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The U.S. Postal Service owes the Treasury Department $5.5 billion. The bill is due today, but the postal agency cannot make the payment. Nothing will happen in the near term: Post offices will not shut down overnight, and people will still be able to send letters and packages through the mail. But the default underscores not only the financial woes plaguing the nation’s mail system but also dysfunction in a partisan Congress, which controls the Postal Service. Some say privatizing the mail agency is the only way to stanch the flow of red ink. Others blame Congress’ requirement to pre-fund postal retirees’ health benefits. The future of the U.S. Postal Service.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The U.S. Postal Service is losing about $25 million a day. It's little surprise. The agency said it will default today on a $5.5 billion payment for future retiree benefits. The Postal Service has come up with a variety of cost-cutting proposals, but Congress regulates the agency and has not taken action.
MS. DIANE REHMJoining me in the studio to talk about the future of the nation's mail service: Lisa Rein of The Washington Post, from a studio in Miami, Fredric Rolando of the National Association of Letter Carriers, and, from a studio in Harrisburg, Pa., Tad DeHaven of The Cato Institute. I'm sure many of you will have comments. Please join us, 800-433-8850. Send us your email to firstname.lastname@example.org. Join us on Facebook or Twitter. Good morning to all of you.
MS. LISA REINGood morning.
MR. FREDRIC ROLANDOGood morning, Diane.
MR. TAD DEHAVENGood morning, Diane.
REHMTad DeHaven, if I could start with you, give us a little background on how this requirement to pre-fund postal retirees came about.
DEHAVENBenefits were promised to postal employees. A massive unfunded liability occurred in 2006. Congress addressed this massive unfunded liability by requiring a series of annual payments. And then the economy proceeded to drop, and, in combination with that and the continued diversion to electronic forms of communication, these payments have become difficult to make. And a lot of the argument you hear is, well, nobody else in the federal government has to make such payments ahead of time.
DEHAVENThe private sector doesn't have to do this, isn't required to pre-fund retiree health care benefits, to which I say there's nothing that the federal government does, financially speaking, that should be emulated. But, more importantly, very few people in the private sector get retiree health care benefits.
DEHAVENAnd that's part of their problem is that you have benefits that are out of whack if the Postal Service is operating in a private market. And they're talking about an unfair requirement for a benefit that most Americans in the private sector who have taken on the chin for the past four years would say isn't fair.
REHMLisa Rein, give us some background on why the Congress made this decision.
REINWell, right now, we're in a situation where the Postal Service is -- these pre-payments aside, is hemorrhaging money. The background is that, for the last couple of years, mail volume has plummeted by 25 percent. People are using the Internet. They're paying their bills over the Internet. Our modes of communication are just vastly different than they used to be. And one of the biggest conundrums here is that the Postal Service is a kind of a quasi-government agency.
REINSince the '70s, it's basically been required to pay its own bills, bring in its own revenue. Congress doesn't subsidize it, except in rare cases for mail for disabled people and absentee ballot mail. So -- but Congress controls what the Postal Service does. Postal Service in return has a monopoly and is required to deliver mail to every home and business in America. And it's a very unusual setup that I think is partly at the root of the problem.
REINSo, this health payment aside, the Postal Service faces a really uncertain future. And the path to financial stability is just not clear. And Congress has not -- Senate has passed a bill, the House has a bill pending, but Congress, for a lot of reasons, has not moved to rescue the Postal Service.
REHMAnd turning to you, Fredric Rolando, as president of the National Association of Letter Carriers, what's your position on the pre-funding requirement?
ROLANDOThank you, Diane. I want to get back to the term of unfunded liability that Tad opened with because I think that's a little bit of a mischaracterization. No company, no federal agency is required to pre-fund future retiree health benefits, especially 75 years into the future. Rather, what all the other agencies and companies do is they pay it as it becomes due.
ROLANDOThe way this pre-funding came about was the Postal Service had a very large surplus in their Civil Service Retirement System, and the administration at the time decided that rather than just giving the money to the Postal Service, even though it was rightfully theirs, that they would establish this pre-funding account to remain budget neutral with their budget rules. And they would put the $17 billion -- it was about $17 billion into this account.
