The Bailout Of The US Postal Service Begins: Cost To Taxpayers - $110,000 Per Union Vote "Saved Or Gained"

Tyler Durden's picture

A week ago, when reading between the lines of what had heretofore been considered an inevitable USPS episode of austerity in which hundreds of thousands of labor union workers would lose their jobs but in the process would streamline a thoroughly outdated and inefficient US Postal Office bureaucracy, we asked if a US Postal Service bailout was imminent, focusing on the following: "Enter Ron Bloom, Lazard, and the very same crew that ended up getting a taxpayer funded bailout for GM. From the WSJ: "The Postal Service's proposal to close thousands of post offices and cut back on the number of days that mail is delivered "won't work" and would accelerate the agency's decline, according to the six-page report by Ron Bloom, President Barack Obama's former auto czar, and investment bank Lazard Ltd., LAZ who were hired by the union in October." That's right: after all the huffing and puffing about "sacrifice" and austerity, the labor union took one long look at the only option... and asked what other option is there." The other option, it turns out courtesy of news from AP, is the first of many incremental bail outs of the US Postal Office, better known in pre-election circles as hundreds of thousands of unionized votes up for the taking, and which could be bought for the low low price of $11 billion in taxpayer money, or $110,000 per vote! And so the latest bailout of yet another terminally inefficient and outdated government entity begins.

 From AP:

The Senate offered a lifeline to the nearly bankrupt U.S. Postal Service on Wednesday, voting to give the struggling agency an $11 billion cash infusion while delaying controversial decisions on closing post offices and ending Saturday delivery.


By a 62-37 vote, senators approved a measure which had divided mostly along rural-urban lines. Over the past several weeks, the bill was modified more than a dozen times, adding new restrictions on closings and cuts to service that rural-state senators said would hurt their communities the most.


The issue now goes to the House, which has yet to consider a separate version of the bill.


"The Postal Service is an iconic American institution that still delivers 500 million pieces of mail a day and sustains 8 million jobs," said Sen. Joe Lieberman, I-Conn., a bill co-sponsor. "This legislation will change the USPS so it can stay alive throughout the 21st century."

One would think that the USPS workers would be delighted as a result... One would be wrong. This is merely the beginning:

The mail agency, however, criticized the measure, saying it fell far short in stemming financial losses. Postmaster General Patrick Donahoe said if the bill became law, he would have to return to Congress in a few years to get emergency help.


"It is totally inappropriate in these economic times to keep unneeded facilities open. There is simply not enough mail in our system today," the Postal Service's board of governors said in a statement. "It is also inappropriate to delay the implementation of five-day delivery."

In the meantime, we can now add another zombie to the endless list of insolvent organizations on the government's dole, whose only saving grace is it has nearly half a million votes that can be bought by the highest bidder.

The Senate bill would halt the immediate closing of up to 252 mail-processing centers and 3,700 post offices, part of a postal cost-cutting plan to save some $6.5 billion a year. Donahoe previously said he would begin making cuts after May 15 if Congress didn't act, warning that the agency could run out of money this fall.


The measure would save about half the mail processing centers the Postal Service wants to close, from 252 to 125, allowing more areas to maintain overnight first-class mail delivery for at least three more years. It also would bar any shutdowns before the November elections, protect rural post offices for at least a year, give affected communities new avenues to appeal closing decisions and forbid cuts to Saturday delivery for two years.


At the same time, the Postal Service would get an infusion of roughly $11 billion, basically a refund of overpayments made in previous years to a federal retirement fund. That would give it immediate liquidity to pay down debt to forestall bankruptcy and finance buyouts to 100,000 postal employees.


The agency could make smaller annual payments into a future retiree health benefits account, gain flexibility in trimming worker compensation benefits and find additional ways to raise postal revenue under a new chief innovation officer.

And some more details on the bailout:

—Place a one-year moratorium on closing rural post offices and then require the mail agency to take rural issues into special consideration. Post offices generally would be protected from closure if the closest mail facility was more than 10 miles away. The exception would be cases in which there was no significant community opposition.


