Burrus Update 12-2010, July 21, 2010

In a series of recent Updates for union members, I have pointed out that the Postal Service’s current financial difficulties are the result of the Postal Accountability and Enhancement Act of 2006 (PAEA), which imposed on the USPS the onerous burden of pre-funding future retiree healthcare liabilities — in amounts exceeding $5 billion annually over a 10-year period.

Despite the accuracy of my Updates, numerous articles and editorials in the mainstream media have reported somberly on the Postal Service’s desperate financial situation. My response has been that USPS deficits are directly linked to the pre-funding issue, and do not accurately reflect the relationship between postal revenue and expenses related to providing mail service.

A USPS chart [PDF] confirms my analysis: It shows that from 2001 through 2008, minus the pre-funding requirement of the PAEA, the Postal Service experienced a cumulative surplus of more than $14 billion.

This record refutes the screaming headlines that the Postal Service’s financial situation is in need of major surgery if the USPS is to survive far into the future. The chart clearly rebuts the leading sentence of virtually every media report about the Postal Service’ proposed rate increase and the future of mail.

It does not take a genius to look at the true picture of postal finances and conclude that despite the diversion of hard-copy communication and the worst recession in 60 years, the Postal Service has performed admirably. The deficits of 2007 and beyond directly correspond to the future healthcare funding obligation, period.

William Burrus
President