U.S. Postal Service to Stop Paying Into Pension Fund

[bobbyw24]

The U.S. Postal Service, facing insolvency unless it gets approval to delay a $5.5 billion payment for worker health benefits, will suspend contributions to an employee retirement account to save $800 million this year.

The Postal Service will stop paying employer contributions to the defined-benefit Federal Employees Retirement System, which covers about 85 percent of career postal workers, it said today in an e-mailed statement. The $115 million payment, made every other week, will stop on June 24, the statement said.

http://www.bloomberg.com/news/2011-0...sion-fund.html

[Sola_Fide]

Bailout time!

[Michael P]

The ineptness of the Postal Service really sums up the Federal Government. The inability to compete with UPS & Fedex, the amount of small offices and employees that should have been replaced years ago with drop boxes and stamp machines, the way they are trying to squeeze city carriers on office time instead of street time, way too many middle management positions... I could easily name 100 errors TPTB at the Post Office have made in a really out-of-touch & idiotic manner.

[Seraphim]

Same here for Canada Post.

Brutal.

The ineptness of the Postal Service really sums up the Federal Government. The inability to compete with UPS & Fedex, the amount of small offices and employees that should have been replaced years ago with drop boxes and stamp machines, the way they are trying to squeeze city carriers on office time instead of street time, way too many middle management positions... I could easily name 100 errors TPTB at the Post Office have made in a really out-of-touch & idiotic manner.

[specsaregood]

The ineptness of the Postal Service really sums up the Federal Government. The inability to compete with UPS & Fedex, the amount of small offices and employees that should have been replaced years ago with drop boxes and stamp machines, the way they are trying to squeeze city carriers on office time instead of street time, way too many middle management positions... I could easily name 100 errors TPTB at the Post Office have made in a really out-of-touch & idiotic manner.

Interestingly enough FEDEX uses the USPS to ship orders using at least one of their services. FEDEX smartpost:
http://en.wikipedia.org/wiki/FedEx_Ground

FedEx SmartPost specializes in the consolidation and delivery of high volumes of low-weight, less time-sensitive business-to-consumer packages, using the US Postal Service[1] for final delivery to residences. FedEx SmartPost’s customers include e-tailers and catalog companies. Through its network of 26 distribution hubs, FedEx SmartPost provides delivery Monday through Saturday to all residential addresses in the U.S., including P.O. Boxes and military destinations.

How does that fit into your theory that the usps can't compete with ups and fedex?

[Gaddafi Duck]

Interestingly enough FEDEX uses the USPS to ship orders using at least one of their services. FEDEX smartpost:
http://en.wikipedia.org/wiki/FedEx_Ground

How does that fit into your theory that the usps can't compete with ups and fedex?

Easy--private postal companies in the past delivered first class mail cheaper than the USPS did. Even now, with the USPS's first class subsidized rates, private companies could still outcompete them if it weren't for federal restrictions on first class mail delivery.

If private companies like UPS/FedEx can deliver packages and still compete with USPS, what makes you think they can't deliver letters as well? Simple partnerships with the USPS doesn't negate free market mail's competency. Companies outsource all the time, not because they are inefficient, but because they choose to focus on their core competencies (their big fish), while throwing the leftovers to other companies.

Welcome to the late 20th/early 21st century of business. Most companies do this.

[specsaregood]

Easy--private postal companies in the past delivered first class mail cheaper than the USPS did. Even now, with the USPS's first class subsidized rates, private companies could still outcompete them if it weren't for federal restrictions on first class mail delivery.

If private companies like UPS/FedEx can deliver packages and still compete with USPS, what makes you think they can't deliver letters as well?

Because as I pointed out in my example fedex outsources delivery of some packages to the USPS for final delivery to people's homes because it is cheaper than they can provide themselves, not because they aren't allowed to delivery it.

[Gaddafi Duck]

Because as I pointed out in my example fedex outsources delivery of some packages to the USPS for final delivery to people's homes because it is cheaper than they can provide themselves, not because they aren't allowed to delivery it.

Simple partnerships with the USPS doesn't negate free market mail's competency. Companies outsource all the time, not because they are inefficient, but because they choose to focus on their core competencies (their big fish), while throwing the leftovers to other companies.

