Are Postal Workers About To Go Postal On Imminent USPS Benefits Default?

Tyler Durden's picture

So far the beyond insolvent US Postal Service has been able to avoid outright bankruptcy simply because no major cash outflows were required by the organization. That is about to change in just under two weeks when the USPS is due to make a $5.5 billion payment for retirement accounts. The problem: the USPS does not have the money and needs a bailout. The bigger problem: the USPS needs Congressional action to authorize this latest and so far greatest USPS bailout, however with Congressional recess imminent this won't happen. So are several hundred thousand postal workers about to go postal once they realize that (earmuffs time for all those who love chanting ideological slogans, but have yet to graduate to the abacus) math matters, and every "welfare-funding" entity in the US is ten times broke over? And maybe most importantly: just how will the postal labor union vote in the upcoming election if indeed they suddenly are denied what they had been lied to for years is rightfully theirs?

From the WSJ:

While lawmakers continue to fight over how to fix the ailing U.S. Postal Service, the agency's money problems are only growing worse.

 

The Postal Service repeated on Wednesday that without congressional action, it will default—a first in its long history, a spokesman said—on a legally required annual $5.5 billion payment, due Aug. 1, into a health-benefits fund for future retirees. Action in Congress isn't likely, as the House prepares to leave for its August recess.

 

The agency said a default on the payment, for 2011, wouldn't directly affect service or its ability to pay employees and suppliers. But "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," said spokesman David Partenheimer.

 

The agency says it will default on its 2012 retiree health payment as well—also roughly $5.5 billion, due Sept. 30—if there is no legislative action by then.

We have covered the extensive woes of the USPS before, but here they are again in summary:

Most everyone agrees the Postal Service needs an overhaul. It had a loss of $3.2 billion in the second quarter of this fiscal year; it is to report third-quarter results on Aug. 9. The agency blames factors including declining mail volumes and the unusual 2006 mandate by Congress that it annually set aside billions for future retirees. But while the Senate has passed legislation to overhaul the agency, the House says it doesn't expect to take up its own proposal until after August.

 

The two sides remain far apart. Senators voted in April, on a bipartisan basis, for legislation that largely shores up the agency's finances by returning an estimated $10.9 billion overpayment made into the federal employee pension system. The legislation limits the agency's ability to close postal branches and stop Saturday delivery.

 

Republican House leaders support legislation they say would require the agency to operate more like a business, in part by setting up a panel to reduce the network of post offices. Some rural-district House members, from both parties, have been worried about closures in their areas.

And here is where we should pay attention, because if the muppets are unable to come to terms over a modest payment which would ensure a key union vote swing in either direction, what does that leave for the fiscal cliff at the end of the year, which as everyone knows by now, is economic armageddon for the country unless at least partially resolved?

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sickofthepunx's picture

thank you lame duck congress of 2006

--UPS and Fedex

Clueless Economist's picture

Postal workers are the among the hardest working Americans. My postal route of about 6 suburban blocks only needs 3 mailmen to service.  I have one guy who drives the truck down the street on Mondays/Thursdays, another Tuesdays/Fridays, and a third on Wednesdays/Saturdays.

If this was a privately run business, I have no doubt it would take a dozen or more strong men to service this route.

In fact it is so grueling, I usually see the postal truck parked behind the shopping center from 11AM-2PM.  Our hard working Postmen and Postwomen need to rest up, so they can get my mail to my box by 2:30/3PM.

ihedgemyhedges's picture

If my postal carrier looked like the chick TD has used for this post, I'd never leave my mailbox.  Alternatively, I'd like to stuff her mailbox as well...............

Pladizow's picture

Id be the one making deliveries to her box.

flacon's picture

Why are employers (any employer) forced to pay for non work-related expenses such as medical, dental, maternity, "pensions" etc? People who are employed ought to be able to buy on their own since these things have nothing to do with productivity of their daily job. 

 

Should employers be forced to pay for clothing, food, and shelter as well? Of course not. So why all these other cash-cow "benefits"?

FEDbuster's picture

Unions and legacy profitability.

Bicycle Repairman's picture

Postal workers have my sympathy, but I'm glad the first test case for cutting retirement benefits involves federal government employees.  If they keep their benefits, then the "let's kick grandma into the street" train stops here.

financial apocalyptic contagion's picture

how long till they start searching through my mail and eat my choclates!

Manthong's picture

BS

The mis-hyped “default” is just underfunding to bring the USPS pensions in line with almost every other pension fund in the country except for the auto workers who got their pensions fund fully funded in Obama’s scam takeovers.

Welcome to the real world of unfunded liabilities.  

This is just another nail in the socialization coffin of the former United States of America.

cbxer55's picture

how long till they start searching through my mail and eat my choclates!

