- The Washington Times - Wednesday, January 2, 2013

The disappointing “fiscal cliff” tax-and-spend bill proves Washington isn’t serious about bringing its financial house into order. A Government Accountability Office (GAO) report released last month suggests the same could be said of the U.S. Postal Service (USPS), and unless something is done, the postman may not be around to deliver the final overdue notice for Uncle Sam’s unpaid bills.

The problem is that the Postal Service has promised $94 billion in health benefits without a realistic plan to meet those obligations in full. Currently, 471,000 people are collecting payments from the postal benefits fund, and another 528,000 career employees will be eligible to do so upon retirement. As a free-standing government agency that’s supposed to be self-supporting, USPS wasn’t able to hide this mound of debt behind the $16.4 trillion mountain of red ink like the rest of the federal leviathan.

GAO auditors have been complaining about the Postal Service’s unfunded liabilities for a decade. Congress did something about the shortfall in 2006 with a law that forces USPS to make annual payments of about $5.5 billion into the retiree health benefit fund through 2016. Half of the money the Postal Service has used so far to follow the pre-funding law was borrowed from the Treasury. As USPS already has reached its borrowing limit, the organization has failed to make its two most recent payments.

The situation won’t improve with time. In the past six years, the agency has racked up $41 billion in debt, about $32 billion of which can be blamed on the congressionally mandated pre-funding requirement. Postal officials insist pre-funding has unfairly put the organization in an untenable position and the problem would go away if it were allowed to use the same “pay as you go” approach most other federal agencies use. Paying each current retiree’s benefits out of the present year’s operating budget would, as an accounting matter, move the red ink off today’s ledger, but the move would be temporary. GAO auditors calculated it would show up again in 2026, when the retirement fund goes bust. By 2040, the debt would swell to $250 billion.


With mail volume projected to drop every year through 2020, it’s not clear how USPS ever could meet its unfunded obligations without a bailout from the taxpayers. Though USPS has a cost-cutting plan that includes measures such as eliminating Saturday delivery, the Postal Regulatory Commission calculates that drastic move would save just $1.7 billion. It’s too little, too late.

The real cause of the financial difficulties lies in the lavish benefits and career system created by the public-sector unions to guarantee lifetime employment regardless of performance. Managers who know the government will serve as a backstop for any business decisions they make — no matter how bad — don’t need to worry about the consequences of signing gold-plated retirement deals. After all, the bills will come due decades later on someone else’s watch.

USPS and the federal government share this problem, and both seek to push it off until another day. As America’s debt crisis deepens, that only makes matters worse.

The Washington Times