1. The Post Office is a government sponsored entity mandated by the Constitution —- Amazon cannot “acquire” it.
2. The lie about the USPS losing money ignores that Congress requires the USPS to pre-pay for 70 years of worker benefits. The truth is that left to manage their own business the USPS would be making huge profits and pouring them both into innovation and services as well as the US Treasury.
3. The same interests which coerced Congress into making #2 happen will recruit every logistics and retail competitor of Amazon to storm Congress with lobbying and money to make sure Amazon can’t make the kind of deal suggested in this article. Amazon is big but they would motivate an army of companies across several industries to oppose them.
It’s far more likely that Amazon will start acquiring logistics companies and ramping up their last mile service more aggressively.
Didn't item #2 expire? Seem to recall it having a ten year window during which it heavily impacted the USPS balance sheet but the fund became fully populated at the end of the ten year term, which has passed.
I was curious about how both of these could be true:
> 2. The lie about the USPS losing money ignores that Congress requires the USPS to pre-pay for 70 years of worker benefits. The truth is that left to manage their own business the USPS would be making huge profits
So I did some quick reading[1] and in 2006, Congress mandated that the USPS pre-pay for 70 years of benefits - but only gave them 10 years to do it (2007-2017.) The payments were $5.6 billion per year. Okay, so that satisfies part of the comment: if it wasn't for this law, the USPS would have a much better cash flow picture.
Why $56 billion? For long term investments to cover the pension, the USPS is only being allowed to invest in bonds, not stocks, real estate, etc. [3] This meant their 2007-2017 payment structure was even higher (since bonds have relatively low yields.) They currently have over $335 billion set aside for future pensions, though, so between this position and the forced conservative investment policy...I gotta say, suddenly the USPS is looking like one heck of a good place to get a line-level job if you're worried about a recession.
So would they be making huge profits? Yes, but...they wouldn't be covering their pension liabilities. What they'd really need to do is walk back some of their pension guarantees (bad idea for employees), segue into employee-funded retirement plans like 401Ks, or ... take the same risks as other big companies did, and simply not pay their retirees their pensions (ouch.)
>They currently have over $335 billion set aside for future pensions, though, so between this position and the forced conservative investment policy...I gotta say, suddenly the USPS is looking like one heck of a good place to get a line-level job if you're worried about a recession.
Correct. Those who bring this up as proof that "Republicans hate the Post Office" or somesuch don't understand (willfully or not) that the 10 years of pain were always intended to be that, 10 years of pain. It's what any business with pension obligations in a secularly declining market ought to be doing; USPS employees are fortunate in that its government masters forced the USPS to do so.
The Constitution gives the federal government the authority to establish a postal service, but "mandated" it is not. (I'm not a Gov downsizer, but think the distinction is important.)
> The truth is that left to manage their own business the USPS would be making huge profits and pouring them both into innovation and services as well as the US Treasury.
Quite. People need to remember that they aren't permitted to set prices on their most important ("market dominant") products or even determine the days they work. The monopoly they get from being the USPS is the one nobody would ever want: having to deliver first class mail anywhere in the United States at a price they aren't allowed to set themselves.
> The monopoly they get from being the USPS is the one nobody would ever want: having to deliver first class mail anywhere in the United States at a price they aren't allowed to set themselves.
That's the case for your local power company or water utility too. A government-granted monopoly (which the USPS has in the form of first class mail) is almost always accompanied by government-regulated rates.
The US Constitution gives Congress the power to establish (and regulate) the postal system.
Congress protected the workers by requiring their pensions be funded. Alternatively, they could have voted to change the pension to a 401k type system, which they did for the rest of the federal civil service in the late 80s, and which is common in the non-government world. As far as I can tell, the postal workers union wanted this and they got it.
FedEx and UPS both have pension funds that are nearly fully funded (90%+). That means they have 90% of the funding required to ensure they can pay all projected claims without paying out of current revenues. The wrinkle with USPS is that it also offers health benefits, and USPS employees generally are not on Medicare. FedEx and USPS indirectly pay for health benefits by paying employer payroll taxes into Medicare, but USPS obviously had to fund those benefits itself.
