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.

Post by:
Filed under: U.S.
soundoff (431 Responses)
  1. NelsMN

    "William Demuth" – are you for real? The problem can be resolved and its not the USPS, nor the Union, nor its employees, who have to fix it. USPS is trying to address some of their issues and UPS and FedEx are not without their own issues so that is not the answer. If anyone has a SMART answer to the issues within the USPS, then speak up, the rest of you just mouthing off are just wasting time spewing out ignorant opinions.

    August 19, 2011 at 8:55 am | Report abuse |
    • legman

      BALONEY. You have NO idea what you're talking about. It's ALL a union problem and nothing but. Those people are nothing but lazy bumbs.

      August 19, 2011 at 8:59 am | Report abuse |
    • NelsMN

      "legman" – you are so wrong – I'm QUITE familiar with unions and the USPS. Rushing to blame unions for all of the problems....Please. Nothing is perfect and I'm sure there are enough issues – Union or not – and now I'm not just talking about the USPS.

      August 19, 2011 at 9:02 am | Report abuse |
    • Richard

      If not the employer or the employees, who has to fix it? The consumer? Nobody is going to send more mail than they need to just so the USPS can make ends meet.

      August 19, 2011 at 9:12 am | Report abuse |
    • vfr800cr250

      Lol, Legman is a typical right wing union hater. Can't even spell the insult he hurls. Too funny.

      August 19, 2011 at 9:15 am | Report abuse |
    • Tom

      I read this interesting article some time ago in bloomberg weekly. Anybody intrested in the subject should have a read. I found a link to it

      http://www.businessweek.com/magazine/content/11_23/b4231060885070.htm

      August 19, 2011 at 9:20 am | Report abuse |
    • bob

      NelsMN, you're a paid usps union thug, right, because you can't be serious! THE UNION IS THE PROBLEM - PERIOD!

      August 19, 2011 at 9:31 am | Report abuse |
  2. Postal1

    lol....He's right. Most people don't even read the previous posts.....

    August 19, 2011 at 8:57 am | Report abuse |
    • bob

      you're probably at work typing from your USPS union computer, right?

      August 19, 2011 at 9:29 am | Report abuse |
  3. legman

    I had my own semi truck for 5 years and have been to many BMC's in the Midwest and in Denver, Co. and can tell you that workers at the US Postal Service Bulk Mail Centers (BMC) are THE laziest bumch of union slobs in the American workforce.

    Go to any BMC an all you'll see is a bunch of people ambling around like a bunch of retarded people!!! In Atlanta one time it took a guy 20 minutes to drive his forklift from one side of the building to the other. These lazy clowns don't deserve HALF of what they make in wages – let alone benefits.

    August 19, 2011 at 8:58 am | Report abuse |
    • Postal1

      What? You don't know lazy people in any other places? There are slackers in every workforce, try pointing out something on a larger scale. Let me guess you were running a night shift? Because things are always slower then anyhow.

      August 19, 2011 at 9:01 am | Report abuse |
    • NelsMN

      I'm sure there are lazy truck drivers out there too...so are you one of them? Every industry and business has their share of less than adequate workers, even trucking, lumping everyone into a category is presumptive of you, not to mention wrong.

      August 19, 2011 at 9:04 am | Report abuse |
    • bob

      well, postal1, other businesses may have 5% lazy bums, but you postal types are probably 90% bums.

      August 19, 2011 at 9:28 am | Report abuse |
    • farmerjeani

      I use to work in a truck stop, legman. I say truckers are the laziest workers in the world! They sit on their fat butts all day in their trucks and then moan and groan about how 'hard' they work, sit in the restaurant booth for an hour after they are through eating, rarely tip and then make passes and say obscene things to the women who are doing all the work and are on their feet for 8-10 hour shifts. No not really! But one was like that, so it means you ALL are, right? And if that one guy at the postal service was lazy, that means his co workers had to carry his load as well, so for every one that's not doing his job, another guy is doing twice his. AND, the pay and benefits are not the issue in this case. The top executives of the USPS pay ranges from 113 to 276,000-modest when you consider what executives in private companies make. Prepaying retirements is ridiculous if no other government agency is required to do it. And where are those funds? For all we know it went into the general fund just like social security and have already been spent on other programs! none of us use the mail service like we use to, but do you want to lose it? How would you like to have to pay Fed Ex or UPS every time you wanted to mail a letter. You would have to drive to them instead of having it picked up daily from your mail box and what do you think it would cost-$8-10 a letter? i can mail a letter in Nevada and have it to my sister in California the next day. Last time I sent a registered letter by Fed Ex, about 16 years ago, it was $8.00 then. I don't know if they have regular mail or what they charge for that, but it sure isn't 44 cents! We should be very happy with the low cost and efficiency of the postal service, not going around bashing the folks who do the job.

