Congressman Dennis Ross attempts to clear up the whole issue about USPS overpayments. After reading statements from politicians, unions and employees on the postal reform bill, the real showdown may come down to America and Issa/Ross duo.
Myth: The Postal Service has overpaid by $50-$75 billion into the Civil Service Retirement System and Congress owes this money back.
Fact: There is no Postal Service overpayment. In 1974, the Postal Service agreed to a formula to share the retiree costs of individuals who worked for both the Post Office Department and the Postal Service (which replaced the Department in 1971). Now, more than 40 years later, the Postal Service argues that that formula is unfair. The Postal Service argues that if a formula it considers to be fair had been used instead, than it would be owed $50-$75 billion by the US Treasury. This is an attempt to rewrite history. The original formula was instituted as part of a broader set of decisions concerning the creation of USPS. For instance, those decisions included not charging any fee to USPS in return for the postal monopoly it was granted. Another reason why it makes little sense to speak of an overpayment due to USPS is that the Postal Service had a clear requirement from 1971 until 2006 to raise postage rates to cover all costs, including its cost of retirement funding. If a different formula had been used all these years that had resulted in lower annual payments by USPS for its federal employee retirement costs, those savings would have been used to lower the cost of postage rates.
Myth: The Postal Service is unfairly saddled with an annual $5.5 billion retiree health care prefunding payment that is required of no other federal agency. If only the prefunding requirement were eliminated the Postal Service would be profitable again.
Fact: If the Postal Service were allowed to immediately cease prefunding of its retiree health care obligations, it would have an unfunded liability of nearly $100 billion by 2017. This would clearly be an unaffordable burden for an entity whose core business and revenue is steadily shrinking. It would likely result in a taxpayer funded bailout of postal workers’ retiree health care payments. USPS is under its statutory prefunding requirement because – although it was created to be a self-sustaining entity – taxpayers stand behind the large and growing retiree health care liability. Its also important to note that the annual deficit of the Postal Service now easily exceeds its entire annual prefunding payment, illustrating its fiscal problems run much deeper.
Myth: The Postal Service has a FERS surplus of $6.9 billion that should be immediately returned.
Fact: The Postal Service, in addition to a number of other federal agencies, has a temporary, projected surplus because interest rates have been at historically low rates. Once interest rates inevitably begin to rise, that projected surplus may melt away leaving the Postal Service with a deficit it can ill afford to pay back. Other federal agencies with temporary surpluses are not being granted refunds for “overpayments” as a result of these fluctuating balances.