Is benefits law dragging down the Postal Service?
August 18th, 2011
11:18 PM ET

Is benefits law dragging down the Postal Service?

The U.S. Postal Service is in a precarious financial situation, telling Congress it faces the "equivalent of Chapter 11 bankruptcy." Losing billions of dollars a year, it is considering whether to close more than 3,600 post offices and lay off tens of thousands of workers.

The service faces many problems, including a drop in mail volume in recent years. But the service, which employs nearly 572,000 people, says some of its difficulties are inflicted by the federal government through a law governing how the agency funds workers' retirement health benefits.

In 2006, Congress passed a law requiring the Postal Service to wholly pre-fund its retirement health package  that is, cover the health care costs of future retirees, in advance, at 100%. The Postal Service, which is a corporation owned but not funded by the federal government, is the only government-related agency required to prefund retirees' health benefits.

"No one prefunds at more than 30%," said Anthony Vegliante, the service's executive vice president.

Sally Davidow, spokeswoman for one of the unions that represents postal workers, calls it a "a ridiculous requirement."

"(The requirement is) so ridiculous, Congress doesn't do it. No other government agency does it. No private businesses do it," she said. "It's $5.5 billion a year, every year, for 10 years. That's what is causing the problem.

"The law was passed in 2006 and lo and behold, ever since 2007, the Postal Service has been suffering a tremendous debt."

The Postal Service reported a net loss of $8.5 billion last fiscal year.

The American Postal Workers Union and the National Association of Letter Carriers don't want to lose the benefits. But Davidow says a solution is possible.

Click the audio player to hear the rest of the story from CNN Radio's Jim Roope, and hear what Davidow says should be done, and why some legislators oppose the plan:


You can also listen to the CNN Radio Reports podcast on itunes or subscribe to the podcast here.

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  1. email marketing

    Well,this is a very interesting content I found today.Well done on everything here.As I myself not reallylike to leave comment very often,however,not this time.I will come back to check out more later.Anyway,thanks for your content.Learned a lots.

    August 20, 2011 at 1:18 am | Report abuse | Reply
  2. vinnyp

    First the 8.5 billon $$$ shortfall part of that is the 5.5 billion $$ retirement payment prefunding!
    Second one person commented on employees receiving fully funded retirement benifits. Not true the average retiree pays on average $300 to $450 a month for just health benefits. Its is true the USPS must changes to exsist today but lets get all the facts straight before we can go forward !!

    August 20, 2011 at 10:21 am | Report abuse | Reply
    • Northstar

      It also sounds to me like they need a new health plan that doesn't cost both employer and employee so much. The pre-funding is beyond crazy....oh yes, let the politicians do their worst and the citizens pay. The Congress needs to fix this now!

      September 6, 2011 at 1:18 pm | Report abuse |
  3. mandinka

    The union goons with their 1920 style work rules have taken the PO to its knees. If you want to see how combative and obtuse they are just visist federalsop.com

    August 20, 2011 at 9:47 pm | Report abuse | Reply
  4. paul

    The p/o has to prefund retirement for 75 yrs and pay for it in 10 yrs. Sound fishy? Prefunding retirement for people who haven't been hired yet or born seems a little unreasonable. If no other business (private or public) has to prefund and the postal service does, you can bet congress has already spent it. Why else would they let all those people get laid off when a stroke of the pen could save em.

    August 21, 2011 at 11:59 am | Report abuse | Reply
  5. rich1mc1

    Look I work for the USPS and the customers owe me my pay and benefits and retiremnet. Its the Union who has provided me with this job not the Postal customers. Time to get off our backs and if the USPS goes bankrupt so be it

    August 21, 2011 at 8:57 pm | Report abuse | Reply
    • EX-EXPEDITOR

      AS AN EX POW(POST OFFICE WORKER) THE MAIN REASON THE USPS IS FAILING IS BECAUSE MOST WORKERS DO THEIR 8 HRS. AND GO HOME PERIOD THEY DON'T CARE ABOUT IMPROVING THE SERVICE. WHEN SCANNING FIRST CAME OUT ONLY THE BRONX HASP SCANNED! BRONX GPO AND JFK REFUSED ALONG WITH OTHER FACILITIES.SO IF YOU ORDER AN ITEM AND YOUR PAKAGE IS IN THE SYSTEM THE POST OFFICE CAN'T FIND IT. WHICH IS WHY I ALWAYS SHIP UPS-I WANT GOOD SERVICE NOT LAZY ASS SERVICE! FRUSTRATED 30 YEAR MAN.

      September 6, 2011 at 7:08 am | Report abuse |
    • Name*AnginNYC

      No one owes you anything. Put your money away like the rest of the world and save for your own retirement.

      June 27, 2012 at 10:37 am | Report abuse |
  6. kevin f flaherty

    Sounds alot like the artifically created crisis on the debt ceiling. The GOA found the retirement overpayment. Why won't Congress do SOMETHING and fix this???

    August 23, 2011 at 12:05 pm | Report abuse | Reply
    • Richard Greifer

      Conservatives have wanted the Postal service to fail for years. They want it privatized. It wouldn't surprise me to find out that this was a deliberate sabotoge by Bush and his cabonet on the Postal service. This is why many Republican congressment will not vote to pass the bill that will correct this problem.As a postal worker I am feeling the words of the declaration of independence."When in the course of Human Events............." Congress is violating our rights. How dare they make the decision on how much money should be put into this account. They don't do it for any other business.

      September 20, 2011 at 10:13 pm | Report abuse |
  7. Richard Greifer

    Conservatives have wanted the Postal service to fail for years. They want it privatized. It wouldn't surprise me to find out that this was a deliberate sabotage by Bush and his cabinet on the Postal service. This is why many Republican congressmen will not vote to pass the bill that will correct this problem.As a postal worker I am feeling the words of the declaration of independence."When in the course of Human Events............." Congress is violating our rights. How dare they make the decision on how much money should be put into this account. They don't do it for any other business.

    September 20, 2011 at 10:32 pm | Report abuse | Reply
    • Jay Blanton

      I just knew Bush was at the bottom of this. Forecasters called for sunny skies today in Tampa and it's overcast...I'm certain Bush had something to do with that too.

      February 6, 2013 at 1:46 pm | Report abuse |
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