The Berkeley downtown post office, formally the "Downtown Berkeley Main" station, is set to close and be sold off. There is concern about town regarding the fate of a historic public building occupying incredibly valuable municipal real estate. There is more to the story, though. Congress, it turns out, is waging war against the postal service, or so it seems:
Tomorrow, August 1st, the post office is required to make a $5.5 billion payment to a fund for retiree health benefits. In September, another $5.6 billion is due. The postal service has announced that it will not make these payments. (source: Business Insider (July 31, 2012): Post Office Nears Historic Default on $5 Billion Payment)
It's odd that the Postal service owes $11.1 billion to the health care fund and here is why:
According to the Postal Service Inspector General, the postal service has overfunded its pension fund (not the retiree health care fund). Pensions are funded at 105%. (source: Office of the Postal Service Inspector General (June 18, 2012): Pension and Retiree Health Care Funding Levels: Management Advisory Report)
Did you catch that? Pensions are over-funded by $13.1 billion. Retiree health care is under-funded by $11.1 billion.
Why not, then, simply move $12.1 billion from one fund to the other? Problem solved, right? And with each fund winding up with an extra $1 billlion.
Why not? Because Congress won't let them. The Inspector General writes (emphasis added):
The Postal Service has funded its pension benefit obligations at nearly 105 percent and is currently overfunded by $13.1 billion. The law does not allow the Office of Personnel Management to alter the contribution formula for the Postal Service, nor can it refund current or future surpluses. Although the Postal Service continues to implement changes to align costs with revenue, action is needed now to use the current and future surpluses to remain a viable business.Congress hasn't stopped there. The Inspector General continues:
Further, the Postal Service is required to fully fund its future retiree health care benefit obligations. Currently, the Postal Service has funded nearly 50 percent of that obligation.
Which brings us to the punchline:
Currently, the Postal Service has funded nearly 50 percent of that obligation. As an alternative to the annual prefunding payments, which has been difficult, we estimate the Postal Service’s fair market value of real property totals $85 billion and would be enough to cover the remaining unfunded obligation of $46 billion. Recognition of these assets that could be applied to the liability, if ever needed, could prevent the prefunding payments from increasing Postal Service debt.Simply put, the Post Office shouldn't be considered in default, says the Inspector General, for missing the $11.1 billion in payments. They're good for the money as soon as they sell off a lot of real estate. To their credit, the Inspector General and the Postal Service management aren't in favor of selling the real estate. Rather, they would prefer Congress give the postal service greater freedom to manage its services in a way that it can stay in the black. So far, Congress is steadfastly refusing, and "so sell the buildings" it is.
Surely some extremists in Congress are driven by anti-labor and anti-government sentiments. The prospect of privatizing prime municipal real estate, the post office's financial services, and indeed even the delivery of mail create giant opportunities for our capitalist elites. The Business Insider article cited above notes, as just one example, that Wall St. banks stand to gain handsomely if more people are forced to make payments electronically rather than by mailing checks.
Indeed, it is Eric Cantor (R-VA), not John Boehner (R-OH) who has announced that a Senate bill to let the Post Office get its house in order lacks enough support to pass in the house. Instead, Cantor and Darrell Issa (R-CA) are putting together a bill that, in the event of a (congressionally forced) default, the Postal Service would come under direct federal control with authority to override management decisions and break union contracts. (Source Federal Times (July 28, 2012): Is D.C. takeover a model for the U.S. Postal Service, via Salon (March 14, 2012): Congress' war on the post office)
The postal service, it seems, is being "drowned in a bathtub."
A closing note. You might want to send a letter to Representative Cantor asking him to reconsider his position. He publishes his contact information in Washington D.C. with this qualifier:
The contact information for my Washington, DC office is listed here. You are welcome to call me or send me a message through the U.S. Postal Service, but please note that postal mail is the slowest method for contacting me. All postal mail sent to my offices must be scanned for security purposes, which means it will take an additional two weeks for my staff and me to receive it.Of course it is.
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