      August 19, 2011 at 10:04 am | Report abuse |
  4. Postal1

    On another note, the easiest fix it to raise the price of a stamp and shut down Saturday Delivery. Sadly Congress don't seem to care what works. That's nothing new however. Our leaders are worse than ever...... sadly....

    August 19, 2011 at 8:58 am | Report abuse |
    • astuartgirl

      We still have postal service? Why? I avoid the post office like it's the DMV.
      Everything can be done paperless, online or sent FedEx.
      Shut it down and let FedEx or UPS hire them.

      August 19, 2011 at 9:26 am | Report abuse |
  5. Joe in Colorado

    Why not just raise the cost of a stamp to $1 and properly fund their retirement accounts? $1 for having a letter shipped cross-country is very reasonable, and would provide all the funding they need.

    Instead, what they really want is to whine and complain about *having* to properly fund their retirement accounts... which is sort of evil.

    August 19, 2011 at 9:02 am | Report abuse |
  6. legman

    raise you nand if you REALLY think someone deserves $25.00/hour to unload a semi truck, or deliver mail to someone's house.

    Boy, now there's a skilled trade if I ever saw one!!!!!!!!!! Probably requires at least 4 years at Harvard – huh?

    August 19, 2011 at 9:02 am | Report abuse |
    • Sebas56

      I think the $25 I get paid an hour to deliver mail is worth my back pain, carpel tunnel, and skin cancer I suffer with everyday and I am only 34.

      August 19, 2011 at 9:15 am | Report abuse |
    • John

      Why do you care?
      Why do you want other people to make less money and have worse benefits?
      Our entire country has gotten wacked.
      Working people yelling for other working peoples' jobs to be worse.
      Wake up people – they want to privatize the postal service so 1% of the population can get richer while your neighbors get poorer. What the hell is wrong with everyone?

      August 19, 2011 at 9:16 am | Report abuse |
    • vfr800cr250

      I see in another post you drive truck. Do you somehow believe that there's more skill involved there? Self-driving vehicles are being developed right now. What will you do then? Probably whine that you didnt' have a union looking out for your interests while collecting welfare.

      August 19, 2011 at 9:18 am | Report abuse |
    • bob

      Seabas56 is a classic example of a whining union member. Need we say more?

      August 19, 2011 at 9:19 am | Report abuse |
  7. Selymes Csibe

    Sell it to Wall Mart, they will fix it.

    August 19, 2011 at 9:02 am | Report abuse |
  8. Larry

    This is a false issue. The Postal Service needs to do whatever it takes to become profitable. If that means delivering mail three times a week, so be it. When it is critical that something get somewhere quickly, it is going to be sent Fedex or UPS, so this issue is moot. Go to three or four deliveries a week; lay off the appropriate number of workers and move on.

    August 19, 2011 at 9:03 am | Report abuse |
    • Postal1

      The problems go much deeper than pre-funding. Upper tiers of management need to be weeded out for one and the slow offices do need reductions. But Congress is the bigger problem because they refuse to allow decent changes. That is why the USPS is looking for other ways to do this.
      It's obvious that a majority of people posting are jealous of the USPS as well. Sorry we have a good job, but you really rather see me get laid off.... guess what, if that hapens I'll be home with a huge unimployment check... I really don't want that. Lazy, I think not.

      August 19, 2011 at 9:15 am | Report abuse |
    • bob

      postal1, ha, ha, ha, ha..! we're jealous of USPS? you are one demented dimwit! jealous, no, we citizen taxpayers are just tired of paying you overpaid, lazy, whining union thugs! seriously, postal1, get a life...