Welcome to the late 20th/early 21st century of business. Most companies do this.

By your measure, any company that outsources must be inefficient?

[gls]

What's a "pension"?

We don't have those in the non-coercive sector.

[specsaregood]

Simple partnerships with the USPS doesn't negate free market mail's competency.

Of course I never said it did.

The quote I was referring to was:

The inability to compete with UPS & Fedex

Which is not completely accurate since they clearly do compete in the delivery to the last mile for many packages, otherwise they wouldn't be getting outsourced to

Companies outsource all the time, not because they are inefficient, but because they choose to focus on their core competencies (their big fish), while throwing the leftovers to other companies.

Yes, companies do outsource all the time, but it isn't necessary "leftovers" or "scraps" but offloading work onto companies with DIFFERENT core competencies and usually taking a cut off the top for little risk and investment. Perhaps USPS has different competencies, not a lack of ability to compete.

Welcome to the late 20th/early 21st century of business. Most companies do this.

I'm fairly certain it has been going on much longer than that.

[VBRonPaulFan]

The USPS is failing because it's extremely management heavy and there is an overwhelming bureaucracy that keeps the offices from running efficiently. The local managers don't get to make decisions on how best to spend funding for that office - so if they really need new machines to process mail they can't get them even though they've been given funding to repave a parking lot that is still in good shape.

Also Gaddafi, the USPS isn't taxpayer subsidized. It is completely self-sufficient, and the only government benefit they get is extremely low interest loans directly from the treasury, I believe.

[specsaregood]

The USPS is failing because it's extremely management heavy and there is an overwhelming bureaucracy that keeps the offices from running efficiently. The local managers don't get to make decisions on how best to spend funding for that office - so if they really need new machines to process mail they can't get them even though they've been given funding to repave a parking lot that is still in good shape.

And one problem they have is govt mandates regarding compensation and payments into pension plans, for example:

For three years, the Postal Service has been asking the Congress to alter the payment schedule of a mandate in a 2006 law that, unlike any other federal agency, requires the Postal Service to prefund retiree health benefits in amounts approximating $5.5 billion. In addition, the Postal Service has asked to gain access to $50 to $75 billion in overpayments it has made to the Civil Service Retirement System (CSRS) and a $6.9 billion it has overpaid to the Federal Employees Retirement System (FERS).

They wouldn't be facing any shortfalls right now if they had access to $ they OVERPAID in the past.

[Gaddafi Duck]

The quote I was referring to was:

Which is not completely accurate since they clearly do compete in the delivery to the last mile for many packages, otherwise they wouldn't be getting outsourced to

Yeah, they compete so well that they end up losing billions of dollars each year and get bailed out consistently.

By that standard, the big banks are great companies because they're massive, have consistently secured their markets for decades, have lost, now, trillions of dollars, but have been bailed out.

I don't think you figured any of this into your argument. Yes, the USPS can compete with UPS/FedEx when it receives billions in supplemental income each year from the federal government. Who the hell couldn't compete with that advantage?

[Seraphim]

For once I totally agree with The Duck.

Yeah, they compete so well that they end up losing billions of dollars each year and get bailed out consistently.

By that standard, the big banks are great companies because they're massive, have consistently secured their markets for decades, have lost, now, trillions of dollars, but have been bailed out.

I don't think you figured any of this into your argument. Yes, the USPS can compete with UPS/FedEx when it receives billions in supplemental income each year from the federal government. Who the hell couldn't compete with that advantage?

[specsaregood]

Yeah, they compete so well that they end up losing billions of dollars each year and get bailed out consistently.

By that standard, the big banks are great companies because they're massive, have consistently secured their markets for decades, have lost, now, trillions of dollars, but have been bailed out.

I don't think you figured any of this into your argument. Yes, the USPS can compete with UPS/FedEx when it receives billions in supplemental income each year from the federal government. Who the hell couldn't compete with that advantage?

Really? please list all the bailouts and subsidies the usps has recieved? Are they more or less than the amount they have OVERPAID to the federal government and should really be on their books instead of the fed.

How much tax money does the USPS receive each year?

[Gaddafi Duck]

Also Gaddafi, the USPS isn't taxpayer subsidized. It is completely self-sufficient, and the only government benefit they get is extremely low interest loans directly from the treasury, I believe.

