Does the USPS post office lose $6 billion per year and require taxpayer bailouts every year?

Question

This video says the USPS requires a $6 billion bailout every year.

• Why does it need a bailout every year?
• When did the USPS first offer pensions?
• Was the USPS underfunding their pensions?
• What would happen if the USPS failed to fund their pensions?

Answer 1

• Why does it need a bailout every year?

  As usual with accounting, because the income is less than expenses. Specifically, expenses related to paying its liabilities.

  Income is obvious - advent of electronic communications (and competition from UPS and FedEx to top that off) drove down revenues significantly since 2000.

  As far as expenses (and liabilities): By federal law of 2006, USPS is required to pre-fund both its pension and retiree healthcare benefit liabilities (this is important - the fiscal issues aren't from pensions themselves but from pre-funding of Retiree Health Benefits Fund - RHBF).

  The audit explains that the Postal Service lost $62.4 billion between FY 2007 and FY 2017, with $54.8 billion of these losses relating to retiree health care prefunding that it had been required to pay down as part of Postal Accountability and Enhancement Act of 2006. This law required the agency to prefund its looming liabilities by contributing between $5.4 billion to $5.8 billion annually from 2007 and 2016 to the Postal Service Retirement Health Benefits Fund. Instead, it has defaulted on required payments since 2011. (source)

  

  This R Street article has some more chart porn on the topic for those monetarily inclined.

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• When did the USPS first offer pensions?

  Interestingly, I was unable to find any details but, presumably, 1971 when it was first established as a company separate from Post Office Department

  A separate interesting question is whether USPS inherited its liabilities (and if they were funded) from POD.

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• Was the USPS underfunding their pensions?

  As usual with Facebook relationships life, "it's complicated.

  • They were NOT underfunding their pensions till 2006. Not only that, but ironically, this whole mess started because OMB found that USPS was overfunding Civil Service Retirement System (CSRS) pensions liability to the tune of $70B! :)

  • They continued funding their pensions fully till 2011

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• What would happen if the USPS failed to fund their pensions?

  I wasn't able to find the authoritative source yet but, presumably, they would become Yet Another Liability for PBGC (Pension Benefit Guaranty Corporation), which is what happens to all other private companies in USA.

Answer 2

Why does it need a bailout every year?

The USPS is expected to be self financed and profitable, but has to also adhere to regulatory burdens that other carriers don't have to deal with such as:

• mandated retirement plans
• mandated pricing limits
• mandated service areas

And, of course, they need to compete with FedEx and UPS that don't have these types of mandates in an increasingly shrinking market.

That said, USPS does not take taxpayer money. The 'bailout' talk refers to particular subsidies they receive. Plenty of industries and corporations receive subsidies and it's certainly valid to argue the validity of any of them but it's not quite fair to call them 'bailouts'.

As for the pension issue, note the major painpoint is the retirees' medical expenses which have been underfunded for several years which may lead to an actual bailout at some point.