In today's New York Times column, Joe Nocera reveals an absurdity in the current relationship between the Postal Service and the US Government. The only thing more absurd than the situation he identifies is the solution he proposes.
When the US Postal Service was "spun off" as an independent agency in 1971, it was not given responsibility for the health and retiree benefits of its employees. That responsibility remained with the federal government, and some formula was established for payment by the USPS to the government to fund those benefits. A payment of $5.5B is due tomorrow, and the USPS does not have the money.
The absurdity revealed is that all the billions the USPS has paid into government coffers over the decades has been invested in US Treasury Securities and spent on other government programs, just as our Social Security taxes paid have been invested in government bonds and spent. So, there is nothing in those so-called trust or escrow funds, neither Social Security nor USPS retirement and health care funds, but government debt, IOU's, that must be redeemed in cash in order for any benefits to be paid. And the only way for the government to get that cash is to borrow it elsewhere.
Mr. Nocera's solution to the problem seems to be to just eliminate the requirement for payment by the USPS. My solution would be to shift the burden of responsibility for health and retiree benefits to the USPS and let them follow the same funding requirements that private companies have to follow, investing such funding in a highly diversified basket of stocks and bonds. Both Mr. Nocera and I would free the USPS from politically motivated government restrictions on its operations and allow it to operate as a business. We are not holding our breaths.