The Coming Postal Bailout:Congress wants taxpayers to save mail worker pensions(but not you or me)

The Coming Postal Bailout:Congress wants taxpayers to save mail worker pensions(but not you or me)
wsj ^ | 5-14-11

Posted on Sunday, May 15, 2011 9:54:36 AM by bestintxas

One thing we'll say about federal bailouts—if you pay attention, you can usually see them coming a mile away. It was true of Fannie Mae and General Motors, and it's increasingly clear that the next candidate will be the U.S. Postal Service.


The odds of a multibillion-dollar rescue package went way up this week when Postal Service management reported a $2.2 billion loss for the first quarter, more than 25% higher than last year despite the economic recovery. It now appears that the $15 billion line of credit the feds have offered USPS will be used up by the end of this year, with low odds on ever being paid back.

If that isn't ugly enough, the Postal Service expects $42 billion in additional losses over the next four years. Mail volume and revenues have suffered what Postmaster General Patrick Donahoe concedes are "unprecedented declines" since 2006, with projections of another drop of 20 billion letters mailed by the end of the decade, down from 171 million this year, thanks to competition from electronic mail.

If this were a private business, the obvious response to these losses would be urgent cost-cutting to avoid insolvency. Instead, Postal Service management recently concluded negotiations offering the 205,000-member American Postal Workers Union a new four-and-a-half-year contract that will provide a 3.5% pay raise over three years, dole out automatic cost of living wage hikes after 2012, and expand no-layoff protections.

Postal officials say this is the best deal they could get and that, had they not agreed to it, an arbitrator would have been even more generous to the union. But given that 80% of postal costs are for wages and benefits, this contract is unhinged from all fiscal reality.

(Excerpt) Read more at online.wsj.com ...