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Comment by magduf | Hacker News Reader

Huh? I'm not sure what this has to do with taxes or government spending. The USPS doesn't get tax money; it's financed by its customers, like any other business, it just happens to be wholly owned by the federal government. Postal rates are high because they're forced by the UPU agreement to deliver Chinese mail for almost nothing, so they pass the costs on to US customers.

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The USPS has been getting money from taxes to offset the debt they run each year. For many years now they have been in the red.

Fortune wrote about it back in 2015[1] and you can read the 2018 financial results[2].

Some tax money goes to the USPS.

[1] https://fortune.com/2015/03/27/us-postal-service/ [2] https://about.usps.com/news/national-releases/2018/pr18_093....

That first article is severely stretching the definition of "getting money". Virtually all of the alleged $18B is attributed to the law that gives the USPS jurisdiction over your mailbox.

The second just reflects Congress's attempts to deliberately hobble the USPS in 2006 by requiring them to suddenly pre-fund their pension obligations.

https://www.uspsoig.gov/blog/be-careful-what-you-assume

https://www.bloomberg.com/opinion/articles/2018-04-04/congre...

> The law requires the Postal Service, which receives no taxpayer subsidies, to prefund its retirees' health benefits up to the year 2056. This is a $5 billion per year cost; it is a requirement that no other entity, private or public, has to make.

> hobble the USPS in 2006 by requiring them to suddenly pre-fund their pension obligations

Maybe it's a flawed methodology (arguable), but being fiscally responsible about pensions is something that should be encouraged. In California pension liabilities are out of control and at impractical levels, causing all sorts of havoc and manipulation (corruption). https://www.vcstar.com/story/news/2018/12/07/governor-jerry-...

If fiscal responsibility were the goal, they'd have required the other federal agencies to do the same. That this specifically targets one of the few agencies ripe for potential privatization is... suspicious. Even if it made fiscal sense, the sudden switch is problematic.

> If fiscal responsibility were the goal, they'd have required the other federal agencies to do the same

That's not how the Federal government works. It's a LARGE organization that sometimes have people with philosophies align. There is no chance that the military would prefund pensions. I think that, toward the initiative to make the USPS free of subsidy now and in the future, it made perfect sense. The USPS workers used to talk about everything moving electronic, but that's not happening in our lifetime. 50 years is just "the near future", respectively.

OK, let's reword that a bit.

Why didn't the same Congressional Republicans who pushed through the Postal Accountability and Enhancement Act of 2006 push for similar changes to how other federal agencies fund their pensions?

Why won't the military pre-fund pensions? Why shouldn't they do the same "fiscally responsible" thing for veterans benefits?

> Why didn't the same Congressional Republicans who pushed through the Postal Accountability and Enhancement Act of 2006 push for similar changes to how other federal agencies fund their pensions?

I don't know. Probably something to do with the majority of the US population liking the USPS but not everyone wanting more military spending.

> Why shouldn't they do the same "fiscally responsible" thing for veterans benefits?

Probably because congress would never approve another 20%+ on top of the current military spending and still get all their pork in. These topics are an amalgam of political decisions as well as leadership decisions.

I vote for more accountability, reliability and term limits in government. That's rarely a topic from either major party.

Fully funding pensions out to 50 years in the future goes beyond "fiscally responsible". Consider that the nominal working lifetime of an employee is only 47 years (18 - 65) -- they're being required to fund pensions for hypothetical employees who are still in high school.

Talking about people in high school who will end up in public service is irrelevant.

Having more money in the bank than you take out for a car loan is fiscally responsible. Not exactly. More than. That's WITHOUT your holdings (bank account balance) being subject to market forces, which is a compelling reason.

Postal workers' retirement age is 55-57 (https://about.usps.com/manuals/elm/html/elmc5_058.htm).

Oh, ha -- so then change "high school" for "grade school". Either way, it seems ridiculous to require a pension to be fully funded years before its beneficiary is even hired.

