It's not fair to think that everyone has an internet connection though, should be posed as an alternate solution, then I think it makes a lot of sense.
Rethinking The Postal System
31–40 of 50 posts
Re: Rethinking The Postal System
#32Earlier quoted context omitted.
The first thing they need to do is reduce the pension funding requirement, which was forced by a 2006 law. They have to fully fund the pension for 75 years, and do that in 10 years. That would reduce their operating budget deficit. Second, they need to push their parcel service, and open the counter all week long. The internet has caused a reduction in regular first class postal mail, but is also increasing the numbe…
I don't really understand the pension funding issue -- I assume it was that the pensions were previously underfunded, and this was to correct it. The issue is that even the GAO thinks there are "pyramid" issues -- the USPS revenue is going to be in a long-term decline, and peak-retirees will hit in a period where the revenue is lower than today. So, pre-funding makes a lot of sense. Similarly, SS (and I think medicar…
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Re: Rethinking The Postal System
#33USPS is an institution that provides a low margin business to the masses. The majority of mail is not the glamorous packages that can demand shipping rates in the $20-$50 range. It's the letter-sized envelopes and mailers that ensure that a postman stops at every residential & business address on a daily basis. That basic service the federal government guarantees ensures the USPS can't bring itself out of this rut until this changes. One solution would be to spin off the profitable portion to compete head-on and finance the low-margin side.
Re: Rethinking The Postal System
#34Earlier quoted context omitted.
The first thing they need to do is reduce the pension funding requirement, which was forced by a 2006 law. Yes, rather than fully funding their pensions like any private company, they should be allowed to push massive problems into the future like the public sector does.
Private companies don't really fully fund their pensions, but during the period where pensions were common in private companies, those companies were expanding in revenue and headcount, so it was ok. Was. High-risk private enterprises don't do pensions now (can you imagine a Zynga Pension Plan?). Approximately everyone has shifted to defined-contribution from defined-benefit. The problem is USPS and the fully-private…
Private companies are legally obligated to fund defined-benefit pensions. There are some waivers given out, but it is generally required.
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L...;
Though strangely, defined benefit non-pension plans (e.g., retiree health care) are not required to funded. That's a loophole which should definitely be closed.
You are correct that the private sector has abandoned pensions for defined-contribution retirement plans, and with good reason. The public sector should do the same.
Re: Rethinking The Postal System
#35Earlier quoted context omitted.
Realistically too, the post office is running on a shoestring budget. I don't quite understand their biggest overhead costs (beyond paying out salaries and pension benefits to postal employees) but there has to be a way to make the mail system work the way it's worked but at less cost to tax payers.
Until this 2006 law that requires the pension to be fully funded for 75 years, and that this be achieved in three more years, the USPS was self sufficient. Postage paid for everything. No cost to the taxpayer. I remember when this was achieved in the 80s - it was on TV. This link has a lot of detail about the USPS. http://usgovinfo.about.com/od/consumerawareness/a/uspsabout....
Until this 2006 law that requires the pension to be fully funded for 75 years, and that this be achieved in three more years, the USPS was self sufficient.
Well, self sufficient if you ignore their pension obligations.
The same logic says that if I run a business with $100 in revenue, that pays $50 in cash and $75 in IOUs to suppliers, it's profitable.
Re: Rethinking The Postal System
#36IMO it would be pretty easy to change the USPS to be profitable or sustainable, but politically difficult. Preserving universal service (expensive rural routes and facilities) should be done via direct government subsidy, vs. commercial cross subsidization. Reducing or contractorizing staff (to cut medical and retirement costs) would have been done already by a really private company, but would have political and eco…
The USPS hasn't taken tax payer money since 1982 and has posted profits almost every year up until 2006 when the new retirement pre-funding requirements were introduced. The USPS is the only agency required to pre-fund their retirement plans for 75 years. You could certainly cut the facilities producing the least revenue, but then you'd be closing mostly rural post offices. Incidentally Fedex and UPS use USPS infrast…
Since we're all guaranteed postal service in the constitution...
Could you cite the relevant part of the constitution?
As far as I know Congress has the power to "establish Post Offices and Post Roads", but there is no requirement that they do so.
Re: Rethinking The Postal System
#37Earlier quoted context omitted.
Private companies don't really fully fund their pensions, but during the period where pensions were common in private companies, those companies were expanding in revenue and headcount, so it was ok. Was. High-risk private enterprises don't do pensions now (can you imagine a Zynga Pension Plan?). Approximately everyone has shifted to defined-contribution from defined-benefit. The problem is USPS and the fully-private…
Private companies are legally obligated to fund defined-benefit pensions. There are some waivers given out, but it is generally required. http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L... ; Though strangely, defined benefit non-pension plans (e.g., retiree health care) are not required to funded. That's a loophole which should definitely be closed. You are correct that the private sector has abandoned p…
"The PPA increases the funding target for
single-employer defined benefit pension plans from 90
percent to 100 percent of the plan’s present value of all
accrued benefit liabilities"
Cool, now just make them fund the next 75 years of expected liability, instead of just the current liability.
Re: Rethinking The Postal System
#38"But the truth is, the USPS needs to innovate." Tell your congressional representative, not USPS. FedEx and UPS have spent large amounts of lobbying money ensuring that USPS does not innovate. Congressional legislation is what prevents USPS from innovating.
> FedEx and UPS have spent large amounts of lobbying money ensuring that USPS does not innovate. It's hardly surprising, but do you have any sources for this claim?
From the recent Esquire article[1]:
Over the past five years, FedEx and UPS have spent a combined $100 million lobbying Congress. Because neither company has a delivery network nearly as sprawling as Donahoe's, they contract with the postal service to deliver the "final mile" of much of their cargo. For instance, more than 21 percent of all FedEx deliveries are dropped off by a postal carrier. Meanwhile, millions of postal-service letters hitch rides on FedEx flights every day, for which the company gets paid $1 billion a year. FedEx and UPS don't want the postal service to go out of business but to remain contained, out of the way — one reason many of the addresses on packages that pass through Medford are handwritten by mothers and grandfathers and eBay minimoguls, rather than printed by manufacturers and retailers.
[1] http://www.esquire.com/print-this/post-office-business-troub...
Re: Rethinking The Postal System
#39IMO it would be pretty easy to change the USPS to be profitable or sustainable, but politically difficult. Preserving universal service (expensive rural routes and facilities) should be done via direct government subsidy, vs. commercial cross subsidization. Reducing or contractorizing staff (to cut medical and retirement costs) would have been done already by a really private company, but would have political and eco…
Wages, staffing and work rules are huge problems. I strongly suspect that the USPS falls very, very far short of UPS and Fedex on almost any productivity measurement. Because it is politically impossible to take on the postal unions.
Universal delivery is a very important service, but it probably ought to be directly subsidized by Congress. Because the current system of subsidy through monopoly gave a false sense of security in their revenues. Now technology is killing those revenues, and the system is trying to avoid job losses by service reductions. The logical end of that spiral is obvious.
Re: Rethinking The Postal System
#40Earlier quoted context omitted.
Private companies are legally obligated to fund defined-benefit pensions. There are some waivers given out, but it is generally required. http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L... ; Though strangely, defined benefit non-pension plans (e.g., retiree health care) are not required to funded. That's a loophole which should definitely be closed. You are correct that the private sector has abandoned p…
"The PPA increases the funding target for single-employer defined benefit pension plans from 90 percent to 100 percent of the plan’s present value of all accrued benefit liabilities" Cool, now just make them fund the next 75 years of expected liability, instead of just the current liability.
They already do, that is what "present value of all accrued benefit liabilities" means.