An interview with postal workers Jim Kaufman and Jeff Levitt from Albany, New York, about the alleged financial crisis of the Postal Service
Jeff Levitt: It is an artificially created crisis. It’s created by the Congress. . . . In 2006, the Postal Service became an institution that is required to pre-fund future retiree health care costs. It is the only corporate entity in the United States that actually has to pay that at this point. Since 2006 the Postal Service has been paying between 3 and 5 billion dollars out of their receipts from postage for those expenses. No other organization, no other corporate entity, has to pay that. That has created much of the deficit that we now face as a business. Since we are a government service, since service is our most important product, unfortunately the response of the organization has been to cut back on services. They plan on cutting back tremendous amounts of services. . . . All of this is an artificially created crisis because in fact the Postal Service has overpaid into the federal retirement systems — depending on which figures you use, whether those of the Congressional Budget Office or various unions in the Postal Service — between 20 and 100 billion dollars. . . . This is the fourth time the Postal Service has been overcharged. In the past, the Postal Service was always reimbursed by the federal government for these overpayments. At the moment, though, since the federal government does not want to have the deficit by a hundred billion if they pay back the Postal Service this money that is owed to the Postal Service, they are balking on reimbursing the Postal Service for these overpayments. As a group, we are asking that the Congress allow the Postal Service to apply these overages from retirement toward the federal requirement for pre-funding health care for future retirees. If they could do the right thing here, they would relieve the Postal Service of that obligation, and our deficit would go away.
Jon Flanders is a member and former president of IAM LL 1145 and a member of the Troy Area Labor Council, AFL-CIO. The text above is an edited partial transcript of the interview. Cf. <www.apwu.org/issues-uspsfinances/>; “The APWU president has been asked to focus his testimony on USPS proposals for legislation that would abrogate the union’s Collective Bargaining Agreement. The USPS is asking Congress to enact laws that would separate postal workers from the Federal Employees Health Benefits Program and from federal retirement plans and that would allow the agency to lay off 120,000 employees. Guffey has denounced the proposals as a ‘reckless assault on the Postal Service and on postal employees.’ ‘The Postal Service is in danger of financial collapse,’ the union president noted, ‘but the cause of its financial difficulties are often misunderstood.’ The problem is a 2006 law that is pushing the Postal Service into bankruptcy, he pointed out. The Postal Accountability and Enhancement Act imposes a burden on the USPS that no other government agency or private company bears. It requires the Postal Service to ‘pre-fund’ the healthcare benefits of future retirees and forces the USPS to pay for a 75-year obligation in just 10 years — at a cost of more than $5 billion annually. Meanwhile, Guffey noted, two independent auditors have found that, due to a faulty funding formula, the USPS has overpaid its pension accounts by more than $50 billion. ‘Congress must get at the cause of the Postal Service’s financial crisis,’ he said. ‘Lawmakers must allow the Postal Service to apply the pension overpayments to the pre-funding requirement'” (“APWU President to Testify before Senate Committee,” American Postal Workers Union, 31 August 2011).