Wish-a-ton DC: And Now for a Postal Bailout

And Now for a Postal Bailout

Sunday, March 25th at 10:39PM EDT

7 Comments

It’s another week in Washington, and it’s yet another bailout. This time, taxpayers will be tapped for another $41 billion to subsidize the healthcare retirement benefits of postal workers – benefits that are quite scarce in the private sector.

Democrats have a serious problem with creative destruction and advancements in technology. For self-described progressives, they are quite regressive when it comes to efficiency in markets and use of technology. They exhibit nostalgia for 14^th century energy technology and 20^th century banking technology. Hence, they don’t care too much for market progression. In concerted drives to hold back the tide of technology, they are quick to offer a helping hand to a dying industry. One such industry is the mail delivery.

It’s no secret that the United States Postal Service is on its way out. The transition to electronic communication, in conjunction with the success of private mail carriers, has dramatically reduced the demand for their service. Consequently, they no longer generate enough revenue to function as a self-sufficient entity, particularly when it comes to paying employee retirement benefits. In recent years, the USPS has patched the annual losses with borrowed money from the Treasury. However, it is now in such dire straits that it’s expected to hit the $15 billion borrowing cap later this year. It needs extra taxpayer cash to fill in the gaps.

If the USPS were a private entity, it would trim its workforce and operations to the amount of revenue they can produce until they are eventually forced to go out of business. That’s how creative destruction and supply and demand work in the real world. That is not how it works in Washington.

In order to continue operating at a limited capacity, which is what the free-market would dictate in this circumstance, there is a plan to end Saturday delivery, cut the workforce by about 220,000 employees, and close 3,700 local post offices and 252 processing centers. Postmaster General Patrick Donahoe even asked Congress for the flexibility to act more like a business and use innovation to restructure and cut costs. But Democrat nostalgia for the past is too potent to overcome. They are completely averse to gradually winding down the Postal Service. Claire McCaskill has even suggested that people write more letters so that the USPS will have more work.

Once again, a bipartisan group of senators plan to bail out a failing government entity with taxpayer dollars, allowing them to operate, more or less, at current capacity for much longer. S. 1789, which has 2 Republican cosponsors, will grant a $41 billion bailout to the postal service for the purpose of managing the payments of healthcare benefits for its retirees. Harry Reid is planning a cloture vote late Monday afternoon, following a vote to raise taxes on oil companies and hand the proceeds to green energy companies.

As part of the proposal, sponsored by Joe Lieberman, the USPS would be entitled to recoup $11 billion in so-called overpayments that it gave to the Treasury for employees’ retirement benefits held in the Civil Service Retirement System. The problem is that there are no overpayments. Last year, the GAO ruled that the Postal Service was wrong in their assertion that they paid too much money to the Treasury to fund employee retirement benefits. As such, any money recouped from the Treasury would engender more taxpayer funding. Don’t let them fool you with language pertaining to “transfers” and “overpayments.” This is a pure bailout.

It’s time to let the wheels of economic progress spin. Let’s do to the Postal Service what should have been done with Fannie Mae and Freddie Mac. It’s time to attempt to privatize it or wind it down. Either way, taxpayers should not be exposed to more bailouts.

Cross-posted from The Madison Project

7 Comments Leave a comment

Government Has Never Successfully Run a Business

mostlyrightcom Sunday, March 25th at 10:56PM EDT (link)

The United States government has had a virtual monopoly on all things postal since our existence. They have never successfully operated with any margin. To understand the current state in Washington is to understand that those in power actually think government “can” successfully involve themselves in business and be successful. Of course there are several fail programs out their to show them otherwise but alas they fail to see. I write about several failed programs on my site www.mostly-right.com. Check it out.

Jeff

At least it won't survive the House.

mbecker908 (Diary) Sunday, March 25th at 11:10PM EDT (link)

Two Problems with the Story

kelp Sunday, March 25th at 11:19PM EDT (link)

1) No mention of the fact that the Post Office’s problems stem largely (but not entirely) by a mandate from Congress to pre-fund 75 years of retirement benefits in 10 years (2006-2016). Most of the USPS’s unprofitable quarters would have been profitable without this unrealistic requirement.

2) The story states that the bill relies on refunding CSRS money, which is not true. The relevant overpayments are to the FERS fund, not CERS, and are not in dispute. The same GAO report you mentioned even stipulates that surplus (Appendix II).

It's in the Constitution

patman2108 (Diary) Monday, March 26th at 12:41AM EDT (link)

Since establishment of postal offices appears in Article 1, Section 8 of the US Constitution, defunding is not a “constitutional” approach to solving the problem. As much as we reject Obamacare b/c it has no basis in the Constitution, when an entity has such a basis (i.e. postal service), we can’t jump to ending its existence unless by amendment.

/rdc/

Defined Contributions not Benefits

drfredc Monday, March 26th at 1:25AM EDT (link)

The solution to this sort of fiasco is to require the Pension Guarantee Trust board to say to all government pensioners that after X date, they will no longer guarantee defined pension benefit plans and offer a plan for prorated evolvution of all current and future defined benefit plans (retirement and health care) into defined contribution plans.

The political reality is defined benefit plans for politicians, unions and bureaucrats allows them to live in this privileged fantasyland where they can do pretty much anything they want to the private sector and not face the effects for the failures of these fantasies.

If these folks had to rely upon market sensitive defined contribution benefits, they’d quickly turn the corner to support lowering corporate taxes, abandon highly progressive tax schemes, and stop producing costly overbearing regulations, as high taxes and regulations reduce their future retirement benefits.

Always, Fred C

There is a legitimate reason for certain govt employees to have defined-benefit plans....

Dave_A (Diary) Monday, March 26th at 2:28AM EDT (link)

If your government job places you at risk of life/limb on a daily basis – eg, fire, law-enforcement & military… A pension fits…

That said, there’s no reason for someone who’s job is no more dangerous than a clerk at CitiBank to have a pension…

Formerly known as dcacklam – they finally fixed my access to the ‘profile’ page

The problem with the Post Office is that it's half business, half federal agency.

Dave_A (Diary) Monday, March 26th at 2:24AM EDT (link)

The question is, what do we need a Post Office for?

Do we need them as an official/legal method of delivering letters, bills & legal correspondence – and to provide mail & package services for overseas military…

Or do we need them to primarily operate as a private business & parcel-delivery service, in competition with UPS, FedEx, and various local firms….

If it’s the first, then keep them as a federal agency & adjust their size & scope – and the price of their service – to make them efficient at that purpose…. But get rid of the domestic parcel business & the advertising (paper-spam) service – make them for official mail only…

If it’s the second, then privatize & divest – there’s no reason for the government to operate a parcel-delivery company staffed with federal employees.

Formerly known as dcacklam – they finally fixed my access to the ‘profile’ page