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September 21st, 2011 12:40 pm
Issa: No Overpayment by USPS Exists

Hat tip to Rep. Darrell Issa (R-CA) and his staff at the House Committee on Government Oversight for sharing this “Myth v. Fact” explanation via email of the USPS’s alleged overpayment into the federal retirement system.

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.

The United States Postal Service was created in 1971 from the old Post Office Department in order to provide better mail delivery and let it act more like a business. 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, calling it “proper, as a matter of principle.” Now, with revenues declining, 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, then 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.

Issa’s postal reform bill is up for consideration in a congressional subcommittee today.  You can get more information on his version of postal reform at this website.

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