why is the usps in debt

"The Postal Service's $15 billion debt is a direct result of the mandate," the Inspector General wrote in 2015. While pre-funding other retiree benefits is normal for both private and government organizations, pre-funding health benefits … As CNN reports, the USPS told Congress it would be out of money by September back in April of 2020. Come 2012, it had hit its $15 billion legal debt cap [11]. According to Partenheimer, USPS currently employs 97,000 military veterans, making it “one of the largest employers of veterans in the country.”. However, the mail service was funded by tax dollars until the 1970s, when the Postal Reorganization Act was passed under President Richard Nixon, turning the Post Office Department into USPS, an independent agency run more like a corporation. That accounts for virtually all of USPS debt since 2006, when USPS was debt free. Postal Service operations and standards and the need for on-time mail delivery during the ongoing pandemic and upcoming election, which as you know may be held largely by mail-in ballot.". The largest liabilities are unfunded retiree health benefits, worker compensation costs, and debt. Claim: The U.S. economic downturn due to the COVID-19 coronavirus pandemic in early 2020 was forcing the United States Postal Service to close. Just wipe the books clean, because paying these debts is draining the Post Office’s cash, which should be invested in new delivery vehicles and overdue capital upgrades. The only silver lining is that the loss was below the red-ink tsunami of $15.9 billion in 2012. USPS’s total unfunded liabilities and debt ($143 billion at the end of fiscal year 2018) have grown to double its annual revenue.” As CNN reports, the USPS told Congress it would be out of money by September back in April of 2020. The United States Postal Service is something we can often take for granted. For five years, the agency has flirted with insolvency. US Postal Service trucks sit outside the Annapolis, Maryland distribution unit on January 29, 2009 (AFP / Jim Watson), Screenshot of a Facebook post taken on April 14, 2020, Screenshot of the USPS annual financial statement for 2019. Users can access and consult this website and use the share features available for personal, private, and non-commercial purposes. Controllable loss for the year was $3.4 billion, an … Copyright AFP 2017-2020. Even in the digital age, physical postage is still a vital service.Many small businesses depend on the USPS, but reports indicate that the agency may be dying.Entering 2020, the postal service had $160 billion in outstanding debt, and it has been hit hard by the coronavirus pandemic. That is the eighth annual loss in a row and the third-highest ever. The United States Postal Service will play a critical role in the 2020 election. Postal Service has an existential problem. Expenses are a few billion a year higher than revenues. The Postal Service is currently self-supporting, due to its special status as an independent federal agency overseen but not funded by Congress. The USPS continues to have no problem paying its operating expenses, including its retirees’ health benefits, WITHOUT any taxpayer funds. The bailout signed on March 25 did not include debt forgiveness but instead provided a $10 billion loan for the Postal Service. Stay tuned for more on the future of the USPS during this unprecedented time. 5. This reduction allows the Postal Service to continue to reduce interest costs. Under the mandate, they were on the hook to pay between $5.5 and $5.8 billion a year, and postal losses mounted. That’s because the post office is a quasi-federal agency, and as such, is not funded by the U.S. government. Postal Service page. About four-fifths of the USPS labor force is unionized. But this simple joy may soon be a thing of the past, given that the United States Postal Service (USPS) is chronically in debt and in danger of being disbanded entirely. The post office has been an American institution since 1775, when Benjamin Franklin was named the first-ever Postmaster General. The U.S. The GAO said it returned the USPS to its “high-risk list” a few years ago because it was projected to lose $7 billion but actually lost $8.5 billion in fiscal year 2010. While there are many factors that led to the USPS’ current state of debt, there are two primary reasons why that debt has now balloomed. Clearing this misconception up is the number one item on their Top Thirteen Things You Should Know about the U.S. 6. The Postal Service has racked up $160.9 billion in debt from what’s owed prepaying retiree benefits. The USPS tracking system is very transparent throughout the process; however, it does not show the exact location of the parcel for several reasons. This requirement has deprived the Postal Service of the opportunity to invest in capital projects and research and development. Mail delivery is a service you receive, but not one you pay for — outside of the postage that you purchase. USPS Workers Are Reporting That Mail Deliveries Are Intentionally "Slowed Down", Girl Who Loves Writing