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TelecomEng

@cisco.com

Here's a better way to fix the Post Office...

Repeal the Postal Accountability and Enhancement Act of 2006 that forces the USPS to fund 75 years of pension costs in the span of nine, you read that right, years.

CXM_Splicer
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2 recommendations

^^^^ THIS ^^^^

Is 100% correct. The current Postal Service problems are caused by a stupid decision that needs to be repealed. No where else does such a requirement exist. It is nothing but the deliberate destruction of the Post Office by congress-critters who will most likely profit directly from its demise.

Where is the bill to require UPS & FedEx to fund their pensions for the next 75 years?

»www.huffingtonpost.com/2012/08/2···211.html

rradina

join:2000-08-08
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You mean FedEx and UPS might have bought lobbied Congress? No! Say it isn't so!


skeechan
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reply to TelecomEng
No way because then they won't be saving the money they owe and they'll accumulate MASSIVE unfunded liabilities which the taxpayers will end up bailing out...just like the rest of the bankrupt government does, now close to $80 trillion in unfunded liabilities.

If they can't pre-fund their promises they shouldn't be promising.

andre2

join:2005-08-24
Brookline, MA
reply to TelecomEng
There is no such requirement. The correct number is 50 years. (But that doesn't work as well with the "forced to fund workers who haven't even been born yet" catchphrase.)

»washingtonexaminer.com/unravelin···/2521473

Also, regarding the notion that the PAEA is an evil Republican plot shoved down the USPS's throat, note the following page

»www.nalc.org/postal/reform/paea_2006.html

from the NALC, one of the major postal unions, showing that everyone involved (both major parties, postal management, AND postal unions) were enthusiastic about PAEA at the time. It was only after the recession struck and mail volume started plummeting that the "evil plot" meme started circulating. Unless the recession itself was part of the plot, but considering it was on Bush's watch, and helped Obama win the 2008 election, that's farfetched.


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reply to rradina
said by rradina:

You mean FedEx and UPS might have bought lobbied Congress? No! Say it isn't so!

Actually supposedly it was. They couldn't compete on postal price so they lobbied and got that. Essentially from what I read, it was set to bleed the postal system dry, thus everyone would have to use fedex, ups or another carrier for postal mail. Then they could just compete to death, winner takes all!
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TelecomEng

@rr.com
reply to skeechan
said by skeechan:

No way because then they won't be saving the money they owe and they'll accumulate MASSIVE unfunded liabilities which the taxpayers will end up bailing out...just like the rest of the bankrupt government does, now close to $80 trillion in unfunded liabilities.

If they can't pre-fund their promises they shouldn't be promising.

Last I read, the USPS is one of better funded pension systems with 100% of the funding required to meet current and future benefits. Apparently they missed some payments in past years, but the numbers showed that they could have skipped payments for many years and the system would have survived for decades just on the interest earned by the current funds. In other words, there was no need for them to pre-fund the pension system.


TelecomEng

@rr.com
reply to andre2
said by andre2:

There is no such requirement. The correct number is 50 years.

I stand corrected.

The original point still stands, though, that the Act in question is a source of the USPS's current fiscal imbalance.

CXM_Splicer
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said by TelecomEng :

said by andre2:

There is no such requirement. The correct number is 50 years.

I stand corrected.

The original point still stands, though, that the Act in question is a source of the USPS's current fiscal imbalance.

Actually, 75 years is the correct number. Some are misstating it as '75 years into the future' but that is not right. The additional 25 years covers the current employees. It has to be funded 50 years into the future and 25 years into the past. Even at 50 years, the catchphrase is still accurate. Someone born this year could grow up, get hired by the post office, and retire after 25 years all by 2056.

The private sector also accumulates massive unfunded liabilities that the tax payers often end up bailing out... shouldn't they also be required to pre-fund?

andre2

join:2005-08-24
Brookline, MA
said by CXM_Splicer:

Actually, 75 years is the correct number. Some are misstating it as '75 years into the future' but that is not right. The additional 25 years covers the current employees. It has to be funded 50 years into the future and 25 years into the past. Even at 50 years, the catchphrase is still accurate. Someone born this year could grow up, get hired by the post office, and retire after 25 years all by 2056.