 

Or in my case, smoke my cigars. They better not, that would really piss me off, and I might go postal. ;-)

All the mail carriers should look like Tyler's pic. She could smoke my cigar any time.

A Nanny Moose's picture

I think mine already ate your chocolates, and everybody elses'

How do these people become so rotund doing that much walking acound?

cbxer55's picture

Walking? All of the homes around here have the mailboxes in big brick enclosures out by the curb. They just drive around and rach out the window. Also if there is a vehicle in front of the home which might impedes their access to the box, they just drive on by. They keep driving on by until the vehicle is moved, then deposit however many days worth of mail they skipped.

Walking? RIGHT!

_ConanTheLibertarian_'s picture

Because the government people are all wannabe communists. Think about it. It all makes sense.

Jay Gould Esq.'s picture

It is now likely a foregone conlusion that Saturday delivery will be coming to an end, and yet another rate increase will be in the offing.

j0nx's picture

Just like everything else the banksters have gotten their greedy little hebrew hands around: pay more for less. It's the American way after all.

SilverIsKing's picture

Oh yeah, but I did hear that you love Hebrew National salami.

jumbo maverick's picture

If I was the postmaster general I would say we can no longer deliver mail to your home or business. Everyone gets a post office box at the post office. You come in and pick your mail up. That would save a ton of money.

gtb's picture

That would require a lot of boxes.

Raymond K Hessel's picture

There you go, thinking like a free market person.  

Seriously, you're on the right path.  A cost conscious person with an eye towards profitability is motivated to solve the problem you posed.  This is how all things in our economy should work.

Bravo.

augmister's picture

I volunteer for stamp licking.

Id fight Gandhi's picture

Id just be happy to get my mail undamaged or at all. They're getting really bad lately.

That and they sometimes shit in your yard.

boogerbently's picture

How lazy or/and inept they are is not the point. ALL govt. employee's have that (well deserved) reputation.

They agreed to the job in exchange for the wage, and they agreed to the wage in exchange for the benefits.

Postal workers need to go "postal" on the politicians that misappropriated their funds.

With all the postal employees in all the states, I'm sure they could "clean house" better than any vote could.

toady's picture

That would be a good start.

Add in all the private sector folks whose 401k's are now 201k's (and soon to be 'corzined') and you will REALLY have something.

Both public and private sector personnel have been robbed and lied to... The way I read these comments is the private sector people are jealous that they didn't get benefits in their contracts and public sector people did. Other than that, both public and private are both in the same boat.

All monies they think they have in pensions, 401k's, or other retirement accounts is not there. It may appear to be there in statements they see online, but there will be a bigger pig at the trough if any funds actually materialize.

But keep fighting the public v private battle. It's almost as amusing as the D v R debate!

Taterboy's picture

I would lick her tramp stamp!

Gene Parmesan's picture

Clueless economist is exactly right. I had a friend who started off as a carrier and had to cover routes for others. The message he got from every last person he covered for was to deliver the mail, then figure out a way to kill the next 4 hours before going back to the office. Without exception.

I expect the unions will be making threats and striking as needed to get what they feel is owed to them.

boogerbently's picture

There is an X-ray tech, working at Veterans Hospital that CAN'T be trusted working with female patients......but they CAN'T fire him.

So another tech sits with him......ALL DAY.

Teachers getting paid NOT to work.

These are NOT isolated incidents.

ALL road improvements are chosen based on the benefit to relatives of the politician, a "contributor" to the politician, or, the politician himself.

THIS is what has the deficit so high. NOT low taxes (on ANYONE).

Skateboarder's picture

More people need to start paying attention to CAFRs, like California's, which reveals that Jerry "Let's Bankrupt More Cities" Brown was bullshitting us hardcore about Cali's "deficit."

Skateboarder's picture

As a former cyclist and cycling enthusiast, I have a nostalgic element of association with USPS. Love or hate the organization, the USPS Cycling team that carried Lance Dopestrong and team (Jose Azevedo is a fucking champion lieutenant and deserves most of the credit for Armstrong's victories) was great.

Maybe I've been lucky, but I have yet to have a negative experience with USPS. I would assume that corporation-issued mail (that oft include the prepaid business reply envelope) is the major revenue source for USPS.

Priority mail is cheap as hell. Why would anyone complain...

Id fight Gandhi's picture

I really need sleep, I read that as cyborg.

A Nanny Moose's picture

Mmmm...Better living through chemistry.

Why would a monopoly ever need to advertise on two wheeled, rolling billboards?

PiratePawpaw's picture

"Clueless"...appropriate.

The average route serves between 500 and 1000 deliveries.(your 6 block neighborhood must be very crowded).

"Postal trucks"(also known as LLV's) are usually parked. That is because they are mobile resupply points for the carrier to reload mail from. Most routes are "Park and Loop", the carrier is somewhere within about 10 blocks delivering govt checks and "junk mail" while fighting off dogs because their "clueless" owners wont lock them up.

