The Corner

USPS Prepares to Default, Reform Stalls

That’s the gist of a New York Times report today. While the U.S. Postal Service will continue to operate as before, it will not be able to make a required payment toward future retiree health benefits. This is not the first time these payments, at about $5.5 billion a year, have been a problem. In fact, the payment in question was already deferred from last year, and there’s another one due in September.

Congress required ten years’ worth of these “pre-funding” payments in a 2006 law, largely because USPS’s business was shrinking and future revenues couldn’t be expected to cover benefits. Until that point, USPS had been operating on a “pay as you go” model — i.e., not setting aside money for future benefits. To transition from that system to one that accounted for future obligations, a “catch-up” period was needed to make up for all the saving that hadn’t been done previously.

Meanwhile, a Senate plan to reform USPS has passed, but the House has yet to vote on its bill — and there are huge differences between what the Senate wants (e..g extending the catch-up period to 40 years) and what the House wants (e.g. cuts in services and changes to benefits).

The problem with extending the catch-up period is that USPS’s revenue is still not done shrinking thanks to the Internet — it’s hard to tell what the company will be able to afford decades in the future. And some of us are still holding out hope of privatizing USPS before then.

This will be interesting to watch.

You can read our past coverage of USPS’s problems here.

Most Popular

Culture

Courage: The Greatest of Virtues

EDITOR’S NOTE: The following is Jonah Goldberg’s weekly “news”letter, the G-File. Subscribe here to get the G-File delivered to your inbox on Fridays. Dear Reader (Or Listener), As the reporter assigned the job of writing the article about all of Sidney Blumenthal’s friends and supporters told his ... Read More
Immigration

My American Dream

This morning, at 8 a.m., I did something I’ve wanted to do for as long as I can remember: I became an American. I first applied for a visa in early 2011, and since then I have slowly worked my way through the system — first as a visa-holder, then as a permanent resident (green card), and, finally, as a ... Read More
U.S.

The Gun-Control Debate Could Break America

Last night, the nation witnessed what looked a lot like an extended version of the famous “two minutes hate” from George Orwell’s novel 1984. During a CNN town hall on gun control, a furious crowd of Americans jeered at two conservatives, Marco Rubio and Dana Loesch, who stood in defense of the Second ... Read More