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US Post Office Facing Default...AGAIN, as UNIONS Continue to Decimate America

he United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.Enlarge This ImageJustin Sullivan/Getty ImagesLabor represents 80 percent of the agency's expenses.GraphicThe Postal Service’s DifficultiesAdd to Portfoliohttp://www.nytimes.com/2011/09/05/business/in-internet-age-postal-service-struggles-to-stay-solvent-and-relevant.html" rel="nofollow" target="_blank">United Parcel Service Inc[/*]http://www.nytimes.com/2011/09/05/business/in-internet-age-postal-service-struggles-to-stay-solvent-and-relevant.html" rel="nofollow" target="_blank">Wal-Mart Stores Inc[/*]http://www.nytimes.com/2011/09/05/business/in-internet-age-postal-service-struggles-to-stay-solvent-and-relevant.html" rel="nofollow" target="_blank">FedEx Corp[/*][/list]Go to your Portfolio »Enlarge This ImageDaniel Rosenbaum for The New York TimesCliff Guffey, left, and Fredric Rolando preside over two of the Postal Service's largest unions.Readers’ CommentsShare your thoughts.Post a Comment »[/*]Read All Comments (594) »[/*][/list]“Our situation is extremely serious,” the postmaster general, Patrick R. Donahoe, said in an interview. “If Congress doesn’t act, we will default.”In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts.The post office’s problems stem from one hard reality: it is being squeezed on both revenue and costs.As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail.At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the agency’s predicament on Tuesday. So far, feuding Democrats and Republicans in Congress, still smarting from the brawl over the federal debt ceiling, have failed to agree on any solutions. It doesn’t help that many of the options for saving the postal service are politically unpalatable.“The situation is dire,” said Thomas R. Carper, the Delaware Democrat who is chairman of the Senate subcommittee that oversees the postal service. “If we do nothing, if we don’t react in a smart, appropriate way, the postal service could literally close later this year. That’s not the kind of development we need to inject into a weak, uneven economic recovery.” Missing the $5.5 billion payment due on Sept. 30, intended to finance retirees’ future health care, won’t cause immediate disaster. But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.The causes of the crisis are well known and immensely difficult to overcome.Mail volume has plummeted with the rise of e-mail, electronic bill-paying and a Web that makes everything from fashion catalogs to news instantly available. The system will handle an estimated 167 billion pieces of mail this fiscal year, down 22 percent from five years ago.It’s difficult to imagine that trend reversing, and pessimistic projections suggest that volume could plunge to 118 billion pieces by 2020. The law also prevents the post office from raising postage fees faster than inflation.Meanwhile, the agency has had a tough time cutting its costs to match the revenue drop, with a history of labor contracts offering good health and pension benefits, underused post offices, and laws that restrict its ability to make basic business decisions, like reducing the frequency of deliveries.Congress is considering numerous emergency proposals — most notably, allowing the post office to recover billions of dollars that management says it overpaid to its employees’ pension funds. That fix would help the agency get through the short-term crisis, but would delay the day of reckoning on bigger issues.Postal service officials say one reason for their high costs is that they are legally required to provide universal service, making deliveries to 150 million addresses nationwide each week. They add that a major factor for the post office’s $20 billion in losses over the past four years is a 2006 law requiring the postal service to pay an average of $5.5 billion annually for 10 years to finance retiree health costs for the next 75 years.But the agency’s leaders acknowledge that they must find a way to increase revenue, something that will prove far harder than simply slicing costs.
In some countries, post offices double as banks or sell insurance or cellphones. In the United States, the postal service is barred from entering many areas. Still, the agency is considering ideas, like gaining the right to deliver wine and beer, allowing commercial advertisements on postal trucks and in post offices, doing more “last-mile” deliveries for FedEx and U.P.S. and offering special hand-delivery services for correspondence and transactions for which e-mail is not considered secure enough.
Mr. Donahoe’s hope is to cut $20 billion of the $75 billion in annual costs by 2015. To do that, he wants to close many post offices and slash the number of sorting facilities to 200 from 500 and trim the agency’s work force by 220,000 people, from its current 653,000. (A decade ago, the agency employed nearly 900,000.)The postal service has the legal authority to close facilities, although community opposition can make the process difficult. To placate critics and cut costs, officials say they would seek to run some postal operations out of stores like Wal-Mart or to share space with other government offices.Cutting the work force is more difficult. The agency’s labor contracts have long guaranteed no layoffs to the vast majority of its workers, and management agreed to a new no layoff-clause in a major union contract last May.But now, faced with what postal officials call “the equivalent of Chapter 11 bankruptcy,” the agency is asking Congress to enact legislation that would overturn the job protections and let it lay off 120,000 workers in addition to trimming 100,000 jobs through attrition.The postal service is also asking Congress for permission to end Saturday delivery.Given the vast range of stakeholders, getting consensus on a rescue plan will be difficult.Senator Susan Collins of Maine, like many lawmakers from rural states, vigorously opposes ending Saturday delivery, which would trim only 2 percent from the agency’s budget. Ms. Collins, the ranking Republican on the committee overseeing the postal service, said the cutback would be tough on people in small towns who receive prescriptions and newspapers by mail.“The postmaster general has focused on several approaches that I believe will be counterproductive,” she said. “They risk producing a death spiral where the postal service reduces service and drives away more customers.”The post office’s powerful unions are angry and alarmed about the planned layoffs. “We’re going to fight this and we’re going to fight it hard,” said Cliff Guffey, president of the American Postal Workers Union, which represents 207,000 mail sorters and post office clerks. “It’s illegal for them to abrogate our contract.”Senators Carper and Collins do back several of the postal service’s main ideas to avoid default, including recovering around $60 billion that some actuaries say the agency has overpaid into two pension funds. Although the Obama administration is working closely with the senators to find a solution, it has signaled discomfort with the pension proposals, questioning whether the postal service really overpaid.Meanwhile, Representative Darrell Issa, the California Republican who is chairman of the House Oversight Committee, says the pension proposals would amount to an unjustifiable bailout that would not solve the agency’s underlying problems. He is pushing a bill that would create an emergency oversight board that could order huge cost-cutting and void the postal service’s contracts — a proposal that not just the unions, but Senators Carper and Collins oppose.Fredric V. Rolando, president of the National Association of Letter Carriers, warned of disaster if partisanship keeps Congress from acting.“This is about one of America’s oldest institutions,” he said. “It survived the telegraph, it survived the telephone, and we have to do everything we can to preserve it and adapt.”
http://www.nytimes.com/2011/09/05/business/in-internet-age-postal-service-struggles-to-stay-solvent-and-relevant.html?_r=1


