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  I'm all for strong employee benefits and organized labor,
  but 75 years' pre-funded benefits for retired workers
  seems excessive

Those two things are not related. The prefunding requirement was specifically added for political reasons to screw over the Postal Service.

So you're both [edit: all] saying that Congress is being paid (by who? UPS/Fedex?) to screw USPS over. Do you have any citations?

Why wasn't this mentioned in the article if it's such a well-known scheme?

  So you're both saying that Congress is being paid (by who? UPS/Fedex?)

Nowhere in his/her comment was anything even remotely close to what you inferred here.

How do you get that congress was paid to make this happen? It could just be normal republican tactics for proving that government is bad by making laws to move the goalposts when things are bad.

Sure, it could be purely political.

The bill might also be a result of regulatory capture, which is what I was suggesting and seems fairly plausible to me.

And I still have yet to see any actual citations rather than speculation.

  One stipulation of the PAEA has caused controversy. 
  It stipulates that the USPS is to make payments of 
  $5.4 - $5.8 billion into the Postal Service Retiree
  Health Benefits Fund, each year, from 2007 to 2016 in
  order to prefund 50 years of estimated costs.

https://en.wikipedia.org/wiki/Postal_Regulatory_Commission

How many retirees do you know that live fifty years in retirement? If the Post office were liquidated, the retirees would be dead two decades before the mandated fund would run out.

Republicans hate public services as a matter of ideology. They don't need to be paid to do this, they do it for fun.

> So you're both [edit: all] saying that Congress is being paid (by who? UPS/Fedex?) to screw USPS over.

I don't see anyone saying that Congress is being paid to do that. Congress has lots of members who favor privatization of government services in general and the post office in particular, but outright privatization seemed like it would have a political cost that they weren't willing to bear. So they put in that measure, with the intent of building political support for privatization over time.

Whether the preference for privatization is honest ideology, corruption, or something else is its own issue.

> Why wasn't this mentioned in the article if it's such a well-known scheme?

The article mentions the mandate as one of the central problems facing the USPS, and the fact that it is a requirement that neither private businesses nor other public institutions face.

Ok, so putting aside whether this bill was the result of political ideology or regulatory capture, where are the citations that back up your claims?

> The article mentions the mandate as one of the central problems facing the USPS, and the fact that it is a requirement that neither private businesses nor other public institutions face.

Right, the point of my original comment was to highlight this seemingly absurd policy. The Economist provides no further explanation. People in this thread are quick to color in whatever details they like. I'm no expert on the USPS so perhaps the Economist has an agenda to push by not including the relevant information.

I was 13 in 2006, so if this really was the result of Bush and his friends in Congress, they did a fantastic job of playing the long game. But I'll wait to form an opinion until I see credible citations.

http://www.savethepostoffice.com/how-postal-service-began-pr...

EDIT:

> I was 13 in 2006, so if this really was the result of Bush and his friends in Congress, they did a fantastic job of playing the long game. But I'll wait to form an opinion until I see credible citations.

Also, IMO your age at a particular time a decision was made is irrelevant. The facts on what happened are readily available. Just because I was 9 when the first Gulf War happened, doesn't mean I can't have formed an understanding of it from (contemporary) sources and later reports, articles, and books. It's almost a reverse ad hominem, an attempt to excuse yourself from a discussion or drawing a conclusion because you weren't present or cognizant at the time. You're capable of conducting research yourself, you're an intelligent, human being. And others have provided citations and discussion throughout this thread on the topic.

>So you're both [edit: all] saying that Congress is being paid (by who? UPS/Fedex?) to screw USPS over.

Lobbyists who want it privatized so it can be milked. Just like social security or a myriad of other things.

>Do you have any citations?

http://angrybearblog.com/2015/03/epic-fail-for-the-postal-se...

>Why wasn't this mentioned in the article if it's such a well-known scheme?

Because the Economist is a neoliberal rag. They're about as likely to say "maybe free market orthodoxy isn't all its cracked up to be" as they are to start running op eds by dreadlocked union leaders.

Those two things kind of are related.

The prefunding requirement was added to give the impression of financial problems so as to manufacture consent for privatization among the public.

A quick look around this thread demonstrates that it's mostly been a successful ploy ("Privatization isn't looking too bad.").

I've no doubt that any privatization that does occur will dump these existing pension liabilities on the federal government, raise prices and strip employee benefits to the bone while jacking up executive compensation.

Textbook private equity stuff.

Whomever buys the USPS will get a cheap monopoly which they can milk indefinitely. This will be declared a success for the free market or something.

> Privatization isn't looking too bad. I'm all for strong employee benefits and organized labor, but 75 years' pre-funded benefits for retired workers seems excessive.

The whole purpose of that unique mandate is to make privatization look better by making the state of the USPS look bad.

I think it's the opposite: any org (private or public) should be required to pre-fund infinite years of benefits. That is, if you're compensating the employee with benefit X, you should book (the ROR-discounted present value of) that full liability now, irrespective of when you would have to eventually pay it. That one extra month of employee work earned them $100, 80 years from now? Great, that should be $0.71 less you have to spend. No 75-year cutoff. (Or 50, or 40, or 25).