You should tell this to Fredric Rolando (current NALC president). In the column mentioned in the link, he said
quote:
Moreover, lawmakers set a highly aggressive level -- prefunding for the next 75 years, paid within a decade.

And when the columnist asked the NALC to explain the 75-year figure, they sent nothing. So I don't think they want that misunderstanding to be cleared up, if it is one. If you want, you can email the columnist. There were no substantive posted comments on the article itself.
said by CXM_Splicer:

The private sector also accumulates massive unfunded liabilities that the tax payers often end up bailing out... shouldn't they also be required to pre-fund?

I think pre-funding should be required (in either the public or private sector) whenever it can change whether the taxpayer is on the hook or not. For the vast majority of government agencies, that get funded through taxes (the USPS being one of the few exceptions), pre-funding wouldn't help, since the taxpayer pays for them regardless.


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reply to TelecomEng
There is always need for a dying business to pre-fund a bloated and unsustainable pension system particularly when its failure would ultimately end up being made whole by the taxpayers.

The USPS can't be trusted to be responsible.

CXM_Splicer
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said by skeechan:

There is always need for a dying business to pre-fund a bloated and unsustainable pension system particularly when its failure would ultimately end up being made whole by the taxpayers.

The USPS can't be trusted to be responsible.

If a business knows it is dying what would be the point of pre-funding pensions for people that don't even work there yet? Just don't hire more people. As we can clearly see here, the added burden of pre-funding that far into the future can put a business so far into the red that it is deliberately killed. The post office was not 'dying' before this requirement. They have had their ups and downs like any business but overall they are highly profitable.

@andre2 - It depends on if you are talking about the fund (which considers people's hire dates) or the people (which considers their retirement dates). The law (and my explanation) is addressing the fund. The fund, as you pointed out, was to be financed 50 years into the future (until 2056). That will cover people who retire between 2006 and 2081 (75 years into the future). It is not proper to say the fund needed to be financed 75 years into the future because that would cover people retiring up until 2106. No matter how you slice the numbers, it is a ridiculous requirement that is directly responsible for the post offices' 'losses' since 2006 (two years before the recession started). Revenues were increasing in 2006 & 2007 but the law pushed operating expenses above revenues even in those years. True, in 2008 the recession made it worse but this is a result of the law... not the recession.


TelecomEng

@rr.com
reply to skeechan
said by skeechan:

There is always need for a dying business to pre-fund a bloated and unsustainable pension system particularly when its failure would ultimately end up being made whole by the taxpayers.

The letter carrying side of the business is in decline, but the package side is quite healthy and in recent years has seen a growth trend, so the USPS isn't a "dying business".

The USPS can't be trusted to be responsible.

Based on what facts? Since their pension fund already exceeds projected immediately and medium to long term future needs, you'll have to prove this statement.


skeechan
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Based on the fact that they can't fund their promises while facing a diminishing business. No one believes that if they don't fully fund now, in 10 years when their business has all but evaporated that they would be able to do a pay-go.

I wouldn't care if taxpayers weren't the ones that will have to bailout the union when they go belly up just as they did the UAW.

The USPS can't be trusted just like GM couldn't be trusted, except taxpayers weren't supposed to be on the hook for billions with GM...billions GM still owes while paying out fat bonuses to the very workers that were the beneficiaries of the bailout. I'm not interested in a repeat with the USPS.

CXM_Splicer
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All but evaporated?!? So I presume UPS and FedEx are also going out of business?

There is no one to bail out, they have already pre-funded the benefits of the people they currently have working there. 'Fund their promises'?? I am not sure you understand how the post office works, it is not suppose be a mega-business generating billions in profits every year to go to someone's pocket (although many think it should be). If it were, the cost of a 1st class stamp would be double what it is. They are mandated to be revenue neutral and the price of postage reflects that. The current crisis is suppose to be fixed by Congress raising the rates to bring them back to neutral. So why isn't that happening? The rates are being raised minimally, not enough to correct the problem. That is pretty ironic since once the post office has been destroyed and mail fully privatized, 'first class' postage will be well over a dollar.

Just out of curiosity... when they go 'belly up', what happens to all the money in the pre-funded retirement fund of the people that never got hired (or never reached retirement)? That is going to be in the $10's of billions. Maybe we should just give it to FedEx to compensate them for all the trouble they will have to go through picking up the pieces of our failed government system? I am sure that's what Wall St. would say.