NALC: Say it ain’t so, Joe- USPS CFO tries to bamboozle the WSJ

“The situation now, as you can see, is fairly precarious. When you have roughly $4 billion of cash, and over $100 billion in liabilities, it doesn’t take a genius to figure out we’re in a financial crisis.”

—USPS Chief Financial Officer Joseph Corbett,

Wall Street Journal online edition,

June 18, 2014

June 18, 2014—Poor Joe Corbett. The Postal Service’s chief financial officer probably finds it hard to get out of bed each morning, knowing that his bank account holds only a fraction of what he owes on his home mortgage, car loan and credit cards. Then he has to go to work at the Postal Service and face, what he thinks, are the same daunting financial circumstances.

Of course, most Americans—geniuses or otherwise—know that comparing your total liabilities over the next several decades to a small fraction of your assets that’s held in cash is probably not the right way to approach the problem.

Kidding aside, Corbett, who was interviewed for a Wall Street Journal online edition blog post, knows perfectly well that he’s blowing smoke. The chart that he provided The Journal, comparing the Postal Service’s “total liabilities” to its current and projected cash balance, is designed to bamboozle readers into buying USPS’ plan to continue to dismantle the nation’s invaluable postal networks.

CFOs of major companies don’t compare their liabilities by comparing them to their companies’ cash balances. Rather they compare total liabilities to total assets. (See the NALC chart below).

This bogus comparison was designed to convince Journal readers that the USPS is near collapse and that its radical downsizing is in order. Corbett has been peddling this misleadingly selective liabilities chart for months to convince Congress that it’s time to radically slash services to the tens of millions of American businesses and households who rely on the Postal Service to conduct business and to communicate every day.

USPS wants to end Saturday delivery and phase out door delivery to tens of millions of homes and businesses, in favor of cluster boxes. We think there is a much better way.  We need fundamental reform to dramatically reduce the pre-funding burden, change how the retiree health fund is invested, improve USPS’ pension valuations, and modernize our pricing and new-product regulations.

So, let’s set the record straight.

Yes, the U.S. Postal Service’s financial situation is fragile, thanks mostly to Congress, which imposed a crushing mandate on USPS in 2006 to pre-fund decades’ worth of future retiree health premiums over the past seven and a half years. Indeed, 83 percent of the $47 billion in USPS losses since 2007 are due to the pre-funding expenses, a burden no other company in America faces.

And although the Postal Service’s $4 billion cash balance is dangerously low, it’s up dramatically from its level of $1 billion in 2011.

That’s because the Postal Service has bounced back from the Great Recession. As the economy has slowly rebounded, USPS has recovered on the strength of booming e-commerce deliveries and growing advertising volume, which have more than offset the decline in First Class Mail due to Internet diversion.

Indeed, over the first two quarters of 2014, package revenue growth of $730 million strongly outpaced the $230 million decline in letter mail revenue.

If the Postal Service wanted to have an honest discussion of liabilities, it would not just show unfunded liabilities marked to market with current interest rates. Nor would it ignore it assets, similarly marked to market.

The NALC chart below offers a more accurate picture of the Postal Service’s assets and liabilities. Although the chart leaves out workers’ compensation liabilities, which have been temporarily inflated due to record low interest rates, it shows that the Postal Service’s pensions are nearly fully funded and that the USPS has pre-funded a much greater share of future retiree health benefits than most, if not all, Fortune 1000 companies. Indeed, two-thirds of such companies don’t pre-fund retiree health benefits at all.

The NALC chart also shows that, with its real estate carried at market value, the Postal Service’s overall financial picture is stronger than Corbett tried to suggest with the chart he provided The Journal.

Indeed, if the Postal Service or the Office of Personnel Management were allowed to invest USPS’ $290 billion retiree pension fund and its $47 billion retiree health fund in a safe mix of long-term index funds offered by the federal Thrift Savings Plan, the Postal Service’s liabilities would be massively over-funded. (Under current law, these funds must be invested in low-yielding Treasury securities.)

We doubt many of The Journal’s sophisticated readers or writers fell for what Corbett was peddling. But the Postal Service clearly hopes Congress will.


  • Eric Simon

    The NALC still trying to protect their NALC dues and membership decline if the Saturday service is eliminated. Now who is really blowing smoke?

  • Just judy

    Looks to me like everyone is blowing smoke


    Yes. Mr. Corbett also gets Free Health Benefits. Nice job ; if you can get it. 800 Postal Executives get free health benefits .I guess that is not in the report.

  • common sense

    How does that work Eric? Are you saying that the NALC leadership wants to protect its members jobs? Isn’t that what a union is for? Are you suggesting that the union should fight to get its members laid off?


  • Truth Sayer

    Not true, executive free health care stopped 4 years ago

  • Nick Danger

    Another scab

  • Eric Simon

    No it’s time to move on as it relates to the topic of Saturday deliver. It’s no longer necessary and will assist the financially strapped Postal Service. The sooner Saturday deliver is stopped the better.


    Hey Truth Sayer I heard that 4 years ago also. Truth. I have been TOLD many times that Free Health Benefits was eliminated 4 years ago. I have never seen the writing. Sorry; I don’t believe chatter. Chatter don’t matter. Active Retired Letter Carrier

  • postalnews

    Free health insurance for PCES and officers ended in 2012. See EL-380, page 18. It was announced in the 2011 Annual Report:

    “Currently, the Postal Service pays the full cost of the premium for its officers and executives. Beginning in January 2012, the Postal Service will, over a three-year period, increase the percentage its officers and executives pay until the percentage matches the percentage paid by employees in the rest of the federal government. In 2012, the Postal Service share of the premium will be reduced from 100 percent to 91 percent of the federal weighted average premium, limited to not more than 94.75 percent of the total premium for any given plan, and enrolled officers and executives will pay the balance of the premium for the plan they select.”