ROLANDOAnd to make it budget neutral, they would require the Postal Service -- unlike any other agency or company -- to, in a 10-year period, fund future retiree health benefits for 75 years for people who hadn't even been born yet to a tune of $5.5 billion a year. I have to believe the intent of that was to use any future surpluses or any profits to put into that fund. That fund currently has $45 billion in it, enough for decades of future pre-funding for the retirees.
ROLANDOSo the term unfunded liability doesn't really work here and neither does the term default when $45 billion in decades of pre-funding is more than the Congress, the White House, any federal agency and 90 percent of corporate America.
REHMOK. So today, you have $5.5 billion due to the U.S. Treasury, Fred. What happens?
ROLANDOWell, according to the statement by the Postal Service, nothing. We just don't add anything more to the $45 billion that's already in that account because there are no profits or recognized surpluses at this time from which to draw from. But it has absolutely no effect on the operations. The negative side of it is the requirement to make these payments since 2006 has detracted the Postal Service from the bigger picture.
ROLANDOAnd that's concentrating on replacing the lost revenues from loss of first-class mail which, if they were able to concentrate their efforts, their savings, their borrowing authority, all the things that have been depleted by this pre-funding, they would be able to come up with an intelligent business plan with which to do so to maintain the postal services that the American people are used to.
ROLANDOThis is no different than the telegraph, the telephone, the fax machine. You got to adapt to what America's needs with the Postal Service are, and this is such a time. And they need to put their energies towards that, not be detracted by this manufactured crisis and manufactured debt.
REHMAnd just to be clear about the present day, Lisa Rein, as I understand it, the revenues are $25 million in losses each day. Is that correct?
REINThat's right. And the Postal Service is projecting that it will lose almost $15 billion by the end of this fiscal year alone. There is another payment on this health fund due this fall. And even though mail definitely increases in the fall, we've got an election. We've got holiday mail coming. You know, the bigger problem is just the cash flow is not there. And you -- Fredric mentioned the Postal Service's five-year-plan which is an ambitious plan they've been very open about.
REINThey have -- they would like to go five-day service, eliminate Saturday deliveries. They'd like to have the flexibility to sell more products right now. They can only really sell postal-related products. They'd like to raise prices on stamps that these prices are currently capped by Congress. They'd like to close more post offices, shorter hours, close more processing plants which they're actually in the process of doing.
REINBut a lot of these -- a lot of the elements of this plan they have not moved forward with for political reasons and because Congress really needs to give them authority to do so.
REHMAnd, Tad DeHaven, considering what Fredric Rolando has said that no other agency in the government is required to do this in the same way the Congress has demanded that the Postal Service do it, what was -- what is the ongoing reason for that demand?
DEHAVENI'm going to say two things. One, Fredric is still not addressing the fact that very few private sector workers get retiree health care benefits. The straw man argument is being created that it's not fair because nobody else in the private sector has to do it. Nobody else in the private sector has to do it. Very few people in the private sector get -- have to do it. And that's the problem is that in the long term, the Postal Service needs to cut cost to master permanently declining revenue.
DEHAVENAnd that's the question is, how are you going to address this cost structure? And, you know, take away the payments, Diane. Forget about these payments. Forget about whether it's fair or not fair. Even if you made it disappear tomorrow, in the long term, in its current form, in its current incarnation with its current restrictions and requirements from Congress, the Postal Service is not tenable in the long term.
REHMBut are you suggesting and that the Postal Service as a government entity simply go away?
DEHAVENI'm suggesting that in the 21st century when the rest of the world has already liberalized their postal markets, moved towards privatization, sought an injection of private capital, what I'm suggesting is we get with the times. We are looking at a government-run business. Look, I'll be honest with you. I don't think Congress is capable of running a lemonade stand. And so why in the 21st century do we still insist upon Congress determining what price mail should go out, when it should go out, six days a week?
DEHAVENThese are determinations that in a day and age where mail is competing with electronic alternatives that are cheaper and faster that the market should be allowed to set prices. Maybe some people want mail three days a week. Maybe they want it one day a week. Maybe they're willing to pay more for seven days a week. We don't know because it's all being dictated by the central planners in Washington.