Added: Sep-5-2011 Occurred On: Sep-5-2011
By: yorba
In:
Politics
Tags: US Postal Service, Mail, default, government ineptitude, unsustainable debt, pensions, unions
Location: Washington, District of Columbia, United States (load item map)
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  • It's reaaly sad to see this country going down the drain. Too many liberals, socialists, illegals, crooked politicians, crazy environmentalists and a president so far in over his head makes a poor fellow want to cry. Our money is becoming worthless, people loosing their savings, unions striking, the administration's ATF selling guns to Mexican cartels and yet people like this totally ill=equiped Muslim Boy President. I don't get it.

    Posted Sep-5-2011 By 

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    • @getevennotmad Sadly, I think the only solution at this point in Ron Paul... and that's something coming from these lips/fingers. I have never once supported him nor his son, but I believe the time has come.

      Posted Sep-5-2011 By 

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  • Think of UPS they come hauling ass up then drop off the package and haul ass away.
    I have gotten one wrong package in over 20 years.
    Now the USPS, they come puttering up, sort the mail, get it wrong far too often and stick it into a mailbox.
    I have gotten a lot of wrong mail that belonged to neighbors.
    USPS needs to take notes.

    Posted Sep-5-2011 By 

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    • @moefugger Dude, I still get the wrong mail at one of my business locations and it's going on 12 years now. In fact, the Post Office never delivered a labor court verdict to my business and I got penalized $7,800 on a $700 wage dispute because I didn't "appeal" it on time and it went to default judgment.

      Fuck the post office and the idiots who run it like it's a 1950s Soviet behemoth of ineptitude and waste.

      Posted Sep-5-2011 By 

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  • The US postal service is now an anachronism. There's no reason for it to exist. Have UPS, FEDEX and other delivery services take over.

    Most daily correspondence is by email now.

    Posted Sep-5-2011 By 

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    • @vicsemprini I agree, however the postal service is one of the very few things the constitution actually mentions, unlike almost everything else.

