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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Filed under: U.S.
soundoff (431 Responses)
  1. HIH

    5 days is plenty

    August 19, 2011 at 6:57 am | Report abuse |
  2. Mmmmm

    On-line purchasing is a convenience that does local communities in...moves your local earned dollars and local healthy economy to somebody else's bank and neighborhood...you green-eco are overlooking keeping your local economy green...remember that you fake, knuckleheads...wake up! so stupid you repubs voting with your thumbs down and off with their heads...when you should protect the peoples interest.

    August 19, 2011 at 7:00 am | Report abuse |
    • Brett

      What? Was there suppose to be a coherent thought in there?

      August 19, 2011 at 7:04 am | Report abuse |
    • John Andrews

      Brett,
      Nothing coherent.

      August 19, 2011 at 7:42 am | Report abuse |
  3. AGeek

    Well, here's a suggestion – do the same way the private sector does it. Here's a 401K plan – participate if you want. Your retirement is up to you. These gravy government jobs are part of the problem.

    August 19, 2011 at 7:00 am | Report abuse |
    • Mmmmm

      you corrupt politician and corrupt stock investor...

      August 19, 2011 at 7:02 am | Report abuse |
    • scndnv

      Um, that or.. you could do what's right, guarantee your employee retirements.

      August 19, 2011 at 7:12 am | Report abuse |
    • lloyd roberts

      I just wish your same thoughts and solutions would apply to congress too

      August 19, 2011 at 7:17 am | Report abuse |
  4. Rick

    No, Email and on line bill pay is what is sinking the USPS. But, everyone always tries to blame their problems on "the working class is getting too much."

    August 19, 2011 at 7:04 am | Report abuse |
    • Brett

      That isn't helping them, for sure. And the pension thing isn't helping either (FULLY fun your pensions? What a novel concept, no wonder no one does it.). But, their -real- problem is that they are still operated like they are a government agency, and have more than 4X the management staff than a similar private industry company would have.

      Want to really straighten it up? Take out the top two layers of management, replace them with people from UPS and FedEx, and give them "carte blanche" to re-structure the whole mess. In 5 years they'll be turning a profit, or at least holding their own.

      August 19, 2011 at 7:10 am | Report abuse |
    • Mmmmm

      Mr. Repub Rick, stop being a azzzzz, product and goods don't go through the email...so talk to the hand buddie!

      August 19, 2011 at 7:10 am | Report abuse |
    • Mmmmm

      @Bret you part of the winning team: after stealing and robbing the govt services blind, you want the multibillion dollar taxpayer funded services and its corrupt representatives to sell it to you for pennies...deputy Holden should be looking at you boys....

      August 19, 2011 at 7:16 am | Report abuse |
  5. Rick

    Shut down e-mail..Ban it, you will be back in busness .....theres your sign!

    August 19, 2011 at 7:07 am | Report abuse |
  6. mayito

    Sorry folks! Since the end of the world is near, what we do expect from human behavior? Reasoning? Intelligence? kindness? Common sense? We just have to make sure we are on God's side when he pass judgement on this generation. Godspeed!

    August 19, 2011 at 7:14 am | Report abuse |
  7. The Masked Avenger

    Just switch to a ponzi style retirement plan like social security. Problem solved.

    August 19, 2011 at 7:15 am | Report abuse |
  8. Faberm

    This crippling cost shows the REAL COST OF BLOATED government programs. Stop them and stop them now. Postal workers shouldn't be so outrageously better off than those they serve when it is paid by those they serve. WAKE UP PEOPLE....this is the sort of stuff bankrupting America.

    August 19, 2011 at 7:16 am | Report abuse |
    • Mmmmm

      NO!!! GOVT FUNDS/TAXPAYING DOLLARS REDIRECTED TO PRIVATE COMPANIES BYPASSING ESTABLISHED GOVT AGENCIES AND SERVICES!!!

      August 19, 2011 at 7:23 am | Report abuse |
  9. mmmmm

    I think we should replace all the postal workers with monkeys. Monkeys are much better workers. Plus monkeys wouldnt missdeliver so much mail. It seems most mailmen are either drunk or cant read. Maybe they are just tards and get confused with what mail goes to what address.

    August 19, 2011 at 7:17 am | Report abuse |
    • The Real, Bonafide Mmmmm

      You racist repub. Most of you postal employees are ex military and war veterans...

      August 19, 2011 at 7:26 am | Report abuse |
    • Matt

      Wow, you are educated and talented, but the only words you seem to know are tard and doodoo. It must be tough living with a vocabulary of 10 words.

      August 19, 2011 at 7:30 am | Report abuse |
    • Mmmmm

      @Matt when blogging you speak bubble not essays...

      August 19, 2011 at 7:39 am | Report abuse |
  10. mmmmm

    but i am pretty sure they are just tards that eat doodoo for lunch

    August 19, 2011 at 7:19 am | Report abuse |
  11. Government Contractor

    Perhaps the USPS can hire contractors to get their efficiency up; keep their personal benefits/retirement (which they get back in their first year of retirement anyway) and offer their sibling contractors no benefits and lay them off when the e-mails and online payments continue to reduce their share of this market. Works this way in the rest of Government.

    August 19, 2011 at 7:23 am | Report abuse |
  12. Fred Arent

    Mismanagement is a BIG part of the Post Office down fall I have been employed there 38 years and it gets worse every year.
    Time to start chopping at the top management people

    August 19, 2011 at 7:23 am | Report abuse |
    • Mmmmm

      What do we have here?!?!? a retired postal sellout....you're not on base...they will restructure your retirement...with the cry of bankrupcy...

      August 19, 2011 at 7:36 am | Report abuse |
  13. Jenni

    Hello!!! Did anyone read the article? We get no tax-payer dollars. As someone who had family in the postal service, the employees are not all union workers. Some get no benefits what so ever. The new people are payed just above minimum wage and most that are in haven't had a raise in 10 years due to budget constraints. It is appauling that Congress is making them pay ther 100% up-front when no other agency or business isn't. It is a shame that some postal empoyees have become a joke but my postal workers are the best at what they do. If you don't like the post office you go to complain to the customer service department or go to another post office. Isnt' that what you do with any other business?????

    August 19, 2011 at 7:36 am | Report abuse |
  14. Justin

    I have never met a USPS worker who didn't say it had to be one of the best gigs ever paywise and benefit wise. I mean the entry-level salary for a letter carrier is 19.00 a hour! Thats more than what the vast majority of college graduates make being out of school for 3 years. Plus the benefits! Does this make sense to you? Plus its just like any other government agency where efficieny isnt their strong point, this is because their job is secure as they are apart of a union. This increases the amount of employees necessary and increases overtime payment for the ones that get it.

    August 19, 2011 at 7:43 am | Report abuse |
  15. Buzzwad

    2006? Wonder who was running the country then....?

    August 19, 2011 at 7:44 am | Report abuse |
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