirror.

  • Your Mailman||

    We have a good time, laughing...and wondering what the requirements are for a job like yours.

    "We"? Excellent! It took a while, but the hate has finally emerged.
    I knew you could do it!

  • sevo||

    "It took a while, but the hate has finally emerged."
    The stupidity, on the other hand, was immediate.

    "I knew you could do it!"
    You do it six days a week. And get paid for it!

  • ||

    The Postal Service now claims that its fiscal problems can be substantially reduced if the Civil Service Retirement System just returns $75 billion or so in "overpayments" that the Postal Service says it has made to its employee pension fund.

    Yup.

    We should definitely trade that cow for those magic beans.

  • Tony||

    The USPS was running a surplus before the Postal Accountability and Enhancement Act, passed in the 2006 lame duck, which required it to prefund pensions for 75 years over a 10 year period. That's pensions for employees who aren't even born yet. It was as if this law were specifically designed to destroy the USPS.

  • Joe M||

    Too bad we can't get something similar for the entire federal budget.

  • Spencer||

    Wait,

    could you try blaming Bush for something once in a while? I mean, really- he WAS in office a few years ago.

  • romulus augustus||

    Cite please.
    And, if correct, why didn't the Obama Congress repeal in 2008-2010 when they had the chance?

  • sevo||

    Shithead, other agencies should fund their benefits packages.

  • ||

    75 years of funding is a standard actuarial practice that corporations do. The pensions should have been funded the entire time.

    It is as if Tony specifically doesn't want normal laws to apply to government corporations.

    The GAO report addresses the issue.

    Of course, no one pays attention to the GAO, especially when they're right. They're just an ombudsman.

    Tony has no interest in effective government or good government; he just wants more government.

  • Tony||

    No private company or other government agency has this requirement for pensions. Most operate pay-as-you-go. This requirement is a poison pill--the USPS would be in the black without it.

    After all, you can't demonstrate the ineffectualness of a government with the goal of turning into a for-profit enterprise unless you can actually demonstrate it's losing money. And what better way to do that than to force it to lose money with an arbitrary and excessive prefunding requirement?

  • sevo||

    "No private company or other government agency has this requirement for pensions"
    You're right, shithead; one more sleazy slight-of-hand.
    No private company is "required" to do so, but smart ones do anyhow.
    As regards the government, *EVERY* government agency *SHOULD* be required to fund their benefits.

  • GW||

    Does your sphincter hurt when you pull stuff like this out of your ass?

    Most operate pay-as-you-go.

    Uhhh, no. The only pension plans I've ever had have been defined contribution plans.

  • ||

    No private company or other government agency has this requirement for pensions. Most operate pay-as-you-go.

    Err, not really. ERISA requires that defined benefit plans be "fully funded". Exactly how that is defined and enforced, I couldn't say, but it definitely is not "pay-as-you go."

  • Richard||

    From this CRS (Congressional Research Service) report:

    http://assets.opencrs.com/rpts/R40983_20091214.pdf

    "The USPS’s financial losses resulted from declining operating revenues and significantly increased operating costs, the latter of which was largely the effect of the PAEA’s requirement that the USPS prefund its future retirees’ health benefits. Section 803 of the act established a 10-year payment schedule to greatly reduce the size of the USPS’s future retiree health benefits obligation."

    The annual payment is about $5.5B.

    My reading of the law makes me think the feds looted the USPS's retirement account by moving it from off-budget to on-budget and then requiring that it be heavily pre-funded.

  • sevo||

    "My reading of the law makes me think the feds looted the USPS's retirement account by moving it from off-budget to on-budget and then requiring that it be heavily pre-funded."

    Care to define "looted"?
    And "pre-funded"? You mean like they actually have to keep funds on hand to pay their debts?

  • Richard||

    "Looted" like the so-called Social Security Trust Fund. As a quasi-independent governmental entity the USPS had positive cash flow and a respectable retirement fund. The feds saw this and directed the USPS to move the fund to an on-budget U.S. Treasury account, meaning congress can do what it likes with the actual money, and directed the USPS to annually deposit a very large amount of its "profits" to the fund, ostensibly for the future benefit current workers.

    Keeping funds on-hand to pay debts is a good thing, but this isn't that. The money is being spent and the workers are getting a government IOU.

  • Red Rocks Rockin||

    Keeping funds on-hand to pay debts is a good thing, but this isn't that. The money is being spent and the workers are getting a government IOU.

    Tony seems to think that the SS IOUs are A-OK, so I can't possibly see why he'd object to this.

  • MJ||

    "The USPS was running a surplus before the Postal Accountability and Enhancement Act, passed in the 2006 lame duck, which required it to prefund pensions for 75 years over a 10 year period."

    Is Tony calling for the Post Office to be deregulated? That dirty little anarchist! Does he not know regulation are the only things saving us from utter ruin!

  • Almanian||

    USPS: "Hey! Bank error in your favor - collect $75 $75B from other agencies taxpayers!"

    GAO: LOL! No!

  • GW||

    It's pretty amazing that they're going under. I get more junk mail now than ever before. I say let 'em die. FedEx moves most of the mail around the country anyway.

  • ||

    Do some homework.

  • robc||

    Spooner solved this problem in the first half of the 19th century.

  • Your Mailman||

    I'm intrigued! How did he "solve" the "problem"?

  • robc||

    He ran a private post office system until the law changed and ran him out of business.

    He forced the USPS to drastically lower their prices first, however.

  • ||

    Not hate so much as revulsion.

  • ||

    the USPS would be in the black without it.

    Much like the new! improved! "profitable" General Motors.

  • ||

    In fairness to the USPS, I think they should be able to raise the price of first-class mail whenever and however they want (rather than have to get approval from Congress). Let the people decide if they can (or want to) afford the post office.

