Let’s start with the USPS mandate: It was formed with a very different directive than its private-sector competitors, such as FedEx Corp. and United Parcel Service Inc. Those two giant private shippers, along with a bevy of smaller ones, are for-profit companies that can charge whatever they believe the market will bear. The USPS, by contrast, is charged with delivering to every home and business in America, no matter how remote. And, they can only charge what Congress allows; increases require approval. It also has congressional pressure and oversight on where it must maintain postal offices. The USPS has been slowly closing sites where there is insufficient customer demand. But closing an obsolete or little-used facility invariably entails a battle with each representative, who in turn faces voter anger when the local post office is targeted for closing. FedEx or UPS can open or close locations with little problem as demand and package traffic dictate.
Then there is the Postal Accountability and Enhancement Act of 2006 (PAEA), which some have taken to calling “the most insane law” ever passed by Congress. The law requires the Postal Service, which receives no taxpayer subsidies, to prefund its retirees’ health benefits for 75 years into the future — this covers the health cost of employees not yet hired, and in many cases not even born yet. If that doesn’t meet the definition of insanity, I don’t know what does. This is a $5 billion per year cost; it is a requirement that no other entity, private or public, has to make. Without this obligation, the Post Office actually turns a profit. Some have called this a “manufactured crisis.” It’s also significant that lots of companies benefit from the burden that make the USPS less competitive; these same companies might also would benefit from full USPS privatization, a goal that has been pushed by several conservative think tanks for years.
Paying retiree obligations isn’t the issue here; rather, being singled out as the only company with a congressional requirement to fully fund those obligations is. It puts the USPS at a huge competitive disadvantage. Yes, a retirement crisis is brewing; most private-sector pensions are wildly underfunded. But the solution is to mandate that ALL companies cover a higher percentage of their future obligations — not just one entity.