GOP and the US Postal Service: No, It's Not Raining

[peristaltor.livejournal.com]

When last I ranted I promised to share any "gems" I found in the 2012 Republican Party Platform. I don't like posting too often, but traipsing across this item just got my blood boiling. Let's read:

Restructuring the U.S. Postal Service for the Twenty-First Century

The dire financial circumstances of the Postal Service require dramatic restructuring. In a world of rapidly advancing telecommunications, mail delivery from the era of the Pony Express cannot long survive. We call on Congress to restructure the Service to ensure the continuance of its essential function of delivering mail while preparing for the downsizing made inevitable by the advance of internet communication. In light of the Postal Service’s seriously underfunded pension system, Congress should explore a greater role for private enterprise in appropriate aspects of the mail-processing system.

Let's take this bold paragraph bit by bit, shall we? The very first sentence notes "dire financial circumstances." How dire are these, we should ask. According to the New York Times, the agency is caught in a classic bind, with its revenues falling due to growing internet traffic taking over communications previously carried over letter, and "decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs."

Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

Wow, this sounds serious, doesn't it? Shouldn't something be done?!? Why are we still using "mail delivery from the era of the Pony Express" anyway? Aren't we a modern people here in these United States?

Hold on, Sunshine. Let's look at what might be happening beyond the hype. First, yes, labor is a much larger component to USPS operations compared to that of its two largest "competitors." (I put that last word in scare quotes for a reason to which I shall later return.) After all, both of the private delivery companies operate on a less-than-day-to-day basis for a majority of Americans, while the USPS delivers to every home and business almost every day. While all the delivery players operate fleets of trucks, driving mail literally from home to home in a dense urban setting is silly; it makes far more sense to drive the bulk of the mail to near the recipients, then walk the letters with the hired carriers. This increases the travel time for each letter, yes; but such a situation is unavoidable with, again, every addressed served every mail day.

Let's also not forget that both of the private operations operate more expensive vehicles than the USPS. I see both Fed Ex and UPS jets daily here at home under the final approach to Boeing Field, the busiest general purpose airfield in the country and an air hub for both big private delivery ops. By contrast, since they don't handle nearly as much overnight and time-sensitive deliveries, the USPS contracts air service with private carriers. Your letters fit nicely in the luggage hold of passenger planes, and for much less money than Fed Ex and UPS spend on their jets. That's a huge equipment advantage for the Postal folks, equipment that takes a bigger percentage-wise chunk from the final budgets of the big private two.

I don't mean to say with the above paragraph that the USPS doesn't pay well, but it turns out they don't pay nearly as much as the percentage of labor as cost per organization cited in the NY Times would lead one to believe. Here's a table showing comparisons between pay rates from a year ago. As Moshe Adler points out, that means "a UPS delivery driver earns 15% more in wages and 59% more in benefits than a postal service letter carrier." (I emphasized.) Adler continues, noting of the other guy,

The pay of Fed Ex delivery drivers is lower than even that of postal service letter carriers, but that only means that Fed Ex workers are even more grossly underpaid and an article about these workers and the anti-unionization activities that Fed Ex engages in against them would have been both more interesting and more fitting for Labor Day.

No, you're not going to find the answer to this seeming crisis by looking only at the first half of the GOP plank. Keep reading to this section: "In light of the Postal Service’s seriously underfunded pension system. . . ." Here is where the lies begin in earnest.

---

In 2006, a Republican-dominated House and Senate passed a bill signed into law by the most conservative president in our country's recent history, the Postal Accountability and Enhancement Act. Among regulatory changes to postal rate change authority (I wish I knew more about that; I suspect the new regulators would be able to thwart stamp price increases), the Wiki cites this doozy of a provision:

The PAEA stipulates that the USPS is to take any surplus at the end of a fiscal year, and put that amount into the Postal Service Retiree Health Benefits Fund to prepay for employees retirement costing the USPS a total of 500 billion dollars between 2007 and 2015.

(How could I not emphasize and underline?)

