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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 heal

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...

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...