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Ramifications of USPS going out of business

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WASHINGTON (WANE) - The United States Postal Service is running out of cash, in a hurry.

In a report by The New York Times , the USPS will reach a $9.2 billion shortfall when its fiscal year ends at the end of September.

The postmaster general, Patrick Donahoe said in an interview, "If Congress doesn't act, we will default."

The default is due in large part to a payment the service must make to retirees' future health benefits. Congress passed a law in 2006 requiring the USPS to make a $5.5 billion dollar payment every year for ten years to ensure future health benefits for the next 75 years. Coupled will sharp declines in revenue and higher operating costs, it's a payment that the USPS might not be able to sustain.

The post office's problems stem from the Internet revolution; people corresponding more via email and paying bills online. Mail volume has plummeted 22 percent since 2006. And labor agreements with postal works are financially straining the agency.

Labor costs represent 80 percent of the agency's expenses, including salaries and benefits.

Donahoe has come up with controversial plans to trim costs, including eliminating Saturday mail delivery. He also wants to close up to 3,700 postal locations and layoff 120,000 workers.

The problem is federal law requires Saturday mail service, and labor agreements prevent any layoffs of postal workers. Postal locations can be closed legally, but community protests make that difficult.

Congress is considering numerous emergency proposals, including allowing the post office to recover billions of dollars in overpaid pension funds, a total reported near $60 billion.

The USPS is looking into gaining the right to deliver beer and wine. Also, advertisements on postal trucks and post offices would increase revenue, something the post office needs to do. They have also considered doing more "last-mile" deliveries for competitors FedEx and UPS .

It has even considered consolidating post offices with other government offices and adding operations at some large department stores.

The USPS cannot raise postage fees higher than inflation.

The Senate Homeland Security and Governmental Affairs Committee will hold a hearing to discuss the agency's financial problems. Republicans and Democrats have not yet been able to reach a consensus on how to fix the issues.

The USPS said if Congress does not take emergency action to help the agency stabilize its finances that it could be forced to shut down this winter.

Donahoe hopes to cut $20 billion of the $75 billion in annual costs by 2015. The unions associated with the USPS are alarmed about potential layoffs.

"We're going to fight this and we're going to fight it hard," said Cliff Guffey to the Times, president of the American Postal Workers Union, "It's illegal for them to abrogate our contract."

The USPS generates its own revenue, it receives $0 in taxpayer money to operate

http://www.wane.com/dpp/news/national/usps-going-broke

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I know alot of us take for granted snail mail due to the explosion of e-mail and instant messaging. But perhaps some posters could bring to light a few things the postal service does that we often forget about...do any of you think that if USPS does go down...what kind of impact it will have on the US and its citizens.

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I don't see any reason for the USPS to be gov owned and run. Clearly there are several free market operations that can take over delivering unwanted advertising to my house.

The gov should just sell it off to the highest bidder.

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

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The USPS generates its own revenue, it receives $0 in taxpayer money to operate



why do I not believe this at all? no advertising? no pensions? nothing? not even certain things "guaranteed" when the USPS is over budget?



in a completely different tack.....what about the loss of private sector jobs since they are taking away business from other companies that would do the same thing?

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

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It has received government loans, which obviously won't be repaying.

I wouldn't want to be at the helm. Hamstrung by their labor agreement, hamstrung by congress.
"The restraining order says you're only allowed to touch me in freefall"
=P

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I know alot of us take for granted snail mail due to the explosion of e-mail and instant messaging. But perhaps some posters could bring to light a few things the postal service does that we often forget about...do any of you think that if USPS does go down...what kind of impact it will have on the US and its citizens.



I'd be fine with getting mail two days a week. I'd be fine with the mail carrier getting $15.00 an hour, basic medical care and no pension and a weeks paid vacation.

The mailmen I know get 70K a year, better health care plan than God, insane pensions, 5 weeks of paid vacation and 12 sick days a year.

For dropping a piece of paper in a hole.

It's unsustainable.