To offset the debt that Congress has forced on them by requiring them to pre-fund pensions and healthcare cost for employees who don't exist yet. And Congress sets postage rates as well, so USPS can't raise rates in order to pay down their congressionally-mandated debt without getting approval from Congress. And the requests to raise rates are often denied.

Congress sets domestic letter mail rates.

Everything else is a free-for-all.

I’m sure Amazon’s direct delivery system also stuck a knife in USPS.

It's not "any other business"; it's a shared resource that improves the lives of all citizens. And we WANT it that way. "Any other business" would not offer or employ any of the features we expect from our Post Office (systemwide flat rate parcel & 1st class letter, 6d/wk delivery (for free!), lack of surge/congestion pricing). If you think UPS and FedEx aren't taking profit away from USPS think again.

It has a legal monopoly, the power to tax competitors under the Private Express statutes (this is why there is no FedEx First Class mail competitor), it is exempt from local taxation, and doesn't pay federal taxes to the same extent a regular business would.

What is the UPU and how'd they get this power?

Universal Postal Union: http://www.upu.int/en.html

"With its 192 member countries, the UPU is the primary forum for cooperation between postal sector players. It helps to ensure a truly universal network of up-to-date products and services."

There’s a really excellent planet money podcast about this. Back when the US was a major exporter the UPU was great for US merchants.

https://www.npr.org/sections/money/2018/08/01/634737852/epis...

> Back when the US was a major exporter the UPU was great for US merchants.

The US is the world's #2 exporter. $1.57 trillion versus $2.15 trillion for China. China's figure peaked a few years ago, the US is likely to narrow that gap, especially with US energy exports continuing to ramp up. US exports of goods are near an all-time high after adjusting for inflation.

Universal Postal Union is a UN body that manages the relationships between different national post offices. They set standard rates and stuff for all member countries so that each country doesn't have to negotiate a treaty with any other country it wants to send international mail to.

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

The USPS gets a monopoly on its gigantic market from the government. That is an enormous government subsidy. It is very much not like any other business.

The USPS does have a special relationship, but it isn't a one way street. First, it isn't a monopoly -- there are many other shippers competing in the profitable segments of the market. Second, USPS is obligated to service every location in the US, and at government-controlled prices.

USPS will deliver, door to door, a letter from Nowhere, MT to Remote, GA for $0.55, even though they take a loss on it. Try to get Fedex to match that.

> Second, USPS is obligated to service every location in the US

I’ve heard this many times. I also know quite a few places that USPS does not service.

> First, it isn't a monopoly

But it is. A simple googling gives many hits confirming this simple fact. This one seemed most informative:

> The USPS actually has two legally enforced monopolies, as per Title 39 of the US Code. One is over the delivery of anything defined as a “letter,” which is within certain size and weight limits. The second is over the use of your mailbox.

From https://www.econlib.org/rick-geddes-explains-the-postal-mono...

That is defining monopoly in a very constrained way. You might as well be complaining that USPS having a monopoly over delivering watch fobs. FedEx isn't trying to capture the $0.55 letter delivery market.

It's the textbook definition of a government instituted monopoly. Monopolies don't get more monopol...ied than that!

> FedEx isn't trying to capture the $0.55 letter delivery market.

Because that would be illegal. Otherwise they would.

Perhaps you should look at USPS Publication 542, https://about.usps.com/publications/pub542/welcome.htm, which describes how they have a monopoly and the power to levy what amounts to a tax on anyone that competes in a prohibited way.

the commenter acknowledged that, and pointed out that there are responsibilities that come with their privileges.

This is incorrect. There's no mechanism by which cheaper prices for UPU mail translates into higher prices for US customers.

If they had pricing power they'd raise prices regardless of fixed losses elsewhere.

The USPS has to ask permission from regulators to raise prices, unlike their more private counterparts.

And that is evaluated on a per market basis. The assertion that losing money on some services causes them to raise prices elsewhere is baseless.

Even if there was a mechanism the numbers don't work - there's orders of magnitude more packages sent within the US than into the US from UPU.

I was commenting on your remark about USPS lacking pricing power. I wasn't really disagreeing with you, just pointing out some of the moat between them and pricing power.

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