Sorry JD, I should have been clearer, that was poor phrasing. I should have said something like “drive out of business” instead of “defund”.
There has been a financial shortfall at USPS for several years, which makes up the difference by borrowing from the treasury. They’ve been at their $15 billion statutory debt limit, and have net income of about $-5 billion per year.
That’s a deceptive summary though. The main reason the USPS has such a huge budget shortfall is the Postal Accountability and Enhancement Act of 2006.
The PAEA was a bipartisan bill, intended to tweak various bits of post office rate schedules, bureaucratic procedure, etc. It’s a complicated piece of legislation, so I’m not exactly sure everything that went into negotiating it, but anyway, it passed with broad support in Congress. However, the Bush Administration insisted that a rule be stuck in about pre-funding USPS pension obligations. It was crazy for the Democrats to go along with this plan, I’m not sure what they were thinking, but I guess they didn’t realize it would be such a big problem (in 2006 the USPS was doing pretty well; mail volumes have tanked afterward), and wanted to strike a compromise so they could get their bill passed.
The rule change goes like this: Up until 2006, the USPS had been paying pensions of retired employees as they came along. The PAEA required that the USPS must instead pre-fund 100% of an actuarial estimate of its future pension obligations, and required that they get to that point within 10 years. Since the USPS has a sizable number of employees, pre-funding all of their pension obligations many decades into the future costs a lot of money, an extra $5+ billion/year. (As far as I understand no other institution, public or private, faces this kind of requirement.)
There’s not necessarily anything inherently wrong with pre-funding pension obligations, but requiring that it be done so quickly, during a period of declining post office revenue (oops, right before a recession) hit the USPS budget like a ton of bricks.
There have been repeated attempts by Democrats to offer various fixes, but the Republicans are in charge of Congress, and are happy to see the USPS flounder. They’ve been preventing USPS from scaling back services, adjusting rates, consolidating rural post offices, etc., they won’t let the USPS enter any new lines of business, they won’t let the USPS run at losses (unlike other government institutions), they won’t raise the statutory debt limit, and they definitely won’t consider fixes to the way USPS is required to prefund its pension obligations. In my opinion their ultimate goal is to see the USPS get privatized.
