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. Want to buy a pencil?

    It all comes down to Health benefits, if you want to make businesses thrive get them out of taking care of health benefits. The only way this problem will ever be solved in a fair and rational manner will be everyone paying for their own health care. If we don't want to have people uninsured than a national health bank is the only way.

    August 19, 2011 at 11:12 am | Report abuse |
    • f

      Millions of people do not have healthcare benefits. They pay for the doctor when they go to the doctor. They are generally healthy and DO NOT NEED health care plans. What are the odds of an 18-28 year old needing major medical work?? Its like buying auto insurance when you don't even own a car ! It's like buying long-term care insurance when you are 30 years old. ANY TYPE of insurance is only needed by certain people and at certain times in their life. Healthcare for all (Obamacare) is ridiculous and will put the entire country in bankruptcy once and for all.

      August 19, 2011 at 11:26 am | Report abuse |
    • John

      @f, are you impeded? You have no idea what "insurance" is all about.

      August 19, 2011 at 11:47 am | Report abuse |
    • CTYank

      "f" Interesting opinion, but silly. Because you only envision age-related or otherwise foreseeable illness. Ever hear of accidents? They do happen.
      And WTH is "Obamacare"? Funny how the Reps go with old-line-communist naming schemes.
      In fact, the overall most economical health-care-delivery we could have is blanket national coverage. As things stand, something like 25% of medical care costs is administrative- how to say "no." That should click with cheap sob-s like you.

      August 19, 2011 at 11:49 am | Report abuse |
  2. Justsayin

    The Steel business was the first to go. Then followed any and all company's that had a "Union". Automobile Industry stands, but in shreds. Music Biz.........you can't sale a song, so there isn't a biz. USPS, Social Security, Medicare are now on the cutting block. And the Queen is about to scream, "Off with their heads!"

    August 19, 2011 at 11:18 am | Report abuse |
  3. f

    Well the USPS union wanted it, their Congressional buddies forced it into law and now the shortsighted fools can't figure out how this hapened ! It is amazing to me that the federal govt (the biggest business in America) is the worst at running a business. This is happening with the USPS. This is a microcosm of what will happen in couple of years with Obamacare. And when the Shiite hits fan, the dopey Dems will blame the now-Republican president for Obamacare's bankruptcy.

    August 19, 2011 at 11:22 am | Report abuse |
    • aecsret

      And consider this. What political party was in control of both houses of Congress when this was passed. I'll give a hint. Since it is a socialistic policy and a gov't controlled industry, take an educated guess!!

      Liberals are destroying our way of life and have been for 50+ years. Every time they are in control of Congress, we become weaker overall, our military has been cut, taxes go up, expenditures go up, and social programs expand.

      August 19, 2011 at 11:48 am | Report abuse |
    • James

      F, I hope you never learn the hardway why health insruance is important. You may be willing to gamble that you will never need health care (and your analogy with car insurance without a car is off the mark, you have health, you have the potential to need a doctors services, therefore YOU NEED health insurance). Without healthcare insurance only the well-to-do can afford to visit the doctor, the rest of us just have to suffer and die. I don't think ObamaCare went far enough, we should have a NATIONAL HEALTHCARE SYSTEM. It doesn't have to be perfect, and it doesn't have to cover everything, but how about covering the basics, especially preventative care. Then leave it up to the individuals to purchase the "long term care" or "Cadilac" plans. I HATE having my employer dictate who my doctor is and what level of benefits I get, to include cutting me off when it gets to expensive.

      August 19, 2011 at 11:50 am | Report abuse |
    • Asav

      This is not a bad law. The problem is this law should apply to ALL businesses, so that noone can promise something and then not deliver later.

      August 19, 2011 at 11:53 am | Report abuse |
  4. Hugo

    Reading most of these posts, I just don't see how any of this stuff affects 95% of the posters here. The PO pays for itself by selling products and services. You, as a citizen, do not have to have anything to do with the Post Office. You do not have to send anything with them and you do not even have to receive anything from them. Whether the PO is doing great or going bust shouldn't matter to the average person out there.

    As a matter of fact, all the "haters" of the Post Office can take down their mailboxes and then they won't have to put up with all that "junk" mail. Ya'll get started and everyone remove the mailbox and show the PO how much they are not needed. Go ahead....

    August 19, 2011 at 11:22 am | Report abuse |
    • f

      I have checked my mail for the past week. I received 32 pieces of unsolicitated junk mail. I received one bill from the quaint old-fashioned water utility company that doesn't yet have online payments. Why do I need mail delivered 6 days a week? Once a week is enough.