—Shut five of the seven post offices on the Capitol grounds.


—Take into account the impact on small businesses before closing mail facilities.


—Cap postal executive pay through 2015 at $199,000, the same level as a Cabinet secretary, and create a system under which the top people at the Postal Service are paid based on performance.


The Senate bill faces an uncertain future. The House version, approved in committee last year, would create a national commission with the power to scrap no-layoff clauses in employee contracts and make other wide-ranging cuts.


"This of course kicks the can down the road," complained Sen. John McCain, R-Ariz., who unsuccessfully pushed for a commission in the Senate bill. He said the current proposal failed to address longer-term fixes and delayed major decisions. "We'll be on the floor in two years addressing this issue again, because it is not a solution."


Noting that more people every year are switching to the Internet to send letters and pay bills, Donahoe called the Postal Service's business model "broken." The agency has estimated that the Senate bill would only provide it enough liquidity to continue operating for two years or three years.

At stake are more than 100,000 jobs, The agency, $12 billion in debt, says it could run out of money for day-to-day operations as soon as this fall, forcing it to shut down some of its services. The mail agency forecasts a record $14.1 billion loss by the end of this year; without changes, it says annual losses will exceed $21 billion by 2016.

Yeah, yeah. In the meantime all that matters is that about 100,000 votes have been secured for the incumbent candidate. The cost? Only $11 billion, or $110,000 per vote. To all taxpayers.

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becky quick and her beautiful mouth's picture

but, but, but, the post office runs off its own accord and doesn't take any taxpayer money! it's entirely self-funded!

GetZeeGold's picture



Changed entirely to partially......there....fixed it for you.



How bout you pay me the 110 Grrr and I figure out something better to do with it?

Hippocratic Oaf's picture

Is that Cramer as a postman?


Carl Spackler's picture

Yes, it is Jim Cramer.  Cramer is as stale (past their prime) as the business model of the post office is.

Somebody wake the dog and have him chase the clown away!

redpill's picture

1) Jack up junk mail rates so advertisers have to be more selective about what trash they stuff in my mailbox

2) Deliver 3 days a week instead of 6, and cut the workforce in half.



greensnacks's picture

167.9 billion — number of mail pieces processed in 2011 by usps.


$0.10 stamp increase coming?

RockyRacoon's picture

Yeah, probably an increase coming.   Thinking back to when the first postage stamps were issued in the U. S. the denominations were 5c and 10c.   That was a very big expense.  Not sure what that amount would be in 2012 dollars, but it would certainly not be 45c.   I'm amazed that something gets delivered from East Podunk to Nome, AK at that price.   If there really is subsidy of the USPS it is still cheap.  No way any private company will deliver at those prices.   Junk mail pays for the low First Class rates so I don't moan about the junk in my mailbox all that much.   I don't like commercials on TV either, but the functions are similar.   All in all, I think a decision needs to be made as to whether the USPS serves a national function, and whether it should actually be measured by normal business models.  We don't do that with the military, or wiring homes out in the boonies to the electrical grid.  Talk about your subsidies!

Cognitive Dissonance's picture

Hi Rocky

Time to stock up on Forever stamps. They may be a very good investment some day.

Until the PO revokes their "Forever" that is and we become just another creditor waiting for a few cents on our dollar.

RockyRacoon's picture

Hey, CD.   Since I'm a dealer I don't need to stock up on new stamps.  I've got several thousand dollars worth of pre-1950 stamps that I use to mail out my customer packages.  It sure takes a lot of low-value stamps to equal a Priority Mail rate!  You can buy discount postage all day long on eBay, and I get phone calls from people all over the country wanting to sell their mint stamp accumulations.  Regular buy prices are 50 to 75% of face value.  What the hell would I want to buy Forever Stamps for!?  Now, you, on the other hand....  Gopher it.

