Republican legislation in the 109th congress hamstrung the USPS, forcing USPS to prefund retiree healthcare benefits 75 years into the future. You didn't know this?
Actually, I’m not aware of it, but it doesn’t exist quite as you put it, but that is not an uncommon misconception.
No company is allowed a pay-as-you-go to pensions, with some exceptions for executives. You’re talking about the 2006 PAEA. What they required that was in addition is to pre-fund their retiree medical promises. In the private sector a company may cancel retiree benefits at any time. For the USPS, only an act of Congress would allow that. The real burden on this was the first 10 years. The concern was particularly for the reduced contributions.
If you look at the position we’re in now, it is where the USPS is intended to be amortizing its remaining unfunded liability over 40 years. Meaning that after 2016, the additional burden would be completed. 40 years is the same length as the private sector (See EIRSA – 1974).
You could make an argument that Congress was trying to force privatization then. I wouldn't argue one way or the other on that. That 10 year period is in the past.
Also in 2009 Congress reduced the contribution. The USPS defaulted and refused to pay the mandated funds that PAEA called for. They state that clearly in their 10-K (“the Postal Service did not make any of these [required pension funding] payments in order to preserve liquidity to ensure that the ability to fulfill the primary universal service mission was not placed at undue risk”).
To claim that the PAEA is causing the the USPS to lose money is one that the USPS would deny since they don't pay what was mandated any way.
The amount on their P&L shows $4.564 billion, that is maybe $900 million more than they would be paying on a pay-as-you-go plan (which Fedex, UPS, and Amazon does not do). So, there is no evidence of this as a cause of P&L loss.
The 75 years is a misconception. The accounting method does not call for 75 years of future accruals to be advance funded, only that the long term sustainability of the system is to be measured over a 75 year period.
The real question is why do the retiree benefits for the USPS cost so much per individual. This is partly because they do need to meet certain government level (that have nothing to do with PAEA), but is deeper than that.
This is why (or one of the many reasons why) they are basically looking into what the USPS should be in the future. It is not prefunding benefits as described in the 2006 PAEA (which isn’t prefunding all benefits for 75 years) because they state clearly they are not doing that.
It’s a tough road in front of them. It is good people are working on it. As I said previously, I think they should have thrown the money at them this year. That was dumb politics and it is worth spending the money to buy confidence in the republic. We are throw so much money around this year that isn’t going to come back to us, why not here?