That's right. The Post Office is the only agency in the entire country required to prepay employee retirement and health benefits for 75 years in only 8 years. Allison Kilkenny discusses this unprecedented requirement:

Perhaps it was its booming history that first drew Congress' attention to the Postal Service in 2006 when it passed the Postal Accountability Enhancement Act (PAEA), which mandated that the Postal Service would have to fully fund retiree health benefits for future retirees. . . .

"It's almost hard to comprehend what they're talking about, but basically they said that the Postal Service would have to fully fund future retirees' health benefits for the next 75 years and they would have to do it within a ten-year window," says Chuck Zlatkin, political director of the New York Metro Area Postal Union.

It was an impossible order, and strangely, a task unshared by any other government service, agency, corporation or organization within the United States. The act meant that every September 30th, the USPS had to cough up $5.5 billion to the Treasury for the pre-funding of future retirees' health benefits, meaning the Postal Service pays for employees 75 years into the future. The USPS is funding the retirement packages of people who haven't even been born yet.

(Me doing that again.)

It gets worse. According to the article, the USPS has actually been overpaying its existing retirement benefits, one of the few organizations that has done this. After some audits, it was suggested that these overpayments be applied to the $75 billion total to relieve some of the crushing debt that is currently forcing the agency to close offices and curtail service. These suggestions have been turned into pending legislation, H.R. 1351, the United States Postal Service Pension Obligation Recalculation and Restoration Act of 2011:

But there are political opponents that have no desire to see the USPS survive what is, for all intents and purposes, a stupid accounting maneuver. Namely, the GOP and moderate Democrats were the players behind the PAEA, and are now the same forces peddling the narrative that the Postal Service is broke, the union too demanding and the only solution is cuts, cuts and, oh yes, more cuts.

Speaking of cutting, Kilkenny also notes that further legislation is pending which would continue the USPS destruction already underway.

[Representative Darrel] Issa introduced the Postal Reform Act to Congress, a bill that Zlatkin says would "Wisconsin" the Postal Service. "[The bill would] give them the kinds of powers that the Super Committee is having to just go in there temporarily and do what has to be done: rip into the contracts, close post offices without hearings. It's basically the Postal Service Destruction Act." The bill has one co-sponsor: Dennis Ross. And both men just happen to be in charge of the House Oversight Committee. Between the "Save The Postal Service" H.R. 1351 and the Postal Service Destruction Act, Zlatkin asks rhetorically, "which is gonna come to a vote?"

Whether or not it comes to a vote, I very much doubt our current president would sign it. That doesn't much matter, though, since the bill and its Senate counterpart (no. 1625, introduced by John McCain) would need to both be passed and reconciled before signing.

---

So what might be a possible end game with the GOP tampering with the USPS? In a word, it's unions. After all, the USPS is the second largest employer in the country behind Walmart:

[H]ere we have a service that . . . employs over 574,000 union members. No wonder it became such a mouth-watering target for the GOP. It would be quite a feather in the cap of Darrell "the liberal hunter" Issa to take out one of the largest unions in the country and simultaneously give the US a nudge in the direction of total privatization by crippling one of the last great public services.

What Scott Walker did to the unions in Wisconsin is just a preview to the assault on worker organization the GOP in general opposes. And as the Party platform promises, the union jobs lost to the Post Office will, should the GOP get their way, provide an opening for "a greater role for private enterprise. . . ."

It's the last portion of that last plank sentence that might be the GOP's undoing, though. What exactly might they mean by "in appropriate aspects of the mail-processing system"? It turns out that the Founders intended the Postal Service not as a cash cow, but as a necessary service, and included its authorization in Article One. Courts have interpreted this mandate as an exclusive one; only the Post Office may deliver a letter in the US. FedEx and UPS get around this provision only by adding cost; they package the letters they might deliver in a package, meaning they aren't technically letters after they have been stuffed into cardboard envelopes. How many in the US will tolerate additional packaging—and the added costs inherent therein—just so a private carrier can legally handle postcards and Xmas greetings?