REHMAll right. Tad DeHaven, he is budget analyst at The Cato Institute. Short break. Right back.
REHMAnd in this hour, we're devoting time to talk about the post office, the Postal Service, which was due to make a $5.5 billion payment to the U.S. Treasury today and another $5.6 billion due at the end of September to finance future retirement payments. I'm just wondering, Fredric Rolando, with the inability of the Postal Service to make that payment today -- and I have the feeling not make the payment in September -- what happens to those retirees or potential retirees who are in the system now? Will they get the retirement they've worked so hard for?
ROLANDOYes, they will get the retirement. They would've got the retirement if this fund was never even established. We -- like I said, we got $45 billion in that fund, enough for decades of future pre-funding. It's important to notate, when you speak of the day-to-day losses, that 90 to 95 percent of these losses are totally attributed to this pre-funding. They have nothing to do with the operations of the Postal Service, the day-to-day operations. Productivity is at an all-time high in the post office. This is totally a pre-funding issue.
REHMLisa Rein, you...
ROLANDOI think a lot of what's happening here is those who are proponents of privatizing for profit are using this manufactured crisis as a basis to forward their agenda at this time.
REHMOf course, Lisa...
REHM...we were talking during the break about the cost of labor and how high that is.
REINRight. So the Postal Service in is many ways facing the same challenges as the auto industry was a few years ago. You have 80 percent -- and, Fredric, correct me if I'm wrong. But 80 percent of the Postal Service's costs come in labor. I mean, it takes -- there's no easy way for a mail carrier to deliver a letter to your doorstep except, you know, to get paid by the hour, by the week, by the year to do it.
REINAnd these labor costs -- Republicans have really, really hit hard at the Postal Service on this issue, saying that union contracts are too generous and that this is an area where costs need to be cut. And of -- the Postal Service is now in arbitration with three of its unions largely over these kinds of issues. Obviously, the tug of war over cutting labor cost is greater now than it ever was.
REINOne of the big issues has to do with work rules. For a long time, you know, there are many different crafts. You have male clerks, you have people who sort the mail, who -- and who do various things, who put it in certain containers for delivery, but with mail volume declining, the Postal Service has wanted to reassign some of the workers who traditionally sort the mail and say, well, if they don't have as much mail to sort, they should be assigned to other tasks. But the unions have resisted this, so it's a real struggle on both sides.
REHMWhat do you say to that, Fred?
ROLANDOWell, let me start out with, you know, this 80 percent figure, which is closer to the 70s and has consistently declined from the high 80s. It's a very labor-intensive work, what we do, and the labor costs are not an issue. Again, the productivity has done nothing but rise throughout the years. The labor contracts, all of us have been through negotiations. Some are still in negotiations.
ROLANDOWe're able to come to terms with what needs to be done with the collective bargaining agreements through each of the unions with the post office. The postmaster general has, time and time again, said the employees are not the problem, that the productivity is at an all-time high.
ROLANDOI'll speak for my union. My union has consistently been fairly compensated for their unique contributions as to what they bring to the Postal Service. It's the face of the post office. It's the most trusted federal employees.
ROLANDOAnd what they do day in and day out, not only delivering the mail and collecting food and acting as guardian angels in every neighborhood of the country by, you know, having the privilege of knowing the neighborhoods and being in the neighborhoods and being at places where other people just aren't during the course of a day, whether they're saving somebody's life or putting out a fire or stopping crime. We have a very unique privilege to serve the community all across the country.
REHMAll right. And, Tad DeHaven, I want to turn to you. Talk about the measures that are currently in Congress to address the Postal Service problems.
DEHAVENI look at the Senate bill as kicking the can down the road, you know, waiting two more years to decide if we can get rid of Saturday delivery service. The House is certainly more stringent, wants to get to the heart of some of the cost issues. But, again, I see a distinct lack of imagination out of both houses, out of both bills. Perhaps this is about a political reality right now. But, again, in the 21st century, I would like to think that, you know, Rolando can say -- Fredric can say all he wants about -- that this isn't a labor cost issue.