      Posted Sep-5-2011 By 

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    • @vicsemprini Amazingly, it seems to be that those private companies are doing a better job, with their own money, without the government.

      Posted Sep-5-2011 By 

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    • @ST0N3PONY
      Great point,
      In addition, you will not find those crippling pension plans
      anywhere in Federal Express.

      Wonder why that is...

      Posted Sep-5-2011 By 

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    • @wharris It's almost as though when an organization operates with their own money, with their own employees, they tend to be more motivated to be efficient and not wasteful. And, it seems like when these companies are forced to compete against each other in a free market, they tend to strive for superiority. Making costs go down, quality up. etc. etc.

      Posted Sep-5-2011 By 

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    • @ST0N3PONY

      You mean despite the government.

      Posted Sep-5-2011 By 

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  • ~thanx, Yorba.
    Well the Post office is gonna' default, our faithful "public servants" have been raiding the Social Security "lock-box" all along, Medicare is in trouble, the deficit is outrageous and yet there are STILL brainless twit morons out there who want the federal government to take over health care. What pathetic idiots !

    Posted Sep-5-2011 By 

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  • We should have gotten rid of the post office long ago. Lets see, I get 3 bills, a few cards a month, and about a ton of advertisements and circulars. I can pay my bills online and get email without chopping down tons of trees just to throw whatever was written on it away. The whole thing is inefficient, costly, and wasteful. The post office said they could be self-sufficient but that obviously isn't the case even after the many raises in postage costs.

    Posted Sep-5-2011 By 

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  • NYTIMES:

    ... decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs.

    Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors.

    Postal workers also receive more generous health benefits than most other federal employees.

    LET THAT SINK IN:

    Postal workers also receive more generous health benefit More..

    Posted Sep-5-2011 By 

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  • Unions and politicians have destroyed a once great institution!

    Sell the damn thing to some private investors and it will shine again!

    Better yet "Hey Warren Buffet, you bought all that BOA stock (in which you made a killing) Why not send some of that cash you wish we'd take from you via higher taxes and help out the USPS???????

    BTW I'll pull out my crystal ball and say this will be our Nations health care system in 20 years if ObamaCare isn't thrown into history's trash heap of bad ide More..

    Posted Sep-5-2011 By 

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  • "we have to do everything we can to preserve it and adapt"
    Why the fuck do we have to do that? This is typical bureaucratic thinking. "If it fails, we need to invest more heavily in the failure."

    Posted Sep-5-2011 By 

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  • Government run = FAIL!

    Posted Sep-5-2011 By 

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  • Fed Ex has the lowest cost compared to the Big 3.

    It's also not a Union company.

    Fed Ex is superior in every way!

    Posted Sep-5-2011 By 

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    • Comment of user 'Cheesehead' has been deleted by author (after account deletion)!
  • Ahhhh, they reap what they have sewn. They got greedy along with ebay raising prices, raising prices, raising prices and the ceos cashed out with huge sums of money. The ones left holding the empty bag? the buyers and sellers. They pushed it so far off the edge that now ebay has lost maybe 50-60% of what it used to sell. That's alot of packages that are now no longer going thru the post office. TY MEG WHITEMAN? CAN YOU SEE NOW WHY YOU LOST YOUR RACE FOR GOV. This is the end result of greedy ceo' More..

    Posted Sep-5-2011 By 

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    • @virtualdesires
      what are you talking about the retired workers are federal civil service theyll get paid til the whole federal govt collapses. how do i know this my dad worked for the post office. the new guys are going to get fucked though they arent under the old structure so they have 401k and the other new scams that are going to get treated like slush funds til the whole thing collapses

      Posted Sep-5-2011 By 

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  • to be fair to the post office they have to deliver mail to everyone in the us that includes everywhere that it is wildly impractical or expensive to ship mail at the same price so they lose tons of money doing that each year but they cant cut costs because that is mandated by law hell most of the post offices problems are created by congress

    Posted Sep-5-2011 By 

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  • So unions don't hurt American competitiveness? Well, of all sources to get info from...NPR!! Read it and weep as Toyota runs circles around GM in productivity and other areas.

    http://www.npr.org/news/specials/gmvstoyota/

    Posted Sep-5-2011 By 

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    • Comment of user 'Cheesehead' has been deleted by author (after account deletion)!
  • As much as unions have been destructive to American competitiveness in recent years, the problems at the USPS are much less the fault of unions and much more the fault of a shifting economy and burdensome expectations from the government and public. The post office still provides a service that is aimed at an economy 20 or 30 years old, before fax machines and then especially e-mail made paper mail largely obsolete. Anymore, people hardly send letters, and most paper mail is commercial bulk ma More..

