If a smidgen of suspense lingered earlier today about whether much of the government would shut down tomorrow, there was never the slightest doubt that the U.S. Postal Service would skip a legally required retiree health care payment for the third straight year.
Pretty much ever since the Postal Service defaulted on the 2012 payment, USPS leaders have been warning they would miss the $5.6 billion obligation due by midnight tonight; in another 15 minutes or so, the agency will officially be in default. Unlike past years, however, when an anxious Congress either cut the amount of the annual installment or pushed back the deadline, this year’s no-show routine now seems . . . routine.
But Sens. Tom Carper, D-Del., and Tom Coburn, R-Okla., sponsors of a Senate bill that would give the Postal Service some relief on the “prepayment” requirement, put out a joint statement calling the default a reminder of the agency’s broader financial woes. After holding two hearings on the bill earlier this month, Carper said, “I hope to move our bipartisan legislation swiftly through our committee and onto the Senate floor for a vote as soon as possible.”
The current pre-funding schedule is laid out in the 2006 Postal Accountability and Enhancement Act. According to numbers included in a Government Accountability Office report, the agency has made $17.9 billion in required payments and-as of tomorrow–will have defaulted on $16.7 billion worth.
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It is rather telling that Mr. Reilly doesn’t notice that his calculation of USPS’ contributions to its Retiree Health Benefit Fund (PSRHBF) is off by around $30 billion. It is telling, but not surprising, given Mr. Reilly’s low information approach to reporting on postal financial affairs. Since the balance in PSRHBF is around $49 billion and Reilly cluelessly accounts for only $17.9 billion of it, one wonders where the rest of it came from. Why, the truth is that USPS also contributed $3 billion in 2006 from the escrow account where it had deposited the money left over from the change in its pension contribution, after the Government Accounting Office audit revealed massive surpluses in its pension funds. USPS also contributed $17 billion in “start-up funds” that were refunded from its massive pension surpluses. The rest is interest on the loan of these funds to the US Treasury.
It is better to know what one is talking about rather than not having any idea, don;t you think, Mr. Reilly?
Dear Mr. Skye:
Thank you for reading Federal Times and for contributing to the conversation on an important issue. I would note, however, that I was referring only to the Postal Service’s record in meeting the annual payment schedule laid out in the PAEA, and was thus not attempting to provide a comprehensive analysis of the condition of the PSRHBF. My apologies if I didn’t make that clear, but anyone wanting a “full-information” picture can click on the GAO link that I provided in the post (go to page 14). A quick question: What is your source for the $49 billion figure? The GAO report (from last December) puts the balance at $45.7 billion and the Postal Service (in its latest quarterly report) states that the fund has $33.9 billion. There are obviously different ways to arrive at a total, but I’d be interested in knowing what your baseline is.
Sincerely,
Sean Reilly
Federal Times
Both great points but they each miss the bigger picture.. Where is the cash? The billions given to the treasury have been replaced with bonds? Who spent it? Also back in 03-06 when it was discovered that the USPS have overpaid it’s pensions and Congress had to pay back the 75 billion why did they pass the PAEA? Iit just so happens that the PO was then forced to prefund around 75 Billion.. Just happen to be close to the same amount the treasury had to pay back. Maybe this is why the USPS is the only company in the nation that has to prefund 100%. Whats even more concerning is.. How many Postal employees will be around 75 years from now? Unless all 475k employees( the ones who receive bennies) are all 6 month old babies.. Im thinking this is all a shell game.. In fact you are aware that current employees bennies are funded from current revenue right? So the guy retireing today is paid from current and not even this prefunding account.. Just my two cents.. Also look up the whole military pension issue back in 03 when they tried to get the USPS to cover DOD responsilities (27 billion worth)