4 ms·

No other company has to do this. They created this rule specifically to make the USPS run at a loss so they would have a reason to gut it. And that's what they'

No other company has to do this. They created this rule specifically to make the USPS run at a loss so they would have a reason to gut it. And that's what they're doing now, gutting it. John Oliver had an episode about this: https://youtu.be/IoL8g0W9gAQ https://youtu.be/IoL8g0W9gAQ

rahimnathwani 5y ago
"No other company has to do this." This is false. Every private company has to do this.
- notatoad 5y ago
  do you have a source for this? the USPS claims "Unlike any other public or private entity, under a 2006 law, the U.S. Postal Service must pre-fund retiree health benefits. [1]" and everything else i've seen on the topic agrees that this is a requirement unique to the USPS. [1] https://about.usps.com/who-we-are/financials/annual-reports/fy2010/ar2010_4_002.htm https://about.usps.com/who-we-are/financials/annual-reports/...
  - cperciva 5y ago
    Private companies have to fund retirement benefits. The US government doesn't -- which is why there's arguments over why the US debt is around 20 trillion (current bonds outstanding) or over 100 trillion (including unfunded social security benefits).
    - rahimnathwani 5y ago
      Also, unfunded US govt retirement benefits come in two forms: A) future pension and medicare costs, for people who are alive today, and B) future retirement benefits for current and former govt employees IMO (B) should be prefunded (or at least have an actuarial value on the govt balance sheet) because it's an actual liability. But whether or not (A) should be treated the same way depends on whether the benefits are fixed as of now, or whether they can be reduced/eliminated if they take too large a part of the total budget at the time they're due to be paid.
      - cperciva 5y ago
        Agreed, although (a) the fact that social security is the "third rail of politics" suggests that while it's not a contractual obligation like employee retirement benefits, it's effectively an unavoidable obligation; and (b) even if the future value of benefits to be paid out isn't recorded as a liability, the social security taxes paid should probably be treated as "deferred revenue" since that revenue is at least theoretically being gathered for the purpose of paying the future benefits in question.
        rahimnathwani 5y ago
        Yes, taxes collected by govt effectively go into a single pool. The money is not ringfenced for particular purposes. Both in the UK (where I'm from) and in the US (where I live now), there are separate taxes ('social security' in the US, 'national insurance' in the UK), but the AFAICT this is just a trick to obscure the true rate of payroll/income taxes.
  - rahimnathwani 5y ago
    There are two separate things: 1. pensions (what I was talking about) 2. retiree health benefits (what you are talking about) For #1, all private companies have to pre-fund them. For #2, private companies don't usually have to pre-fund them because (i) most companies don't offer medical insurance for retirees, and (ii) even if they do, they are discretionary (i.e. unlike the pension, the benefits can be cut/eliminated).
    - rsj_hn 5y ago
      Correct. The 2006 law being referenced was trying to lock in retirement health benefits to USPS workers that were generally not available to private sector workers. It was one of the many pieces of union pork in that bill, and there is no end of irony that it is being portrayed as some nefarious Republican plot to kill the post office. It is not about how the benefits are funded but that congress mandated these benefits that disadvantages the post office by raising their labor costs. Of course the post office is advantaged in many other ways -- e.g. it is illegal for a private agency to deliver mail, only the USPS is allowed to do that. Fortunately, the post office is magnanimous enough to allow private courriers to deliver mail if they purchase a stamp and then cancel it! Why must they purchase a stamp and affix it to the letter? Because it is illegal to place anything in a mailbox (even if you own the mailbox) without postage and only the USPS can collect postage. The USPS is also the only company that it is illegal to undercut by offering letter delivery for less