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Hamstrung by their labor agreement, hamstrung by congress.



Actually it's hamstrung by a decision made back in the 80s to take it off tax payer funding at shift it over to user funding.

That ended up shortchanging it in the long run and especially with the decline of physical mail.

Postage itself can only do so much and through international agreements can only be raised so far.
quade -
The World's Most Boring Skydiver

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The USPS is echoing a common theme - long-term retirement benefits killing it.

The retirement system for the USPS was set up by law. Again, we find a situation where collective bargaining provides a benefit for the short-term but a long-term hosing. The benefits that become negotiated and agreed upon are not affordable at present so they put off the cost to the future.

And then the time comes where the payments cannot be made.

CalPERS and CalSTIRS are underfunded by at least $500 billion over the next fifteen years because retirement benefits are not treated as an account or a trust but instead are funded primarily by present funding.

Isn't it time that we stop this foolishness given the dismal long-term track record? Ponzi schemes always pay off well in the beginning...


My wife is hotter than your wife.

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The USPS is echoing a common theme - long-term retirement benefits killing it.

The retirement system for the USPS was set up by law. Again, we find a situation where collective bargaining provides a benefit for the short-term but a long-term hosing. The benefits that become negotiated and agreed upon are not affordable at present so they put off the cost to the future.

And then the time comes where the payments cannot be made.

CalPERS and CalSTIRS are underfunded by at least $500 billion over the next fifteen years because retirement benefits are not treated as an account or a trust but instead are funded primarily by present funding.

Isn't it time that we stop this foolishness given the dismal long-term track record? Ponzi schemes always pay off well in the beginning...



I agree.

Also both sides should be held accountable; Labour and Employer sides.

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I don't see any reason for the USPS to be gov owned and run.



You mean except for that whole thing in the US Constitution. Right?



snarky much?

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Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

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I don't see any reason for the USPS to be gov owned and run.



You mean except for that whole thing in the US Constitution. Right?



snarky much?



But it's OK to mention the Constitution when guns are involved, without being snarky. I get it.
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pensions aren't helping, but the core problem for the USPS is it's a shrinking business. And not a slow decline mind you, but an abrupt one due to the disruption caused by online billing.



I agree with Skyrad about holding labor and the management accountable.

However, the core problem is not a shrinking business. "Shrinking business" is a convenient excuse but it's a step further in the daisy chain.

The issue that I get to before that is the issue of funding in the future based upon future projections. "Hey, sure we'll fund this loan. It's 2007, and the home value will increase. It's risk free."

Nope. Rosy pictures are too often painted and relied upon. Nobody could predict the online communications. I get that. Anyone could predict, however, that locking in multibillion dollar payments based upon uncertain futures is a bad, bad idea.

Medicare? Underfunded by over $100 trillion by 2080. Social Security? Underfunded.

How come government pensions are underfunded? Not due to anything except extravagant promises that would be paid by those who didn't agree to it.

This is not an issue of failing to predict. This is an issue of predictions being notoriously inaccurate.


My wife is hotter than your wife.

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The mailmen I know get 70K a year, better health care plan than God, insane pensions, 5 weeks of paid vacation and 12 sick days a year.



This made me curious, so I looked it up; and (at the risk of offending the OP) I think your figures may be high:

By salary: http://www.payscale.com/research/US/Job=United_States_Postal_Worker_%28Carrier%29/Salary

By vacation weeks: http://www.payscale.com/research/US/Job=United_States_Postal_Worker_%28Carrier%29/Vacation_Weeks

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I don't see any reason for the USPS to be gov owned and run.


You mean except for that whole thing in the US Constitution. Right?


snarky much?



You do realize that the USPS is one of the very few government agencies specifically addressed in the US Constitution; right? Not an Amendment that came later. Not even in the Bill of Rights, but it actually predates the Constitution itself and then is formalized in Article I, Section 8, Clause 7 of the United States Constitution.

If you're going to say that's "snarky" of me to mention it, I kinda have to assume you didn't know that.

