US Postal Service loses $2B this spring
Source: ASSOCIATED PRESS
WASHINGTON (AP) The U.S. Postal Service says it lost $2 billion this spring despite increasing its volume and charging consumers more money to send mail.
The agencys quarterly loss was significantly higher than its $740 million loss during the same three-month period last year. The agency said revenue jumped 2 percent compared to last year. But because of compensation and benefit costs, the agency continues to face a deficit.
Agency officials said the Postal Service would likely remain in bad shape unless Congress acts on reform legislation. In a statement released Monday, the agency said it would have to default on a congressionally mandated payment of $5.7 billion this September for health benefits for future retirees.
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Read more: http://www.salon.com/2014/08/11/us_postal_service_loses_2b_this_spring/
byronius
(7,369 posts)USPS has been profitable for years, except for the benefit payments for as-yet-unborn employees required by the minions of privatization ghouls.
Fuck, we're embarrassing as a nation.
Travis_0004
(5,417 posts)From the Government accountability office:
Contrary to some claims, there is no liability held, nor contributions made for any future employees who have yet to be hired or yet to be born.
http://www.gao.gov/assets/660/650511.pdf
It appears like you are the one spreading false information.
Also if they are loosing about 8 billion a year and only prefunding 5.5 billion eliminating the prefunding will not fix all their problems.
SoapBox
(18,791 posts)Psephos
(8,032 posts)Prior to the bipartisan, Democrat-cosponsored Postal Accountability and Enhancement Act of 2006, USPS operated under a pay-as-you-go model for retiree health care funding. The Act requires the Postal Service to pre-fund its benefit obligations using an NPV calculation.
Bernie Sanders was a co-sponsor. You really think he was shoving it to the Post Office? Or perhaps he understood that Ponzi schemes are catastrophes when they explode.
Original bill passed the House 410 to 20. Passed the Senate on a voice vote, with an amendment by Unanimous Consent.
Here's the text of the final bill.
https://www.govtrack.us/congress/bills/109/hr6407/text
USPS was granted considerable new regulatory flexibility regarding prices and services offered, and at the same time required to prepay retiree costs in accord with the GAAP model required of private business, instead of the tomorrow will never come model used by government.
One can argue whether the bill could have been better crafted. But the ideas that the USPS needed more price and service flexibility to respond to fast-changing technology, and also needed to make sure its promises to its retirees could be kept without a bailout, are tough to argue against.
goldent
(1,582 posts)would be a disaster for a declining business like letter delivery. Glad it is being addressed.
Travis_0004
(5,417 posts)Look at Detroit. Their pension is pay as you go and a lot of current and future retirees got screwed. If the pension was prefunded current retirees may have been untouched. A future retiree who retires in 1 year would have 95% of their pension prefunded and would have a minimal impact. Plus Detroit could spend less on pensions and spend more on services. I think if somebody makes a promise they should fund that promise and not just tell you not to worry, we will find the money later. Prefunding pensions makes them much more secure, and who can be against that? Maybe the way they are going about prefunding them can be tweaked but scrapping the prefunding is a horrible idea.
JackRiddler
(24,979 posts)What does your screenname mean?
Psephos
(8,032 posts)Psephos is the Greek word for "pebble." (I think some here believe my head is full of little "psephos," but I don't mind.)
The ancient Greeks used pebbles for ballots. Dark one would be a nay vote, light one a yea vote. Harder to mess with the ballots that way, for sure.
Psephology is that part of political science which studies and analyzes elections, especially when the analysis involves studying historical data, polling trends, and other hard data.
lol That's the first time anyone has asked that in 10 years here. I do find it enjoyable to compare and contrast rhetoric and political opinion with data when it comes to understanding the polity.
I've seen your posts around here for a long time, Jack, and your input is always worth the read. Wish we had more like you.
FreeState
(10,553 posts)GOP talking points wrapped in a faux bipartisan house committee.
Mr. Issa is corrupt as hell.
louis-t
(23,199 posts)Not 'loosing'. If they are pre-funding 75 years into the future, it IS for future employees AND some of those may not be born yet. Do the math. Jeez.
Travis_0004
(5,417 posts)Impressive.
louis-t
(23,199 posts)If I read the GAO report correctly, the number is 50 years.
D Gary Grady
(133 posts)See page 7 of http://www.gao.gov/assets/660/650511.pdf
As the GAO report notes, payments are front-loaded, so that the amounts in question are substantially higher than would be required by a standard amortization schedule for 50 years. I suspect claims of 75-year prefunding are based on looking up what time frame would require such large payments.
louis-t
(23,199 posts)You don't just take first quarter losses and multiply by 4 to get annual profits or losses.
liberalmike27
(2,479 posts)The Issa Bill, demands pensions are funded for 75 years, in a ten year time frame. No other agency, public, private, or corporation is required by the government to do this.
The loss is on paper--when you remove this obligation Issa has saddled them with, then turned a profit.
The idea behind it is as usual, to try to make it look dysfunctional, to rid the UPS and FedEx of government mail delivery, which will mean a further concentration of incomes. Workers will be paid less, the rich will get ever larger shares of the profit, and demand will further sag.
