There they go again . . .
The Washington Post gets the postal crisis wrong again
This morning’s Washington Post has done it again. For the fourth time this year, they have offered an editorial on the Postal Service’s financial problems that is remarkable in its ability to get even the most basic facts wrong. We have corrected the editors in published letters and we have met with the editorial writers. Yet the paper refuses to learn and appears to accept postal management’s bogus talking points with an utter lack of skepticism. These are fundamental failings for so-called journalists.
Let’s try it again. We hope they are paying attention over there on 15th Street.
1) The financial crisis at the Postal Service, including the large losses in recent years and the $12 billion debt the paper decries, is not due to postal labor costs or the Internet. All of the losses and the entire debt are due to the massively unrealistic and unaffordable payments to pre-fund future retiree health benefits that Congress mandated between 2007 and 2016, of which $20.9 billion have been made in the past four years. No other public agency or company in America, including The Washington Post Company (which does not pre-fund its retiree health benefits at all), is required to pre-fund such benefits.
The fact that labor costs represent 80 percent of total costs, as the Post editorial cites, does not mean that labor costs are excessive; it simply means that the USPS provides a labor-intensive service—we serve 150 million households and businesses each day, six days a week. Even so, labor costs as a percentage of total costs have declined (to 78 percent excluding the pre-funding costs) over time from a peak of 86 percent in 1979. Moreover, as new Postmaster General Pat Donahoe testified last week before the Senate, postal productivity has increased dramatically over the years. That allows the USPS to provide universal service at among the most affordable postage rates in the world.
2) The postal unions are not “lobbying the Congress to release the Postal Service from its requirement to pre-fund about $5 billion in retiree health benefits,” as today’s editorial asserts. As we told the editors in our face-to-face meeting, we are simply asking Congress to allow the USPS to use its massive pension surplus to cover the cost of the pre-funding payments.
Two independent, well respected private sector actuarial firms, The Hay Group and The Segal Company, have found that the USPS has overfunded its pension plans by between $50 billion and $75 billion over the past 40 years. If we were allowed to transfer these funds to our retiree health benefit fund, which currently has more than $42 billion in it, we would have fully funded all our future liabilities—currently estimated to be $92 billion over the next 75 years.
A pension transfer is sound public policy that is consistent with best practice in the private sector among ERISA pension plans. It would not only allow us to save the $5.5 billion we are being charged each year, but it would allow us to avoid the kind of draconian cuts in service that The Post seems to take such joy in advocating—the elimination of Saturday delivery, the closing of thousands of post offices and the elimination of 80,000 jobs in the midst of a recession.
3) The Post has exposed its gullibility by swallowing hook, line and sinker the bogus claim by postal management that “federal law gives unions the edge in collective bargaining with postal management,” as claimed in the latest editorial. It offers no evidence of this whatsoever, because there is no evidence. Postal wages and postage prices have risen in line with inflation over the past 40 years of bargaining and postal productivity gains have more than allowed the USPS to absorb the rising cost of benefits (especially health benefits) while taxpayer subsidies that once covered a quarter of the budget were eliminated.
Rather, the Post has bought into postal management’s dishonest argument that arbitration boards “are not required to consider the financial condition of the Postal Service in their decisions.” This is simply not true. The law requires, and the practices and standards of professional arbitrators mandate, that arbitration boards consider all the evidence presented by the parties. Testimony and data on postal finances is always presented by one or both of the parties. In fact, management’s claim is absurd: Postal interest arbitration is a tri-partite process, with arbitrators appointed by both management and the union joining a neutral arbitrator on boards established to resolve bargaining impasses. Apparently, the USPS has convinced the Post’s editors that its management arbitrators are struck dumb, like potted plants, when it comes to presenting management’s financial evidence to the other arbitrators. This is nonsense and postal management knows it. And The Washington Post should know better than to fall for it.
Understanding the financial crisis facing the Postal Service is not easy. But it is not rocket science. Shame on The Washington Post for misleading its readers.