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hundreds of thousands of labor union workers would lose their jobs but in the process would streamline a thoroughly outdated and inefficient US Postal Office bureaucracy, we asked if a US Postal Service bailout was imminent, focusing on the following: "Enter Ron Bloom, Lazard, and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 And so the latest bailout of yet another terminally inefficient and outdated government entity begins.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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Thu, 04/26/2012 - 11:40 | 2376815 Uncle Remus
Uncle Remus's picture

What was the definition of a "liberal" in Jefferson's time?

Thu, 04/26/2012 - 21:41 | 2378913 StychoKiller
StychoKiller's picture

ClueBat:  Liberal != Socialist/Progressive

Thu, 04/26/2012 - 11:38 | 2376814 Dr. Richard Head
Dr. Richard Head's picture

I agree.  THe example is used to shake those that believe in the blue/red team bullshit and to shake them from their conditioning.  In order to do that, I often have to point out that is wasn't the other team that di this or that, but their team.

Thu, 04/26/2012 - 11:15 | 2376723 Xkwisetly Paneful
Xkwisetly Paneful's picture


Thu, 04/26/2012 - 11:45 | 2376826 Nels
Nels's picture

I never met a small-government republican who thought either Bush was a member of their group. The 'compassionate' modifier for conservatism is pretty much seen as defined to be 'not at all'.

Thu, 04/26/2012 - 12:19 | 2376948 RockyRacoon
RockyRacoon's picture

Maybe the recently ostracized Huntsman is right -- there should be a third party, at least.

Thu, 04/26/2012 - 10:51 | 2376594 Cognitive Dissonance
Cognitive Dissonance's picture

You highlight a very simple concept that is always overlooked by the general population as well as many here on ZH. Control the language and you control the people. Even among those who think they are aware of what is going on.

Since we use the words of our enemy we think in terms that are manipulated by our enemy. This is very difficult to avoid if we aren't constantly diligent with our own self examination. Question EVERYTHING.......beginning with ourselves. Not just what we think or believe, but WHY.

Thu, 04/26/2012 - 11:06 | 2376659 pods
pods's picture

Where do you think I acquired this skill?

<hat tip to CD>

Thu, 04/26/2012 - 14:03 | 2377344 Max Fischer
Max Fischer's picture



That's called the Sapir-Whorf Hypothesis. 

For instance, when I repeatedly refer to libertardians as "doomer goons" the intention is that, over time, you'll envision libertarians as idiotic, smelly oafs.  


Thu, 04/26/2012 - 21:09 | 2378857 PrinceDraxx
PrinceDraxx's picture

Gosh, you must be the idiotic, smelly oaf look at the reds. Of course, I'll probably run you a close second, since trolls have their friends downcheck any one who offends them. Sorry, did I actually say friends? Odd way to describe littermates from the pig pen of liberals. Have I offended you yet?

I tried, but I'm nowhere near as good at it as Nancy and Harry and Obummer.

Thu, 04/26/2012 - 10:46 | 2376601 Oh regional Indian
Oh regional Indian's picture

Very well said pods.

Especially the last line...


Thu, 04/26/2012 - 11:00 | 2376662 Uncle Remus
Uncle Remus's picture

I love the sound of stretching hemp in the morning. Sounds like justice.

Thu, 04/26/2012 - 21:10 | 2378862 PrinceDraxx
PrinceDraxx's picture

I think the singing of piano wire or perhaps the Kiss of Madame Guillotine.


Thu, 04/26/2012 - 10:40 | 2376568 Dr. Richard Head
Dr. Richard Head's picture

That "God-Damned piece of paper" only matters when convenient.  When it is not convenient that piece of paper doesn't factor in.  Selective enforcement of the "law" has been the modus operandi for far too long, yet some will still argue for more ruling capabilities of our rulers.  The "there ought to be a law against that" group of the population, minus the governing crowd of politicians, is always well-meaning, yet they fail to look at the consequences and the effect of the two-tiered legal system.

The idea of anarcho-capitalism and a non-existent government looks more and more appealing to many more people each day, including myself.


Thu, 04/26/2012 - 11:09 | 2376698 SeattleBruce
SeattleBruce's picture

"That "God-Damned piece of paper" only matters when convenient.  When it is not convenient that piece of paper doesn't factor in....The idea of anarcho-capitalism and a non-existent government looks more and more appealing to many more people each day, including myself."


While "the idea of anarcho-capitalism and a non-existent government" may seem appealing, the question I have is how we'd get there, and who would take over, in other words, what will the reset look like, because make no mistake, leadership will arise and assert itself, and they would hearken to certain 'guiding principles' from history.  Not that current leadership is adhering to the USC much, true enough.

