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. RF

    I proudly work for the United States Post Office and I am scared. I have invested my whole life into this organization and had planned on retiring from here. This is all I have. Can it be argued that I have made a mistake putting all my eggs into one basket? Of course it can but thats hindsight which is always 20/20. This is not just a job for me it is my means of survival. I am not asking for sympathy. I am asking for the chance to continue to serve our customers, earn my living respectfully and ultimately leave this life with the dignity that comes with having pulled my own weight.

    August 19, 2011 at 3:55 am | Report abuse |
    • Trebec

      Well sure its your means of survival, but that's just secondary to the means of the real purpose, to send mail. You didn't come first and made the job, the job was their to be filled by you.

      August 19, 2011 at 4:04 am | Report abuse |
    • shawn l

      Workers, who have done NOTHING wrong should not be punished for loyalty and doing a good job. The USPS is a great service to this entire nation and has been for hundreds of years. The federal requirements that are im place forces the USPS to lose money. Every town has to have a post office, even if it loses money. Close post offices, they aren't needed in as many places or have the federal government pay for the excess costs as part of the infrastructure of the USA>=

      August 19, 2011 at 4:18 am | Report abuse |
    • bill james

      I did the same thing you did, I worked loyally for a company for 20 years. Unfortunately, just like you, it was mismanaged and we went out of business. You might want to do what I'm doing... go back to school and train yourself for something different.

      August 19, 2011 at 4:55 am | Report abuse |
    • kryg

      I symphatize with you. I hope you'll be able to retire and enjoy the benefits of your hard work.

      August 19, 2011 at 5:35 am | Report abuse |
    • gino

      While I sincerely empthize with you, I am curious.

      How much will you make monthly in retirement after how many years in the postal service, and how much of your (and wife's–if married) medical coverage is guaranteed for the rest your life?

      August 19, 2011 at 10:24 am | Report abuse |
  2. zapatta

    Anyone who has ever been in a post office knows the real problem. We call them the "one speed wonders". No matter how long the line the work is one speed, SLOW! "F" us huh? Well the shoe is now on the other foot. Shut it down, they deserve it.

    August 19, 2011 at 4:09 am | Report abuse |
  3. Craig

    Interesting. These government workers receive fully-paid retirement health benefits. How many people employed in the private sector get that sort of perk. They have not only a government funded retirement plan, but this too? I find it hard to feel too sorry for them. Most of us have to pay for that ourselves, if we're lucky enough to have the money to do so. Must be tough.

    August 19, 2011 at 4:13 am | Report abuse |
    • cosmicsnoop

      How very adult and American of you. You have a better job than me so screw you, I hope you do worse. Let me guess, a Union bashing bagger?

      August 19, 2011 at 5:55 am | Report abuse |
    • Curtiss King

      I think you need to research your data and verify the facts.

      August 19, 2011 at 5:59 am | Report abuse |
    • Tee Ballin

      See, the "media" mis informs due to postal MIS management. No, in fact I will be paying approx 500 per month for my health care coverage upon retirement. And we have NO dental or vision coverage. MANAGEMENT of the USPS needs to be privatized, thats definitely THE problem, not the craft workers. But I'd agree to the outside public it looks quite different from their perspective AND what they are told.

      September 5, 2011 at 8:13 pm | Report abuse |
    • PostalWorker27

      We don't have paid health benefits for life. When we retire, we have the option to keep our healthcare,but the cost actually doubles for us upon retirement, We also pay our own retirement under FERS. We are not Civil Service employees.

      September 6, 2011 at 11:28 pm | Report abuse |
  4. Perfesser Firefly

    If true, yes, this IS ridiculous. But, let me back up a second:

    "LOW and behold?"

    How about "LO and behold" instead?

    I'm just saying.

    August 19, 2011 at 4:14 am | Report abuse |
  5. bruce

    Odd requirement, perhaps.... But if they didn't pre-fund retirement, then they would be crying,
    like GM, about having to "post-fund" retirement! (you know, all those people who don't even
    make cars anymore). Or am I misunderstanding "pre-fund"?

    August 19, 2011 at 4:17 am | Report abuse |
  6. candros

    The USPS is obsolete. I am a typical American, and 95% of my mail goes straight to the trash!! Where are the environmentalists on this?? I order one item from a Pottery Barn catalogue, they sell my address, and an entire forest ends up in my mailbox. Not to mention all the other junk and the gas burned to get the junk transported around the country. Yes, I feel bad for the individual employees – but they are only facing what the private sector employees and small business owners face DAILY.