Despite this promised gloom and doom from the Elephants in the room, I prefer to take a long-term view of the future here. Yes, the Republican Party might be gunning to eliminate minimum wages in the Pacific Territories and postal worker unions; but in the future, these acts will only slow the inevitable. Legislate as they might, Lincoln was right. "Labor is prior to, and independent of, capital." And when the Baby Boomers start retiring in earnest (as they already are), there won't be enough replacement workers to fill their jobs.

The sheer number of boomers destroyed the labor movement by diluting the bargaining power of each worker. The GOP knows this, and is pre-emptively attempting to gut worker collective bargaining before the absence the boomers will create helps worker bargaining traction. They can try, but I doubt it will work. It doesn't matter if future jobs are union or no, if they suck, they will be left unfilled.

I'm going to stop reading this Platform thing for a while. It's too full of the stoopid, if not of the Pure Evil.

Comments

[telemann.livejournal.com]

I wished the post office would do a serious fee increase for 1st class stamps, As a tax payer, I don't mind a significant increase for their services, this one and two cent increase every other year is for the birds. I would rather pay that versus hefty fees for what Fed-Ex or UPS would charge (and please spare me any arguments about how cheaper those services would be if the post offices monopoly on first class mail was removed. Consumer Reports did a study on it and said what the Post Office does compared to those companies is a bargain).

[peristaltor.livejournal.com]

Yes, I would pay more for stamps to avoid giving Fred Smith any money at all. :-)

[mutive.livejournal.com]

Agreed. Having to pay, say, $1 to mail a letter would not break me. (And I suspect they'd be fine even if they charged only, let's say, $.65 vs. their current $.45 or whatever it is.) It's a really easy solution.

[badlydrawnjeff.livejournal.com]

Ugh.

Okay, first things first. From your Wikipedia link: "The PAEA stipulates that the USPS is to take any surplus at the end of a fiscal year, and put that amount into the Postal Service Retiree Health Benefits Fund to prepay for employees retirement costing the USPS a total of 500 billion dollars between 2007 and 2015."

This means that it's not coming out of general operating revenues. It's coming from surpluses. It's hard to feel bad that an agency has to spend its surpluses on something.

Second, so what if it's unique that the postal service is being told to prepay the health and pension benefits? They benefit from a postal monopoly, so they don't have to worry about competition, and they're part of an unsustainable model anyway, so this is an attempt to make sure they're set up for when they invariably don't exist again. I don't necessarily support this action, mind you, but it's not crazy.

The USPS issue is, somewhat, about unions. Mostly because the unions share a significant amount of the blame in the eventual, unavoidable insolvency of the postal service in it's current incarnation. The union model preserves a 1950s model of employment in a 2010s atmosphere, and it's simply not appropriate anymore. When the USPS is saddled with as much pension and labor costs as it is, it needs to be blown up, and fast.

Privatize the postal service.

EDIT: Forgot to add this WaPo editorial (http://www.washingtonpost.com/opinions/postal-disservice/2012/07/08/gJQAGi3kWW_story.html). When you can't get the WaPo board behind you...

The retiree fund payment is not causing the Postal Service’s collapse. Its essential problem can also be stated simply: Because of technological change, the volume of first-class mail is plummeting, with no end in sight. Yet the Postal Service remains geared to the demands of a bygone age, burdened by a large network of little-used post offices and mail-processing centers, as well as a unionized work force of more than half a million people. The union labor contracts insulate workers from layoffs and guarantee them more generous health-care benefits than the general public, or even other federal workers, receive. This is not a sustainable system.

[peristaltor.livejournal.com]

For different reasons, I second your Ugh.

The WaPo has become so beholden to the right it's sickening. For example, the article from your link said this:

Congress is working on the issue, though efforts thus far do not inspire confidence that lawmakers can or will overcome entrenched interest groups that benefit from the Postal Service status quo. The House’s relatively realistic approach would empower a commission to decide on closing postal facilities, on the model of the military base-closing efforts of recent years. It would allow the Postal Service to move more quickly to five-day delivery and bar no-layoff clauses in labor agreements.

