In response to a comment posted on his Facebook page, Congressman Dennis Ross says that the US Postal Service hasn’t overpaid any obligations. Ross says the prefunding requirement is appropriate because, well, because Congress said it was appropriate:
The USPS did not "overpay" any bill. It was required to prefund retirement. I will grant that prefunding is rare, but not unheard of. Nor should it be out of the ordinary. Prefunding protects future retirees and is more cost effective in the long run. But in the end, USPS retirement and health benefits have the guarantee of the taxpayer. To NOT prefund is to toss that risk more to the taxpayer. But all the prefunding argument is meaningless if the USPS continues to operate at labor costs of 80% of revenues. 1st class mail is going, going, and will be gone in the future. Either USPS changes its business model (and yes, reduces staffing), or the taxpayers will demand it be privatized or sold. That is reality.
Of course, as several commenters have pointed out, the prefunding requirement is a big chunk of that 80% in labor costs. Last fiscal year, the USPS had $67 billion in revenue- the mandated $5.5 billion future retiree prefunding requirement amounts to 8% of revenue. Conservatives like Ross love to lecture the USPS on how it should be run “like a business”, but I doubt that they can find an example of a successful private business that sets aside 8% of current revenue to overfund future hypothetical retiree health benefits. Congress has, in effect, increased the postal service’s labor costs by ten percent, and now demands that postal workers make up for it in reduced pay and benefits.
The other obvious problem with Ross’s comment is his position that the prefunding is appropriate simply because that’s what the law says. Strangely enough, he doesn’t seem to feel that way about other laws, like the ones that created Medicare and Health Care reform. Why is it OK to repeal Medicare, but PAEA is considered sacred?