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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soundoff (431 Responses)
  1. Henry

    Hard to compete when you must have 100% pre-funded pensions. No way.

    August 18, 2011 at 11:48 pm | Report abuse | Reply
  2. Dave

    Open your eyes, people. This is what happens when government gets involved with the operations of a business. Stupid law requiring ridiculous coverage, and huge expenses. What do you think will happen to all private businesses when they are forced to give health care to all workers?

    August 19, 2011 at 12:09 am | Report abuse | Reply
  3. Jazzzzzzzz

    ok, ppl bare with me I'm having trouble posting so I'm doing it in two parts

    August 19, 2011 at 12:11 am | Report abuse | Reply
  4. Jazzzzzzzz

    The Ineptness of Congress, which owns this corporation (United states Postal service) is just another illogical move on their part. I mean really to *make* them pay a 100% of a (pre-funding pension) to cover the health care of it's workers in retirement years. I'm thoroughly convinced that all Government workers are taken to a class when first entering the job they are to hold,

    August 19, 2011 at 12:11 am | Report abuse | Reply
  5. Jazzzzzzzz

    The second part of my comment has NO bad words in it, comon dude let me post

    August 19, 2011 at 12:15 am | Report abuse | Reply
  6. Jazzzzzzzz

    Grrrrrr

    August 19, 2011 at 12:18 am | Report abuse | Reply
  7. Jazzzzzzzz

    how to S-C-R-E-W-UP ANYTHING 101)

    August 19, 2011 at 12:18 am | Report abuse | Reply
  8. Jazzzzzzzz

    Losing 80 Billion dollars a year as the USPS has since 2007.

    August 19, 2011 at 12:20 am | Report abuse | Reply
    • Gov't Contract Worker

      Re-read the article. It's $ 8.5 Billion a year. At an $ 80 Billion a year loss they would of been closed the first time that happened.

      August 19, 2011 at 9:24 am | Report abuse |
    • Jazzzzzzz

      @ Government Worker, listen to the narative it has more information and Yes It may have been 80 million if I ruined your day I apologize

      Have a nice day anyway :)

      August 19, 2011 at 12:24 pm | Report abuse |
    • Jazzzzzzzz

      Pardon me it is 8.5 billion, just looked and the first response to your comment still applies... hope I didn't ruin your life by my mistake!

      August 20, 2011 at 9:08 am | Report abuse |
  9. Jazzzzzzzz

    Of course the sensible ones have a solution, throw the 60 Billion in over-payments on to the pre-funding acct. So my question to ya'll is will Congress agree to this bill 1351 which is in the house. Naaaaaaa of course NOT. Idiots in motion, watch out Social Security ...your next after the last of the (baby boomers) retire.

    August 19, 2011 at 12:23 am | Report abuse | Reply
  10. Jazzzzzzzz

    But the question to you all is *why* would Congress make them do this, no one pays 100% , no other branch of the government does this. The USPS
    Answer that !

    August 19, 2011 at 12:54 am | Report abuse | Reply
    • michaelfsu

      I agree on some of your posts but for once the government is trying to be responsible. The USPS is losing market share year in and year out. They know as of right now they cannot cover the reirement benefits and is only getting worse. This same problem faces the entire government and most states. I cannot give the one solution but somehow with more and more people working for the government there are going to have to be concessions. The military has cut retirement a couple of times over the last couple decades seeing it was unsustainable ( looking to do it again) I am afraid the USPS will need to do the same.

      August 19, 2011 at 7:51 am | Report abuse |
    • seriously?

      If you people had a clue you would realize that Congress is taking the extra money stashed in the fund to fund other government agencies. Not one iota of tax money funds the post office, yet Congress, mainly republicans have their eyes on the cash it is dumping into the coffers for them to borrow from. Wake up people, the Republican Congress enacted this crazy law, they won't make the rich pay equal taxes, or corporations forward fund their retirees, but they keep sticking it to the little guy!

      August 19, 2011 at 11:34 am | Report abuse |
  11. Somebody

    Well that's awesome, and yes its probably a stupid mandate. Could CNN please do some investigating reporting and come up with why congress in 2006 made that law? It would kind of be helpful. However it doesn't change the fact that A. The majority of what the USPS does is also performed by private business and therefor redundant. B. Electronic Medium has made nearly all forms of paper mail obsolete. I'm saying the same thing I said about the newspapers, just let it die already

    August 19, 2011 at 1:38 am | Report abuse | Reply
  12. Jazzzzzzzz

    @ Somebody, We order things Online, right....Well someone has to delivery it.

    August 19, 2011 at 1:53 am | Report abuse | Reply
  13. Paul

    the plan was a GOP scheme to destroy the USPS ... they want its business while cutting off the remote parts of the country, which typically vote democrats.
    Hey GOP.. screw the USA if that's how you feel ... we the people are gullible ... not your fault

    August 19, 2011 at 3:16 am | Report abuse | Reply
    • CaringFool

      Slipped through without much noise.

      August 19, 2011 at 7:53 am | Report abuse |
    • Cranky

      Remote areas vote democrat? What fantasy world are you living in? Urban areas are generally liberal (democrat) while the rural (remote) areas are generally conservative (republican).

      August 19, 2011 at 8:53 am | Report abuse |
  14. Zero1020

    It's the digital age, paper mail is outdated and slow.

    August 19, 2011 at 3:25 am | Report abuse | Reply
  15. madashell

    Obvious maneuver by the GOP to force the sell off of the USPS to its friends :( Typical of corrupt governments that want to sell public assets to their corporate supporters at knock down prices.

    August 19, 2011 at 3:36 am | Report abuse | Reply
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