      August 19, 2011 at 9:25 am | Report abuse |
  9. Richard

    By prefunding at 30%, won't they have to pay the other 70% later? In the old days, when we were growing much more rapidly than we are now (don't have the resources to keep going like that), it might have made sense, since the future contributions (even still at 30%) would be sufficient due to the greater number of contributors. By prefunding at 100%, the future liability is removed, but the transition is what is going to hurt – since the previous underfunding must be made current in addition to the current funding.

    Maybe the solution would be (or would have been) to transition from the 30% prefunding to 100% (or whatever level is appropriate) over time so as to spread out the 'catch up' payments.

    Prefunding at 100% might be more than is necessary – there are a lot of factors that go into what is appropriate. But is 30% sufficient?. The question being asked shouldn't be why does the USPS have to prefund at 100% while every other agency doesn't, but why do the other agencies get off the hook so easy (if 30% is indeed insufficient)?

    August 19, 2011 at 9:08 am | Report abuse |
    • bob

      you are missing the point. the retirement fund is just a smokescreen. the union is the real problem!

      August 19, 2011 at 9:17 am | Report abuse |
  10. Juan Peron

    Well the real life time has come to US Postal Services. Maybe now they realize what the rest of the population outside the postal service is going through with the existent economic situation, jog lost, house lost and the ones that have a job has suffer a pay cut like me of 50% if I one to keep my job and bring food to the table. Every time I go to the post office there is four or five employees walking around, one working and the line of customers of 10, 15 or 20 waiting to be taken care and they act like they are doing you a favor (THEY DON'T REALIZE YOU ARE THE ONE PAYING THEY SALARY.

    August 19, 2011 at 9:09 am | Report abuse |
    • John

      Yea Juan, let's put more people on unemployment, let's make more people live without health insurance or retirement – that's a good idea. You lost your house or took a pay cut – let's make sure everyone loses their house and takes a pay cut.
      Freaking puppet for the rich – you lost your house and took a pay cut so some guy that makes 100 million a year can make 110 million a year, not because postal workers get decent pay and benefits.

      August 19, 2011 at 9:22 am | Report abuse |
  11. ralph bowers

    ALL postal employees need to contact their congressman and tell them to PASS House bill 1351. Fully pre-funding health benefits for retirees (like me) is pure bulls**t

    August 19, 2011 at 9:10 am | Report abuse |
  12. Mr Polite

    There is not much demand these days for the post office. Since we can pay most of our bills online and recieve online statements. The only thing I get in the mail is junk mail. IF I could opt out of that I would!! I could care less if the post office goes under. Less junk that I have to sort through...

    August 19, 2011 at 9:13 am | Report abuse |
    • Well

      Remember that next time you order something from Amazon and the USPS is delivering it.

      August 19, 2011 at 9:17 am | Report abuse |
    • bob

      I couldn't agree with you more. The USPS is like a legal spam/junk mail delivery system, and nothing more.

      August 19, 2011 at 9:21 am | Report abuse |
  13. Thomas

    Gang-busting Unions! Money, Power, and Greed. Plain and simple.

    August 19, 2011 at 9:13 am | Report abuse |
  14. bob

    blaming the retirement fund is just a smokescreen being used to protect the USPS union! i have several former friends that work for the USPS, and they are the most overpaid, laziest bunch of men and women that i've ever met! fire em all and give the jobs to people that want to work!

    August 19, 2011 at 9:15 am | Report abuse |
    • Postal1

      Yep fire us. We'll get the biggest unemployment checks you ever saw. PLEASE, use your heads..... you obviously think one sided.

      August 19, 2011 at 9:17 am | Report abuse |
    • John

      Yea Bob, make everyones' life as miserable and bitter as yours.
      "I don't have it, so NOBODY should have it" – right?
      Unions are the reason six year olds don't work in factories and people in this country make more than $0.43 an hour.
      If you don't realize that you're ignorant, or stupid, I'm guessing the second one.

      August 19, 2011 at 9:30 am | Report abuse |
  15. jayman419

    Your basic stamp has gone up in price 5 times since 2002. It's not the people sending out a boxful of wedding invitations at 44 cents a piece that are bankrupting the system. The yearly fee to send bulk mail should go to $1900, and non-profit rates per piece should end. If you want me to throw away your trash in my lobby, then you should make it worthwhile.

    August 19, 2011 at 9:15 am | Report abuse |
1 2 3 4 5 6 7 8 9 10 11 12 13 14