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USPS Pre-Funding Necessary to Prevent Bailout

Those opposed to the 2006 legislative requirement that the USPS pre-fund its retiree health benefits appear to be in deep denial regarding the current financial status of the USPS. Far from being profitable in the absence of the pre-funding mandate, the most recent Government Accounting Office (GAO) report states that the USPS is expected to lose $14 billion in fiscal year 2012.

The astute reader will note this projected loss represents $8.5 billion more than the USPS’s current annual retiree health funding obligation of $5.5 billion. That’s because declining mail volume and excess operating expenses are far bigger problems for the USPS’s bottom-line than pre-funding the benefits they’ve promised their employees.

A reasonable argument could be made that a reduction in the pre-funding requirement is in order while the USPS reorganizes, cut costs, and tries to find new sources of revenue. However, any such reduction would mean that the unfunded liability for these promised benefits will grow even larger and the USPS may not be able to cover them, or in the words of the GAO: “We testified that deferring some prefunding of USPS’s retiree health benefits would serve as short-term fiscal relief. However, deferrals also increase the risk that USPS will not be able to make future payments as its core business declines. Therefore, we concluded that it is important for USPS to continue funding its retiree health benefit obligations — including prefunding these obligations — to the maximum extent that its finances permit.”

Given that both the Congressional Budget Office (CBO) and the GAO have repeatedly stated the federal government will be liable for USPS retiree benefits if the USPS fails to improve its financial situation I’m thankful that Congressman Darryl Issa — R-CA, is working proactively to prevent yet another taxpayer-funded bailout.

Judith Muehlbauer


Denton (Denny) Newman Jr.
I've worked at the Brainerd Dispatch with various duties since Dec. 7, 1983. Starting off as an Ad Designer and currently Director of Audience Development. The Dispatch has been an interesting and challenging place to work. I'm fortunate to have made many friends, both co-workers and customers.
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