A few billion here and there
July 23rd, 2009 | Agencies Postal Service | Posted by Gregg Carlstrom
The latest report (pdf) from the Postal Service’s inspector general looks at the payment schedule for the retiree health care trust fund. It concludes that the Postal Service is overpaying. A lot.
If the Postal Service continues the payment schedule required by the Postal Accountability and Enhancement Act of 2006 (the Act), our calculations indicate that the Postal Service could overfund its retiree health care liability by $13.2 billion by the end of fiscal year 2016. The Postal Service could pay on average $4.0 billion less each year from FYs 2009 to 2016 to prefund its retiree health benefits and still achieve the same level of funding anticipated under OPM’s assumptions.
The problem, according to the IG, is that the PAEA estimates 7 percent annual inflation for health care costs; most Fortune 500 companies project 5 percent inflation.
This is a huge mistake. Consider the numbers for this year alone. The Postal Service is scheduled to pay $5.4 billion into the trust fund; it has already made half that payment, with the other half due by September 30. But the IG report says the Postal Service should only need to pay $1.6 billion — a difference of $3.8 billion, or more than half the Postal Service’s deficit for the year.
The Postal Service can’t just decide to pay the reduced amount, of course; Congress would have to amend the PAEA. But this IG report gives added weight to the Postal Service’s claim that the trust fund payments are an unfair burden.
Tags: H.R. 22
Inaction in the Senate
July 15th, 2009 | Agencies Congress OMB OPM Postal Service | Posted by Gregg Carlstrom
I’m skimming over a conference report from the Senate Financial Services and General Government appropriations committee (really a fun way to spend your Wednesday afternoon!), and I came across this passage on the Postal Service:
Because some experts, including OPM, have expressed concerns about the assumptions made in the Postal Service IG report, the Committee directs the Postal Service, in coordination with OPM and OMB, to develop a fiscally responsible legislative proposal to grant a limited measure of relief from the PAEA requirements to pre-fund retiree health benefits.
If I’m reading this right, the Senate is not going to move forward on companion legislation to H.R. 22 until the Postal Service, OMB and OPM create a “legislative proposal.” Nevermind that there is already a legislative proposal, H.R. 22, which passed the House Oversight and Government Reform committee unanimously last week. The Senate wants a new one.
That puts the Postal Service on a rather tight timetable, especially with Congress taking off most of August for vacation. If this bill isn’t passed by September 30 — when the Postal Service’s health care payment is due, a payment it cannot afford — then it becomes a moot point.
Tags: H.R. 22
H.R. 22 passes subcommitee
June 24th, 2009 | Agencies Postal Service | Posted by Gregg Carlstrom
H.R. 22 was approved this morning by the House Oversight and Government Reform subcommittee on the federal workforce, Postal Service, and the District of Columbia (say that five times fast…). Now it goes to the full committee.
More details to come over on the Web site.
Tags: H.R. 22
Movement on H.R. 22
June 22nd, 2009 | Agencies Postal Service | Posted by Gregg Carlstrom
One more Postal Service post: The House Oversight and Government Reform committee has (finally) scheduled a markup hearing for H.R. 22, the bill that would give the Postal Service some relief from its retiree health benefit obligations.
Don’t get too excited, though: This is actually just a subcommittee markup. The bill has a long way to go before it becomes law.
The bill was introduced in January and it’s been stuck in committee limbo almost ever since. The Postal Service says it can’t pay all its year-end bills if H.R. 22 doesn’t pass.
Tags: H.R. 22