Thu, 04/26/2012 - 11:33 | 2376778 Dr. Richard Head
Dr. Richard Head's picture

How we get there is through withdrawal of consent.  Taxation, court dates, traffic tickets, etc.  The problem with withdrawal of consent is that, under our current system, many perceive there are too many enforcers that will sooner or later demand consent through threat of force or caging that dissenter in prison or jail.  Additionally, there are too many in our current population that fears reprisal from the actions of ignoring their rulers based on the perception of more enforcers than withdrawers (if that is even a word).

Getting others to understand that the majority of their daily actions in life are derived by their own will and rule and can operate completely fine without said rulers is the key.  Only through example and being our own "beacon of shining light on the hill" will others see the possibility.  To be the example is to put oneself in a position of possible retribution by the state, but it is a choice one has to make.

Quite frankly, I believe the way society would look without rulers would look much like it does today in our daily life, but without the constant extortion and fear of being locked in a cage for something that harmed no person or property.  The leaches of society would no longer have enforcers to enable their parasitic behavior that is sucking the wealth, freedom, and charity we are capable of achieving.  It seems to me that a non-governed society could indeed be the panacea of the most humane way of achieving a much greater prosperity for all in our local communities and actually helping to lift the poor out of their conditioned "need" for governmental assistance in every aspect of their life.

Of course, I am nuts and none of this seems achievable with the masses grabbing Uncle Sam's teats all of the time.


Thu, 04/26/2012 - 11:38 | 2376811's picture

because make no mistake, leadership will arise and assert itself,

A monopoly on the use of force is not a prerequisite for leadership. True leadership is provided by those with good ideas. Free individuals can chose to follow or not follow prospective leaders based on expectations of success.

Thu, 04/26/2012 - 11:13 | 2376715 Fiat Currency
Fiat Currency's picture

wisefool: "post office was in the original constitution."


I gave you a thumbs up for that. But I must have missed a memo ... when did you guys start following your constitution?

Thu, 04/26/2012 - 10:33 | 2376507 hedgeless_horseman
hedgeless_horseman's picture that they always come back to bite you and me.

Like the Federal Reserve?



Want to learn about The Federal Reserve and The Bailout Game?  Read this book:

The Creature From Jekyll Island

Thu, 04/26/2012 - 10:34 | 2376541 Dr. Engali
Dr. Engali's picture

That's a good book and a must read.

Thu, 04/26/2012 - 10:39 | 2376563 pods
pods's picture

Also I might add Eustace Mullins "Secrets of the Federal Reserve."


Thu, 04/26/2012 - 10:50 | 2376622 Alea Iactaest
Alea Iactaest's picture

And Hayek's "Road to Serfdom"

Thu, 04/26/2012 - 11:11 | 2376705 SeattleBruce
SeattleBruce's picture

Ron Paul's "End the Fed"

Thu, 04/26/2012 - 10:35 | 2376547 Cognitive Dissonance
Cognitive Dissonance's picture

I always "see" the Federal Reserve as in a category of its very own.

It isn't a hidden obligation of the US Gvt. It owns the US well as you and me.

Thu, 04/26/2012 - 10:43 | 2376589 Oh regional Indian
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That honour goes to the UN via the IMF CD.

How come so sporadic now?


Thu, 04/26/2012 - 10:49 | 2376616 Cognitive Dissonance
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I've been busy with Mrs. Cog (self) renovating our Armageddon hideout. Plan "B" bitches.

Almost done, just a few more weeks. Then you'll Shirley regret asking me where I've been when you can't get rid of me. :>)

Thu, 04/26/2012 - 10:55 | 2376646 Oh regional Indian
Oh regional Indian's picture

Nice CD, nice.... we'll keep that on the hush hush now....

And don't call me Shirley!!!


Thu, 04/26/2012 - 10:47 | 2376605 Son of Loki
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Griffen's book is a real eye opener ...was for me anyway....a must read for everyone...

Thu, 04/26/2012 - 10:32 | 2376527 Bicycle Repairman
Bicycle Repairman's picture

When you consider this story, can you imagine the unwillingness of the political class to touch SS?  And why single out SS?  Can you count the number federal and state programs that actually are nothing more than entitlements?  Nobody can. 

They will print and tax.  That's the only answer they can live with.  4% to 8% inflation for as long as it takes.  30 years, if necessary.

Thu, 04/26/2012 - 10:35 | 2376537 hedgeless_horseman
hedgeless_horseman's picture



...4% to 8% inflation...

lol!  Ahhh, the optimism of youth.

Thu, 04/26/2012 - 10:39 | 2376553 Cognitive Dissonance
Cognitive Dissonance's picture

I was thinking more along the lines of 100% inflation over 3 years minimum. And that's just to keep the US Gvt from falling into the black debt hole in year 4.