      August 19, 2011 at 11:29 am | Report abuse |
    • Bookmanbob

      Silly,
      The USPS is supported by BOTH federal funds AND sales. It has been running at an increasing loss for years, due to our reliance on technology, especially electronic mail etc. Taxpayers pay the Federal taxes, much of which pay for our USPS.
      Look it up. First it was newspapers that have been in business for a century closing for same reason. This is the beginning of the end...next it's the Libraries. Imagine that...Since we all have spellcheck on our computers we have generations of kids that can't even spell. Laziness.
      If you want to DO anything about this, then Register and Vote! YOU and ME can make a difference.
      God Bless America. We need it!
      -BOOKMANBOB

      August 19, 2011 at 11:31 am | Report abuse |
    • Jess

      Well said.

      They can also start sending all their mail through a private carrier at $10 a letter, and pick up their mail in the nearest metropolitan area.

      I'm sick of the arguments saying its the workers fault. Carriers work their butts off delivering through all sorts of weather, and those that work at the counter have to deal with crabby customers day in and out. Lets talk about the bonuses for management and having 10 supervisors for 10 carriers.

      There are ways to turn this around but it has little to do with those that actually do the majority of the work.

      August 19, 2011 at 11:35 am | Report abuse |
    • Kh

      I totally agree -

      August 19, 2011 at 11:35 am | Report abuse |
    • Bill

      Hugo – the problem is – the post office DOESN'T pay for itself – that's why it lost $8.5billion.

      August 19, 2011 at 12:12 pm | Report abuse |
  5. Walker

    ditch health care, if you want to see a doctor, save your dough, you're actually better off never going to a doctor, ever.

    August 19, 2011 at 11:24 am | Report abuse |
    • James

      Walker, What an idiot, the next time your in a car accident, we'll just leave you a$$ by the side of the road, no insurance, no cash, no doctor for you. Of course you'll be the loudest one screaming, oh, poor me, I should get treated even if I can't pay!

      August 19, 2011 at 11:53 am | Report abuse |
  6. Cliff Claven

    Close these 3600 post offices, fire dead-wood & dry-rot & stop Saturday delivery.

    August 19, 2011 at 11:25 am | Report abuse |
  7. lookinthemirror

    They might help themselves by being a little more cheerful when providing customer service. The majority of occasions when I have used the counter services there, the employees seem ticked off!

    August 19, 2011 at 11:27 am | Report abuse |
    • f

      It's like going to the Dept. of Motor Vehicles. Same people, same union mentality. "You are here to pay my ridiculous salary and benefits. What do you want? Can't you use the APC? (Automated Postal Center)". Fire them all. One day of mail per week is enough.

      August 19, 2011 at 11:31 am | Report abuse |
    • Alberto

      AMEN!!! USPO service at the stations STINKS

      August 19, 2011 at 11:40 am | Report abuse |
    • Jess

      FYI: Taxes do not pay postal employees anything! They have to follow gov't imposed rules but are not supported by the gov't. And it has nothing to do with the union, and it is not the same union. Do your homework. You sound foolish when you make things up.

      August 19, 2011 at 11:40 am | Report abuse |
    • Momof2NJ

      Hence the phrase....going postal! I agree with you...they certainly know NOTHING about customer service!

      August 19, 2011 at 11:46 am | Report abuse |
    • Soundbug

      Did you ever think that they have downsized so much to survive that the employees are overworked in their jobs like the rest of America? Route sizes have increased dramatically over the last 10 years! We need to get a little perspective here and look at what it is like standing in someone else s shoes before we start slinging mud at them.

      August 19, 2011 at 12:21 pm | Report abuse |
    • marielaina

      Walk a mile in their shoes. Cerk jobs and hours have been cut to the bare bones. They have many more duties to perform behind the scenes. Bosses continually abuse and belittle them, cheat them out of hours by changing hours and falsifying clock rings. Postal HQ is ruining the service all over the country. Support the craft employees and make sure you get the whole story before you post.

      August 19, 2011 at 11:12 pm | Report abuse |
  8. Spock

    Let them go under and UPS or Fedex can buy them and run them at a profit

    August 19, 2011 at 11:31 am | Report abuse |
    • f

      That is a great idea. Let it be done.

      August 19, 2011 at 11:32 am | Report abuse |
    • Jess

      Certainly. Good Idea. We'll all spend $10 to mail a letter, but they'll be making a profit.

      August 19, 2011 at 11:37 am | Report abuse |
    • Soundbug

      Sure just wipe out 572,00 jobs and blame the Democrats. Idiots.

      August 19, 2011 at 12:18 pm | Report abuse |
    • IceT

      Soundbug ... are you kidding? Wipe out 572,000 jobs! They're wiping themselves out. You can't just keep jobs that lose billions every year ... besides the post by Spock was to "put them UNDER UPS or FedEx" not eliminate them. Sell the current asets and infrastructure to one, or both, of these profitable & sustainable companies & pay off the debt incurred. This is a great way to SAVE those jobs! & you called others "idiots" !?

      August 19, 2011 at 12:24 pm | Report abuse |
  9. Waste

    The USPS has the most generous retirement package of all governmental agencies. Some retirees receive 80% of their last pay grade when they retire. No private corporation could possibly afford what the USPS offers, especially a business that nas never turned a profit. If this was a private business it would have been closed decades ago. Sell it off or close it and all of us will be better off. Why do we continue to support government agencies that are worthless.