Which House effort is this? It certainly isn't H.R. 1351, which would at least make the pension pre-payment affordable. Interesting they didn't mention this. Actually, it's telling. Why the paper's ever cited as an example of "liberal" media is beyond me.

Furthermore, Moshe Adler (http://www.counterpunch.org/2011/09/09/targeting-the-post-office/) notes that, despite the "no-layoff clauses" in their contract, the Service has reduced its workforce by 25% over the last decade (probably due to contraction and retirement attrition). It is shrinking to meet the future demands, just not fast enough to satisfy the anti-worker bent of the current GOP.

I, too, was puzzled by the Wiki talk of "surpluses" doing the pre-funding. If that were the case, there would be no huge controversy over "missing payments" and "default." I suspect the true language would be more akin to "surpluses or whatever's left after the surplus is drained." Leave it to Wiki to confuse matters. I'm sure tomorrow it will be accurate, though before we check it again and after it's been restored to silly.

Privatize the postal service.

That's what the GOP is trying to do, yes. The question is more what it will look like if they try. From Adler again:

By law the post office cannot raise its prices beyond the consumer price index even though the increases in the components of its costs far exceed the increases in the consumer price index. The post office often operates branches in suburban or rural communities where the number of customers is very small. In addition, while because of the internet the volume of the mail has been decreasing, the number of addresses that it delivers to has nevertheless been increasing because of the growing number of households.

To change that last point would be to violate the Constitution in ways the founders would find objectionable. The entire reason behind the postal service was to knit the entire country together with a reliable means of communication, even to rural areas not always served by our intertubes. Oh, and it's the rural areas that have exploded in the last decades, further raising their costs.

Which is why the service was subsidized by taxes until 1982. They've had to fund themselves since the Reagan years. I'm sure it was disappointing to the GOP even then that they didn't implode way back then, and required another head shove in the bucket to hasten their untimely demise.

[mylaptopisevil.livejournal.com]

This means that it's not coming out of general operating revenues. It's coming from surpluses. It's hard to feel bad that an agency has to spend its surpluses on something.

like taxes?

[nevermind6794.livejournal.com]

This means that it's not coming out of general operating revenues. It's coming from surpluses. It's hard to feel bad that an agency has to spend its surpluses on something.

No, it means that any operational surplus must go toward prepayment rather than investment in increased efficiency. You're also misunderstanding what that line means - the payments are not solely made up of surpluses, they are fixed amounts. That's why the USPS has financial losses - as opposed to operational losses - and still has to make these payments. They've actually had operational profits the whole time (though they're shrinking), but this bizarre requirement of prepayment is the sole reason for their overall losses.

[737-700.livejournal.com]

The only monopoly they have is first class, they have to compete on every other level, such as express mail.

[underlankers.livejournal.com]

Honestly, at the rate the GOP's working the only government we'll have will be the Department of Homeland Security and the Department of Defense. And if hardliners get their way we're likely to even privatize our armed forces. It's like the Bizarro version of anarchism.

[peristaltor.livejournal.com]

Yes, the Bizarro version of anarchism could properly be labeled corporatism.

[curseangel.livejournal.com]

I really like this post. I feel that what the GOP is trying to do to the USPS is unconscionable and, well, frankly just stupid. I love the USPS, and I really hope somehow the Democrats can save it from the GOP's privatization "we love the rich and fuck everybody else" bullshit. :\

[root-fu.livejournal.com]

Good post. [:

I for one applaud the prepayment of pension plans to a certain degree. If a persons paycheck says they're paying taxes for social security, those funds should go to social security as opposed to being exchanged for treasury bills which are put into a social security surplus then spent on wars in afghanistan and iraq with successive generations left to pick up the tab.

There could be parallels drawn between the USPS and healthcare. Our fearless leaders are claiming to fix both issues whilst simultaneously screwing us with industrial strength battering rams. Its not just a job for us its an adventure and a lifestyle.

