Hidden in Obama’s 2012 Budget: USPS Bailout

As traditional mail volumes decrease and competition from companies like FedEx and UPS increase, the U.S. Postal Service is facing a $2.2 billion net loss in its second quarter.

The agency warned it might default on payments to the federal government at the end of the fiscal year – unless they get a bailout.  President Obama hid a small bailout in his 2012 budget, which would return overpayments to pension funds and allow the Postal Service to reschedule prefunding payments of future health benefits over the next forty years, beginning in 2017.  In other words, $4 billion dollars of “temporary financial relief.”

Allowing the agency to reschedule those payments amounts to money up front and not to be paid back until 2017 – and even then they will have 40 years to pay that back.  Taxpayers are footing the bill now, but won’t get all of that money back until 2057!

This is not the first time that the USPS has needed a bailout.  Just last year the agency was reporting a shortfall of about $7 billion.  At that time, Congress allowed the USPS to reschedule the future retiree health care benefits, which is what President Obama is proposing to do again.  Of course, at that time, APWU President Cliff Guffey had no qualms about blaming Republicans for the USPS’ problems.

“The Postal Service’s financial problems are the direct result of the onerous prefunding requirements of the Postal Accountability and Enhancement Act (PAEA) of 2006.  In fact, without the prefunding mandate, the USPS would have experienced a surplus of $3.7 billion in Fiscal Years 2007-2009, despite the worst recession in 80 years.”

Really Guffey?  A business in the decline reporting a surplus? That’s like saying DVD rental stores would have had a surplus.  The market is simply in less demand.

While the “bailout” discussion was taking place, Congressman Darrell Issa (R-CA) blamed the predicament on labor contract negotiations.  He said in an op-ed:

“Labor costs account for 80 percent of USPS operating expenses.  Yet because of union contracts that contain “no-layoff” clauses, thousands have less than a full day’s work, and some are even paid to sit in empty rooms.”

Taxpayers should not be giving this agency money so that workers can sit around twiddling their thumbs.  Force the unions to consent to lay-offs, and restructure the company.  Rep. Issa made it clear that he would not be a part of another bailout for the U.S. Postal Service, it’s time Congress decide on a way to fix USPS, instead of pouring more money into a failing agency.

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