    August 19, 2011 at 11:46 am | Report abuse |
    • Frank

      That is the max after 41 years and 11 months service. That 80% is based on my high three base salary. I've paid in dollar for dollar with the Postal Service. My share of health insurance rises substantially in retirement and I pay extra for a 1/2 survivor benefit.

      August 19, 2011 at 7:27 pm | Report abuse |
    • msp

      Look, if you're still standing and sane after 41+ years at the PO, YOU deserve that 80%, believe me.

      August 19, 2011 at 10:17 pm | Report abuse |
  10. Momof2NJ

    I have the rudest, most ignorant mail carrier in the world...I try as best I can to pay all my bills electronically just so I don't have to see her nasty face or hear her leaning on the horn at 8 am on Saturday. Cancel Saturday delivery....who cares!

    August 19, 2011 at 11:48 am | Report abuse |
    • Frank

      Mom I apologize. I hope I never treat any patron like that.

      August 19, 2011 at 7:30 pm | Report abuse |
  11. jt_flyer

    Can we really afford to have mail delivered by US citizens who live at a significantly higher standard of living, including bene's, than the average of the population they serve?

    August 19, 2011 at 11:51 am | Report abuse |
    • The Old Mailman

      A "significant higher standard of living"? Says who? I doubt very much if you could do the job! Postal workers make about average, and comparing us to any other industry is like comparing apples to oranges. Tell us, how much does a hater make on average?

      August 19, 2011 at 1:46 pm | Report abuse |
  12. Soundbug

    Really, the right-winged comments, the hatred and rage on here are unbelievable. Why do Republi-CONS, who talk so casually about letting the second biggest business is this country fail, (off with their heads) then turn around start whining about where are all the jobs and then blame it on the Democrats. Now really do you think that is a logical solution? This prejudicial rhetoric, thinks nothing of wiping out 572,000 postal worker jobs, and then blaming Democrats? What would you say if this rhetoric of jealousy and rage was inflicted on your choice of business or JOB? I for one and many others still rely on the postal service. What gives you the right to say the postal service is extinct when what I just read here is that business has been increasing because of the internet? There is an increase in ordering things online from stores…somebody still has to deliver it. I mailed a box over 3000miles yesterday and it was cheaper than Fed Ex & UPS. In addition, if something goes wrong, you have government protection, that Fed Ex and UPS do not. Mail fraud is a Federal offense. If you really read this article and the audio news story at the end of it, it explicitly explains where the major money problem lies, and that is the requirement mandated by congress in2006, (Republicans Again!) requiring the Post Office to pre-fund health and retirement benefits, which no other business in America is required to do. Please, do yourself and this country a favor and get educated instead of slamming with your right winged and very prejudiced propaganda. I swear the republicans are the protectors of the very rich. It is the very rich who don’t pay their fare share of taxes, protects the big corporations, the banks and insurance companies that are bringing this country and others down to its knees. My God, please start paying attention, start reading the details of an argument, stop listening to propaganda and Wake UP!

    August 19, 2011 at 12:15 pm | Report abuse |
    • The Old Mailman

      AMEN!

      August 19, 2011 at 1:47 pm | Report abuse |
    • Bobby

      You said it really well. People, just get the facts and stop making up stuff. The PO is over funding future health benefits otherwise it would be making money. Simple fix, stop over funding, save jobs, make more jobs, economy grows larger, more jobs. If we all use some common sense and all work together, rich, poor middle class, dems, repubs, tea party we can solve alot of problems. Stop blaming each other. Lets get America back to work. Wake up people.

      August 19, 2011 at 9:02 pm | Report abuse |
  13. SumDumGuy

    Funny- it used to be the comments on CNN (Communist News Network) were mostly liberal leaning.
    Now that the public seems to be fed up with the liberal Big Government solutions the comments are decidedly right leaning.

    The humor comes when reading the loon liberals comments. They seem to be going nuts as their ship burns.

    August 19, 2011 at 6:25 pm | Report abuse |
  14. joann

    Have,they ever thought what happens,to people who only have Landline Services?What,happens when they want to order online?who's going to deliever?Santa.We,need the Post Office and United Parcel Service. JoAnn Bartholomew

    August 19, 2011 at 9:01 pm | Report abuse |
  15. md

    like it was said in a movie,,, "Guns do not kill people, postal workers do..." lol. I would sell my soul to have one of those overpaid jobs that could be held by someone with the IQ of Forrest Gump. Go Cry somewhere else. Fed ex, UPS, and others do a better job anyway.. Fire all those freeloading morons. Privatize the system. Aren't unions a great deal? Something for nothing. I thought only rockstars got their money for nothing. Screw them all. Lay off all the freeloaders. let them get REAL jobs with the rest of us.

    August 19, 2011 at 11:16 pm | Report abuse |
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