USPS problems go back to 2006 law

March 1, 2013 6:18:54 PM PST
We've heard about the effect of online bill paying and the impact of the great recession as reasons behind the U.S. Postal Service cutting Saturday services. But far less has been reported about a 2006 law that was really a poisoned pill for the Postal Service.

In 2006, the Postal Service wasn't in debt. It was making money and handling a record amount of mail.

But then internet bill paying began cutting into the Postal Service's bread and butter. The great recession pushed revenue down even further and Congress passed the Postal Accountability and Enhancement Act, requiring the USPS to prefund retiree health benefits 75 years into the future and to pay all of that money in the next 10 years.

"The Postal Service is the only agency required to make that retiree healthcare benefit," USPS spokesperson James Wigdel said. "Every other agency is required to pay as you go."

Payment is about $5 billion a year. The USPS put $44 billion into the account before it ran out of dough, went into debt and finally couldn't make the payments.

ABC7 News asked postal customers if they thought funding health care benefits 75 years into the future was good business.

"That sounds a little crazy," one said.

"I probably wouldn't be comfortable with that," said another.

Some progressive reports have tried to make out the funding requirement as a poisoned pill pushed by small government Republicans intended on bankrupting the Postal Service, but two of the three co-sponsors were Democrats, including Henry Waxman of Los Angeles. And that year his biggest financial supporters included the Postal Workers Union, the National Association of Postmasters and the National Rural Letter Carriers Association.

Waxman defends the law, saying the USPS would be worse off without it.

But Friday, he also added this, "Congress should strengthen the Postal Service and put it on a long-term path to sustainability."

Rep. Mike Honda, D-Calif., was more to the point., saying "Retirement obligations imposed by the 2006 law are unprecedented and should be changed to be in line with other agencies".

Last year, the USPS lost nearly $16 billion, but most of that (a little over $11 billion) was because of the Postal Accountability and Enhancement Act of 2006.


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