The famous mantra of Bill Clinton’s 1992 presidential campaign was: “It’s the economy, stupid!” It was adopted to force everybody involved to stay focused on the most important issue facing the country.
We need that same kind of focus right now when it comes to the debate over the future of the Postal Service: It’s the pre-funding, stupid.
So much of the recent press coverage on the Postal Service has focused on Amazon packages, falling letter mail volume and postal retirement costs, but the real driver of postal finances is the Congressional mandate to prefund retiree health premiums decades in advance. That 2006 mandate accounts for some 90% of recorded losses since 2007. That should be the focus in Congress, in the media and in the new White House task force on the USPS.
A lot of reporters and commentators, including those who support a strong Postal Service, get the basics wrong. Yes, letter mail volume has declined as a result of the internet. But we still deliver nearly 500 million such letters every day and the USPS has cut costs, adapted and raised productivity to record levels – even as it has facilitated a boom in e-commerce deliveries from hundreds of thousands of merchants (including Amazon). And no, the problem is not with postal “pension costs.” Too many reporters get this wrong: Our pension funds are better funded than most private plans – even though we are forced to invest all the funds in low-yielding Treasury bonds.
The real issue is pre-funding future retiree health benefits. This has cost us between $5.5 and $5.8 billion per year since 2007. No other enterprise has to do it. The key to strengthening the Postal Service is ending or reforming this mandate. There are many alternative ways to do it (see the President’s Message from the May issue of The Postal Record), but all the parties involved in the debate over the Postal Service need to stay focused on this central issue.
As NALC members, you can do your part by spreading this message far and wide: It’s time for Congress to relieve the pre-funding burden.