Why is the U.S. Postal Service Being Forced into Bankruptcy?

If you listen o the media over the past few years, one would believe that bad and or mismanagement is to blame. When has the government, ever gotten anything right? What you don’t know, will shock you âÂ?¦ The U.S. Postal Service actually has a multi-billion dollar surplus.

On Friday November 15, 2013 the United States Postal Service reported an annual loss of $5 Billion dollars, despite a reported increase in revenue. I will get back to how this $5 billion dollar loss was entirely preventable, a little later in this article. First I want to dispel the biggest myth concerning the U.S. Postal Service.

Source: USPS: http://about.usps.com/who-we-are/financials/welcome.htm

The Internet Myth: The Internet has made the U.S. Postal Service obsolete.

  • 1. Email is responsible for the decline of first class letters. First lets look at how people actually use email. Our children use email and text messages to send short messages to their friends. When I was growing up, thee were no email. We would get home and tie up the phone line talking for hours with the friends we just spent all day at school with. Teenagers mailed off very few letters to their friends, unless they were forced to send a thank you letter for gifts they received.

Adults use email and text messages primarily to send short business related messages, or to briefly communicate with a friend, family member or coworker. Before email and smartphones, a brief phone call would do. I never remember my mother sending me a letter while she was at work to tell me to wash the dishes.

Email had almost zero effect on the U.S. Postal Service. Email affected the phone companies. Remember when you were charged by according to the zone you lived in, when making a phone call? Thanks to email, text messages and unlimited cell phone plans, we now pay a flat rate for unlimited domestic phone calls.

Video chat has also affected international phone rates. Instead of making expensive international phone calls, families can stay in touch instantly at no extra charge to their existing Internet service plan. Those with out Internet access can go to the library or a cyber caf�©.

The decline in letter size mail in the U.S. Postal Service can be traced back to 2007 when the world economy took a nosedive. When businesses started cutting back, they soon got around to their advertising and marketing budget.

The U.S. Postal Service relied on Bulk Business Mail (BBM), which most customers refer to as “junk-mail”. When BBM started to decline, mail volume decreased. Mail volume is how the Postal Service track cost of delivering mail during a fiscal quarter or fiscal year. It also affects the daily delivery scheduling at local offices.

  • 2. Paying bills online is responsible for the decline in first class mail. Before the Internet there were basically three options available pay by mail, pay in person or pay by phone. Believed it or not, people still pay bills by mail. Yes there has been some decline, but not as dramatic as we are lead to believe.

For instance, if you paid by phone you can now pay online or have it directly taken from your checking account. This caused a lot of companies to close their payment centers. Those customers moved to online options. As I pointed out above the real reason is the reduction in BBM.

For example: if 100 customers who paid an average of 5 bills a month by mail switched to an online option the lost to the Postal Service would be $235.00 per month at the first class rate of 0.47 cents per letter. One BBM account could generate thousands per week in revenue.

  • 3. Online shopping is responsible for the decline in overall financial stability of the U.S. Postal Service. This is the biggest myth of them all. Amazon, iTunes and eBay are the saving grace in all of this. When you order something online, it has to be shipped. The Postal Service has had an increase in parcel delivery since the ecommerce boom. I know this first hand. I worked as a letter carrier for 24 years with the U.S. Postal Service. I had a single business fill the back of my Postal Long Life Vehicle (LLV) on several occasions. There were times I had to call into the office for another carrier to come for the over flow.

Another myth attached to this myth is that private industry can do it cheaper and better. Not true. The U.S. Postal Service is the founder of Express Mail Delivery. The Postal Service can deliver any package (within shipping guidelines) from coast to cost in 24 hours. Also the Postal Service can do it for less money. I will let you judge this one for yourself. Below are the links to USPS, UPS and FedEx websites where you can compare shipping cost for yourself.

Source USPS: https://www.usps.com/ship/compare-domestic-services.htm

Source UPS: http://www.ups.com/content/us/en/shipping/cost/zones/continental_us.html

FedEx: https://customcritical.fedex.com/ShippingToolkit/login.jsp;jsessionid=jZ13SRsMt3hm1vMFQqMp2PSQHzjxgdksKy8twfTtzyGfHvmyVm6D!851761680

I’m sorry for the long links, but I want you to know you are going to the actual sites and not some phishing site.

Now lets get to the facts. On May 17, 2011 the United States Postal Service Office Inspector General (USPS-OIG) gave testimony to the U.S. Congress regarding the financial crises of the U.S. Postal Service. First I want to make it clear that the USPS-OIG is not a department of the U.S. Postal Service. The OIG is responsible for auditing the U.S. Postal Service and investigating criminal complaints concerning fraud amongst other criminal acts. Every government agency has an OIG department attached to them.

