Trump has decided the Post Office is in debt. He is correct. One hundred billion dollars plus in debt. He blames Amazon who contracts with the Post Office for many of its deliveries. Big dollars to the Post Office. In 2017, $7 billion. In reality, Amazon’s $7 billion is the Post Office’s life line.
The Post Office of course gives Amazon a discount. Any business that gets that volume of work provides a discount. The Post Office still makes a significant profit.
The real reason Trump is on Amazon’s ass is because the owner of Amazon also owns the Washington Post. The Washington Post is constantly investigating Trump’s activities. Trump is trying to get even with the Post by going after Amazon.
Last thursday, Trump announced he had created a task force to study the Post Office’s financial problems. Trump continues to assert the Post Office’s problems arise because of pricing in the package delivery market.
Trump has failed to do his homework.
Up through 2005, the Post Office was debt free. Made money. Understand the Post Office is set up to receive no tax dollars. It subsidizes itself by revenues from postage and services.
The Post Office was a cash cow. Congress recognized it. Congress devised a scheme whereby certain Post Office funds could be channeled into the national fund. To pay various government obligations.
In 2006, Congress passed the Postal Accountability Enhancement Act which was signed into law. It set up a system that would bankrupt any business.
The law mandated payments to pre-fund health care benefits for postal retirees – 75 years into the future. To make it even worse, the total of the payments had to be paid in 10 years. Project costs 75 years, but pay full amount in 10 years. The cash cow got fatter.
The law is quirky. Experts say full of accounting gimmickry. An example being the law only required pre-funding to actual current and past employees at the time of its passage in 2006. Theoretically, it has to include new entrants beyond that date and/or not born yet for accounting purposes. Making the program even more onerous.
Note that the Post Office is the only enterprise in America required by law to pre-fund future retiree healthcare benefits.
The new law required the Post Office to pay roughly $5.5 billion a year in pre-funded benefits. Any wonder why the Post Office was solvent in 2005 and in debt 2 years later.
A point was reached where the Post Office could not pay the pre-funded dollars. The ten years ended 2016. However at that time instead of 100 percent prefunded, only 49 percent had been paid. The Post Office owes the rest.
The Post Officewas required to pay, if it could, $115 million per month. Tough!
The solution is to change the law. Perhaps lower the amount. Even better, get off pre-funding and go to pay as you go like everyone else.