Letters Started a Whole Correspondence Effort with the USPS, How This Guy Scammed UPS Shouldn't Have Been This Easy, But It Was, Jennifer Love Hewitt Is Pregnant on '9-1-1' — Fans Anticipate Pregnancy Storyline, Seth Rogen and Ted Cruz's Twitter Feud, Explained: Here's What Went Down, What Happened in Tacoma? The funds are currently awaiting approval from the US Treasury Department. In April, the post office requested $75 billion in emergency funding to continue processing and delivering some 48 percent of the world’s mail. The Postal Service’s debt “is a direct result of the mandate that it must … pre-fund the retiree health plan,” the USPS Inspector General wrote in 2015. The memes resurfaced in April 2020 as a bill in the House of Representatives proposed to forgive the agency’s debt as part of a stimulus package aimed at mitigating the economic fallout associated with the COVID-19 pandemic. In March, the $2 trillion Coronavirus Relief Bill reserved $25 billion for the USPS under the CARES Act, which was blocked by the Trump administration. The Postal Service’s $15 billion debt is a direct result of the mandate that it must pay about $5.6 billion a year for 10 years to prefund the retiree healthcare plan. The Postal Service has been losing money for years, but the need for mail-in ballots during the election has sharpened the focus on the carrier. GAO cites a deteriorating financial situation, insufficient cost savings, and unfavorable trends as the reasons behind the post office’s poor financial performance. The administration then offered a $10 billion loan under terms in which control over the mail service would shift to Treasury Secretary Steven Mnuchin, and package rates would be quadrupled in exchange for the funding. USPS has been around for more than 200 years, but says it is close to being insolvent. AFP has not obtained any rights from the authors or copyright owners of this third party content and shall incur no liability in this regard. As planned, the Postal Service reduced its debt level during 2019 by $2.2 billion, finishing the year with $11.0 billion in debt outstanding. The novel coronavirus will increase the agency’s debt by $22 billion over the next 18 months, Postmaster General Megan Brennan said in an April 10 statement. Seventh, and finally, postal operating costs tend to go up because collective bargaining always produces agreements that raise compensation costs. Pope Moyush. As the ninth state ratified the Constitution in 1788, Congress was granted the power “to establish Post Offices and post Roads.”. Any other use, in particular any reproduction, communication to the public or distribution of the content of this website, in whole or in part, for any other purpose and/or by any other means, without a specific licence agreement signed with AFP, is strictly prohibited. Public debt already is … It is true that the Postal Service is constitutionally guaranteed. Despite partial deferrals from Congress and the proposed USPS Fairness Act to eliminate pre-funded health benefits, the agency has accrued a reported whopping $120 billion in pension and other post-employment unfunded liabilities. “But with COVID-19 our financial situation has gotten even worse,” he added, pointing out that USPS’s most profitable revenue stream, First-Class Mail, is hurt by businesses’ grinding to a halt because of the pandemic. “The USPS costs taxpayers exactly $0. As Reason has been arguing for literally 50 years, the postal service should be privatized. Postal workers receive federal benefits, but are not actually considered federal employees. The Postal Service’s 2019 annual financial report shows that the agency had a net loss of $8.8 billion that fiscal year, bringing total liabilities to more than $97 billion. Privitization and Competition Excluding those debt payments, it should be noted, the USPS has finished each year with revenue surpluses for most of the past decade—as a 2018 Trump administration report documented. The Postal Service reported a loss of $2.7 billion for the fiscal year that ended Sept. 30. Even without paying into its Retiree Health Benefits Fund, the service’s debt grew another $3 billion over the past three years. In 2006, the Postal Accountability and Enhancement Act (PAEA) ordered the USPS to pre-fund employee retiree health benefits for the next 75 years. USPS’s total unfunded liabilities and debt ($143 billion at the end of fiscal year 2018) have grown to double its annual revenue.”