Any other arrangement is forcing the employee to become an investor, in which case the usual protections should attach.

No company should be able to play the game of "oh, man, we totally thought we'd be making bank 40 years on, bummer we can't pay the rest of our worker's employment compensation, tough s---." And then you have situations like GM, Bethlehem Steel, etc.

Why is anyone cool with "don't worry, we'll be profitable later" when it comes to worker's wages? Why do people like gambling with workers' promised benefits?

I don't see why this logic does not equally apply to debt and financing, which are the structural foundation of capitalism.

I answered that here:

>>Any other arrangement is forcing the employee to become an investor, in which case the usual protections should attach.

The return is speculative? Then you're an investor. The return is part of your promised compensation package? It shouldn't be (modulo the ability to predict reasonable RoRs, etc.)

I think there is an aweful lot of handwaving that goes on...

Largely the justification for owners of equity get rewarded for taking a risk, and the employees get wages less than the full value of their output because they take no risk. If they are taking no risk, then any pension plan should also be risk free, not a hidden tie-in to the risk used to justify their pay.

> I think it's the opposite: any org (private or public) should be required to pre-fund infinite years of benefits.

This position is not unreasonable. OTOH, it is unreasonable to require the USPS to prefund benefits that neither private businesses nor government agencies are required to prefund, specifically to make its finances look bad when compared with other entities.

Is it reasonable to scream bloody murder when one org is forced to follow the sane policy instead of demanding that others start to follow it too?

> Is it reasonable to scream bloody murder when one org is forced to follow the sane policy instead of demanding that others start to follow it too?

I disagree that it is a sane policy (much less that it is the sane policy) except when applied consistently. There is a not-unreasonable argument that it might be a sane policy, applied consistently.

This used not to be a problem when pension benefits were shifted to the public sector (which doesn't have a solvency problem by definition).

Nonetheless, neoliberal dogma says that the market does a better job of investing than the government will.

Coincidentally privatized pension contributions provide ample opportunity for profiteering.

It's more that we let this happen to us through inaction rather than we asked for it, though.

>This used not to be a problem when pension benefits were shifted to the public sector (which doesn't have a solvency problem by definition).

There is no definition of public sector that makes bankruptcy impossible.

Pre-funding is about honesty of the obligations. If you say you're going to pay the workers $X at time t, apportion the money now. Put your full faith and credit behind it now. Make it so you can only renege by reneging on bonds in general.

It's mind-boggling how ostensibly pro-worker advocates are okay with the mentality of, "don't worry, we'll find your pension money later, if Congress appropriates enough down the road".

>There is no definition of public sector that makes bankruptcy impossible.

The US treasury can't and won't ever run out of dollars. Whenever there is a bank that needs bailing out or a war suddenly the government remembers this. It's only when funding pension obligations or healthcare it suddenly 'forgets' and assumes that taxes pay for things.

There is still an inflation risk but bankruptcy does indeed become impossible.

>Pre-funding is about honesty of the obligations. If you say you're going to pay the workers $X at time t, apportion the money now. Put your full faith and credit behind it now. Make it so you can only renege by reneging on bonds in general.

There has to be wiggle room somewhere if it's a private sector obligation. Pension are invested and future payouts are based upon certain assumptions about those investments holding. A lot of perfectly reasonable assumptions pre-2008 suddenly went out of the window afterwards.

So it is not entirely about honesty of the obligations.

>It's mind-boggling how ostensibly pro-worker advocates are okay with the mentality of, "don't worry, we'll find your pension money later, if Congress appropriates enough down the road".

I've never heard any ostensibly pro worker advocate say this.

>The US treasury can't and won't ever run out of dollars.

Again, the point is that dynamic is unrelated to the definition of the public sector. I understand the on-the-ground reality; I was objecting to your characterizing of it as "by definition".

>There has to be wiggle room somewhere if it's a private sector obligation. Pension are invested and future payouts are based upon certain assumptions about those investments holding. A lot of perfectly reasonable assumptions pre-2008 suddenly went out of the window afterwards.

Right, but there's a big difference between "our reasonable RoR estimates were a little off and we unexpectedly needed to add a little more this year" vs "we never funded it to begin with and expected to earn the income to fund this later".

Funding it now makes the promise honest; "we'll find the money later" isn't, and it's wrong for GM or the USPS to do this. For the US government, the promises need to go right into the federal debt, which the 75-year prefund obligation would accomplish.

>I've never heard any ostensibly pro worker advocate say this.

You did, when you advocated the USPS handle its pensions that way, not having to prefund them (modulo time/RoR discount).

The prefunded benefits was a move to kill the postal service so that private companies could take over the space. If the conclusion you draw from this is "[p]rivatization isn't looking too bad", then you haven't looked at the problem.

> We might end up losing a few of the more rural branches

In many rural "towns" the post office is basically the only public building or store, everything else is miles away. Rural post offices serve an important public function even if they are not profitable.

The cynical ploy by Bush era Republicans has worked. It was a machiavellian two-for-one, destroy a public service and get people like you to blame unions for it.