Yes, it is taxpayer subsidized. Anytime it gets into trouble, which is every year, it receives a federal bailout. So when that $0.45 stamp is used on your next letter, the real cost of mailing it is likely higher, say $0.50 or whatever the number is, given that at a $0.45/letter rate, they still manage to lose billions of dollars. Obviously $0.45 is too low, and the USPS is still in operation after losing money year over year, so unless it has a massive war chest, that money is coming from the Federal Government, which in turn is taxpayer money.

Yes, it is taxpayer subsidized.

[Gaddafi Duck]

Really? please list all the bailouts and subsidies the usps has recieved? Are they more or less than the amount they have OVERPAID to the federal government and should really be on their books instead of the fed.

How much tax money does the USPS receive each year?

So you acknowledge the USPS is billions of dollars in the red. How can you say a company that is losing money the more it operates as a company that is successfully competing with profitable ones?

And google is your friend. I'm not going to write a research paper for you. If you come ill-equipped to an argument asking for sources, then don't argue perhaps. It's well established the USPS has received aid from the federal government. Hard not to when you're in the red year over year.

[specsaregood]

So you acknowledge the USPS is billions of dollars in the red. How can you say a company that is losing money the more it operates as a company that is successfully competing with profitable ones?

And at the same time has overpaid the federal government to the tune of about 75billion?

[Gaddafi Duck]

And at the same time has overpaid the federal government to the tune of about 75billion?

So wait, a company that has an open window to borrow from the Treasury at subsidized low interest rates is NOT being bailed out?

So banks that borrow from the Fed/each other in order to stay above regulatory reserve requirements are perfectly solvent?

Funny how I'm sure you'd reject the notion of me borrowing from the Feds at low interest rates, yet if the USPS does it, it's a great company that "competes" with FedEx.

Where does the USPS get this magical money every year operating at losses? The government.

[Gaddafi Duck]

Oh look, Google found it for me:

[the USPS] finances itself from cash from operations and borrowing from the Federal Financing Bank, which is under the supervision of the U.S. Treasury.

In 2008, USPS’s borrowing amounted to $7.2 billion, an increase of $3 billion from the end of fiscal year 2007.

In addition,

Although it operates as a private enterprise, it does not pay federal or local taxes, may borrow from the Treasury at discounted rates, and can use governmental rights of eminent domain to attain private property.

No taxes, eh?? That's a huge $#@!in' savings. But it's not being bailed out, and it's "competing" with FedEx.

Game, set, match.

[specsaregood]

So wait, a company that has an open window to borrow from the Treasury at subsidized low interest rates is NOT being bailed out?

Nope, sounds like a bailout. I never said they didn't. Now, would they need the bailout if they didn't have govt mandates requiring them to prepay pension funds or had the overpayment on their books? Two issues I've brought up already in this thread.

Funny how I'm sure you'd reject the notion of me borrowing from the Feds at low interest rates, yet if the USPS does it, it's a great company that "competes" with FedEx.

Well actually, I pointed out how FEDEX outsources to USPS for different core competencies. It is less "competition" when you are working together. In way you are making the argument that fedex too is benefitting from those subsidies and bailouts; since they wouldn't be there to outsource too without the bailouts.

And UPS, fedex claims they got backdoor bailed out too: http://www.ritholtz.com/blog/2010/07...ing-bailedout/

[gls]

Of course the USPS would not be competitive in a free market -- not only does it receive taxpayer funded artificially low-interest loans, but it also enjoys a legal monopoly on first-class (letter sized) mail.

[specsaregood]

Of course the USPS would not be competitive in a free market -- not only does it receive taxpayer funded artificially low-interest loans, but it also enjoys a legal monopoly on first-class (letter sized) mail.

But in a free market would they not be able to change their focus better, change employment compensation plans, etc which might allow them to be competitive?

[VBRonPaulFan]

The USPS doesn't run in the red every year, but they have the past couple of years. Look it up.

http://www.usps.com/financials/ar/welcome.htm

And I can deal with them getting a break on taxes, since they are one of the few constitutionally delegated powers to the government. Would I be open to that changing? Maybe. I'm not completely convinced that UPS or FedEx would pick up the slack and do the same thing that the USPS does - which is delivering mail directly to your home. Most likely they'd say $#@! that, you guys can come to some localized location and pick your $#@! up when you want, instead.