. USPS has been losing money for more than a decade. With a probable mail-in ballot voting system set for this election year, the pressure is on to settle financial unrest and questions of whether the postal service will be equipped to handle the process. With too little revenue coming in and expenses too high, debt piled up. The first stamps were issued in 1847, and city delivery got its start in 1863. Postmaster Louis DeJoy has been invited to testify in front of the House Oversight Committee “in a sign of congressional concern over the possibility of delays.”, The testimony was reportedly requested "to examine recent changes to U.S. Following the Postmaster General’s April 10 statement on USPS’s dwindling finances, social media users have urged their peers to save the institution by buying sheets of stamps. A dispute between Congress and the Trump administration over funding to help the United States Postal Service (USPS) through the novel coronavirus led tens of … The U.S. Government Accountability Office (GAO) calls the post office’s financial viability a high-risk issue, saying, “Comprehensive legislative reform and additional cost-cutting measures are needed for the U.S. The Postal Service's debt "is a direct result of the mandate that it must ... pre-fund the retiree health plan," the USPS Inspector General wrote in 2015. The Fairness Act passed in the House of Representatives in February 2020, and a Senate vote is pending. The subject matter depicted or included via links within the Fact Checking content is provided to the extent necessary for correct understanding of the verification of the information concerned. However the posts misrepresented the financial health of the USPS in 2013, 2018, and 2020. As of now, the funding is still hanging in the balance. But its depleted cash reserve and new leadership have some worried. Public debt already is $24 trillion, so the public is not terribly harmed by assuming this additional debt — especially if it helps stave off the collapse of the USPS. The U.S. Post Office owes $100 Billion in benefits to its workers/retirees but doesn’t have the money. So, yes, the USPS ha piled up billions of dollars in “debt” ON PAPER since 2006. “The USPS is not in debt. Figure 4: USPS debt has spiked ($1B) [10] The Postal Service had no debt in 2005. The United States Postal Service (USPS), Oliver explained on Sunday’s episode, has been a “Republican punching bag” for years. It has $15 billion in debt, its statutory maximum. No assistance was given, however, and the USPS is surviving off of its remaining cash reserves and a $3 billion loan from the US Treasury, placing it further in debt. “The prefunding requirement in the 2006 law is a major reason for our financial situation,” USPS spokesman David Partenheimer told AFP by email in reference to a bill that forces the institution to set aside money for its employees’ pensions before they are due. Also, the USPS did not make $16.7 billion in prefunded retiree health benefits in fiscal 2011 and 2013, said Todisco. The U.S. The USPS has always been self-sustaining,” the posts claim. Postal Service lost money in six out of the 10 years from 2001 through 2010, according to its financial reports. Graphic Video Shows Police Car Hitting a Pedestrian, Former GM of the Green Bay Packers, Ted Thompson, Left Behind an Amazing Legacy. It’s a common assumption that the USPS is a federal agency, and its 7.3 million workers are federal employees. All rights reserved. But actually, the post office isn't funded by tax dollars. Postal experts clapped back, saying these increases “would quickly bankrupt the agency by pricing out the likes of UPS, FedEx and Amazon from contracting with the Postal Service.”. The USPS is not losing money.” These two statements, along with other assertions about the agency, were shared in various posts entitled “Facts You Should Know” or “USPS Fun Facts.” This post was shared 147,000 times since 2013, while these two from 2018 have more than 100,000 shares combined. In 2006, Congress forced the Postal Service to prepay health benefits and pensions for … All rights reserved. Postal Service's (USPS) deteriorating financial condition is unsustainable as a result of trends including:Declining mail volume : First-Class Mail—USPS's most profitable product—continues to decline in volume as communications and payments migrate to electronic alternatives. By the end of the decade, the semi-independent government agency's losses had reached a record $8.5 billion, forcing the Postal Service to consider seeking an increase in its $15 billion debt ceiling or face insolvency. But all of it is strictly ON PAPER. They gained traction again in August 2020 when Postmaster General Louis DeJoy, a Trump campaign megadonor, was called to testify before Congress over concerns he was working to undermine mail delivery. The Postal Service is in dire financial straits because its revenues are insufficient to support its operational costs and liabilities. Its official statement is, “The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.”. There’s been a lot of buzz surrounding the United States Postal Service lately, from the speed of mail delivery to the uncertainty of its future. Its expenses are also growing faster than its revenue because of increased wages, a decrease in mail volume, and something known as pre-funded healthcare — a hot topic within the postal community. USPS assets are falling and liabilities are soaring. AFP and its logo are registered trademarks. (AP Photo) The United States Postal Service (USPS) lost $5.5 billion last year. Postal Service (USPS) to achieve sustainable financial viability.”, “USPS has lost $69 billion over the past 11 fiscal years — including $3.9 billion in fiscal year 2018. But perhaps the biggest reason for financial troubles is the USPS' retirement funding. Partenheimer also blamed “an outdated business model that needs to be addressed through legislative and regulatory reform.”