Independent fact check by AP, Republican and Democratic senators, Maine postal workers all confirm: Senator Collins’ burdensome pre-funding mandate critical to USPS financial crisis

 

Yesterday, Senator Susan Collins accused Maine postal workers who have criticized her role in creating the USPS’s current financial crisis of spreading what she called “a fiction.” Collins claimed that her legislation, which requires the Postal Service to pre-fund all retirement benefits, is unrelated to the agency’s current financial strain.

 

But according to an independent fact check from the Associated Press, “the biggest factor” contributing to USPS’s financial instability is the “prepayment of retiree health benefits, which Congress imposed and only Congress can take away.”

 

The law that imposed the unsustainable pre-funding mandate on the Postal Service was championed by Senator Collins, who claimed at the time that it would put the agency on “sound financial footing for years to come.” Instead, that pre-funding mandate has placed a $5.5 billion per year burden on USPS that no other federal agency is required to uphold. And according to the AP, if you exclude the payments that were required by Senator Collins’ legislation, the Postal Service “has finished each year with revenue surpluses for most of the past decade.”

 

Now, there’s bipartisan legislation in the Senate aimed at repealing the pre-funding mandate to help get USPS back on track. Senator Collins is not a cosponsor of the bill, and has not said she supports eliminating the pre-funding mandate. The USPS Fairness Act is supported by Senators Angus King and Joe Manchin, and has even been cosponsored by Collins’ fellow Republican Senators Lisa Murkowski, Kevin Cramer, John Hoeven, and Steve Daines. 

 

Here’s what Senator Collins’ Senate colleagues have to say about the pre-funding mandate:

 

Senator Lisa Murkowski (R-AK):

 

“I have been involved in making sure that we can provide some support for the Postal Service by relieving them of the requirement to pre-fund retiree benefits. This is a significant part of what contributes to the Postal Service’s financial deficit. And it's just been eroding their stability.” [KBBI, 4/30/2020]

 

Senator Joe Manchin (D-WV):

 

The Postal Service Protection Act solves the most immediate financial problem facing the Postal Service by eliminating the requirement that the Postal Service pre-fund 75 years of future retiree health benefits in just 10 years. No other agency or company in America is required to pre-fund its retiree health benefits, especially on such an aggressive schedule. Since 2007, this pre-funding mandate is responsible for about 80 percent of the Postal Service’s financial difficulties. [Senator Joe Manchin Press Release, 4/5/2013]

 

Senator Steve Daines (R-MT):

 

Earlier this year, Daines introduced the USPS Fairness Act, which would repeal a burdensome mandate requiring the U.S. Postal Service to pre-fund its employees’ retirement benefits. USPS is the only federal agency that has this requirement and this legislation would put the USPS on stronger financial footing.  [Senator Steve Daines Press Release, 8/14/2020]

 

Associated Press: AP FACT CHECK: Trump’s flawed justification for postal cuts

 

August 17, 2020

By Hope Yen, Paul Wiseman, Calvin Woodward

 

Key Points:

 

  • While the U.S. Postal Service has lost money for 13 years, package delivery is not the reason.

 

  • To become financially stable, the Postal Service has urged Congress for years to give it relief from the mandate to prefund retiree health benefits. Legislation in 2006 required the Postal Service to fund 75 years’ worth of retiree health benefits, at an estimated cost of $5 billion per year, something that neither the government nor private companies are required to do.

 

  • The biggest factor was the prepayment of retiree health benefits, which Congress imposed and only Congress can take away.

 

  • The Postal Service started losing “billions,” as Trump put it, after the 2006 law mandating health prefunding took effect. Those billion-dollar payments, which coincided with the 2007-2008 Great Recession and a wider shift toward online bill payments, pushed the Postal Service into the red. Excluding those health payments, it has finished each year with revenue surpluses for most of the past decade.


 

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