It's Republican bullshit.
Travis_0004
(5,417 posts)Triana
(22,666 posts)So they can claim it's inefficient and "doesn't work", and subsequently privatize it.
Kilgore
(1,733 posts)did it pass the house 410 to 20?
LanternWaste
(37,748 posts)Why then is the USPS held to fiduciary standards no other organization is?
Kilgore
(1,733 posts)And it stands for Generally Accepable Accounting Principles, and is the standard used in the private sector.
http://en.m.wikipedia.org/wiki/Generally_accepted_accounting_principles
A good example is the disclosure my former employer sends me yearly showing the health of the companies pension fund.
Government is not normally bound by GAAP and may or may not properly fund its pension plan. From this standpoint, congress forcing the PO to fully fund it's pension plan will benefit their retirees in the future assuming they can stand the pain now.
Triana
(22,666 posts)forcing USPS to pre-fund the present value of 75 years of its pension and health-benefit fund in 10 years -- about $5.5 billion annually for a business mandated to break even.
"This is a requirement that no other government agency, let alone a private company, must face."
And the USPS has been a model for prudent squirreling. As of Feb. 2012, it had more than $326 billion in assets in its retirement fund, good for covering 91% of future pension and health-care liabilities. In fact, on its pensions, the USPS is more than 100% funded, compared to 42% at the government and 80% at the average Fortune 1000 company. In health-care pre-funding, the USPS stands at 49%, which sounds not so good until you understand that the government doesn't pre-fund at all and that just 38% of Fortune 1000 companies do, at just a median 37% rate. The USPS does better than almost everyone.
Pre-funding is a burden that other government-linked firms don't have to face, notably defense companies. Lockheed Martin's (NYSE: LMT ) pension was underfunded by $13.3 billion as of Aug. 2012 -- nearly half of its market cap. Raytheon's (NYSE: RTN ) was underfunded by $6 billion, more than one-third of its market cap, and Boeing's (NYSE: BA ) by $16.6 billion, almost 30%. They have the luxury of profitability and time to fund their obligations. Another advantage: They can invest in a wide range of securities, while the USPS is forced to invest in only government bonds. Yeah, those bonds that, in some cases, pay less than 1% interest. So USPS has to save a lot more money now for the same payout later.
How the Postal Service Is Being Gutted:
http://www.fool.com/investing/general/2013/03/04/how-the-postal-service-is-being-gutted.aspx (Folks, this whole article is a worthy read. It explains how and why private interests ie: Fed Ex and UPS) are manipulating Congress into destroying the USPS by preventing it from being ABLE to act as a normal business or to complete with those private entities - all this, outside the damn poison pill Congress slammed USPS with in 2006). It's clear they want it GONE.
Kilgore
(1,733 posts)but trying to do it in ten years is a hard hill to climb. Probably should have been spread over twenty. We agree here.
I do not agree with your reasoning that just because government doesn't pre-fund its a bad idea to do so. The government "wing and a prayer" method of assuming future revenues will be there is simply a bad way to go and ultimately leaves the employee in a risky position. Would much rather have the security of knowing the money is there when retirement comes. Regular disclosures lets us keep an eye on it also.
We are lucky, our former company funds our plan 100% a few times over the years we worked there, the employees and the union confronted management when we noticed underfunding. If your company offers a pension, great!!. But take the time and read over the plan and the yearly updates they give you. Get vocal if they are not keeping their obligations, don't just hope for the best. This is how the companies your point out can get away with raiding the cookie jar.
This all is minor considering the deeper problem that a declining number of folks use their service. We are a perfect example. 100% of our bills, banking, and letter writing is online and email. We maybe get a first class letter a few times a year, but tons of junk mail daily which goes directly into recycling and never make it into the house. The USPS needs to find a service that folks like us would actually use. Hate to say it, but if it went away tomorrow, I don't think we would notice.
Kilgore
Triana
(22,666 posts)must follow, makes it an extreme mean-to-destroy poison pill bill, IMO - foisted on this agency by Republicans who hate public services and want them all privatized. And they are driven by private entities which will profit handsomely from said privatization (and they probably don't fund their retirement/health plans 100% either and never will - if they even have such plans).
Will have to disagree on the intent of this crap. IMO, (and that of many others) it's meant to destroy the USPS - partially why it's 10 years and not 20 or 25 at least.
Kilgore
(1,733 posts)I could be there with you if someone explains why the bill was massively bipartisan with only 20 in the house voting no.
liberalmike27
(2,479 posts)Call for spending the money, and leaving debt in its wake, in the form of treasuries, just like the rest of the debt? Where do you think the extra money is going, over the break-even? Straight into a budget,where they use the money for wars, and corporate tax breaks.
From what I can tell, this is NOT a requirement, as pensions have failed all over the place, companies folding and not having put anything away for employees, who were told they were part of the compensation.
madville
(7,397 posts)Because all the Democrats were in on it as well, repeating the myth that this was a Republican bill just makes one look uninformed. Kennedy and Waxman were the primary sponsors in the Senate and House.
arcane1
(38,613 posts)I wish things like this were brought up more in interviews and debates.
tech3149
(4,452 posts)Anyone who has paid attention to the issue knows that it is a manufactured crisis. Congress created the problem, they can fix it. I don't expect my contribution to change federal policy decisions only to inform my neighbors how they are being played.
