1. The USPS is not technically “broke” — yet. Operationally speaking, the USPS nets profits every year. The financial problem it faces now comes from a 2006 Congressional mandate that requires the agency to “pre-pay” into a fund that covers health care costs for future retired employees. Under the mandate, the USPS is required to make an annual $5.5 billion payment over ten years, through 2016. These “prepayments” are largely responsible for the USPS’s financial losses over the past four years and the threat of shutdown that looms ahead – take the retirement fund out of the equation, and the postal service would have actually netted $1 billion in profits over this period. This doesn’t mean, however, that the USPS’s financial situation is good. Revenue has been declining for years, and even if the agency manages to get past this year’s $5.5 billion payment, it would again face insolvency next year. 2. The postal service doesn’t rely on taxpayer funds. Until 1971, mail delivery was handled by the Post Office Department, a Cabinet department in the federal government. Postal worker strikes prompted President Nixon to pass the Postal Reorganization Act in 1971, transforming it into the semi-independent agency we now know as the United States Postal Service. The USPS in its current form runs like a business, relies on postage for revenue and, for the most part, has not used taxpayer money since 1982, when postage stamps became “products” instead of forms of taxation. Taxpayer money is only used in some cases to pay for mailing voter materials to disabled and overseas Americans. USPS spokespersons have been adamant in emphasizing that they are not requesting taxpayer funds from the federal government to make this year’s payment. Rather, they say, the USPS is asking Congress to authorize access to an estimated $7 billion that they overpaid into the future retiree pension fund in previous years. 3. Junk mail sustains the system. Although the USPS does manage to turn a profit based on operations alone, it’s a widely known fact that mail volume has dipped over the past decade. As Americans by and large correspond and pay bills online, first-class mail and, as a result, postal revenue have gone into a decline. From 2006 to 2010, mail volume decreased by a hefty 20 percent. But although the days of custom stationery, handwritten letters and scented envelopes may be long gone, the USPS has been increasingly reliant on junk mail — advertisements, catalogs and other unsolicited mailbox “gifts” — to keep the service afloat. BusinessWeek notes that revenue from junk mail increased by 7.1 percent in the last quarter of 2010 – although volume has not increased since. Donahoe has also expressed optimism that junk mail volume and revenue will increase as the economy improves. But the lower cost of direct mailings means that more junk mail is needed to circulate in the system to make up for the accelerating loss of first-class mail.
Posted on: Wed, 19 Nov 2014 17:53:49 +0000
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