DEHAVENBut the U.S. Postal Service is not going to recover revenue-wise from its flagship product and first-class mail when the recession ends. It's going to get worse and worse and worse. And the question is, what are you going to do about it? And, again, I think in this day and age with (word?) communications, you have to put it in the hands of consumers and let consumers decide what they want, when they want it and when they're willing to pay for it. But, unfortunately, neither bills address this, and there's absolutely no gumption in Congress from either party to think big.
REHMLisa, how important is this whole pre-funding issue to the question of whether the Postal Service can stay in business, or is it the loss of $25 million a day because there's simply not enough demand for first-class mail anymore?
REINI think the pre-funding issue is obviously a very important issue. But I think, as Tad is saying, it's kind of a marker for the state of affairs right now. The situation is only getting worse. Mail is declining or the use of the mail is declining. One thing Tad was talking about were these two bills in Congress. The Senate has actually passed a bill. The House led by -- has a Republican bill that is more aggressive and that would actually allow -- among other things, would allow the Postal Service to renegotiate its union contracts.
REINPostal workers also have a no-layoff clause, and the House bill really gets it -- gets at the issue. But one thing I did want to say is that underlying this whole debate about the Postal Service is that, you know, the post office has this iconic place in our culture, and politicians in Congress are obviously aware of that and not immune to the pressures that that creates. So you have post offices in every single congressional district, hundreds of them.
REINThere are 32,000 post offices across the country, and you have a lot of lawmakers who represent rural districts, rural constituents. And so this is obviously not so much a partisan issue, but a rural-urban one. And they don't want to lose Saturday delivery. Their constituents don't want to. And so, for example, last year, the Postal Service announced that it wanted to close or consider closing 3,700 post offices across the country.
REINAnd Congress, you know, did not applaud and say, hey, this is a great cost-cutting measure. We don't like it, but we realize you have to do this. It's going to save you billions of dollars a year. Instead, Congress -- the Senate forced them to -- have a moratorium on closures. And then the political pressure was so great that the Postal Service said, OK, we're not going to close these rural post offices. Instead, we'll cut back hours.
REINSo some will operate two hours a day, some will operate six hours a day, and it's not clear to me that the savings are the same, but it just, I think, underscores that politically. When you have an institution like this that is so relevant to every member of Congress, it becomes very difficult to make changes.
REHMSo, Tad DeHaven, do you want to comment?
DEHAVENYeah -- no. Look, I've spent time in the U.S. Senate, and this is not a sexy, fun issue for politicians and their staffers. And I think we see that based on what's being discussed on the floor right now, and they don't want to bring these things up. And even if you are a member of Congress who's a -- is a visionary, is progressive in thought and recognizes that it's way overdue for a monumental transformation of the Postal Service, what incentive do you have to stick your neck out there?
DEHAVENCongress is in charge of a $4 trillion federal government. There are gazillions of programs. And postal policy issues is tough, and it's complicated. And it requires a lot of thought, and that's why, I think, we need to allow the marketplace to step in and meet our needs rather than trying to rely on politicians who don't make decisions on the basis of economics and finance. They make decisions on the basis of politics and parochialism.
REHMOK. So, from your imaginative vantage point, Tad, explain how you would see postal operations under a private institution.
DEHAVENDiane, honestly, it's hard to say at this point. You have the short term, you have the medium term, and you have the long term. Do you move to a model that gives a privatized Postal Service a five-year monopoly privilege? Do you allow immediate competition? Do you allow the utilization of the tremendous infrastructure that's in place and allow private carriers to do the last mile? I don't know. These are the things that we need to discuss and work out, but we're not even at that point. And Congress, to this day, doesn't have any interest in finding these answers out.
REHMAnd, Fred, from your point of view, what would a privatized Postal Service look like in comparison to what we have now?
ROLANDOOK. Before I get to that, let me address what was just talked about. You know, I think part of the other concerns of some -- those in Congress that do care about the future of the Postal Service is they also realize it's just not about closing post offices. It's just not about the 180,000, you know, active letter carriers I represent. It's not just about the 500,000 postal employees. This is about the postal-related industries of $1.3 trillion that involve seven to 8 million workers in their districts. It's so much more than about just us. It's about a dislike for unions, government, the middle class.
