The Institute for Research on the Economics of Taxation (IRET) has released a report on the USPS OIG’s contention that the Postal Service has been overcharged up to $75 billion by the Office of Personnel Management for Civil Service Retirement costs since 1971. While IRET is a well known right wing “think tank” financed by, among others, the Scaife and Koch family foundations, it’s difficult to argue with one crucial point raised by the report: even if one accepts the proposition that the USPS overpaid the Treasury by $75 billion since 1971, it isn’t owed any money.
That conclusion stems from the simple fact of the USPS rate setting process- because the USPS was required to break even over time, its rates took into consideration all of its expenses- including the alleged $75 billion overcharge. Had the USPS been charged $75 billion less, its rates would have been proportionately lower, leaving its cumulative net income unchanged.
The report goes on to point out that it would be impossible to reimburse the people who actually paid for the overcharges- postal customers:
… it is not possible to send refunds to those who ultimately paid the bills. As was noted, rate regulation allowed the Postal Service to pass on to mail users its higher costs due to the CSRS allocation methodology. If the methodology is retroactively reversed, it is those customers who should receive refund checks; the Service should not obtain the money because it was already compensated through the postal rates it charged. Unfortunately, it is impossible now to identify those past mail users and determine how much each is owed. One might rationalize that the Postal Service would probably pass along some of the refund to future mailers in the form of lower rates, but future mailers will often be different from past mailers, especially with the shift over time from first-class mail to standard (advertising) mail.
The report is careful to distinguish between the alleged CSRS overpayment and the future retiree health benefits trust fund, pointing out that “The Postal Serviceâ€™s current financial troubles are due… to the triple whammy of the severe recession, accelerated electronic diversion since the recessionâ€™s start, and an ambitious and inflexible schedule for funding the retiree health benefits promised to postal employees.”