Businesses in shopping centers get mail too.

City Carriers work 5 out of 6 days on a rotation. For every 5 routes there is a sub(T-6) who carries on their day off. The 6th day is the T-6's day off. This rotation means one week your regular is off Monday, Tuesday the next week, and so on.

jim249's picture

You name says it all. CLUELESS!!! I am a letter carrier and work up to 10 hours a day in what ever weather mother nature throws at us each day. As in any business you get slackers that won't carry their own weight. People like you who throw this kind of crap around are the real low lifes!

Whoa Dammit's picture

Clueless Economist:

You are seeing different mail carriers because most of them are part time employees now, so as to make them inelegible for benefits. 

I would much rather bail out the postal workers than the banksters. Sadly most sheep would not agree, as they are insanely jealous when they perceive that other sheep may get something and they did not. They also rabidly support the wealthy as if one day they will somehow wake up rich themselves.

NooooB's picture

More "Privatization" bullshit. Stealing the valuables from the American people... Again...

 

Postal Accountability Enhancement Act (PAEA), which mandated that the Postal Service would have to fully fund retiree health benefits for future retirees. That’s right. Congress was demanding universal health care coverage.

Congress mandating coverage for future human beings.

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.

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.

Get your facts straight before you peddal your bullshit.

toady's picture

And don't forget the most important part. The 5.5 billion has already been looted, and a maybe we'll pay it back iou is its replacement.

That's why it's so important the money is paid, it's already spent!

Don Levit's picture

Toady: I have written documentation from many reputable sources that the Social Security truist fund money has beeen spent. Can you cite a reputable source regarding the postal service.  I was under the impression it was never funded.

Don Levit

toady's picture

Sorry, no sources to site.

I've just been going on the assumption that all financial systems are 50+ times leveraged since the W years. If anybody thinks they are in the 1/50th part of that relationship, well, good for them.

Jack Sheet's picture

and the $5.5 billion itself was presumably calculated based on an 8.5% return.

dirtbagger's picture

NooooB -

Do you have the numbers for USPS operating profit/loss, excluding contributions to their pension fund.  It is my understanding that the Post Office would still be operating in the red even if they were allowed to fund their pensions at the same rate as other entitites.   

It seems there are some fairly easy ways to cut operating costs by:

1) suspending SAT deliveries (no great loss);

2) Begin requiring neighborhoods to use community style mailboxes;

3) and to start closing or privatizing post offices is backwater communities - we are not in a hores and buggy world anymore and the argument that these communities would be isolated is pure BS - did they forget about the internet, cars, cell phones

Goner's picture

And guess who the real issue is ... Congress. Postmaster General Patrick Donahoe has proposed several cost cutting ideas (like you mention above) such as

Eliminating Saturday delivery, closing up to 3,700 local post offices, most of them in small towns, replacing them with automated centers operating out of local businesses, laying off as many as 120,000 workers, nearly one-fifth of the agency's work force, and pulling workers out of more expensive federal pension plans

But Congress has to approve this and congress does not like to shut off pork. Its like the base closure debates. Not saying the Postal service is efficient or carries no blame but congress is behind it all. Congress has about a 76% negative approval rating and that shocks me because about 17% still seem to think congress is doing a good job

http://www.realclearpolitics.com/epolls/other/congressional_job_approval...

r4back's picture

Nope, there are many articles out there that clearly state that the USPS would have had an operational profit of between $600 & $800 Million over the past 5 years, But there was that ridiculous funding payment to consider.

WillyGroper's picture

yea, compare prices on a padded enveloped mailed in the same state.

USPS $1.85

UPS $19.00

Sure mail volume has slowed due to technology, USPS is far cheaper to mail packages.

The 75 yr. pension funding mandate is more financial engineering by TPTB.

Comay Mierda's picture

the retirement funds have been ZIRPed

battle axe's picture

That is always good, piss off postal workers....I am staying away from the post office.

t_kAyk's picture

Who will keep all these 'postal' workers away from your mail? 

Dr. Richard Head's picture

I don't know about you, but I never have anything come in the mail that I acually want.  I am going to blow up my own mailbox and blame it on some kid in MI.  Can't deliver when no box is there.

mofreedom's picture

Reverse strike!  Do not accept USPS deliveries, and yes, weld your mailbox and mail slots shut.  Reverse strike!  We don't want to pay for this anymore.  Amen!!!

 

WillyGroper's picture

Great idea for the elderly that get their medication that way. 

Oh, right, as long as it doesn't affect you. 

DosZap's picture

That is always good, piss off postal workers....I am staying away from the post office

Always found it odd, that you cannot carry a weapon in the PO.

Even CCP holders,your at risk every trip.

LOL