ROLANDOBut what about the small businesses that would fall with the Postal Service? And I think they have a lot of concern about those. Also, they're -- I think a lot of those who care about the future of the Postal Service in and outside of the Congress are also reluctant to go forward with anything that's going to destroy the networks that we must rely on to grow this business. I mean, there's challenges with the Internet, but there's certainly opportunities. You look at the growth in any commerce. It's absolutely amazing.
ROLANDOIt's going to -- it is going to continue to grow.
ROLANDOPeople buy things online.
ROLANDOThose packages have to be delivered.
ROLANDOWe are the delivery network for the country. We go to 150 million addresses six days a week. Saturday is the day that people are home to receive the packages. We currently deliver about 30 percent of FedEx's residential ground packages. We deliver millions of UPS packages. That's one of the opportunities of the Internet that we have to take advantage of. I want to comment on the politics that somebody mentioned.
ROLANDOI mean, speaking of politics, you've got a bipartisan majority in the House of Representatives that support a bill that would return a massive surplus to the Postal Service to pay for this pre-funding that's in their civil service retirement system. You've got a bipartisan majority in the House of Representatives that supports six-day delivery because they don't want to see the networks destroyed 'cause they knew -- know that they're crucial to our future.
ROLANDOYet, because of the politics, the bill in the House of Representatives that's discussed is the 2309 that would basically do away with the Postal Service, do away with collective bargaining. It's -- there's a lot of politics involved.
REHMAll right. And I've got to stop you to remind people you're listening to "The Diane Rehm Show." I want to hear from our listeners, so we're going to open the phones now, 800-433-8850, first to William in Miami, Fla. Good morning. You're on the air.
WILLIAMGood morning, Diane. My quick question was, as a consumer, privatizing the U.S. Postal Service, who would benefit and who would not benefit, as consumers, from this privatization?
REINWell, William, you asked a question that's on the minds of many people who can't -- who are just starting to think about this. One of the unique attributes of the Postal Service is that it's required by law to provide universal service. So you have routes that are not profitable in rural areas and where, you know, sometimes you have a house that's 30 miles from the next house. But that person has to get the mail delivered.
REINSo it's not clear to me if you had, you know, a private company -- FedEx, UPS or another entity -- you know, taking over the service. There would not be that requirement for universal service because it would be a profit-making model in which, you know, an unprofitable route would not necessarily be served.
REHMSo you might have to establish centralized locations for people to pick up their mail?
REINAnd that also happens in a lot of areas.
REINI mean, it could also be that as -- I don't know, as a condition of somebody buying the Postal Service. It sounds funny to say that.
REINYou know, a condition of that could be that you'd have to deliver the mail everywhere. I just don't know enough about the economics, but that's one risk. The other risk William -- as William was pointing out, is, you know, you might not get six-day delivery. As Tad pointed out, you know, maybe it would be economically more feasible for the company to say, well, we're going to deliver your mail three days a day -- a week, or you have to drive, you know, to get it to a central, you know, hub the other two days. There's a lot of issues.
REHMTad DeHaven, who would win? Who would lose?
DEHAVENWell, I think consumers would win, given a choice. Now, one fire-back you get is, well, there might be higher prices. Well, maybe there will be higher prices. And let's consider rural areas. Look, people choose to live there. Now, the government doesn't have a network that brings food to the grocery stores and, in some way, delivers food to people who live 30 miles away from the grocery store. The other thing, most people would argue that food is more important than the mail.
DEHAVENMaybe these local areas want to subsidize it. Maybe we need to realize that if you want something, you should be willing to pay for it, just like everything else in this country. And, look, when it comes to rural America, we already have farm subsidies. We have subsidized electricity, subsidized housing, subsidized utilities. At some point in time, you have to realize that rural America isn't Siberia, and people have a choice to live there and should pay accordingly.
REHMTed DeHaven, he's budget analyst with the Cato Institute. When we come back, more of your calls, your comments. I look forward to hearing from you.
