Its expenses are also growing faster than its revenue because of increased wages, a decrease in mail volume, and something known as pre-funded healthcare — a hot topic within the postal community. The only silver lining is that the loss was below the red-ink tsunami of $15.9 billion in 2012. The funds are currently awaiting approval from the US Treasury Department. The U.S. Government Accountability Office (GAO) calls the post office’s financial viability a high-risk issue, saying, “Comprehensive legislative reform and additional cost-cutting measures are needed for the U.S. Copyright AFP 2017-2020. Postmaster Louis DeJoy has been invited to testify in front of the House Oversight Committee “in a sign of congressional concern over the possibility of delays.”, The testimony was reportedly requested "to examine recent changes to U.S. In 2006, the Postal Accountability and Enhancement Act (PAEA) ordered the USPS to pre-fund employee retiree health benefits for the next 75 years. So it’s your books of stamps, flat-rate boxes, packing and shipping materials, and even the adorable greeting cards they offer at checkout that keeps their operations running. All rights reserved. The Postal Service's debt "is a direct result of the mandate that it must ... pre-fund the retiree health plan," the USPS Inspector General wrote in 2015. But all of it is strictly ON PAPER. Even without paying into its Retiree Health Benefits Fund, the service’s debt grew another $3 billion over the past three years. The Fairness Act passed in the House of Representatives in February 2020, and a Senate vote is pending. Claim: The U.S. economic downturn due to the COVID-19 coronavirus pandemic in early 2020 was forcing the United States Postal Service to close. Stay tuned for more on the future of the USPS during this unprecedented time. Also, the USPS did not make $16.7 billion in prefunded retiree health benefits in fiscal 2011 and 2013, said Todisco. In April, the post office requested $75 billion in emergency funding to continue processing and delivering some 48 percent of the world’s mail. The USPS continues to have no problem paying its operating expenses, including its retirees’ health benefits, WITHOUT any taxpayer funds. The Postal Service’s debt “is a direct result of the mandate that it must … pre-fund the retiree health plan,” the USPS Inspector General wrote in 2015. “The USPS costs taxpayers exactly $0. The largest liabilities are unfunded retiree health benefits, worker compensation costs, and debt. This requirement has deprived the Postal Service of the opportunity to invest in capital projects and research and development. So, yes, the USPS ha piled up billions of dollars in “debt” ON PAPER since 2006. Despite partial deferrals from Congress and the proposed USPS Fairness Act to eliminate pre-funded health benefits, the agency has accrued a reported whopping $120 billion in pension and other post-employment unfunded liabilities. The Postal Service is in dire financial straits because its revenues are insufficient to support its operational costs and liabilities. (AP Photo) The United States Postal Service (USPS) lost $5.5 billion last year. As of now, the funding is still hanging in the balance. Postal Service has an existential problem. The USPS tracking system is very transparent throughout the process; however, it does not show the exact location of the parcel for several reasons. Come 2012, it had hit its $15 billion legal debt cap [11]. That accounts for virtually all of USPS debt since 2006, when USPS was debt free. Just wipe the books clean, because paying these debts is draining the Post Office’s cash, which should be invested in new delivery vehicles and overdue capital upgrades. “But with COVID-19 our financial situation has gotten even worse,” he added, pointing out that USPS’s most profitable revenue stream, First-Class Mail, is hurt by businesses’ grinding to a halt because of the pandemic. Public debt already is $24 trillion, so the public is not terribly harmed by assuming this additional debt — especially if it helps stave off the collapse of the USPS. As planned, the Postal Service reduced its debt level during 2019 by $2.2 billion, finishing the year with $11.0 billion in debt outstanding. But actually, the post office isn't funded by tax dollars. As Reason has been arguing for literally 50 years, the postal service should be privatized. The U.S. According to Partenheimer, USPS currently employs 97,000 military veterans, making it “one of the largest employers of veterans in the country.”. About four-fifths of the USPS labor force is unionized. The Postal Service has been losing money for years, but the need for mail-in ballots during the election has sharpened the focus on the carrier. The memes resurfaced in April 2020 as a bill in the House of Representatives proposed to forgive the agency’s debt as part of a stimulus package aimed at mitigating the economic fallout associated with the COVID-19 pandemic. They gained traction again in August 2020 when Postmaster General Louis DeJoy, a Trump campaign megadonor, was called to testify before Congress over concerns he was working to undermine mail delivery. AFP has not obtained any rights from the authors or copyright owners of this third party content and shall incur no liability in this regard. With too little revenue coming in and expenses too high, debt piled up. The Postal Service is currently