  • Eric Simon

    Not a scab Nick Danger just a 29 year employee with common sense.

  • CutTheCrap

    This is total bulldookie as we’ll. I LOVE the excuse for not showing workmans comp liabilities. Why is this? BC half the injuries at USPS are bogus! That and the amount is damn near what the prefunding liability is. Both the USPS and the NALC think they can mind eff people, but I’m far from stupid. Nice try though. Fight for your lives little birdies.

  • common sense

    Nice evasion of the question, Eric! You were asked why you have a problem with a union trying to protect it’s members jobs. Try answering.

  • common sense

    I’m guessing this may be over your head, but I’ll try anyway- there is a very simple reason to ignore the workers comp future valuation number- like it says in the USPS report, it is s “NON-CASH” entry- it doesn’t have anything to do with the USPS’s cash flow.

    Workers comp expenses (what the USPS actually pays out) are fully reflected in the numbers used by the USPS and the NALC.The future workers comp liability number, on the other hand, is an estimate of what the USPS would have to set aside right now to cover all future workers comp expenses.

    The USPS doesn’t have to do that right now. And the number is really just a wild guess, since it has to take into account how much interest the USPS would get on all that money- if it had it in the first place!

    So don’t sell yourself short, little guy! You are much closer to stupid than you give yourself credit for!

  • CutTheCrap

    And they might or might not pay it DIRECTLY you short sighted jackass but the routes these works vacated have to be covered…they don’t run themselves.and they’re often covered with workers who are being paid overtime. Again it’s a numbers game, on both sides. Go ahead and spout of the typical line. #iRobot

  • common sense

    Wow, you really can’t even piece together a coherent sentence, can you? No idea what you’re talking about now. You started off with the workers comp liability, which I explained to you, and now we’re on “the routes these works vacated”. Is English not your first language?

    If you’re talking about carriers out on workers comp, then yes, I think we all know that their routes still have to be covered. Thanks for the news flash!

    What does that have to do with your original rant about the comp liability? As I also explained to you, current workers comp expenses are included in the expense calculations, USPS or NALC- nothing hidden there. The expense of having someone else deliver the mail is also there- but it is obviously not an additional expense- if a carrier’s out on comp indefinitely, someone else delivers the mail- doesn’t cost any more than it would if the original carrier was still on duty.

    Not too good with the numbers, are you little buddy?

  • CutTheCrap

    I’m not going to argue with someone who is going to nitpick a mistake with auto correct. My point SIR is that this is all a big numbers game, pissing match between the union and usps. USPS puts out BS numbers and woe is us lies, and the union puts out BS numbers and “the big bad company is out to destroy us” speech, 50% of which is nothing but big scary emotionally charged words (dismantle, anyone) trying to garner pity. As George Carlin says, it’s all BS and it’s all bad for you.

  • Eric Simon

    No nonsense I would expect nothing less from the NALC but can you give me one good reason why Saturday delivery should not be eliminated. Is the public in a major uproar over the potential loss of Saturday service….NO! Is the savings significant enough that Congress should immediately authorize the Service to cease Saturday delivery….YES! And what good reason does the NALC have other than their full support to discontinue Saturday mail delivery…..YES, membership decline. Look nonsense it’s going to happen just how quick and mark this down once it’s authorized your just around the corner when another delivery day is eliminated leaving four public delivery days……..and a part-time workforce.

  • anon

    The union also left the $15 billion of Debt off its chart. And as for the $85 billion of Real Estate assets, even if the amount were true if you sell the Post Offices where do you work, out on the streets? Those Post Offices would have to be replaced with others so the $85 billion couldn’t be used to offset the liabilities.

  • common sense

    Thank you for proving my point- that you don’t have a clue what you’re talking about, and when someone points out your errors, you can only whine about nit-picking and quote George Carlin. Like Ted Williams once said. “If you don’t think too good, don’t think too much”.

  • common sense

    So, in other words, since postal jobs are in decline anyway, the union should give up fighting for its members’ jobs. Now I get the nonsense about dues- you apparently think the ONLY thing the union should do is collect dues, and leave the members to fend for themselves.

    Thanks for clearing that up!

  • common sense

    Who needs post offices? I thought the whole idea was that the USPS is supposed to go out of business soon! Why else the accelerated funding of retiree health benefits rather than paying them as you go? The real estate is obviously not the most liquid asset, but it’s still an asset, and given that the USPS is already selling off property, and presumably will sell even more as its business declines, it’s reasonable to include it.

    You’re right about the debt though. Even though it exists solely because of PAEA, if you include the trust fund as an asset, you have to include the $15 billion of it that is borrowed as a liability. But it’s less than 4% of the total USPS liability, and in any case, $15 billion is less than a rounding error compared with the national debt!

  • freecountry

    Not necessary for who? The rural people and the elderly want their mail on Saturdays. I personally get orders for my business on Saturdays. WHY do you think that rural GOP politicians are supporting keeping Saturday mail for their constituents??

  • Liam Skye

    If you are really trying to make the argument that the real estate assets don’t count because you can’t liquidate them immediately then you must also admit that the long term liabilities don’t count because USPS doesn’t have to pay them immediately. I suggest you take a couple of business courses so you have a better understanding how business finance works.

  • Eric Simon

    Your very welcome non-sense