    August 19, 2011 at 4:24 am | Report abuse |
  7. recycled paper

    recycled paper.

    August 19, 2011 at 4:54 am | Report abuse |
  8. Tgallant

    The problem is inept management. In March the APWU received a contract with no lay-off provisions, a 3.5% pay raise, and seven guaranteed COLAs over a four and half year period. No recession for them. And now they want additional funds from all taxpayers. In 2006, Congress waived $25 billion in pension liabilities to solve problems they were having then. They just refuse to improve their business model, charge more for stamps, charge "junk-mail" senders more, close some offices, inovate. They should learn from foreign governments that have revamped their systems.

    August 19, 2011 at 5:03 am | Report abuse |
    • Tee Ballin

      Had COLA's on last contract too. But that DOES NOT mean a raise. Go see if grand-ma got a raise on her soc security lately, it includes COLA's too. NOPE now ANY for last 2-3 years,. hmmmm

      September 5, 2011 at 8:18 pm | Report abuse |
  9. Starhopper

    Geesh – what ever happened to compassion folks? It wasn't that long ago that people in the public sector looked down their noses at government jobs as low paying. Now, when the public sector is in trouble, they attack the government workers for nothing more that having made a choice to work for less with the promise of having a "decent" retirement. I'm not saying that the USPS can go on like this, but I am saying that when people dedicate their work life to one job and are promised some type of retirement compensation – that promise should be honored – even though it may have to be altered. And, by the way, I happen to think that the USPS does a great job handling the mail – and NO, I am not employed by them. It has become so easy for people to put down the government workers – but I guarantee you if the services were to go away overnight, they'd be screaming to have them back.

    August 19, 2011 at 5:27 am | Report abuse |
  10. kryg

    The main purpose of the post office is to transport mail. The technology of sending mail, for the majority, has changed. The post office should have established or switched to e-mail / intenet service while maintaining its parcel/package service when the postal leaders saw that the communication terrain was changing in the the late 1980s.

    August 19, 2011 at 5:32 am | Report abuse |
  11. Bev

    No one will be able to hold up the cost of heatlh care (benefits) much longer. Until the powers-at-be wake up and decide it is practically criminal, the cost of meds and getting sick in this country.... The country will continue to decline.

    August 19, 2011 at 5:33 am | Report abuse |
  12. 1/2 of US are gov. employees

    Fully half of the US workforce make their living working for the government. Virtually all of those not working do, save for the relatively few who have retired from the private sector. How long does a dragon eating itself have left to live?

    August 19, 2011 at 5:33 am | Report abuse |
    • Cranky

      Not nearly. In fact, if you took ALL the government employees – those directly employed by the government...adding in contractors and such is cheating – they would fit in a city smaller than New York. That doesn't even come close to 1/2 of the US workforce.

      August 19, 2011 at 9:00 am | Report abuse |
  13. C00kB00k

    Make the postal rate for junk mail, the same as first class. The USPS would make a lot of money, everyone would stop getting five credit card offers a day and other miscellaneous junk, we could save thousand of acres of trees, our landfills would not fill up as quickly by throwing out all the junk mail, the Democrats and Republicans can both fool themselves by claiming they solved the problem which was the other parties' fault.

    August 19, 2011 at 5:35 am | Report abuse |
    • V1KTORvaughn

      I agree. I mean it's actually ILLEGAL to send email spam so junk mail should have a similar status. 99% of my mail is junk or for someone who doesn't even live there.

      August 19, 2011 at 9:31 am | Report abuse |
  14. Rick1948

    No, email and on-line bill pay is sinking the USPS. Everyone always tries to tie their problems to "the working class is getting too much."

    August 19, 2011 at 5:39 am | Report abuse |
  15. 1/2 of US are gov. employees

    @Bev. High-cost of medications? Well, we do spend more on mind-altering drugs than we spend on national defense, so one would think that Americans would qualify for a volume-discount. But with virtually every American pharmeceutical giant being headquartered overseas to avoid US taxes, don't look for any discounts in the near future.

    August 19, 2011 at 5:40 am | Report abuse |
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