REHMAnd as we talk about the Postal Service and concerns over whether service might be cut, whether balanced budgets have to come out of these negotiations, of course, I have a question for you, Lisa, and that is, why is it that Congress is making the rules for the Postal Service? Take us back a little bit and tell us why.
REINWell, for many, many years since our country was founded or our government started the postal -- the people around the Postal Service were -- this was -- these were the spoils of political campaigns. You got a job as the postmaster general because you worked on a campaign. And then this went on until the 1970s, at which point Congress decided to make the -- to professionalize the service, basically, and, you know, take politics out of it a little bit. So now we have civil servants.
REINWe have -- you know, it's not -- this is not -- it's not a political agency anymore. And so -- but the law that passed -- the Congress passed in the '70s basically said you got to be self-sustaining. You have to survive on your own revenues. We're not going to give you any money, but we want to control what you do.
REHMBut we're going to make the rules, yeah. And that's what seems so contraindicated. If the U.S. government is not giving the Postal Service the money, how come the Congress is making the rules about what the Postal Service can or cannot do?
REINRight. Well, part of the issue is, like, we keep going back to this idea of universal service. So, you know, Tad has sort of questioned why do we need, you know, maybe we don't need this anymore, but at that time, you know, the view was, OK, this is like -- this is an American service that we want to provide to every, you know, every citizen, whether, you know, you're poor or you're rich.
REINAnd so that was partly the sort of regulatory framework. And in exchange for having to deliver the mail to every home and business, you know, you get a monopoly, and that's basically what the Postal Service has been.
REHMAll right. Let's go to Cleveland, Ohio. Good morning, Clara.
CLARAGood morning. Thank you for taking my call.
CLARAI would like to make the simple point that our nationwide system of actual post office buildings and actual carrier routes should be seen as not just merely a tool for delivering mail but as a true national resource of democracy centers that are public, neutral, locally accountable, systematic, nationwide places that we can use much more in many new ways in this highly computerized age.
REHMGive me an example of how you feel the post offices can be used in other ways.
CLARASure. Just as we don't think of libraries as just for borrowing books but also for having community meetings, also for being connected by teleconferencing and Internet and a few other libraries in the statewide and nationwide network, the post offices are even better because they do have the carrier route system, and they -- everybody knows where their local post office is even if they don't go there very often.
REHMInteresting. Tad DeHaven, how do you respond to the idea of the post office as an institution on which our democracy is founded?
DEHAVENYou know, Diane, actually, prior to around the 1850s, it was private carriers that picked up mail at a post and took it to an individual's house. In fact, it was private carriers that first utilized the stamp in the United States. This six-day mail delivery to every home and house in the country at a fixed stamp price is a creature of Congress, is a creature of increased congressional power and power for the post office, and, yes, they were given that monopoly to make it all turn out.
DEHAVENBut the monopoly has been effective on -- effectively undermined by technology. And again, the question going forward is what are we going to do about it? And look, just this week, Peter Orszag, Matthew Yglesias were not talking about hardcore libertarian ideologues like Tad DeHaven here talking about privatization. Former Postmaster General William Henderson, within a year of leaving, said the only solution is to privatize it. And so you have these special interests.
DEHAVENAnd there's not -- this isn't just about union bashing and unions. You have the royal constituencies. You have the mailing constituencies. Then you have the members of Congress who -- most of their experience with the mail comes with naming a post office after somebody in the District. This is a political animal, and we need to address it from a economic and financial and common sense standpoint.
REHMAll right. To Salem, Mass. Good morning, Chris.
CHRISGood morning, Diane. How are you today?
REHMFine. Thank you, sir.
CHRISGood -- I have quick thoughts, questions. One, WGBH should have kept your second hour at 11 o'clock. I'm very upset at them. Secondly, about the post office, I just got a real quick idea. You replace some of the vehicles with things that are more eco-friendly, case in point, pedicabs. Pedicabs are amazing, could bring them anywhere, put as much mail in it as possible. You're saving cost by maintenance, gas, parts, and, most importantly, something that's killing this country is the cost of health insurance.
REHMAll right, sir. Thanks for calling. Fred, what about that?