than the USPS charges. IIRC, you have to charge at least six times as much, thus FedEx will never be able to outcompete the USPS on letter delivery as it's only allowed to operate under the "extremely urgent" mail loophole which requires higher charges mandated by law. "The USPS actually enforces these rules from time to time. For example, Equifax learned a terrifying lesson in 1993. Armed USPS inspectors raided the company’s Atlanta headquarters to determine whether or not the letters the company had been sending via FedEx were indeed “extremely urgent” as required by the Private Express Statutes. The letters didn’t pass the test, and Equifax ended up having to pay a $30,000 fine."[1] You can read more about the Private Express Statutes on wikipedia: https://en.wikipedia.org/wiki/Private_Express_Statutes https://en.wikipedia.org/wiki/Private_Express_Statutes See also the American Letter Mail Company, which was a private rival to the post office that was outlawed by the government. [1] https://www.mentalfloss.com/article/26424/why-cant-you-start-rival-post-office https://www.mentalfloss.com/article/26424/why-cant-you-start...
rsj_hn 5y ago
> No other company has to do this. They created this rule specifically to make the USPS run at a loss so they would have a reason to gut it. This is a great reason to not get your news from John Oliver, as everything you have said in this comment is false (except I'm sure the link works). "Prefunding" a retirement account is the only way a private retirement account is ever funded. Normal people call it "set aside" or "fund". The alternative is to 1) not have a retirement benefit, 2) a social security pay-as-you-go system, which is not legal for any private company to have. In a pay-as-you-go system, there is no pension fund but workers get paid benefits from the company's general revenue. You can understand why that may be legal for the government, but not a private business (which can go bust). Private businesses are forced to set aside money for retirement benefits as the liabilities accrue. Obviously this creates a pain point when an arm of the government is privatized. But that doesn't mean we allow private companies to pay pensions out of general revenue just because they used to be public in the past. Even those companies which no longer offer defined benefit plans but only make some 401K contributions still make those contributions to a fund in the worker's name each year, before the worker retires. They "prefund". All private companies "prefund". Have you heard of the phrase "pension fund"? That's the fund into which companies must make payment ahead of retirement when a worker is working and then the worker draws those down when he retires. Forcing companies to set those funds aside ahead of time for each worker is how we fight the temptation to skimp on those contributions and kick the can down the road. Companies that do skimp on pension fund contributions are committing fraud and this creates a big mess as the government has to bail them out or workers end up not getting their retirement checks. What's interesting is where this misinformation came from as it's so popular on the left. There are all sorts of conspiracy theories about "gutting" the post office, but what I think is the key problem is the refusal to acknowledge there might be a tension between the generous retirement benefits negotiated by the postal workers union and the fact that the post office is facing financial shortfalls. And instead of acknowledging these real trade offs, it is some supposed unfair accounting rule that is causing problems for the post office and not, you know, all the money they are promising to pay workers when they retire.
- rahimnathwani 5y ago
  Right. Generous retirement benefits for public sector employees are a trick played on taxpayers by politicians and those responsible for negotiating the contracts (those representing the govt, and unions representing current govt employees). Most people think government employees are paid much less than they would be in the public sector, but that's because it's not obvious to most of us: a. just how much it costs to fund a defined-benefit pension scheme, when asset yields are so low b. how early people can retire with a 'full pension' c. the low performance bar and difficult of firing a govt employee, even for cause