PrinceDraxx's picture

About 2-5 dollars depending on whatever math you want to use and from when in history too. For rural routes, they should carry mail with enough postage on it to at least pay their wages and car allowance. If they don't have it today just wait the junk mail will finally get it there. lol

mr. mirbach's picture

Put all of the mailboxes on one side of the street or bunch them together in cul-de-sacs. 


One reason that the USPS is so expensive is that union ruiles stipulate a 5 day work week, so Saturday delivery requires 1000's of part-timers all with benefits. Also I'd venture to guess the retiree payroll exceeds active employee payroll.

boogerbently's picture

Another poorly run govt. program.

The govt. needs to bail out the USPS to keep employees paying for pensions so they don't need to do it.

boogerbently's picture

Another poorly run govt. program.

The govt. needs to bail out the USPS to keep employees paying for pensions so they don't need to do it.

Oh regional Indian's picture

The post office was killed so that BROWN and FED ex could prosper. Also, snail mail in general is a dying breed except for those voluminous advert. packs. 

Plus, the more in trouble an agency is, the more likely it is to finally give in to coercion. Adn who says Union leaders in the PU are not from the same gene-pool as Jimmy Hoffa? I unserstand some unionistas will get their panties in a twist and yes, Unionism was a necessary bulwark to corporatism, but noticed Union work and leadership lately?

Perhaps a giant privatisation is in the offing.

Did you all know for eg. that a Spanish company called Scytl  will be counting for 26 states this coming Nov.?

" privilege and responsibility of facilitating American elections in 900 municipalities and 26 states. "

Privatize to socialize seems to be the global mantra. India has a giant Pubic(!!!) Sector, legacy of the Brits and a huge stone around India's collective neck. 

Tough one...



Nels's picture

The post office was killed so that BROWN and FED ex could prosper.

You have your head on backwards today.  Brown and FEDEX might have killed the postoffice, but they prospered because they did what the Post Office would not or could not do.

The internet is killing off the rest of the post office, i.e. first class mail and magazine delivery.  But the internet was certainly not created with the post office in mind.

Oh regional Indian's picture

Nels, are you kidding me? You really believe the story of the FedEx chairman who went to Vegas and gambled the company's retirement money to win his next payroll? 

Those are two of the biggest insider companies. Giant Hubs and spokes of Trans-portation (Hey canuckhead, note marine terminology applied to air and land trans-port.... get something? Light bulb going off? UCC everywhere?).

Supply chian is everything for the controllers Nels. In peace-time and war. Key!

This is exactly how it was intended to be. Or .gov would have modernized and "relaxed" the Post Office system (better working conditions, less repetitive movements, brighter uniforms? Feeling Blue today?).....

All as per plan stan, all as per plan.


Gully Foyle's picture

Oh regional Indian

"Or .gov would have modernized and "relaxed" the Post Office system (better working conditions, less repetitive movements"

They already have sorting machines, how much more can you cut down repetitive motion when dealing with mail?

I have worked in worse conditions for less pay and bennies.


"brighter uniforms? Feeling Blue today?)....."

I assume Blue is the color of government in the US. Cops and Firemen have Blue uniforms, Postmen Blue uniforms.

Blue used to send the message government works for you.


Xkwisetly Paneful's picture

They have a monopoly on use of the mailbox.

Something the others have fought over for decades,

surely if they were purposefully killing the USPS off they would have given in to that long ago.

But don't let that or the obviousness of the sky being blue get in the way.

NYC OTB system killed by same people despite doing $1.1billion in handle a year.

No different here, not even in the slightest.


ihedgemyhedges's picture

"But the internet was certainly not created with the post office in mind."

OH YES IT WAS!!!  I created the internet because all of the inefficient, gas/diesel guzzling, carbon dioxide emitting, global warming vehicles the USPS uses all over my green country.  My plan is working!!