ROLANDOYeah, I'd like to touch on a couple things. I want to go back to William. William asked a very good question, who would benefit and who would suffer from the privatization. And let's be real about it because privatization alone would simply benefit corporate America, who would look to make money off the Postal Service without regard to the true mission of the Postal Service, which is found in the Constitution, to serve the American people. Those that are going to suffer are going to be the rural areas, the elderly, the veterans.
ROLANDOI think it's important to be very clear about that. Clara made some really good points with regard to looking forward and maximizing the use of not only our delivery networks but our retail networks and finding different things that we can do. The last caller -- I forget your name, I'm sorry -- again, the Postal Service has been unable to concentrate on those things. They've been so tied up with finding the money for this pre-funding the last few years, they're unable to concentrate on innovation and forward-looking and putting a business plan together and buying different vehicles.
ROLANDOYou know, again, depleted all their savings, depleted all their borrowing authority to make these bogus payments, and, as a result, they haven't had a forward-thinking agenda whatsoever. And I don't know if it's -- what we need is a change in thinking or a change in leadership. But either way, it's time to look forward and see how we can maximize the use of these networks and make changes that are going to bring in the -- replace the revenues for the Postal Service so that they can continue to serve the American people.
REHMAll right. All right.
ROLANDOThe post offices have been around longer than the country itself.
REHMOK. Here's an email from Phil, who says, "Why does the post office need to make a profit? Lots of government programs are not profitable. The military does not contribute to revenues. Neither do food stamps. Why is this a problem?" Tad DeHaven.
DEHAVENWell, I mean, the post office provides a commercial service. And, as Lisa already discussed, the decision was made in the 1970s to make it subsistent of the revenues it brings in. It's no longer going to be doing that. And so perhaps what we're getting at is should taxpayers subsidize it. And I have a hard time coming up with a justification for taxpayers subsidizing postal delivery, which largely benefits -- let's face it. It benefits businesses with advertising mail.
DEHAVENWhy should taxpayers now, at this day and age of the telecommunications revolution, be subsidizing paying for junk mail, so we can make sure it's delivered six days a week in Timbuktu? That doesn't make an ounce of sense to me, and that's not progressive whatsoever.
ROLANDOYeah. The Postal Service is the richest alleged broke company in the world. You know, once again, we don't use tax money. We're not looking to use tax money. And to answer the caller's question, when there is a profit, the Congress set it up to work and be used for something like pre-funding when there's a profit, when there's a surplus, not to deplete their funds that they need to operate.
ROLANDOKeep in mind when I say they're the richest broke company, again, $45 billion for future retiree health benefits, Congress, zero, administration, zero, other federal agencies, zero, most of corporate America, zero. They have two retirement systems. Not only are they fully funded, unlike any other federal agency. Both of those funds are over-funded. There is no dispute their first retirement system has an excess of $11 billion, which the Congress is trying to return to the Postal Service.
ROLANDOTwo independent groups have determined that the Civil Service retirement system has surpluses of between 50 and $75 billion. The GAO has determined that those accounting principles -- where they determined the 50 to $75 billion surpluses are acceptable accounting principles and that Congress needs to make a policy decision with regard to it. So we're not talking about using any tax money, Tad. Nobody is talking about that.
REHMAll right. Let's go...
ROLANDOThey haven't in over 30 years.
REHMOK. Let's go to Lapeer, Mich. Good morning, Joe.
JOEHow are you doing?
JOEThere was a comment made earlier, and it goes -- it's basically about the gentleman that mentioned basically getting rid of the $45 billion or whatever and not using it for health care -- retiree health care costs and doing away with retiree health care. But, you know, I had run a business myself before. I'm not currently a business owner. But I had run a business myself before, and you don't do things because everybody else doing it. You do it based on need.
REHMOK. Any comment on that, Tad or Fred?
ROLANDOYeah. Nobody is talking about doing away with it, sir. We're just saying that when you're going to put it away for 75 years into the future, if and when you have profits and surplus, that's a great thing. And we're very proud that we have $45 billion for future retiree health benefits and look forward to when we can continue to build that fund when we do have our surpluses recognized or do have profits from a forward-looking business plan that'll once again put the Postal Service on stable operational ground. But thanks for your comment.