In the oral testimony Inspector General David C. Williams stated before congress that 90% of the U.S. Postal Service $20 billion dollar loss was directly a result of the 2006 Postal Accountability and Enhancement Act (PAEA). According to Inspector General Williams PAEA was responsible for $18 billion of the $20 billion dollar loss of the U.S. Postal Service. He also details how the U.S. Postal Service could be made profitable.

Source: USPS-OIG: http://www.uspsoig.gov/sites/default/files/document-library/2013/testimony_051711.pdf

Title VIII of PAEA requires the U.S. Postal Service to fund an additional $5 billion dollars each year to the two employee retirement funds. If you recall the first paragraph of this article I told you the U.S. Postal Service reported a $5 billion dollar loss? It could just be a coincidence.

According to the USPS-OIG Report Number FT-MA-13-024 dated September 27, 2013 this may not be such a coincidence at all. The Office of Personnel Management (OPM) a $3 billion dollar surplus in the U.S. Postal Service Federal Employee Retirement System (FERS), as of September 30, 2013. Using the Postal Service-specific actuarial assumptions the surplus would be increased to $12.5 billion dollars. This doesn’t address any overpayment to the entire U.S. Postal Service Civil Servant Retirement System (CSRS).

Source: USPS-OIG: http://www.uspsoig.gov/sites/default/files/document-library-files/2013/ft-ma-13-024.pdf

Source: U.S. Government Printing Office (GPO): http://www.gpo.gov/fdsys/pkg/BILLS-109hr6407enr/pdf/BILLS-109hr6407enr.pdf

On January 20, 2010 the USPS-OIG Risk Analysis Research Center Report Number: RARC-WP-10-001, reported that the overpayment by the Postal Service in 2012 was $78 billion dollars.

Source: USPS-OIG:

http://www.uspsoig.gov/sites/default/files/document-library-files/2013/RARC-WP-10-001.pdf

Can you imagine having $78 billion dollars, and having a debt of $5 billion dollars and not being able to cover that obligation? Some in congress say that refunding the overpayment to the Postal Service is a taxpayer bailout. Yet the funds are sitting unused in the Postal retirement funds. The cost of returning the overpayment to the Postal Service is zero to the taxpayers.

On May 17, 1011 in oral testimony to Congress the USPS-OIG reported the overpayment by the U.S. Postal Service at $82 billion dollars.

Source: USPS-OIG: http://www.uspsoig.gov/sites/default/files/document-library/2013/testimony_051711.pdf

There are others in congress that say the overpayment doesn’t exist. For that to be true USPS Inspector General David C. Williams and everyone on his staff have committed perjury before Congress. If this is true, why haven’t anyone been charged with perjury before a Congressional Committee? The USPS-OIG, like all OIG Departments are charged with reporting the factual financial health to Congress.

The USPS-OIG has not backed down once from its report of the Postal Service overpayment to CSRS. In fact on August 06, 2009 the USPS-OIG in oral testimony to Congress stated that the U.S. Postal Service is not part of the Federal Budget, doesn’t receive funding of any type from the Federal Government nor U.S. taxpayers. The U.S. Postal Service is funded 100% from sales of Postal Services.

Inspector Williams further stated that by continuing to force the U.S. Postal Service to borrow to meet its financial obligations, places the solvency of the U.S. Postal Service at risk. “Borrowing to pay a debt that will be incurred in the future is a controversial practice – not seen in business or government.”

Source USPS-OIG: http://www.uspsoig.gov/sites/default/files/document-library/2013/testimony_080609.pdf

I know I threw a lot at you. I documented every source I used and I linked you to the original source so you can review the facts for yourself. These documents are available to the public, the media and lawmakers free of charge. There is no excuse for misinformation and even disgraceful for lawmakers to release disinformation.

Even if you believe that the U.S. Postal Service is grossly mismanaged, then how do you explain the 2013 financial report shows that the U.S. Postal Service loss of $5 billion dollars could have been offset to zero if the PAEA obligation of $5 billion dollars wasn’t imposed on it? The Postal Service would have broken even this last fiscal year.

Source: USPS: http://about.usps.com/who-we-are/financials/10k-reports/fy2013.pdf

For some unknown reason there are members of Congress who are intent on destroying the U.S. Postal Service by forcing it into bankruptcy. There is zero benefit to privatizing the U.S. Postal Service. The current cost to the U.S. taxpayer is zero. If the Postal Service defaults the taxpayers will shoulder the entire cost.

To date the only people paying for the U.S. Postal Service are those who use their services. So even if you never use the Postal Service, this should infuriate you even more, you will pay the cost of the destruction of the U.S. Postal Service.

I challenge those in Congress who believe otherwise to bring forth proof that the USPS-OIG testimony, reports and findings are false or flawed. If the U.S. Postal Service goes under, the U.S. taxpayers will be dragged down with it. We will be left to pay the bill.

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