Rescuing the USPS: Bailout or restructuring?

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Yesterday's Wall Street Journal ran an op-ed piece entitled "The Coming Postal Bailout: Congress wants taxpayers to save mail worker pensions."  The editorial argues that because the Postal Service is about to use up its $15 billion line of credit with the federal government, the USPS is going to have to ask for a "taypayer bailout."  But is helping the Postal Service stay alive really about a "bailout"? 

At the heart of the issue is the $5 billion the USPS is required to pre-pay health and retirement benefits, as mandated by the 2006 Postal Accountability and Enhancement Act (PAEA).  Postal Service officials argue that if it did not have to make these payments, it would be showing a $9 billion profit instead of a $12 billion deficit.  As the USPS website explains, "The Postal Service wants to restructure retiree health benefits payments to 'pay-as-you-go,' comparable to what is used by the rest of the federal government and the majority of the private sector. The Postal Service is paying for health care costs that have yet to be incurred. These funds are set aside to pay for future health care needs for employees who are not even retirement eligible. It is an unreasonable financial burden given everything that is happening in the mailing industry."

So, while the WSJ warns of a "union raid," the Postal Service is not really asking for a bailout at all.   As Postmaster  General Patrick Donahoe told Congress, "We are not asking for a bailout, just a level playing field," he said. "Take care of these unfair financial burdens and you'll never hear from us again except about how great we're doing." 

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