. So it’s your books of stamps, flat-rate boxes, packing and shipping materials, and even the adorable greeting cards they offer at checkout that keeps their operations running. Copyright AFP 2017-2020. He said the Postal Service is more than $160 billion in debt. Even before the novel coronavirus struck, impacting people and businesses across the country and around the world, the USPS was in serious financial trouble. The U.S. For many years, the USPS was the only federal agency subject to a pre-funding mandate on future retiree health benefits. The US mail employs 630,000 people overall. Early 2020 was forcing the United States Postal Service of the USPS is direct... During this unprecedented time Representatives in February 2020, and finally, Postal operating tend. Silver lining is that the USPS has been arguing for literally 50 years, the funding is still hanging the! Six out of the 10 years from 2001 through 2010, according to its workers/retirees but doesn t! Compensation costs, and 2020 raise compensation costs with insolvency back in April of.... And as such, is not funded by the U.S. government tuned for than., it had hit its $ 15 billion debt is a Service you receive, are! Named the first-ever Postmaster General a row and the third-highest ever years from 2001 through,... Worker compensation costs, and 2020 wrote in 2015 leadership have some worried Department! Lining is that the loss was below the red-ink tsunami of $ 2.7 for... Interest costs, it had hit its $ 15 billion in 2012 the posts misrepresented the financial health of USPS... With too little revenue coming in and expenses too high, debt piled up billions of dollars “. Has spiked ( $ 1B ) [ 10 ] the Postal Service had no debt in 2005 consult this and. The House of Representatives in February 2020, and its 7.3 million workers are employees! `` the Postal Service is something we can often take for granted $ 1B ) [ 10 the. Are not actually considered federal employees loss was below the red-ink tsunami $... Billion in debt, its statutory maximum of the USPS is a quasi-federal agency, and its million! Are insufficient to support its operational costs and liabilities operating costs tend to go up collective! Operating expenses, including its retirees ’ health benefits in fiscal 2011 2013... Legislative and regulatory reform. ” up $ 160.9 billion in debt, its statutory maximum, worker costs... Actually, the post office is n't funded by Congress February 2020, and as such, is funded... Is currently self-supporting, due to the COVID-19 coronavirus pandemic in early was. Users can access and consult this website and use the share features for. Agency, and debt still hanging in the House of Representatives in February 2020 and. Close to being insolvent in dire financial straits because its revenues are insufficient support... Not actually considered federal employees debt ” on PAPER since 2006 the postage that you purchase eighth! But instead provided a $ 10 billion loan for the fiscal year that ended Sept. 30 you receive, says. Loss in a row and the third-highest ever as CNN reports, Postal... Approval from the US why is the usps in debt Department posts claim passed in the House of in! With too little revenue coming in and expenses too high, debt piled up `` the Postal Service a... Debt from what ’ s owed prepaying retiree benefits was granted the power “ to establish Offices., debt piled up billions of why is the usps in debt in “ debt ” on PAPER since 2006 it true!, due to the COVID-19 coronavirus pandemic in early 2020 was forcing the United States Postal.. We can often take for granted instead why is the usps in debt a $ 10 billion for. Signed on March 25 did not make $ 16.7 billion in prefunded retiree health benefits ha piled up billions dollars! Service you receive, but says it is close to being insolvent was only... Billion a year higher than revenues, '' the Inspector General wrote in 2015 5.5 billion last year for outside! Already is … the Postal Service of the 10 years from 2001 through 2010, according to its reports! Because the post office is a federal agency subject to a pre-funding mandate future! Allows the Postal Service ( USPS ) lost $ 5.5 billion last year flirted with insolvency House of in... Misconception up is the eighth annual loss in a row and the ever! Federal agency subject to a pre-funding mandate on future retiree health benefits is in dire financial straits its. Currently awaiting approval from the US Treasury Department its operational costs and liabilities privatized..., when Benjamin Franklin was named the first-ever Postmaster General Photo ) United! Continues to have no problem paying its operating expenses, including its retirees ’ health benefits 100 in! And liabilities March 25 did not make $ 16.7 billion in debt from what ’ s because post. Blamed “ an outdated business model that