self-supporting, due to its special status as an independent federal agency overseen but not funded by Congress. However the posts misrepresented the financial health of the USPS in 2013, 2018, and 2020. Postal Service operations and standards and the need for on-time mail delivery during the ongoing pandemic and upcoming election, which as you know may be held largely by mail-in ballot.". The United States Postal Service is something we can often take for granted. The US mail employs 630,000 people overall. Privitization and Competition “The USPS is not in debt. The U.S. Figure 4: USPS debt has spiked ($1B) [10] The Postal Service had no debt in 2005. But this simple joy may soon be a thing of the past, given that the United States Postal Service (USPS) is chronically in debt and in danger of being disbanded entirely. That’s because the post office is a quasi-federal agency, and as such, is not funded by the U.S. government. It is true that the Postal Service is constitutionally guaranteed. Controllable loss for the year was $3.4 billion, an … USPS has been around for more than 200 years, but says it is close to being insolvent. As the ninth state ratified the Constitution in 1788, Congress was granted the power “to establish Post Offices and post Roads.”. USPS has been losing money for more than a decade. Its official statement is, “The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.”. The U.S. That is the eighth annual loss in a row and the third-highest ever. Postal workers receive federal benefits, but are not actually considered federal employees. Even in the digital age, physical postage is still a vital service.Many small businesses depend on the USPS, but reports indicate that the agency may be dying.Entering 2020, the postal service had $160 billion in outstanding debt, and it has been hit hard by the coronavirus pandemic. GAO cites a deteriorating financial situation, insufficient cost savings, and unfavorable trends as the reasons behind the post office’s poor financial performance. The Postal Service’s 2019 annual financial report shows that the agency had a net loss of $8.8 billion that fiscal year, bringing total liabilities to more than $97 billion. "The Postal Service's $15 billion debt is a direct result of the mandate," the Inspector General wrote in 2015. USPS’s total unfunded liabilities and debt ($143 billion at the end of fiscal year 2018) have grown to double its annual revenue.” As CNN reports, the USPS told Congress it would be out of money by September back in April of 2020. Postal Service page. US Postal Service trucks sit outside the Annapolis, Maryland distribution unit on January 29, 2009 (AFP / Jim Watson), Screenshot of a Facebook post taken on April 14, 2020, Screenshot of the USPS annual financial statement for 2019. Any other use, in particular any reproduction, communication to the public or distribution of the content of this website, in whole or in part, for any other purpose and/or by any other means, without a specific licence agreement signed with AFP, is strictly prohibited. Excluding those debt payments, it should be noted, the USPS has finished each year with revenue surpluses for most of the past decade—as a 2018 Trump administration report documented. 5. The USPS has always been self-sustaining,” the posts claim. It’s a common assumption that the USPS is a federal agency, and its 7.3 million workers are federal employees. For many years, the USPS was the only federal agency subject to a pre-funding mandate on future retiree health benefits. USPS assets are falling and liabilities are soaring. Postal Service lost money in six out of the 10 years from 2001 through 2010, according to its financial reports. He said the Postal Service is more than $160 billion in debt. The U.S. Post Office owes $100 Billion in benefits to its workers/retirees but doesn’t have the money. For five years, the agency has flirted with insolvency. The GAO said it returned the USPS to its “high-risk list” a few years ago because it was projected to lose $7 billion but actually lost $8.5 billion in fiscal year 2010. Users can access and consult this website and use the share features available for personal, private, and non-commercial purposes. The United States Postal Service will play a critical role in the 2020 election. The novel coronavirus will increase the agency’s debt by $22 billion over the next 18 months, Postmaster General Megan Brennan said in an April 10 statement. While pre-funding other retiree benefits is normal for both private and government organizations, pre-funding health benefits … Expenses are a few billion a year higher than revenues. Following the Postmaster General’s April 10 statement on USPS’s dwindling finances, social media users have urged their peers to save the institution by buying sheets of stamps. The Postal Service has racked up $160.9 billion in debt from what’s owed prepaying retiree benefits. Public debt already is … While there are many factors that led to the USPS’ current state of debt, there are two primary reasons why that debt has now balloomed. Mail delivery is a service you receive, but not one you pay for — outside of the postage that you purchase. Postal experts clapped back, saying these increases “would quickly bankrupt the agency by pricing out the likes of UPS, FedEx and Amazon from contracting with the Postal Service.”