  • 0x90||

    Therein lies the rub.

  • robc||

    As soon as they allow direct competition again, I will agree with you.

    If they demand congressional protection, they have to submit to congressional oversight.

  • jtuf||

    It's foolish for the USPS to give a discount for bulk mailings. Junk mail just cheapens their brand. The USPS should just raise it's rates to $0.50 per mailing and cut the number of deliveries to 3 days per week.

  • mad libertarian guy||

    The USPS should be dissolved, and all mail functions transferred to whichever private company the sender chooses to use.

    But if the USPS is to be retained, then they absolutely need to be freed from congressional authority to raise their rates.

    And they should absolutely get rid of bulk rates.

  • ||

    90 percent of the people that make bad comments about the postal service are angry with there own lives, and just want to attack something.look at how angry they get, to the hater's, study the facts and realize the the service and value the postal service gives you . 44 cents boston to texas.

  • mad libertarian guy||

    It's not a value when they're asking for $75B of my tax dollars.

    Would you be willing to bail out some private company with public funds?

    Then why should we acquiesce to a government company that can't keep its fiscal house in order. If it can't be self-sustainable, shut the fucker down.

  • ||

    Your tax dollars??? Sorry folks but USPS hasn't taken any tax dollrs since it became the US Postal Service in 1974. It has been a cash cow since the beginning. USPS can't keep it's profits it goes to the big bad feds to fund wars and the like. The reason the GAO is stonewalling on the 75bil overpay is because that money has already been spent.

  • sevo||

    allen|10.24.11 @ 1:24PM|#
    "90 percent of the people that make bad comments about the postal service are angry with there own lives, and just want to attack something..."

    100% of this is bullshit.

  • Red Rocks Rockin||

    Oh look, another subliterate OWSer has arrived to dump their slam-poetry "stylings" on the HnR board.

  • Brendan Perez||

    Yep. .44 also gives me Las Vegas to Las Vegas.

    I wonder how this works. It's almost as if all those letters you send across town subsidize the letters you send across the country.

    Personally, I don't send letters. But, various companies do send me mail-billing statements, replacement credit cards, etc.

    Some are from across town and pay the same rate as if they were across the country.

    I wonder how UPS and Fedex would do if they could deliver 1st class mail.

    Even better, I wonder how well they could do if they had the same advantages as the USPS like not paying vehicle registration, fuel taxes, or parking tickets

  • GW||

    These morons running the USPS are just rearranging deck chairs on the titanic. Closing post offices that lose money is a really good idea, but MOST of them lose money so that idea can only go so far.

    Increasing the price of stamps and cutting back service will only cause people to use the USPS less, so that won't work either.

    And of course, getting rid of the union won't happen, and that's the biggest thing they could do to stay afloat. I've said for years that if FedEx and UPS could deliver to your mailbox, the USPS would be out of business in 5 years. Looks like even those steps won't be necessary.

    Shit, when you have to hire your competition in order to be able to provide your service, you know your business model is doomed.

  • Underdog||

    Actually the Postal Serevice delivers the last mile for UPS and Fed-ex.

  • Colonel_Angus||

    Whazzut?

  • sevo||

    "Actually the Postal Serevice delivers the last mile for UPS and Fed-ex."
    When you have a lot of employees standing around, you ought to find something for them to do.

  • ||

    Walk a mile in their shoes. Or did you and couldn't cut it?

  • R||

    USPS's attack on the internet was fucking retarded (yeah, snail mail can't be hacked, but it can be lost or stolen by postal employees). It smack's of Ludditism and is a pretty good indication that they're going the way of the buggy whip.

  • Tom||

    Taxpayers didn't want to bail out the corrupt banks either but we were there to do that

  • ||

    Give Up is a helluva good album.

    Not that this has anything to do with the substantive issues. But it is a helluva good album.

  • ||

    Where is your self respect people? It is okay to be discouraged and upset with your government and in fact you should be, but when you resort to obscenities, name calling and insults to make your point you probably don't have much of a point to begin with. How many of you have actually read the 60 page report by the GAO? How many of you have even read the summary page? How many of you have been in a processing and distribution plant to see how your mail gets from point A to point B or witnessed how the carriers prepare the mail for delivery everyday? If you have never done any of this then you have no basis to support your criticism. Your opinions aside it is not an easy job, and to suggest that you have even the slightest modicum of understanding that would support your outrage against the USPS is pretentious and arrogant ignorance. Those of you who are calling for the USPS to be dissolved have no idea what you are truly advocating. You see your own small role of involvement and assume it must be the same for everyone or that your dislikes are the same every where. There is no excuse for poor customer service and if you believe that the USPS simply does not care you should just stop reading now. Customer service is ALL we are about. We are a fundamental cornerstone of a multi-trillion dollar industry which employs over 8 million people and represents roughly 8% of the GDP. It is so much more than any of you realize. Are there serious issues that need to be resolved? Absolutely! Are we asking for a tax payer bailout? Absolutely NOT! The issue regarding the CSRS pension fund is not one of actuaries, accounting or anything beyond the scope of the language which defines those portions of the payments which the USPS is responsible. The GAO did not announce anything that was not already understood. It merely did what Issa asked, and that was to say that there is no actuarial evidence of overpayment. What the USPS has contested is the reorg language of the 2003 and 2006 acts which should have provided for a restructure to the funding requirements but did not address those aspects directly. In other words, it is all about language. There is no dispute about the fact that the return of those monies would create a budgetary “deficit” which would be solely the responsibility of the Treasury. However, it should have been all along if you understand the USPS argument. Try a little civility for a change folks. You will get a much better reception.

  • ||

    Absolutely agree!

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