August 4, 2012 by David K. Sutton

USPS defaults on $5.5 billion payment. Is congress purposely killing the Postal Service?

On Wednesday the United States Postal Services was unable to make a $5.5 billion payment due to the U.S. Treasury. This is the first ever default by the “off-budget” service. I say off budget because the USPS is self-sufficient. It’s operating costs are paid for by the services it sells (i.e. stamps). The requirement to pay the $5.5 billion is a problem that congress created and since congress has chosen to allow the USPS to default, I have one simple question: Is congress intentionally trying to kill the Postal Service?

In 2002, it was discovered that the Postal Service was wildly overpaying its retirement obligations to the tune of $71 billion. Not surprisingly, it soon began advocating for ways to use some of that excess. One bill passed that did almost nothing to solve the problem. Later bills that would have fixed the problem, however, all ran into the same stumbling block: they would have ostensibly added to the deficit. And the Bush administration was adamant that it would veto any bill that wasn’t deficit-neutral.

Thus it was that a new fund was established in 2006 — for the prepayment of health benefits for future retirees, with the Postal Service agreeing to pay between $5.5 billion and $5.8 billion annually. The money simply goes into an escrow account, where it is invested in special issue Treasury securities. Thus does it somehow magically help with the deficit. Also, of course, no sooner did the bill become law than first class mail began to fall off the cliff. The prefunding requirement became a noose around the Postal Service’s neck. / It’s D-Day for the Post Office – Joe Nocera, New York Times Op-Ed Columnist

There’s no question that the Postal Service faces challenges in an increasingly digital world. USPS commercials advocating the use of paper statements instead of electronic statements will not change this trend. However, there will still be a need for mail delivery, even in a digital world, and since the Postal Service also delivers packages, that part of their service offering should expand as more people buy products online.

Therefore, the problem isn’t the decline of mail service, it’s congress. Congress created this insane burden, almost like it was intentionally trying to end the Postal Service. Hell, many members of congress already want to privatize roads, bridges, parks, so why not privatize the Postal Service as well? Is that too cynical? I don’t know how else to explain why congress is unable to act to save the Postal Service when it should be a non-partisan issue.

And if you find it acceptable to kill off or privatize the Postal Service I ask you to keep in mind two things: