By all appearances, Glenn Garvin has had a distinguished career as a journalist. But the current T.V. writer for The Miami Herald tripped badly in his debut as a critic of the Postal Service. Indeed, if "Mark a U.S. Postal Service bailout ‘return to sender'" were a pilot episode on television, it would immediately be cancelled as an embarrassing flop. Perhaps the freedom to offer subjective reactions to television programs without reference to verifiable facts in his day job can explain his complete misunderstanding of the situation facing the Postal Service. But that is no excuse for a supposedly seasoned newspaper reporter.
Garvin may have set some sort of journalistic record for distorting an issue and misleading his readers in a single paragraph. He writes:
"Make that two bailouts. The Postal Service is not only trying to sneak a direct $75 billion payment out of the government without congressional approval, it's also seeking to be let off the hook for a $5.5 billion payment into a trust fund to guarantee the absurdly generous pension benefits it has promised its retirees. When the Postal Service can't pay those benefits a few years down the line, who do you think will get the bill? Hint: Look in the mirror."
Amazingly, there are at least eight errors in this one paragraph.
First, the USPS is not seeking a single bailout, much less two bailouts. A bailout would require access to taxpayer dollars, something the USPS has not had in more than 27 years. Rather, the USPS and the industries that rely on it (banks, parcel shippers, magazines, cataloguers, and yes, advertising mailers) are seeking to use our own money—surplus pension funds—that postal employees and postage ratepayers have paid into the Civil Service Retirement System. We want to use those surplus funds to cover the cost of other retirement benefits in the future—retiree health benefits that now cost ratepayers $5.5 billion per year. Those surplus funds are now credited to the combined pension accounts of all other federal agencies. Garvin failed to report that two private sector firms—the Hay Group and the Segal Company—have conducted independent reviews for postal regulators and investigators and found that the Postal Service's pension funds are massively over-funded by $50 billion-$75 billion. They support the Postal Service's contention that the Office of Personnel Management (OPM) has short-changed the Postal Service by the way it has managed the postal pension accounts that are co-mingled with the accounts for the rest of the federal government within the Civil Service Retirement System (CSRS). Citing a biased defense of the OPM's methods by the agency's own Inspector General, as Garvin does, and treating it as the view of a neutral party in the dispute between the USPS and the OPM is just silly. Garvin should know better.
(Before we continue, note that there are six errors in the second sentence of the paragraph alone—which has got to be another record.)
Second, the postal industry is not trying to "sneak" a direct payment of $75 billion from the government without congressional approval. How sneaky is it to openly and publicly advocate for proposed bipartisan legislation in the Senate (S. 353 and S. 1010 sponsored by Sens. Carper and Collins) or a bipartisan bill in the House of Representatives with 143 Democratic and Republican co-sponsors (H.R. 1351)? Does Garvin know of any bill ever enacted without congressional approval?
Third, the legislation the USPS and its industry supports would not result in a direct payment to the USPS at all—and certainly not from taxpayers. It would simply allow the USPS to transfer surplus postal pension funds from its accounts in the CSRS to a separate trust fund set up to cover the cost of future retiree health benefits, the Postal Service Retiree Health Benefits Fund (PSRHBF). This use of surplus pension funds is considered a ‘best practice' in the private sector.
Fourth, fifth, sixth, and seventh, the USPS is not seeking to "be let off the hook" for the $5.5 billion annual payment for retiree health benefits (as noted, it would be paid), which Garvin mischaracterizes as "absurdly generous pension benefits it has promised to its employees" (when in fact they are health benefits, not pension benefits; for which federal employees are charged more than retirees in other large companies; and which are provided by legislation enacted by Congress for all federal employees, not "promised" by the USPS—or bargained for by its unions).
Finally, finishing off this record-setting paragraph of misinformation, the notion that taxpayers will be left holding the bag for postal pension benefits in the future is absurd. Even using the OPM's flawed, discriminatory methods, the Postal Service's two pension plans are fully funded—unlike those of most public employers and, following the 2008 crash, those of most large private companies. To repeat, the USPS is seeking to use its surplus pension funds to cover retiree health costs, not raid an underfunded pension for postal employees—as Garvin misleadingly suggests.
Garvin then goes on to make the bogus claim that transferring the surplus pension funds would increase the deficit by $75 billion. Wrong, again. A transfer from one trust fund (the CSRS fund) to another trust fund (the PSRHBF) within the OPM's treasury accounts would not directly increase the deficit—and such an inter-fund transfer would not affect the federal government's overall assets and liabilities. It is true that the inter-fund transfer might increase the deficit modestly since the Treasury must amortize any unfunded liability in the federal, non-postal portion of the CSRS over 30 years, but that impact would be small (nowhere close to $75 billion) and one cannot argue that the Postal Service should be responsible for the unfunded liabilities of other federal agencies.
Now if a couple of paragraphs can get so much so wrong, it is not surprising how misguided the rest of the commentary is. Garvin's readers are left in the dark about what is really causing the Postal Service's financial problems. They don't learn that the Postal Service is the only public agency or private company in America that is required to pre-fund (pay in advance) retiree health benefits at all, or that in 2006 Congress disastrously mandated that the USPS do most of this pre-funding (for the next 75 years for current workers and retirees as well as for workers not even hired yet) in just 10 years' time—just as the economy dropped off a cliff. Nor do they learn that in the absence of some $21 billion in pre-funding costs over the past four years, the USPS would have been profitable despite the worst recession in 80 years and the undeniable impact of technology. Instead, due to the pre-funding payments, it recorded losses of $20 billion between 2007 and 2010.
Yes, the recession and the internet have caused volume to decline sharply, but the Postal Service has adjusted incredibly well to reduce costs as volume fell—working with the unions that Garvin shows such contempt for, the USPS has eliminated more than 110,000 jobs since the recession began.
And yes, the Postal Service has been forced to use up its limited borrowing authority to pay the onerous cost of pre-funding, but that does not mean the proposed solution—to use its surplus pension funds instead to cover these costs—is a "bailout." Indeed, no business facing the technological challenges facing the USPS would willingly use all its borrowing capacity to fund 75 years of future retiree health benefits in 10 years' time. The Postal Service should be using its capital to restructure and invest in offering new services from one of the most efficient delivery networks in the world. That FedEx and UPS provide the Postal Service with hundreds of millions of dollars in business each year to do last-mile delivery through the Parcel Select product shows just how efficient the USPS network is.
Given his experience, it is surprising that Garvin fell for one of the most common bogus talking points around: Comparing labor's 80 percent share of total costs in the Postal Service to the lower levels at UPS and FedEx. Leave aside for the moment the fact that the $5.5 billion cost of massively pre-funding future retiree health inflates the USPS percentage—UPS and FedEx, of course, don't have to pre-fund. Simply consider what the Postal Service and its private counterparts do each day and the difference in labor cost shares seems totally understandable. The USPS provides universal letter and parcel delivery, six days a week, to 150 million addresses, while the private companies deliver mostly parcels to at most 15 million addresses a day, five days a week. By definition, the Postal Service's business is more labor intensive. So, of course, its labor costs are greater. In any event, the labor share of USPS costs has declined from more than 85 percent over the past 20 years.
The fact is Garvin clearly has an ax to grind with the Postal Service and its employees—as his repeated cheap shots about "junk mail" and his one-sided portrayal of the labor contract just negotiated by the Postal Service and the American Postal Workers Union attest. Advertising mail is a valued service that helps millions of businesses, large and small, increase sales. (Does Garvin have something against free enterprise?) Those that produce it and deliver it are part of a $1.3 trillion mailing and shipping industry that employs millions of Americans. Calling it "junk mail" demeans them.
And Garvin's contempt for public employee unions doesn't excuse journalistic malpractice. How else can one characterize his embarrassingly one-sided summary of the APWU contract? Indeed, Garvin reports only what the employees got from the alleged "giveaway" contract, not the provisions management achieved—such as a two-year wage freeze, new lower wage schedules for all new career workers, a large new category of non-career workers and reduced employer health care contributions. Overall, the contract cuts labor costs by nearly $4 billion over its term. Perhaps Garvin could get some tips from The Herald's sportswriters on the basics of balanced reporting—we doubt any of them has ever reported just the number of runs scored by Marlins in a baseball game without reporting the other team's score. Better yet, perhaps Garvin should stick to television criticism where facts are optional and opinions reign supreme.
At the end of his anti-Postal Service screed, Garvin almost stumbled into making a good point. He writes, "every time you mailed a letter over the past four decades, you were paying for your mailman's pension." That's exactly right. But predictably, he misses the point by suggesting that the Postal Service "wants to bill you again." Not even close, Mr. Garvin. Postal employees and postal customers simply want access to their own money. They are the ones that don't want to be billed again.