Before 2002-2003, the USPS did not save for those benefits at all. It paid them on a pay-as-you-go basis. It was paying $5 billion per year for those benefits, and facing a huge funding crisis. (FedEx and UPS were not because their pensions are nearly fully funded and their employees are eligible for Medicare.) So Congress passed broadly bi-partisan legislation requiring the USPS to save for its health benefits. This is a relatively unusual requirement among public employers, but public entities are also facing a massive crisis from unfunded health benefit obligations. Private employers don’t have this problem because their employees participate in Medicare. (And what will likely happen with many public entities is that their employees will be bailed out by being brought into Medicare, even though they didn’t pay into Medicare during their working lives.) Moreover, USPS hasn’t been able to make the required payments anyway, and has defaulted on more than half of them.
Congress isn’t forcing USPS to deal with some unfair disadvantage. It’s simply requiring USPS to be prepared to fulfill its obligations to employees, something which FedEx and UPS are already in a position to do. In fact, not requiring pre-funding of benefits would give USPS an unfair advantage in the short term, because private employers are forced to pay employer-side payroll taxes into Medicare and SS for those benefits while the USPS is not.
They could perhaps sell off part of it and let a private company run it to make it profitable, but still maintain some kind of ownership. Sort of like what the UK did with Royal Mail
Nearly everything is for sale, it is just the matter of the price. If Greenland can’t be bought for 250 billion, how about 10 trillion? Or exchanging it for Alaska? Or Hawaii? Granted, these options are not that lucrative, but they establish the price points from which one could negotiate to the mutual benefit.
These types of organizations are nearly impossible to reform quickly. There are so many structures and interest groups.
This is where classic disruption comes in unfortunately. Or alternatively great government leadership that reforms it over a significant period of time.
It would be a a fools errand to try to get Amazon's free market ideas on delivery could easily take root in a large and old government institution. Amazon is actually brutal to it's delivery workforce if you read the articles.
What I was expecting in this article was for Amazon to go big with their own logistics such that Fedex goes bankrupt. Amazon then would pick up Fedex for pennies and round out their logistics ability and totally be in charge of home delivery as they would have an additional advantage over their competitors.
USPS employees are unionized. Given their history of treating their employees like disposable units, I'm not sure Amazon would want to deal with that headache.
They already do that, it's called Amazon Logistics and it's a horrible service compared to other options here in the UK (Royal Mail, UPS, Hermes, etc.).
So the company that was bullied away from building an office building in NYC is going to convince the public it should acquire a beloved 250-year-old American institution?
What a horrible idea, privatizing USPS, especially if it's sold to Amazon. The stupidity is incredible. We're going to sell this to Amazon and leave it up to them to decide who gets and who doesn't get mail now? We're going to leave it up to them to deliver all our packages when they've proven they are incapable of delivering their own? This would essentially put us, at least some of us, in the pre pony express days. The incredible stupidity of privatizing such essential services is simply unbelievable.
Oh hell no. I don’t use ground mail anymore unless I have to because my mailbox gets stuffed with advertisements. Amazon takes over and that will be unavoidable.
If the USPS allowed us to accept 1st-class mail only, I might be OK with it. They bullied the mail-filtering services out of existence, so I don’t even have any other options.
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[ 3.1 ms ] story [ 83.7 ms ] thread2. The lie about the USPS losing money ignores that Congress requires the USPS to pre-pay for 70 years of worker benefits. The truth is that left to manage their own business the USPS would be making huge profits and pouring them both into innovation and services as well as the US Treasury.
3. The same interests which coerced Congress into making #2 happen will recruit every logistics and retail competitor of Amazon to storm Congress with lobbying and money to make sure Amazon can’t make the kind of deal suggested in this article. Amazon is big but they would motivate an army of companies across several industries to oppose them.
It’s far more likely that Amazon will start acquiring logistics companies and ramping up their last mile service more aggressively.
They didn't make all of the payments - they're over $15 billion short.
> 2. The lie about the USPS losing money ignores that Congress requires the USPS to pre-pay for 70 years of worker benefits. The truth is that left to manage their own business the USPS would be making huge profits
So I did some quick reading[1] and in 2006, Congress mandated that the USPS pre-pay for 70 years of benefits - but only gave them 10 years to do it (2007-2017.) The payments were $5.6 billion per year. Okay, so that satisfies part of the comment: if it wasn't for this law, the USPS would have a much better cash flow picture.
