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 or to the podcast here.
Hard to compete when you must have 100% pre-funded pensions. No way.
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?
ok, ppl bare with me I'm having trouble posting so I'm doing it in two parts
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,
The second part of my comment has NO bad words in it, comon dude let me post
how to S-C-R-E-W-UP ANYTHING 101)
Losing 80 Billion dollars a year as the USPS has since 2007.
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.
@ 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 :)
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!
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.
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 !
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.
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!
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
@ Somebody, We order things Online, right....Well someone has to delivery it.
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
Slipped through without much noise.
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).
It's the digital age, paper mail is outdated and slow.
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.
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