why is the usps in debt

It is true that the Postal Service is constitutionally guaranteed. Postal Service (USPS) to achieve sustainable financial viability.”, “USPS has lost $69 billion over the past 11 fiscal years — including $3.9 billion in fiscal year 2018. This reduction allows the Postal Service to continue to reduce interest costs. As the ninth state ratified the Constitution in 1788, Congress was granted the power “to establish Post Offices and post Roads.”. The Postal Service has been losing money for years, but the need for mail-in ballots during the election has sharpened the focus on the carrier. The United States Postal Service is something we can often take for granted. Its official statement is, “The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.”. They gained traction again in August 2020 when Postmaster General Louis DeJoy, a Trump campaign megadonor, was called to testify before Congress over concerns he was working to undermine mail delivery. Claim: The U.S. economic downturn due to the COVID-19 coronavirus pandemic in early 2020 was forcing the United States Postal Service to close. The Postal Service’s 2019 annual financial report shows that the agency had a net loss of $8.8 billion that fiscal year, bringing total liabilities to more than $97 billion. The largest liabilities are unfunded retiree health benefits, worker compensation costs, and debt. USPS has been around for more than 200 years, but says it is close to being insolvent. Seventh, and finally, postal operating costs tend to go up because collective bargaining always produces agreements that raise compensation costs. Postal Service lost money in six out of the 10 years from 2001 through 2010, according to its financial reports. But actually, the post office isn't funded by tax dollars. Even before the novel coronavirus struck, impacting people and businesses across the country and around the world, the USPS was in serious financial trouble. While there are many factors that led to the USPS’ current state of debt, there are two primary reasons why that debt has now balloomed. As planned, the Postal Service reduced its debt level during 2019 by $2.2 billion, finishing the year with $11.0 billion in debt outstanding. Stay tuned for more on the future of the USPS during this unprecedented time. About four-fifths of the USPS labor force is unionized. So, yes, the USPS ha piled up billions of dollars in “debt” ON PAPER since 2006. The Postal Service's debt "is a direct result of the mandate that it must ... pre-fund the retiree health plan," the USPS Inspector General wrote in 2015. Partenheimer also blamed “an outdated business model that needs to be addressed through legislative and regulatory reform.”. The U.S. Excluding those debt payments, it should be noted, the USPS has finished each year with revenue surpluses for most of the past decade—as a 2018 Trump administration report documented. That’s because the post office is a quasi-federal agency, and as such, is not funded by the U.S. government. Postal Service operations and standards and the need for on-time mail delivery during the ongoing pandemic and upcoming election, which as you know may be held largely by mail-in ballot.". For many years, the USPS was the only federal agency subject to a pre-funding mandate on future retiree health benefits. Come 2012, it had hit its $15 billion legal debt cap [11]. The USPS continues to have no problem paying its operating expenses, including its retirees’ health benefits, WITHOUT any taxpayer funds. Postal workers receive federal benefits, but are not actually considered federal employees. Even without paying into its Retiree Health Benefits Fund, the service’s debt grew another $3 billion over the past three years. The USPS has always been self-sustaining,” the posts claim. The first stamps were issued in 1847, and city delivery got its start in 1863. Its expenses are also growing faster than its revenue because of increased wages, a decrease in mail volume, and something known as pre-funded healthcare — a hot topic within the postal community. The Postal Service has racked up $160.9 billion in debt from what’s owed prepaying retiree benefits. While pre-funding other retiree benefits is normal for both private and government organizations, pre-funding health benefits … “The USPS costs taxpayers exactly $0. USPS has been losing money for more than a decade. By the end of the decade, the semi-independent government agency's losses had reached a record $8.5 billion, forcing the Postal Service to consider seeking an increase in its $15 billion debt ceiling or face insolvency. The Postal Service reported a loss of $2.7 billion for the fiscal year that ended Sept. 30. 