Why $56 billion? For long term investments to cover the pension, the USPS is only being allowed to invest in bonds, not stocks, real estate, etc. [3] This meant their 2007-2017 payment structure was even higher (since bonds have relatively low yields.) They currently have over $335 billion set aside for future pensions, though, so between this position and the forced conservative investment policy...I gotta say, suddenly the USPS is looking like one heck of a good place to get a line-level job if you're worried about a recession.
So would they be making huge profits? Yes, but...they wouldn't be covering their pension liabilities. What they'd really need to do is walk back some of their pension guarantees (bad idea for employees), segue into employee-funded retirement plans like 401Ks, or ... take the same risks as other big companies did, and simply not pay their retirees their pensions (ouch.)
1: https://www.govexec.com/management/2017/09/usps-defaults-bil...
2: https://www.uspsoig.gov/blog/be-careful-what-you-assume
3: https://www.rstreet.org/2019/05/30/usps-pensions-vs-the-worl...
Correct. Those who bring this up as proof that "Republicans hate the Post Office" or somesuch don't understand (willfully or not) that the 10 years of pain were always intended to be that, 10 years of pain. It's what any business with pension obligations in a secularly declining market ought to be doing; USPS employees are fortunate in that its government masters forced the USPS to do so.
Quite. People need to remember that they aren't permitted to set prices on their most important ("market dominant") products or even determine the days they work. The monopoly they get from being the USPS is the one nobody would ever want: having to deliver first class mail anywhere in the United States at a price they aren't allowed to set themselves.
That's the case for your local power company or water utility too. A government-granted monopoly (which the USPS has in the form of first class mail) is almost always accompanied by government-regulated rates.
The US Constitution gives Congress the power to establish (and regulate) the postal system.
Congress protected the workers by requiring their pensions be funded. Alternatively, they could have voted to change the pension to a 401k type system, which they did for the rest of the federal civil service in the late 80s, and which is common in the non-government world. As far as I can tell, the postal workers union wanted this and they got it.
FedEx and UPS both have pension funds that are nearly fully funded (90%+). That means they have 90% of the funding required to ensure they can pay all projected claims without paying out of current revenues. The wrinkle with USPS is that it also offers health benefits, and USPS employees generally are not on Medicare. FedEx and USPS indirectly pay for health benefits by paying employer payroll taxes into Medicare, but USPS obviously had to fund those benefits itself.
Before 2002-2003, the USPS did not save for those benefits at all. It paid them on a pay-as-you-go basis. It was paying $5 billion per year for those benefits, and facing a huge funding crisis. (FedEx and UPS were not because their pensions are nearly fully funded and their employees are eligible for Medicare.) So Congress passed broadly bi-partisan legislation requiring the USPS to save for its health benefits. This is a relatively unusual requirement among public employers, but public entities are also facing a massive crisis from unfunded health benefit obligations. Private employers don’t have this problem because their employees participate in Medicare. (And what will likely happen with many public entities is that their employees will be bailed out by being brought into Medicare, even though they didn’t pay into Medicare during their working lives.) Moreover, USPS hasn’t been able to make the required payments anyway, and has defaulted on more than half of them.
Congress isn’t forcing USPS to deal with some unfair disadvantage. It’s simply requiring USPS to be prepared to fulfill its obligations to employees, something which FedEx and UPS are already in a position to do. In fact, not requiring pre-funding of benefits would give USPS an unfair advantage in the short term, because private employers are forced to pay employer-side payroll taxes into Medicare and SS for those benefits while the USPS is not.
One would have to ask the people of Greenland.
This is where classic disruption comes in unfortunately. Or alternatively great government leadership that reforms it over a significant period of time.
It would be a a fools errand to try to get Amazon's free market ideas on delivery could easily take root in a large and old government institution. Amazon is actually brutal to it's delivery workforce if you read the articles.
Never going to happen.
Couldn’t Amazon just start poaching FedEx’s 3rd party companies in large markets?
And yet, they can't seem to avoid being a fence for fake products.
If the USPS allowed us to accept 1st-class mail only, I might be OK with it. They bullied the mail-filtering services out of existence, so I don’t even have any other options.