Reality Check: How to fix the postal service's financial problems
A lot of comments on last night's Reality Check and among those comments, suggestions on how to fix the immediate financial problems the U.S.P.S. is facing.
But will those ideas work?
Let's take a look.
Point number 1: the United States Postal Service is the only federal agency or private company required to pre-fund retiree health benefits for 75 years.
That is true.
I told you last night that according to the funding act signed by President Bush in 2006, the Postal Service must set aside some $5.5 billion dollars every year for retiree health benefits. It is correct that no other federal agency is required to fund health pensions 75 years out.
According to MSN Money, if that requirement were not in place, the U.S.P.S. would have earned a surplus of over $600 million during the last four years.
But there is more, the Postal Service and the Postal Service Inspector General estimate that the U.S.P.S. has over-funded the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) by $75 billion dollars.
The Postal Regulatory Commission has independently estimated the overfunding of CSRS at $50 billion or more.
So, to fix these problems, a bill has been introduced to Congress called the "United States Postal Service Pension Obligation Recalculation and Restoration Act of 2011."
A long title that simply means, money can be taken out of the overpayment of the retirement system and the health pensions and put back into agency.
H.R. 1351, has 193 co-sponsors, including members of both parties.
The other important point here, the postal service is not funded by taxpayer dollars. All of this funding is from the profits of the postal service.
Here's what you need to know.
The immediate answer to the Postal Service's problems certainly may be to reallocate funding from retirement and back into the agency. It is a plan that makes a lot of common sense.
But, what also makes sense, changing the model of how the postal service operates and allowing it to keep up with the Internet.
A quick example, Devin Leonard with Bloomberg Business Week points out that in other countries postal services let people pay bills online and even scan mail and send it to customers online.
In Sweden, people can take pictures on their phones and turn them into postcards. People can use their phones to send letters without stamps.
Fixing financial problems in the short-term is one thing but fixing the long-term problem of an antiquated business model is another.