[peristaltor.livejournal.com]

Thanks!

Prepayment is one thing; ridiculous levels of pre-payment and the threat of dissolution if the ridiculous levels aren't met is quite another. There's also the issue of who controls the pension money, and research ancillary to this post suggested a shit-storm brewing, thanks to legislation also passed in 2006. Seriously, the number of tangible threats to the Union passed by the 2006 legislature is shockingly high.

[root-fu.livejournal.com]

Oh, let's not forget the rise of the machines threatens fedex, ups & the usps (http://www.danshapiro.com/blog/2012/09/tacocopter-basics/).

They can lift 50 lbs of vodka & air lift cargo to your doorstep.

[peristaltor.livejournal.com]

If that thing's the future, my mail carrier's job seems safe . . . unlike anyone around when things get gusty.

[sophia-sadek.livejournal.com]

That video looks like a modern day Kitty Hawk flight.

[yes-justice.livejournal.com]

Hmm. I doubt the FAA would allow it, outside a field.

I don't really want amateurs dropping kegs on power lines, causing traffic accidents. etc.

[ofbg.livejournal.com]

The biggest competition for USPS is not the package delivery business, but the electronic communication business. Fax, Email, Texting, Twitter and some others I can't think of at this time (dinnertime) are killing the 1st class mail, the primary function for the Postal Service.

They can't survive on Christ-mas cards alone in this increasingly secular society.

[gunslnger.livejournal.com]

Electronic bill delivery and payment is the biggest, I would say. I still get my bills on paper, but if I didn't, I could ignore all my mail as junk.

[peristaltor.livejournal.com]

That's why they've been contracting in recent years, losing 25% of the work force (probably through attrition and retirement) in the last decade. They just haven't been shrinking fast enough to satisfy the GOP.

And add to your list ruralization, which increases the cost of every delivered letter. I don't think it will continue to be a factor, but for now it's taking a big bite out of the cost of every stamp.

[yes-justice.livejournal.com]

Hmm. So, its Al Gore's fault?

[musicpsych.livejournal.com]

I dislike it when people use stats like "Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors" to make points, just because it can be misleading. How much do the three groups spend in marketing? How much goes to executive compensation? I don't necessarily see the 80 percent thing as being bad.

[telemann.livejournal.com]

Really. The head of the USPS makes much much less than the CEOs of Fed Ex and other delivery companies. Hell, even Forbes was singing the praises of how efficient the Post Office is:

And the Post Office has been fantastically good at operational improvements. Literally billions of items are processed every week (about 700million/day;) picked up, sorted and distributed across one of the physically largest countries in the world. The distance from Anchorage to Miami covers a staggering 5,100 miles, and works out to a miniscule .009 cent/mile for a first class letter! Compare that to Pony Express pricing (in 1860 $10/oz and 10 days Missouri to California,) and adjusted for inflation you’ll be hard pressed to find any business that has continually improved its service, at ever lower (constantly declining when adjusted for inflation) prices.

[mylaptopisevil.livejournal.com]

Agreed.

[mikeyxw.livejournal.com]

The USPS is not putting away the money that will be used to fund pensions for the next 75 years, this is nonsense. When a pension fund determines how much they need to collect vs how much they want to pay out, they need to pick a point in time to say that they will plan for. For the USPS, they are planning for 75 years in the future. This means that the amount they collect will be based on how much they expect to collect over the next 75 years vs how much they will pay over the next 75 years.

Postal workers would like a shorter timeline as this would mean less would be contributed to their pension fund and therefore more would be available for compensation today. Of course, this would mean the pension fund would need to make up a gap in the future.

The Republicans are really making sure the USPS' pension fund is solid enough that it won't require a taxpayer bailout. Evil, eh?

[dwer.livejournal.com]

I'd like to see documentation for your assertion. That the USPS is being required to save money for pensions of workers who haven't even been born yet has been pretty well established.