    Posted Sep-5-2011 By 

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  • Comment of user 'rclark951' has been deleted by author (after account deletion)!
  • The Post Office in the UK is struggling big time with rapidly falling volumes, & fierce competition

    Posted Sep-5-2011 By 

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  • Comment of user 'Cheesehead' has been deleted by author (after account deletion)!
  • If it wasn't for unions, workers wouldn't have any rights at all.

    Posted Sep-5-2011 By 

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  • It's funny....unions never seemed to hurt the viability of the post office until the internet and email became commonplace.

    Posted Sep-5-2011 By 

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  • Comment of user 'Zardoz003' has been deleted by author (after account deletion)!
    • @Zardoz003

      Disagree. Union contracts are what drive unsustainable cost increases, not just at the USPS, but places like...say, GM and Chrysler.

      Posted Sep-5-2011 By 

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    • Comment of user 'Zardoz003' has been deleted by author (after account deletion)!
    • @Zardoz003

      You do understand, do you not, that the health care costs are determined by the coverages mandated by the union contracts?

      Strange indeed that companies like Toyota who manufacture in the US are thriving and they don't have union labor.

      Unions are driving up the costs in every private industry in which they are still entrenched, and they are a huge factor in state level budget problems...and this is well known.

      I don't care about the minimum wage. It's an unemployment policy. Peo More..

      Posted Sep-5-2011 By 

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    • @Zardoz003 Oh yeah, here's your "health insurance" comparison.

      http://www.npr.org/news/specials/gmvstoyota/

      Posted Sep-5-2011 By 

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  • Hooray for robber barons. Fuck the working man. The level of assholeishness is determined by how high their comment score is on LL.

    Posted Sep-5-2011 By 

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  • Ok, Lets blame the Unions....They established breaks, lunches, safe working conditions, PPE, regulated hours. If the Conservatives have it there way all this would go away.
    Its called COLLECTIVE BARGINING no one holds a gun to there head when they are negotiating, its give and take on both sides.
    Lets see, send your kid to work on his first job and let the owner pay him or her $5.00 an hour. Or work 12 to 14 hour shift with no breaks.
    Get a clue you Radical Right Wing Religion Pushing Idiots

    Posted Sep-5-2011 By 

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    • @jimdrunk

      Agreed

      Posted Sep-5-2011 By 

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    • @jimdrunk
      Labor laws don't allow for anything you said to actually happen. Maybe back in the 40's & 50's unions were needed but now days all they are is a way for lazy fucks like you and other liberals to skate through life with little to no effort!

      Get a clue you stupid fucking freeloading left wing piece of shit.

      Posted Sep-5-2011 By 

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    • @philfan4evr
      Nice attitude, douche. You must be a real fucking hero. Just a selfless, awesome guy. How many Medal of Honors have you received?

      Posted Sep-5-2011 By 

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    • @jimdrunk Maybe you need to Google United Auto Workers Union so you can see how a union can literally take down the entire auto maker known as GM. Wake up.

      Posted Sep-5-2011 By 

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    • @ihateyouall
      Yep, you’re the kind of shit my reply was directed to. Now go smack your mother for not aborting all of you because it’s painfully obvious the only thing she was able to yank out with the coat hanger was your brain!

      Posted Sep-5-2011 By 

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  • Seriously, everyone should be making minimum wage working slave hours with zero benefits. This is the American dream.

    Posted Sep-5-2011 By 

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    • @GeorgeBush: Why? I work in a competitive environment that requires an EDUCATION and people earn a salary based on PERFORMANCE we are a NON UNION INDUSTRY and I'm in the top 10% income bracket.
      Had to work my way through school (no free tuition for poor “whites”) started at the bottom, took me 15 before I started making good money, no one is entitled to success.
      You people seem to want a free ride without ANY effort, sacrifice or risk.

      Posted Sep-5-2011 By 

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    • Comment of user 'AngryWhiteMan' has been deleted by author (after account deletion)!
    • Comment of user 'Cheesehead' has been deleted by author (after account deletion)!