Sincerely, Al Gore

dirtbagger's picture

Nels got it mostly right.  It was internet porn that killed the Post Office.  That is why you only see 1 worker at the counter with 8 registers.  The rest are in back watching the action.

i-dog's picture

   "a Spanish company called Scytl will be counting for 26 states this coming Nov?"

It had to be outsourced because the American education system no longer teaches counting. The Administration is also calling for international tenders to find someone who can draft a budget. The EU is a hot favourite to win the tender, after all their recent budget successes.


Whoa Dammit's picture

Don't forget that if USPS is privatized, whoever takes over will get their greedy little fingers on the billions in pre-funded health care and pension funds. That's what this is all about.

PrinceDraxx's picture

Hell, their pension funds are unfunded just like everyone else's.

ShankyS's picture

"Did you all know for eg. that a Spanish company called Scytl  will be counting for 26 states this coming Nov.?

" privilege and responsibility of facilitating American elections in 900 municipalities and 26 states. ""


Ahhhh and the puncline - Who owns Scytl? None other than Soros I believe. Can you say rigged? I thought you could. 

jus_lite_reading's picture

A while back someone said a bailout of the Postal Service will be the final nail in the coffin... Can't argue there

Ignatius's picture

I'll take the Post Office over the Military/Security complex, despite the problems.  I put a letter or bill in the mail and it has ALWAYS been delivered (my experience).  But the MIC can't get a plane up in a timely manner on 9/11 and otherwise has to create 'terrorist' events to justify their jobs.

Dr. Engali's picture

Good Lord die already!

spastic_colon's picture

+1  cant wait until we have to bailout all of the worlds retailers because online shopping ruined their business too, we better read the fine print in any legislation that comes out of this as precedent will have been set.  and, there is not one party that would allow the USPS to fail, so it doesn't matter who is in office.

TonyCoitus's picture

As a self funded operation, I didn't really think much about trashing 95% of my mail without even opening.

With the bailout, every piece of junk mail is costing us money.

They should raise prices to whatever they need to self fund this piece of shit "business".

What a fucktard bunch of government beauracrats!


Gully Foyle's picture


"With the bailout, every piece of junk mail is costing us money."

How is that? Junk mail pays to be posted. I'm not sure what bulk rates are, but it ain't going out for free.

When you consider the size of those bulk posts someone is tossing out fairly large bucks for them.

redpill's picture

I don't think you understand the role of junk mail.  It only exists to provide volume for the Post Office, otherwise they could not justify the infrastructure and employee expense.  If they only were delivering important shit that someone paid first-class postage for, they could be a fraction of their size, and deliver 3 times a week instead of 6.

StychoKiller's picture

No mas, sooner or later, the USPS WILL only be delivering important (legal notices, etc) 1st-class letters.  The rest will either fall by the wayside, or get picked up by UPS/FedEx/etc.

TonyCoitus's picture

If the USPS can't make money delivering junk mail to our homes, then they should raise their price so tax payer subsidies are not required.  If the junk mailer outfits can't afford it, too bad for them, no loss for us.

PrinceDraxx's picture

less than it ought to be paying since if it wasn't for the junk mail they could get rid of at least half the sorting centers and cut workers  in half as well. Unfortunately, you'll never see junk mail senders paying full price for the garbage that is delivered without fail to my mailbox. As for how good they are: I'm in marketing and I send out our advertising packages. 7 years ago, the package went out First class for $1.03 I think it was, now it is $1.70. Tell me all about their efficiency: Mail comes back marked mail receptacle. I left off the suite number on one particular package and the mail person could find them, they infact inhabited the entire second floor of the building. I see the laziness and stupidity of these highly trained(oops, highly paid) morons who could never get my mail in my mailbox, although my name and house number were clearly ledgible on the approach side of the box.