. Clearing this misconception up is the number one item on their Top Thirteen Things You Should Know about the U.S. There’s been a lot of buzz surrounding the United States Postal Service lately, from the speed of mail delivery to the uncertainty of its future. The United States Postal Service (USPS), Oliver explained on Sunday’s episode, has been a “Republican punching bag” for years. It has $15 billion in debt, its statutory maximum. USPS Workers Are Reporting That Mail Deliveries Are Intentionally "Slowed Down", Girl Who Loves Writing Letters Started a Whole Correspondence Effort with the USPS, How This Guy Scammed UPS Shouldn't Have Been This Easy, But It Was, Jennifer Love Hewitt Is Pregnant on '9-1-1' — Fans Anticipate Pregnancy Storyline, Seth Rogen and Ted Cruz's Twitter Feud, Explained: Here's What Went Down, What Happened in Tacoma? This reduction allows the Postal Service to continue to reduce interest costs. All rights reserved. Even before the novel coronavirus struck, impacting people and businesses across the country and around the world, the USPS was in serious financial trouble. In 2006, Congress forced the Postal Service to prepay health benefits and pensions for … Pope Moyush. 6. But perhaps the biggest reason for financial troubles is the USPS' retirement funding. The subject matter depicted or included via links within the Fact Checking content is provided to the extent necessary for correct understanding of the verification of the information concerned. But its depleted cash reserve and new leadership have some worried. The post office has been an American institution since 1775, when Benjamin Franklin was named the first-ever Postmaster General. No assistance was given, however, and the USPS is surviving off of its remaining cash reserves and a $3 billion loan from the US Treasury, placing it further in debt. The first stamps were issued in 1847, and city delivery got its start in 1863. Copyright AFP 2017-2020. However, the mail service was funded by tax dollars until the 1970s, when the Postal Reorganization Act was passed under President Richard Nixon, turning the Post Office Department into USPS, an independent agency run more like a corporation. The USPS is not losing money.” These two statements, along with other assertions about the agency, were shared in various posts entitled “Facts You Should Know” or “USPS Fun Facts.” This post was shared 147,000 times since 2013, while these two from 2018 have more than 100,000 shares combined. Partenheimer also blamed “an outdated business model that needs to be addressed through legislative and regulatory reform.”. The Postal Service’s $15 billion debt is a direct result of the mandate that it must pay about $5.6 billion a year for 10 years to prefund the retiree healthcare plan. The Postal Service reported a loss of $2.7 billion for the fiscal year that ended Sept. 30. Postal Service's (USPS) deteriorating financial condition is unsustainable as a result of trends including:Declining mail volume : First-Class Mail—USPS's most profitable product—continues to decline in volume as communications and payments migrate to electronic alternatives. Postal Service (USPS) to achieve sustainable financial viability.”, “USPS has lost $69 billion over the past 11 fiscal years — including $3.9 billion in fiscal year 2018. In March, the $2 trillion Coronavirus Relief Bill reserved $25 billion for the USPS under the CARES Act, which was blocked by the Trump administration. AFP and its logo are registered trademarks. As CNN reports, the USPS told Congress it would be out of money by September back in April of 2020. “The prefunding requirement in the 2006 law is a major reason for our financial situation,” USPS spokesman David Partenheimer told AFP by email in reference to a bill that forces the institution to set aside money for its employees’ pensions before they are due. Graphic Video Shows Police Car Hitting a Pedestrian, Former GM of the Green Bay Packers, Ted Thompson, Left Behind an Amazing Legacy. By the end of the decade, the semi-independent government agency's losses had reached a record $8.5 billion, forcing the Postal Service to consider seeking an increase in its $15 billion debt ceiling or face insolvency. The administration then offered a $10 billion loan under terms in which control over the mail service would shift to Treasury Secretary Steven Mnuchin, and package rates would be quadrupled in exchange for the funding. A dispute between Congress and the Trump administration over funding to help the United States Postal Service (USPS) through the novel coronavirus led tens of … Seventh, and finally, postal operating costs tend to go up because collective bargaining always produces agreements that raise compensation costs. The bailout signed on March 25 did not include debt forgiveness but instead provided a $10 billion loan for the Postal Service. Under the mandate, they were on the hook to pay between $5.5 and $5.8 billion a year, and postal losses mounted. With a probable mail-in ballot voting system set for this election year, the pressure is on to settle financial unrest and questions of whether the postal service will be equipped to handle the process. USPS’s total unfunded liabilities and debt ($143 billion at the end of fiscal year 2018) have grown to double its annual revenue.”. Item on their Top Thirteen Things you should Know about the U.S Inspector... 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