So, don't go all Tea Party crazy trying to get rid of it.
quade -
The World's Most Boring Skydiver

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"We're going to fight this and we're going to fight it hard," said Cliff Guffey to the Times, president of the American Postal Workers Union, "It's illegal for them to abrogate our contract."



From the sound of this, it sounds like a lot of ex-mailmen are gonna go postal.

:|:P

Be humble, ask questions, listen, learn, follow the golden rule, talk when necessary, and know when to shut the fuck up.

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I don't see any reason for the USPS to be gov owned and run.


You mean except for that whole thing in the US Constitution. Right?


snarky much?



You do realize that the USPS is one of the very few government agencies specifically addressed in the US Constitution; right? Not an Amendment that came later. Not even in the Bill of Rights, but it actually predates the Constitution itself and then is formalized in Article I, Section 8, Clause 7 of the United States Constitution.

If you're going to say that's "snarky" of me to mention it, I kinda have to assume you didn't know that.

So, don't go all Tea Party crazy trying to get rid of it.



snarky more?


instead of demonstrating your disdain for other humans and feeding Kallends need for it as well, what do you get from the USPS that can't be done otherwise better - with those resources and using those same employees?

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

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The mailmen I know get 70K a year, better health care plan than God, insane pensions, 5 weeks of paid vacation and 12 sick days a year.



http://www.bls.gov/oco/ocos345.htm

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Median annual wages of Postal Service mail carriers were $49,800 in May 2008. The middle 50 percent earned between $41,270 and 51,250. The lowest 10 earned less than $37,400, while the top 10 percent earned more than $52,400. Rural mail carriers are reimbursed for mileage put on their own vehicles while delivering mail.



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For dropping a piece of paper in a hole.



Do you really believe their job is all too easy?
The carriers in my county are considered part time. They are rural letter carriers. They drive their own vehicle. Major wear and tears. They pay for their own maintenance, oil, tires... They deliver mail regardless of the weather. Extreme heat, ice storms, blizzards, below zero temperatures. Any kind of condition. They're in it. When most people are safe at home during major storms, these people are out delivering the mail. They earn every dime they get.
"...And once you're gone, you can't come back
When you're out of the blue and into the black."
Neil Young

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The mailmen I know get 70K a year, better health care plan than God, insane pensions, 5 weeks of paid vacation and 12 sick days a year.



This made me curious, so I looked it up; and (at the risk of offending the OP) I think your figures may be high:

By salary: http://www.payscale.com/research/US/Job=United_States_Postal_Worker_%28Carrier%29/Salary

By vacation weeks: http://www.payscale.com/research/US/Job=United_States_Postal_Worker_%28Carrier%29/Vacation_Weeks



Yep. He is on the high end of the scale. The guy I know has been a city deliverer for 22 years, Brighton, Ma which is part of Boston. The numbers you have do not account for overtime, either, which city carriers make, although temps and rural carriers do not.

Yes, he works outside in bad weather, Big deal. So do a large number of other trades. In fact most of my friends do and so do I, None of them get over 50K and no one I knows get 5 weeks paid vacation, the killer benefits and the pension.

Plus he takes 1.5 hours for lunch a day, and he can't be fired for anything less than murder, as far as I can tell.

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That's funny, replying to a suggestion that your snarky by actually being snarky. Its fun here in speakers conner. Tho in my hood its just considered being a dick.



You know how some parents, when their child cries say, "Quiet or I'll give you something to cry about!"

Yeah, it's like that. ;)

As for being called a dick by a guy hiding behind a sock puppet . . . (eye roll) . . . yeah, like I care.
quade -
The World's Most Boring Skydiver

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I'm not a sock puppet to you as the email addy I gave to sign up is my proper name. Secondly,being snarky for the fuck of it, is being a dick. That fact you don't and shouldn't care what I type doesn't change the fact its a dick move. And yes I know who and basically why you are quibbling with that person. That being said, being snarky to prove just how snarky you weren't in the initial reply is why I like speakers corner.

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