rahimnathwani 5y ago

"No other company has to do this." This is false. Every private company has to do this.

notatoad 5y ago
do you have a source for this? the USPS claims "Unlike any other public or private entity, under a 2006 law, the U.S. Postal Service must pre-fund retiree health benefits. [1]" and everything else i've seen on the topic agrees that this is a requirement unique to the USPS. [1] https://about.usps.com/who-we-are/financials/annual-reports/fy2010/ar2010_4_002.htm https://about.usps.com/who-we-are/financials/annual-reports/...
- cperciva 5y ago
  Private companies have to fund retirement benefits. The US government doesn't -- which is why there's arguments over why the US debt is around 20 trillion (current bonds outstanding) or over 100 trillion (including unfunded social security benefits).
  - rahimnathwani 5y ago
    Also, unfunded US govt retirement benefits come in two forms: A) future pension and medicare costs, for people who are alive today, and B) future retirement benefits for current and former govt employees IMO (B) should be prefunded (or at least have an actuarial value on the govt balance sheet) because it's an actual liability. But whether or not (A) should be treated the same way depends on whether the benefits are fixed as of now, or whether they can be reduced/eliminated if they take too large a part of the total budget at the time they're due to be paid.
    - cperciva 5y ago
      Agreed, although (a) the fact that social security is the "third rail of politics" suggests that while it's not a contractual obligation like employee retirement benefits, it's effectively an unavoidable obligation; and (b) even if the future value of benefits to be paid out isn't recorded as a liability, the social security taxes paid should probably be treated as "deferred revenue" since that revenue is at least theoretically being gathered for the purpose of paying the future benefits in question.
      - rahimnathwani 5y ago
        Yes, taxes collected by govt effectively go into a single pool. The money is not ringfenced for particular purposes. Both in the UK (where I'm from) and in the US (where I live now), there are separate taxes ('social security' in the US, 'national insurance' in the UK), but the AFAICT this is just a trick to obscure the true rate of payroll/income taxes.
- rahimnathwani 5y ago
  There are two separate things: 1. pensions (what I was talking about) 2. retiree health benefits (what you are talking about) For #1, all private companies have to pre-fund them. For #2, private companies don't usually have to pre-fund them because (i) most companies don't offer medical insurance for retirees, and (ii) even if they do, they are discretionary (i.e. unlike the pension, the benefits can be cut/eliminated).
  - rsj_hn 5y ago
    Correct. The 2006 law being referenced was trying to lock in retirement health benefits to USPS workers that were generally not available to private sector workers. It was one of the many pieces of union pork in that bill, and there is no end of irony that it is being portrayed as some nefarious Republican plot to kill the post office. It is not about how the benefits are funded but that congress mandated these benefits that disadvantages the post office by raising their labor costs. Of course the post office is advantaged in many other ways -- e.g. it is illegal for a private agency to deliver mail, only the USPS is allowed to do that. Fortunately, the post office is magnanimous enough to allow private courriers to deliver mail if they purchase a stamp and then cancel it! Why must they purchase a stamp and affix it to the letter? Because it is illegal to place anything in a mailbox (even if you own the mailbox) without postage and only the USPS can collect postage. The USPS is also the only company that it is illegal to undercut by offering letter delivery for less than the USPS charges. IIRC, you have to charge at least six times as much, thus FedEx will never be able to outcompete the USPS on letter delivery as it's only allowed to operate under the "extremely urgent" mail loophole which requires higher charges mandated by law. "The USPS actually enforces these rules from time to time. For example, Equifax learned a terrifying lesson in 1993. Armed USPS inspectors raided the company’s Atlanta headquarters to determine whether or not the letters the company had been sending via FedEx were indeed “extremely urgent” as required by the Private Express Statutes. The letters didn’t pass the test, and Equifax ended up having to pay a $30,000 fine."[1] You can read more about the Private Express Statutes on wikipedia: https://en.wikipedia.org/wiki/Private_Express_Statutes https://en.wikipedia.org/wiki/Private_Express_Statutes See also the American Letter Mail Company, which was a private rival to the post office that was outlawed by the government. [1] https://www.mentalfloss.com/article/26424/why-cant-you-start-rival-post-office https://www.mentalfloss.com/article/26424/why-cant-you-start...

rsj_hn 5y ago

> No other company has to do this. They created this rule specifically to make the USPS run at a loss so they would have a reason to gut it. This is a great reason to not get your news from John Oliver, as everything you have said in this comment is false (except I'm sure the link works). "Prefunding" a retirement account is the only way a private retirement account is ever funded. Normal people call it "set aside" or "fund". The alternative is to 1) not have a retirement benefit, 2) a social security pay-as-you-go system, which is not legal for any private company to have. In a pay-as-you-go system, there is no pension fund but workers get paid benefits from the company's general revenue. You can understand why that may be legal for the government, but not a private business (which can go bust). Private businesses are forced to set aside money for retirement benefits as the liabilities accrue. Obviously this creates a pain point when an arm of the government is privatized. But that doesn't mean we allow private companies to pay pensions out of general revenue just because they used to be public in the past. Even those companies which no longer offer defined benefit plans but only make some 401K contributions still make those contributions to a fund in the worker's name each year, before the worker retires. They "prefund". All private companies "prefund". Have you heard of the phrase "pension fund"? That's the fund into which companies must make payment ahead of retirement when a worker is working and then the worker draws those down when he retires. Forcing companies to set those funds aside ahead of time for each worker is how we fight the temptation to skimp on those contributions and kick the can down the road. Companies that do skimp on pension fund contributions are committing fraud and this creates a big mess as the government has to bail them out or workers end up not getting their retirement checks. What's interesting is where this misinformation came from as it's so popular on the left. There are all sorts of conspiracy theories about "gutting" the post office, but what I think is the key problem is the refusal to acknowledge there might be a tension between the generous retirement benefits negotiated by the postal workers union and the fact that the post office is facing financial shortfalls. And instead of acknowledging these real trade offs, it is some supposed unfair accounting rule that is causing problems for the post office and not, you know, all the money they are promising to pay workers when they retire.

rahimnathwani 5y ago
Right. Generous retirement benefits for public sector employees are a trick played on taxpayers by politicians and those responsible for negotiating the contracts (those representing the govt, and unions representing current govt employees). Most people think government employees are paid much less than they would be in the public sector, but that's because it's not obvious to most of us: a. just how much it costs to fund a defined-benefit pension scheme, when asset yields are so low b. how early people can retire with a 'full pension' c. the low performance bar and difficult of firing a govt employee, even for cause