6. “But with COVID-19 our financial situation has gotten even worse,” he added, pointing out that USPS’s most profitable revenue stream, First-Class Mail, is hurt by businesses’ grinding to a halt because of the pandemic. Any other use, in particular any reproduction, communication to the public or distribution of the content of this website, in whole or in part, for any other purpose and/or by any other means, without a specific licence agreement signed with AFP, is strictly prohibited. Also, the USPS did not make $16.7 billion in prefunded retiree health benefits in fiscal 2011 and 2013, said Todisco. The United States Postal Service will play a critical role in the 2020 election. The subject matter depicted or included via links within the Fact Checking content is provided to the extent necessary for correct understanding of the verification of the information concerned. USPS Workers Are Reporting That Mail Deliveries Are Intentionally "Slowed Down", Girl Who Loves Writing Letters Started a Whole Correspondence Effort with the USPS, How This Guy Scammed UPS Shouldn't Have Been This Easy, But It Was, Jennifer Love Hewitt Is Pregnant on '9-1-1' — Fans Anticipate Pregnancy Storyline, Seth Rogen and Ted Cruz's Twitter Feud, Explained: Here's What Went Down, What Happened in Tacoma? The U.S. Government Accountability Office (GAO) calls the post office’s financial viability a high-risk issue, saying, “Comprehensive legislative reform and additional cost-cutting measures are needed for the U.S. But all of it is strictly ON PAPER. Copyright AFP 2017-2020. The Fairness Act passed in the House of Representatives in February 2020, and a Senate vote is pending. (AP Photo) The United States Postal Service (USPS) lost $5.5 billion last year. So it’s your books of stamps, flat-rate boxes, packing and shipping materials, and even the adorable greeting cards they offer at checkout that keeps their operations running. The administration then offered a $10 billion loan under terms in which control over the mail service would shift to Treasury Secretary Steven Mnuchin, and package rates would be quadrupled in exchange for the funding. Postal Service page. The Postal Service is currently self-supporting, due to its special status as an independent federal agency overseen but not funded by Congress. In 2006, Congress forced the Postal Service to prepay health benefits and pensions for … Postal Service's (USPS) deteriorating financial condition is unsustainable as a result of trends including:Declining mail volume : First-Class Mail—USPS's most profitable product—continues to decline in volume as communications and payments migrate to electronic alternatives. The Postal Service is in dire financial straits because its revenues are insufficient to support its operational costs and liabilities. Under the mandate, they were on the hook to pay between $5.5 and $5.8 billion a year, and postal losses mounted. Just wipe the books clean, because paying these debts is draining the Post Office’s cash, which should be invested in new delivery vehicles and overdue capital upgrades. USPS’s total unfunded liabilities and debt ($143 billion at the end of fiscal year 2018) have grown to double its annual revenue.” As CNN reports, the USPS told Congress it would be out of money by September back in April of 2020. According to Partenheimer, USPS currently employs 97,000 military veterans, making it “one of the largest employers of veterans in the country.”. He said the Postal Service is more than $160 billion in debt. It has $15 billion in debt, its statutory maximum. Users can access and consult this website and use the share features available for personal, private, and non-commercial purposes. The Postal Service’s $15 billion debt is a direct result of the mandate that it must pay about $5.6 billion a year for 10 years to prefund the retiree healthcare plan. But perhaps the biggest reason for financial troubles is the USPS' retirement funding. Mail delivery is a service you receive, but not one you pay for — outside of the postage that you purchase. There’s been a lot of buzz surrounding the United States Postal Service lately, from the speed of mail delivery to the uncertainty of its future. But this simple joy may soon be a thing of the past, given that the United States Postal Service (USPS) is chronically in debt and in danger of being disbanded entirely. The memes resurfaced in April 2020 as a bill in the House of Representatives proposed to forgive the agency’s debt as part of a stimulus package aimed at mitigating the economic fallout associated with the COVID-19 pandemic. Can access and consult this website and use the share features available for personal, private and! Than $ 160 billion in debt from what ’ s owed prepaying retiree benefits due. The ninth state ratified the Constitution in 1788, why is the usps in debt was granted the power “ establish! Workers/Retirees but doesn ’ t have the money virtually all of USPS debt has spiked ( $ 1B ) 10! 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