[Gaddafi Duck]

But in a free market would they not be able to change their focus better, change employment compensation plans, etc which might allow them to be competitive?

USPS in 2007 paid $0 in income taxes, because they don't have to by law. FedEx in 2007 paid $1.2 billion. USPS has access to subsidized low interest rate borrowing, which they did in a tune of $7.2 billion. FedEx has no such privileges.

So, just the financial setup, USPS is given a $8.4 billion/year handicap right off the bat. That's not even including the numerous other privileges it has--just what it can borrow for literally free, and what it doesn't have to pay for in taxes.

But they're "competing," right? Right?

[specsaregood]

USPS in 2007 paid $0 in income taxes, because they don't have to by law. FedEx in 2007 paid $1.2 billion. USPS has access to subsidized low interest rate borrowing, which they did in a tune of $7.2 billion. FedEx has no such privileges.

So, just the financial setup, USPS is given a $8.4 billion/year handicap right off the bat. That's not even including the numerous other privileges it has--just what it can borrow for literally free, and what it doesn't have to pay for in taxes.

But they're "competing," right? Right?

No, they are enabling FEDEX to get backdoor govt subsidized by allowing fedex to outsource to them.

[Gaddafi Duck]

No, they are enabling FEDEX to get backdoor govt subsidized by allowing fedex to outsource to them.

Grasping at straws aren't you?

I suppose FedEx is subsidized as well because they use government roads. In that case, everything is subsidized in America.

If you can extrapolate a conclusion like that, then your logic is no different from the Supreme Court's decision on interstate commerce.

Anyway, your original argument about the USPS 'competes' with FedEx in an apples to oranges comparison, was destroyed. USPS has blatant handicaps in place and someone like yourself actually is comparing the output of USPS with that of FedEx. You forget productivity includes the inputs.

[specsaregood]

Grasping at straws aren't you?

Not really, taking your absurdity to the next level for the hell of it.

Anyway, your original argument about the USPS 'competes' with FedEx in an apples to oranges comparison, was destroyed. USPS has blatant handicaps in place and someone like yourself actually is comparing the output of USPS with that of FedEx. You forget productivity includes the inputs.

You destroyed nothing as you chose not to play the game and avoided answering any of the questions given.

It was not my original argument, it was somebody elses argument that USPS has been unable to compete, I provided plenty of evidence that it is not the case as they have not tried to compete in the same arena as their focus is on other products. And those companies work with USPS to enhance their offerings.

[HOLLYWOOD]

http://www.google.com/url?sa=t&sourc...O6dbsg&cad=rja

 2010 operating revenue was $67 billion and expenses were $75.2 billion.
* 170 billion pieces of mail delivered in 2010.
* In 2010, First-Class Mail accounted for 51% of USPS revenues and 46% of total mail volume.
* In 2010, Standard Mail accounted for 48% of mail volume and about 26% of overall revenue.
* 583,908 career employees, 87,779 non-career employees, down from 696,138 career employees and 100,061 in 2006.
* More than 85% of postal employees are covered by collective bargaining agreements.
* There are about 32,000 post offices, stations and branches, as well as 528 processing facilities.
* The USPS fleet consists of 215,000 vehicles.

Government efficiency...


http://www.hulu.com/embed/AmuCTb1tvO-5YOc5N-97Mg

[Dustancostine]

The USPS doesn't run in the red every year, but they have the past couple of years. Look it up.

http://www.usps.com/financials/ar/welcome.htm

And I can deal with them getting a break on taxes, since they are one of the few constitutionally delegated powers to the government. Would I be open to that changing? Maybe. I'm not completely convinced that UPS or FedEx would pick up the slack and do the same thing that the USPS does - which is delivering mail directly to your home. Most likely they'd say $#@! that, you guys can come to some localized location and pick your $#@! up when you want, instead.

This is exactly what the USPS does in my city, my population is 1,400 and the local Post Office forces you to buy a PO Box if you want delivery of your mail, and they will not deliver it to your house.