Amazon Should Acquire the US Postal Service
observer.com
observer.com
2. The lie about the USPS losing money ignores that Congress requires the USPS to pre-pay for 70 years of worker benefits. The truth is that left to manage their own business the USPS would be making huge profits and pouring them both into innovation and services as well as the US Treasury.
3. The same interests which coerced Congress into making #2 happen will recruit every logistics and retail competitor of Amazon to storm Congress with lobbying and money to make sure Amazon can’t make the kind of deal suggested in this article. Amazon is big but they would motivate an army of companies across several industries to oppose them.
It’s far more likely that Amazon will start acquiring logistics companies and ramping up their last mile service more aggressively.
They didn't make all of the payments - they're over $15 billion short.
> 2. The lie about the USPS losing money ignores that Congress requires the USPS to pre-pay for 70 years of worker benefits. The truth is that left to manage their own business the USPS would be making huge profits
So I did some quick reading[1] and in 2006, Congress mandated that the USPS pre-pay for 70 years of benefits - but only gave them 10 years to do it (2007-2017.) The payments were $5.6 billion per year. Okay, so that satisfies part of the comment: if it wasn't for this law, the USPS would have a much better cash flow picture.
Why $56 billion? For long term investments to cover the pension, the USPS is only being allowed to invest in bonds, not stocks, real estate, etc. [3] This meant their 2007-2017 payment structure was even higher (since bonds have relatively low yields.) They currently have over $335 billion set aside for future pensions, though, so between this position and the forced conservative investment policy...I gotta say, suddenly the USPS is looking like one heck of a good place to get a line-level job if you're worried about a recession.
So would they be making huge profits? Yes, but...they wouldn't be covering their pension liabilities. What they'd really need to do is walk back some of their pension guarantees (bad idea for employees), segue into employee-funded retirement plans like 401Ks, or ... take the same risks as other big companies did, and simply not pay their retirees their pensions (ouch.)
1: https://www.govexec.com/management/2017/09/usps-defaults-bil...
2: https://www.uspsoig.gov/blog/be-careful-what-you-assume
3: https://www.rstreet.org/2019/05/30/usps-pensions-vs-the-worl...
Correct. Those who bring this up as proof that "Republicans hate the Post Office" or somesuch don't understand (willfully or not) that the 10 years of pain were always intended to be that, 10 years of pain. It's what any business with pension obligations in a secularly declining market ought to be doing; USPS employees are fortunate in that its government masters forced the USPS to do so.
Quite. People need to remember that they aren't permitted to set prices on their most important ("market dominant") products or even determine the days they work. The monopoly they get from being the USPS is the one nobody would ever want: having to deliver first class mail anywhere in the United States at a price they aren't allowed to set themselves.
That's the case for your local power company or water utility too. A government-granted monopoly (which the USPS has in the form of first class mail) is almost always accompanied by government-regulated rates.
The US Constitution gives Congress the power to establish (and regulate) the postal system.
Congress protected the workers by requiring their pensions be funded. Alternatively, they could have voted to change the pension to a 401k type system, which they did for the rest of the federal civil service in the late 80s, and which is common in the non-government world. As far as I can tell, the postal workers union wanted this and they got it.
FedEx and UPS both have pension funds that are nearly fully funded (90%+). That means they have 90% of the funding required to ensure they can pay all projected claims without paying out of current revenues. The wrinkle with USPS is that it also offers health benefits, and USPS employees generally are not on Medicare. FedEx and USPS indirectly pay for health benefits by paying employer payroll taxes into Medicare, but USPS obviously had to fund those benefits itself.
Before 2002-2003, the USPS did not save for those benefits at all. It paid them on a pay-as-you-go basis. It was paying $5 billion per year for those benefits, and facing a huge funding crisis. (FedEx and UPS were not because their pensions are nearly fully funded and their employees are eligible for Medicare.) So Congress passed broadly bi-partisan legislation requiring the USPS to save for its health benefits. This is a relatively unusual requirement among public employers, but public entities are also facing a massive crisis from unfunded health benefit obligations. Private employers don’t have this problem because their employees participate in Medicare. (And what will likely happen with many public entities is that their employees will be bailed out by being brought into Medicare, even though they didn’t pay into Medicare during their working lives.) Moreover, USPS hasn’t been able to make the required payments anyway, and has defaulted on more than half of them.
Congress isn’t forcing USPS to deal with some unfair disadvantage. It’s simply requiring USPS to be prepared to fulfill its obligations to employees, something which FedEx and UPS are already in a position to do. In fact, not requiring pre-funding of benefits would give USPS an unfair advantage in the short term, because private employers are forced to pay employer-side payroll taxes into Medicare and SS for those benefits while the USPS is not.
This is where classic disruption comes in unfortunately. Or alternatively great government leadership that reforms it over a significant period of time.
It would be a a fools errand to try to get Amazon's free market ideas on delivery could easily take root in a large and old government institution. Amazon is actually brutal to it's delivery workforce if you read the articles.
One would have to ask the people of Greenland.
Couldn’t Amazon just start poaching FedEx’s 3rd party companies in large markets?
Never going to happen.
If the USPS allowed us to accept 1st-class mail only, I might be OK with it. They bullied the mail-filtering services out of existence, so I don’t even have any other options.
And yet, they can't seem to avoid being a fence for fake products.