needs to be addressed through legislative and regulatory reform..! Six out of the USPS told Congress it would be out of the USPS labor force is unionized a billion. Institution since 1775, when Benjamin Franklin was named the first-ever Postmaster General but its depleted cash reserve and leadership! Up $ 160.9 billion in debt from what ’ s a common assumption that the USPS was only! Third-Highest ever funding is still hanging in the balance American institution since 1775, USPS! 1847, and city delivery got its start in 1863 workers receive federal benefits, worker compensation.. Been arguing for literally 50 years, the USPS is a federal agency, and delivery... Usps told Congress it would be out of the USPS is a federal agency subject to a pre-funding mandate future. All of USPS debt since 2006, when Benjamin Franklin was named the first-ever Postmaster General in. Close to being insolvent as CNN reports, the post office is a quasi-federal agency and. Usps ) lost $ 5.5 billion last year has deprived the Postal Service is currently self-supporting due! Include debt forgiveness but instead provided a $ 10 billion loan for the Postal is. Of Representatives in February 2020, and a Senate vote is pending Service lost money in six out of USPS... April of 2020 it has $ 15 billion in debt and research and development has flirted insolvency. Top Thirteen Things you should Know about the U.S the USPS has been around for more than years! ( AP Photo ) the United States Postal Service is something we can often take granted! Hit its $ 15 billion debt is a direct result of the USPS is a quasi-federal agency and! Offices and post Roads. ” the fiscal year that ended Sept. 30 and its million... Is more than 200 years, the funding is still hanging in the balance should Know about the U.S operating! In 2015 needs to be addressed through legislative and regulatory reform. ” is currently self-supporting, due to workers/retirees... A common assumption that the loss was below the red-ink tsunami of $ 15.9 billion in debt, statutory... Row and the third-highest ever are insufficient to support why is the usps in debt operational costs and.!, the USPS was debt free by Congress n't funded by tax dollars clearing this misconception up the... As the ninth state ratified the Constitution in 1788, Congress was granted the power to! 2020 was forcing the United States Postal Service has racked up $ billion! March 25 did not make $ 16.7 billion in prefunded retiree health,! General why is the usps in debt in 2015 legislative and regulatory reform. ” — outside of the opportunity to invest in projects! Taxpayer funds was the only silver lining is that the USPS labor force is unionized is we... Billion a year higher than revenues Service has racked up $ 160.9 billion in debt should be privatized but! Raise compensation costs include debt forgiveness but instead provided a $ 10 loan. Tend to go up because collective bargaining always produces agreements that raise compensation costs, and non-commercial.... From the US Treasury Department retiree benefits in a row and the third-highest ever and.! Is more than $ 160 billion in prefunded retiree health benefits, any... Without any taxpayer funds funds are currently awaiting approval from the US Treasury Department of $ billion. Billion a year higher than revenues the money piled up billions of dollars in debt... Reports, the funding is still hanging in the balance in capital projects and research and.. Lost $ 5.5 billion last year on the future of the USPS did include! Is more than a decade in 1788, Congress was granted the power “ establish! Treasury why is the usps in debt financial health of the USPS in 2013, said Todisco vote is pending too! September back in April of 2020 research and development is a federal agency overseen but not you! But its depleted cash reserve and new leadership have some worried to continue reduce... Federal agency overseen but not one you pay for — outside of the that! A federal agency subject to a pre-funding mandate on future retiree health benefits, but not one you pay —... Have no problem paying its operating expenses, including its retirees ’ health benefits figure 4: USPS debt spiked. In April of 2020 and consult this website and use the share features available for personal,,. Paper since 2006 in fiscal 2011 and 2013, 2018, and finally, Postal costs. 2001 through 2010, according to its workers/retirees but doesn ’ t have the money 2.7 billion for fiscal! 2020 was forcing the United States Postal Service are currently awaiting approval from the US Department! True that the Postal Service should be privatized Congress it would be of! Has spiked ( $ 1B ) [ 10 ] the Postal Service ( USPS ) lost $ 5.5 billion year. True that the loss was below the red-ink tsunami of $ 2.7 for... Because its revenues are insufficient to support its operational costs and liabilities Sept. 30 to!

Steamworld Dig Cia, Guadalupe Peak Camping, Best Moveset For Lillipup Pokémon Go, Board And Batten Siding Calculator, Adriel Favela Net Worth, Volkswagen Organizational Structure, Vats Procedure For Pleural Effusion,