These days, I can walk in the local PO and find a line of people clear out the door moving forward one at a time since all but one of the drones who inhabit those type jobs working as slowly as possible. You ask, where's you helpers and the reply invariably is on break. Should one of the co-loafers come back, the other leaves. A relatively small PO but 4 registers should anyone care. Oh, also I quit going in til almost 5 pm. If you never believed the old saw of "If you don't think the dead come alive you haven't been here at quiting time. At 10 til five no matter the length of the line every customer has been served by 5pm. Fucking ridiculous.

monopoly's picture

The insanity continues and until it all blows up it will be status quo. No change. Move on.

GS-DickinDaMuppets's picture

"The insanity continues and until it all blows up it will be status quo. No change. Move on."

You are correct - I mail small packages everyday at my local post office in a small town in Texas - I know every person in there and they ALWAYS ask me if my packages contain anything that is Harmful, Explosive, Corrosive, Spoilable, etc. ad nauseum. Now plain ole common sense says that if I was a terrorist or criminal mailing deadly packages, do they really think I am going to say "Why yes, this package contains the Ebola virus with a small explosive that will blow up the person that opens it and spread the deadly Ebola virus for miles around".  It is just another BS "feel good", bureaucratic rule that does absolutely nothing, except expand the time it takes to mail a package. ANYTHING that is run by the government is a total disaster and produces nothing but waste and corruption.  I love my mommy, the government.

Protect what you have the "Night Cometh"

...doing GOD's work....DickinDaMuppets

Cognitive Dissonance's picture

The funny thing about those quasi Federal agencies that really aren't Federal....until they that they always come back to bite you and me. If it's off the Federal books we don't need to count it's liabilities as Federal ones.

Sort of like Fannie Mae or Freddie Mac. Or Social Security, come to think about it. I seem to remember some sort of SS Trust Fund that's really a black hole of Gvt debt.

wisefool's picture

post office was in the original constitution.

TARP bailouts, much less the IRS .... not so much.

pods's picture

Yep, but post office does not mean door to door delivery to every address in the nation.

Just as "general welfare" did not mean the government telling you how much water your toilet can use or what light bulbs you can buy.

Or "income" did not equal wages.

Just as "zero grams trans fat" does not mean "no trans fat" but merely less than 0.5 g trans fat per serving.

Lose the definitions of words, lose everything.


Dr. Richard Head's picture

WAnt to really krinkle the underwear of a hard-core "small government" Republican?  Send them some articles about how light bulb and toilet water restrictions were signed into law by BUSH! 

As a side-note - I see no difference between liberal Obama or liberal Bush.  They both want to force their respective form of government on the population.

Uncle Remus's picture

Wait - help me understand the link between the concept of "small government" and light bulb/toilet water restrictions?

Dr. Richard Head's picture

Many Republican voters are arguing for a small government (i.e. the Tea Party).  Many of those Republicans toe the party line and will defend the actions of Bush in comparisson to the actions of Obama.  Many of those Republican voters will also claim that government actions of telling the population what type of lightbulb they are allowed to use and how much water is allowed to be used to flush one's toilet are indicative of a liberal agenda of government control of every minutia of our lives.  Too much government these small-government Republicans will decree.  I agree with that assessment oftoo much centralized governmental control.

These Republican voters miss completely the fact that these governmental controls of increasingly every action of our life came under the authorized signature of President Bush. 

I guess I am was just tryingto point out the disconnect and I often try to do that when a Republican complains of the liberal agenda of governmental control.


Uncle Remus's picture

Government control is not a liberal agenda - it's the only agenda.

Xkwisetly Paneful's picture

oops -24,213-mainly for projection but also for the narrow POV.

Governance moves towards more not less,

takes the unusual individual to not only stop that movement but reverse it.

Your ideas that Bush did this, while whomever did that is childish.

The day they set up shop in DC is the day they started oppressing the people,

and it has only gotten worse with time with few exceptions.




Xkwisetly Paneful's picture

Funny thing is the liberals of the day got it?

"We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude. If we run into such debt, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our calling and our creeds...[we will] have no time to think, no means of calling our miss-managers to account but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers... And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for[ another]... till the bulk of society is reduced to be mere automatons of misery... And the fore-horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression. "