And haven't Dems overall rolled over and played dead on the mandate?
madville
(7,397 posts)It's pretty hard for Democrats to fight something so many of them cosponsored and voted for.
Paolo123
(297 posts)That being said, at some point we need to recognize that technology is reducing the need for the post office given it's current services. Right now, I have no use for mail service. I have successfully moved all of my bills and such to online. I go to the mailbox to empty it of the junk that cluttered it up all week and it goes straight into the recycling bin.
I understand that many people still rely on the post office, but the number gets less and less every year.
I'd also add that I think junk mail needs to be stopped for the sake of the environment.
The fact is, that under its current list of services six days per weeks mail service may or may not be needed today, but the need for it is getting less and less every year.
I am not saying "let's cut the post office". What I am saying it "let's cut first class mail delivery and reduce junk mail". What to do with the post office? The current infrastructure is very valuable. The post office should be getting into the same or next day package delivery business with it. Also, I think the post office should take over the internet so that we could get internet service that is as good as what exists in europe.
But no, I don't think the post office needs to be delivering junk mail to people's houses six days per week.
EDITED TO ADD: The post office should also get into postal banking as well.
davidpdx
(22,000 posts)If we could get the 2006 law amended or repealed and add banking that maybe enough to stabilize the post office.
Paolo123
(297 posts)However people get mad at me for saying this, but it is time to start phasing out both first class and junk mail.
davidpdx
(22,000 posts)I use a mail forwarding service in the US and they weed out the junk mail, but sometimes I end up still getting it and other times things that look like junk (but aren't) get tossed.
former9thward
(31,806 posts)The post office would be out of business without it.
LoisB
(7,079 posts)that again.
davidpdx
(22,000 posts)If they had a bank that would be possible.
SoapBox
(18,791 posts)Don't forget about us. We cannot do everything electronically. Anyone that says that is the solution and that the PO is virtually irrelevant, does not have an understanding of a much larger picture.
Also keep in mind that they have cut staff by the tens to hundreds of thousands (don't forget that they have also closed hundreds to thousands of locations).
The pre-funding mandate is the BIG elephant in the financial room.
but the fact remains that the traditional services are less and less needed every where. I see progressives make the mistake (it seems to me) of arguing that everything is just find and dandy right now. It's not. What we should be pushing for is using the infrastructure for new services while recognizing that the old ones are slowly fading away.
elleng
(130,156 posts)The Postal Service released its Q3 results this morning and so far this year it has seen a 2.1 percent increase in revenue growth leading to $1 billion operating profit for the first three quarters. To learn more visit: http://bit.ly/1A7WvZw '
https://www.facebook.com/DeliveringforAmerica?fref=nf
USPS fiscal turnaround continues in Q3 2014
Monday, August 11, 2014
The Postal Service released its third quarter financial results this morning and the numbers tell a clear story: the USPS financial turnaround continues.
So far this year, USPS has seen growth in overall revenue, operating profit, letter mail revenue and shipping and package revenue.
Postal finances have seen steady improvement since 2012. Operating profit for the first three quarters of the year increased by $1.4 billion vs. 2013 and by $2.2 billion vs. 2012.
RufusTFirefly
(8,812 posts)We wouldn't want him to become "flat broke," now would we?
The effort continues to smear all public institutions as failures, so the vultures can swoop in.
24601
(3,940 posts)remained essentially governmental and run through normal appropriations & authorizations.
silvershadow
(10,336 posts)It is in the pension fund. nt
blkmusclmachine
(16,149 posts)blkmusclmachine
(16,149 posts)Triana
(22,666 posts)Kilgore
(1,733 posts)Hugin
(32,784 posts)AND... It's a service enshrined in the U.S. Constitution.
Lonusca
(202 posts)If you are talking about the delivery of essential mail, especially to rural communities that do not have another option, I completely agree with you.
But I don't think the 10 pounds of junk mail I throw away a week is a great service.
Kilgore
(1,733 posts)There was a day it was, but no longer. We no longer receive any bills or payments by mail. All have moved to the web. Newspapers and magazines are read online, and Netflix no longer sends us DVD's. Family and friends no longer write, but email or post instead. The stores we shop at offer online coupons.
I seriously cant remember the last time we received or sent a first class letter.
What the USPS seems to be great at is filling my mailbox full of CRAP that goes straight into recycling without even opening. If they would offer a filtering option to knock the flood back, we would sign up immediately.
Another thing thing we think they do great are the flat rate boxes and envelopes. Between buying and selling on Ebay and sending stuff to the kids, they are a great value and a service that needs to be expanded.
Kilgore
Hugin
(32,784 posts)Good luck with that at an average of $2.00 per day. (and the NSA feed)
I'm very happily paying my $4.00 per year with front door pick-up to support my mail order business.