USPS shouldn't be forced to pre-fund retiree benefits

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Friday, June 25, 2010

The June 19 editorial "Good news in the mail" made the misguided argument that Congress should continue to require the U.S. Postal Service to pre-fund its retiree health benefits on an accelerated, arbitrary timetable -- a requirement imposed on no other government agency or private-sector company. The mandate imposes a heavy burden on the Postal Service: In 2008, before the agency received a one-year reprieve from Congress, retiree health benefits consumed roughly 10 percent of the Postal Service's revenue, a staggering amount.

The editorial blithely argued that the fact that the Postal Service "cannot afford such payments only reinforces the wisdom of the requirement." One should draw the opposite conclusion: This requirement is excessive and unreasonable, particularly during a severe economic downturn. The Postal Service's retiree health obligations are already 41 percent pre-funded, enough to cover all benefits through 2025; meanwhile, most companies do not pre-fund retiree health benefits at all. And the Postal Service continues to cover all of its retiree health obligations on a pay-as-you-go basis.

Why should the Postal Service be held to a different standard than are other employers when it meets its current retiree health obligations every year?

Tom Kiley, Washington

The writer is a senior adviser at the Economic Policy Institute.


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