The Postal Service is supposed to be self-funded — not getting any government money. However, the post office is still tightly regulated by Congress. In 2006, Congress passed a law requiring the Postal Service to prepay health benefits for its retirees.
“Congress ordered the Postal Service to pay, for 10 years, about $5.5 billion per year into this prepayment fund,” said Jim Campbell, lawyer and consultant on the Postal Service.
The thinking was to pay it forward, making sure the money is there when retirees need it.
But Campbell said federal agencies don’t have to make these prepayments. Also, the post office couldn’t do it — Campbell said it missed more than half the payments. To make matters worse, Congress capped post office price increases for letters and circulars at the rate of inflation.
“So the Postal Service is sort of caught in this squeeze,” said Cornell University public policy professor Rick Geddes, who added that Congress still requires the post office to deliver to every mailbox in the country six days a week.
“So this is a recipe for fiscal problems, serious fiscal problems,” he said.
And, serious debt. Frank Todisco has been tracking that. He’s chief actuary at the U.S. Government Accountability Office. He said the Postal Service is more than $160 billion in debt. Over the past decade, the debt and unfunded liabilities like pensions and health care have outpaced the revenue the Postal Service takes in.
“So it’s doubled from a little more than one times annual revenue to over double annual revenue,” Todisco said.
Todisco said the Postal Service has been losing money for a decade, which is not a sustainable business model. However, the post office can’t change that model without congressional approval.
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