REHMAll right. To Goshen, Ind. Good morning, Andrea.
ANDREAGood morning, Diane. It's so exciting to talk to you.
REHMI'm glad to have you.
ANDREAWell, I have to say, first of all, I am really sick of hearing that the Congress is incapable of doing anything or managing anything. We elect them to do their job, not keep their job. And I really think that this is not even a difficult thing to solve. This is just political. And it goes back to the certain people in the government or in the private sectors who want to dismantle all services. They go -- they immediately start squawking about taxes. This doesn't have anything to do with taxes, but they throw that in there to get backing.
ANDREAThis is about somebody taking a service that, right now, is reasonably inexpensive that people can afford and privatizing it. I'm from the land of Mitch Daniels. We have our toll roads privatized. They're looking at privatizing our lottery. They are -- basically privatized our schools with these school vouchers that's going to do in our public schools. And I just am sick of people thinking that dismantling all services, that it's a best idea.
REINAndrea, I do agree with your sentiment that this debate over, you know, the Postal Service is kind of being swept in to the larger debate, you know, in Congress and in the country about the government, government spending, is government -- does government spend too much, does it need to be cut? You know, there are lot of Republicans in Congress who feel that, you know, that both bills that are on the table now are essentially, you know, government bailouts of the Postal Service.
REINAnd they don't -- you know, they don't want any money, you know. If -- with health funds, the pension over-payment, all of that, if you just sort of strip that away, they view this as a government bailout, which, you know, it's much more nuanced and complicated than that. But I do agree with you that this is sort of symbolic. It's become symbolic of that larger debate.
REHMAnd you're listening to "The Diane Rehm Show." Here's an email from -- let's see, I'm not sure. He says, "Years ago, when I lived in England, I had a savings account in the post office. It was convenient, yielded excellent interest and was independent of banks. Would this work here in the U.S. Post Office?" Fredric.
ROLANDOYeah. Again, the Postal Service has a great future. There is so many different ways to replace the revenue. Again, we deliver 40 percent of the world's mail at the cheapest rates. You look at what other countries are doing. There's other countries that are into banking and insurance and cellphones, not to take those things over but to partner with other businesses in America where we benefit those businesses also to utilize the delivery and retail networks of the Postal Service.
ROLANDOAnd, yeah, banking is a great idea. And, again, it's just getting the Congress and the leadership of the Postal Service focus away from this pre-funding fiasco. Let's fix that problem, and let's move forward. Let's come up with a business plan that will involve things like that and get us back on solid track. There's a bright future there.
REHMAll right. Tad DeHaven, I think you wanted to comment.
DEHAVENYes. As a matter of fact, postal expert Michael Schuyler had a paper out this week that I discussed on our website that talks about what an absolute disaster it would be for the government-run mail monopoly to get involved in private sector enterprises like insurance or banking, what have you. If you look at the history of postal endeavors, when they've gotten into non-postal activities, nine out of 10 times it's been a disaster.
DEHAVENAnd, quite honestly, we have enough problems in this country with crony capitalism coming out of Washington, D.C. Do we really want the same folks that can't get the Postal Service running to begin with also sticking their nose into an entity that's going to be running banks and insurance and logistics and everything else? That's a horrible idea. And it's excuse to keep it going when it shouldn't be.
REHMOK. All right. Fred, I'm going to give you the last quick word, please.
ROLANDOOK. I appreciate that. And, again, I think it's really important that when we talk in terms of default, lets look at what the real default here. The default is Congress, I believe, has defaulted on their responsibility to fix this pre-funding issue that it created. Again, I think it was created with good intent for surpluses in profits, but those aren't there. They need to fix the problem, and we need to have a leadership in the Postal Service that will now engage itself in what needs to be done to preserve the people's post office. This is America's post office. And we...
REHMAll right. And thanks for those comments. Fredric Rolando, he's president of the National Association of Letter Carriers, Tad DeHaven, budget analyst for The Cato Institute, and Lisa Rein, national reporter for The Washington Post. Thank you all so much. Thanks for listening. I'm Diane Rehm.
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