I tend to listen to John Williams from Shadow Stats about the hidden inflation rather than the BLS. But that's just me.

Thu, 04/26/2012 - 10:41 | 2376574 mayhem_korner
mayhem_korner's picture



I'm speculating that the US mint is simply waiting for Jimmy Carter to expire so they can don his mug on the $1 Billion note and start getting those into circulation.  That'd kick start the process right good.  ;)

Thu, 04/26/2012 - 11:27 | 2376761 Uncle Remus
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What? You aren't buying that nonsense about bills larger than $100 taken out of circulation to thwart money laundering are you? It was an inflation perception hedge.

Thu, 04/26/2012 - 11:09 | 2376695 Ghordius
Ghordius's picture

IMHO, first two years as 20%-25%. Then some correction, one or two years. Then... well, it really depends from the spending levels - as always.

Thu, 04/26/2012 - 11:17 | 2376730 Son of Loki
Son of Loki's picture

I agree with Cog since most food prices have doubles in the past three years...dark chocolate, bread, name it.

I see 100% price rise again in th enext three years as John Williams and others have pointed out....good luck!

Thu, 04/26/2012 - 10:48 | 2376612 Bicycle Repairman
Bicycle Repairman's picture

Let's just say they'll set inflation at an incremental level that will boil the frogs nicely, while keeping their problems under control.  BTW, 6% inflation for 30 years reduces the current dollar to 1/6 of it's current value.  Don't doubt the power of compounding. 

And don't doubt that our future is Argentina, not Japan.

Thu, 04/26/2012 - 11:46 | 2376669 hedgeless_horseman
hedgeless_horseman's picture



Excellent response.  We shall see.

Thu, 04/26/2012 - 11:29 | 2376771 Uncle Remus
Uncle Remus's picture

Don't cry for me Argentina...

Thu, 04/26/2012 - 10:36 | 2376552 mayhem_korner
mayhem_korner's picture

Can you count the number federal and state programs that actually are nothing more than entitlements?


I say count the ones that aren't.  Prolly won't even run out of fingers. 

BTW - 4% to 8% inflation for 30 years is not only a pipe dream, the distance between the two vectors would qualify as alternate universes.

Thu, 04/26/2012 - 10:46 | 2376602 tarsubil
tarsubil's picture

It is worse than you think. Ask 10 mail carriers if they want Saturday off and a regular consistent schedule. The unions are not representing the workers, they are representing themselves. There are lots of union suits in the DC area.

Thu, 04/26/2012 - 10:59 | 2376660 mayhem_korner
mayhem_korner's picture

The unions are not representing the workers, they are representing themselves.


You don't think this is an unusual thing for unions, do you?

Thu, 04/26/2012 - 10:22 | 2376470 GeneMarchbanks
GeneMarchbanks's picture

"We'll be on the floor in two years addressing this issue again, because it is not a solution."

If old John McCain is still in Congress in two years time debating this issue again that just re-enforces that Japanization is actually best case scenario at this point. Step one is already complete: general apathy at the political cycle by a majority of the populace.

Thu, 04/26/2012 - 10:22 | 2376471 beaker
beaker's picture

Don't forget that the spouse and family members vote, too.  But hell, what's another $11 billion? (at this point)

Thu, 04/26/2012 - 10:26 | 2376497 HoofHearted
HoofHearted's picture

Although I've always pledged to vote for Ron Paul, I would probably let my vote go for $100,000 after taxes. Better yet, make it in small unmarked bills so that I can quickly change it with my local gold and silver dealers. What they don't know is that some of us would doublecross them and STILL vote for Ron Paul....suckers!!!!

Thu, 04/26/2012 - 10:25 | 2376473 Stuck on Zero
Stuck on Zero's picture

Just so you know, the USPS has been attempting to modernize for years.  Everything they attempt has been denied them by Congress.  The same Congress critters that accept donations from competing companies to deny the USPS any ability to modernize is now throwing them billions.  Go figure.


Thu, 04/26/2012 - 10:23 | 2376476 Josh Randall
Josh Randall's picture

Cliff Clavin for the WIN

Thu, 04/26/2012 - 10:41 | 2376577 spastic_colon
spastic_colon's picture

WIM with JIM

Thu, 04/26/2012 - 10:24 | 2376477 youngman
youngman's picture

Again the politicians will never cut any costs or expenses.....and the debt keeps getting bigger and bigger.....I hope there is a fight to the death on the next debt ceiling raise....

Thu, 04/26/2012 - 10:24 | 2376478 Dagny Taggart
Dagny Taggart's picture

There are serious implications here... the postman is a person in your neighborhood. must.bail.out.


Thu, 04/26/2012 - 11:09 | 2376701 Uncle Remus
Uncle Remus's picture

That's a serious allegation there...

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