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Mandate By Congress Forces Post Office Into Default

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Brandon Turbeville
Alt-Market
August 8, 2012

On Friday, August 3, 2012, the United States Postal Service experienced its first-ever default on a Congressionally-mandated payment of $5.5 billion for the retirement benefits of future employees.

Although USPS is claiming that, for now, the default will have “no material effect” on the operation of the Post Office and that the agency will continue to deliver mail and pay employees, the fact is that this financial quandary has raised new questions regarding just how long the agency will be able to operate.

After all, the USPS is expected to default on the second half of this payment – another $5.6 billion – in September.

Congress is now debating what to do about the default and the question of how or if the USPS will continue to function in the future. FOX News reports that;

While the Senate passed a bill in April that provides an $11 billion cash infusion to help the mail agency avert a default, it would also delay many of the planned postal cuts for another year or two. The House remains stalled over a measure that allows for the aggressive cuts the Postal Service prefers, in large part due to concerns among rural lawmakers over cutbacks in their communities.

The Postal Service originally sought to close low-revenue post offices in rural areas to save money, but after public opposition it agreed to keep 13,000 open with shorter operating hours. The Postal Service also is delaying the closing of many mail processing centers, originally set to begin this spring. The estimated annual savings of $2.1 billion won’t be realized until the full cuts are completed in late 2014.

Senate Democrats have urged the House to act quickly so that the two chambers can iron out the differences between their two bills. The House, though, is not expected to act until September or later.

Keep in mind, September is the projected date of the second default.

Nevertheless, the report continues describing the pitiful state of the Post Office by mentioning the “crisis of confidence” in the USPS by customers and large clientele. It reads;

Postmaster General Patrick Donahoe has described a “crisis of confidence” amid the mounting red ink that could lead even once-loyal customers to abandon use of the mail.

Banks are promoting electronic payments, citing in part the growing uncertainty of postal mail. The federal government will stop mailing paper checks starting next year for millions of people who receive Social Security and other benefits, paying via direct deposit or debit cards instead.

However, while most lawmakers are predictably blaming the opposing party, at least one member of Congress, Dennis Kucinich, has been speaking out against what he has termed the “manufactured default” of the USPS. Kucinich actually stated on the Congressional floor that Congress is “presiding over the disestablishment of the Postal Service.”

In his brief commentsKucinich stated the following on August 1, 2012:

Article 1, Section 8, Clause 7 of the U.S. Constitution gives Congress the responsibility to establish and ensure operation of the Postal Service.

Today, August 1, 2012 – 224 years after the Constitution was ratified – Congress is presiding over the disestablishment of the Postal Service.

Today a manufactured default created by Congressional legislation is pushing the Postal Service to the brink.

Today the Postal Service will not make a payment that it should never have had to make in the first place to pay for prefunding 75 years of retiree benefits in 10 years. A manufactured default encouraged by banks and other interest groups. A move toward privatization of one of America’s most vital services.

The Congress has a responsibility to stand up, but here in the U.S.A., under Citizens United, everything is up for auction including the Postal Service.

Wake up, America. Universal service is on the line. Wake up, America and stand up for the Constitution. 575,000 Postal Service workers and our obligation to the American people to see to it that the Postal Service is rescued from those who want to push it into default or privatize it for their own profit.

The mandate that Kucinich mentioned in his statement is a provision that was included in thePostal Accountability and Enhancement Act of 2006 which requires the Post Office to fund the health care benefits of future retirees as far out as 75 years into the future and within a window of ten years.

It was precisely this mandate which I addressed in my article “Engineered Austerity Coming to America Starting with the Post Office” in May.

  • A d v e r t i s e m e n t

Nevertheless, it is this Congressional mandate based only in reactionary propaganda that is bankrupting the USPS – not mismanagement, greedy employees, or reduced mail traffic.

This is because the mandate costs the USPS over $5.5 billion per year (equal to about 2 weeks of the cost of the war in Afghanistan). In addition, while the Post Office is being relegated to the humiliation of default and bankruptcy, the federal government is actually holding billions of dollars of overpayments made to the pension fund. When one is able to grasp the manner in which this system operates, it is hard to see how the USPS or any other agency or business for that matter, would be able to stay afloat given the same conditions.

For instance, virtually every other business that maintains a retirement program does so as a pay-as-you-go system. Ironically, in the case of the United States government, the social security program that actually needs a trust fund, has been turned into a pay-as-you-go system for some time.

In addition, as FireDogLake reports, all of the Post Office’s losses over the past four years have come as a result of the Congressional mandate.

Even the Washington Post has had to report similar numbers, particularly in regards to erroneous claims that mail volume is the cause of USPS default.

According to the Post Office white papers, from 2007 to 2010, mail volume declined 20 percent while postage remained capped at the rate of inflation, “resulting in net losses over the period of just over $21 billion, including a loss in FY2010 of $8.5 billion.”

During that period, the prefunding of retiree health benefits cost $21 billion. Without that congressional mandate, the USPS would have cleared $611 million.

It also bears noting that, while the increasing use of online bill payment does play a small role in the reduction of postal customers, the economic depression also plays a role. Naturally, mail delivery and all other services will decrease as the vast majority of Americans are financially strapped and as less and less businesses continue to exist inside the United States.

Indeed, Congressman Kucinich is also right to point out that “there are those who want to push it [USPS] into default or privatize it for their own profit.” It seems that part of the goal of the demise of the Post Office is not merely to break up the agency and divvy up the spoils for private competitors or simply eliminate the most effective competition that exists for them.

However, the enemies of the USPS are not only interested in destroying basic competition and establishing a privatized monopoly on the market.

Corporate predators and other agents of Wall Street have a vested interest in seeing the USPS dissolved for other reasons. Keep in mind the fact that the retirement “prefund” has been stacked to the tune of billions of dollars, a lucrative harvest come feeding time for the Wall Street jackals.

Thus, it is very likely that the Wall Street manipulators and their puppets in Congress have intentionally loaded the USPS with both debt and assets for the purpose of wholesale stripping when the final nail is driven in the coffin of the agency. If the USPS is declared bankrupt and insolvent, the devouring and distribution of the agency’s assets and employee healthcare fund will likely begin before the ink dries on the death certificate.

Because of the relentless reactionary propaganda push against “government spending” and the Post Office in particular, the logic presented by the agents of Wall Street asset strippers may unfortunately seem to make sense to the general public.

But, while the members of the general public may envision a utopia of companies competing to deliver their mail, the reality will undoubtedly be much different. For all their rhetoric about competition and lower prices, the amount of price increases for the base level of hard copy correspondence will skyrocket as soon as the Post Office ceases to exist. Just take a look at the private competition in the market now and you will easily see how much your mail delivery costs will rise if the Post Office option is no longer available. With USPS out of the picture, it is just as likely that the private companies will not only continue to gouge customers, but that prices will increase dramatically using fuel costs and anti-union sentiment as justification.

Currently, the United States Postal Service stands as a model for the rest of the world in terms of logistical capabilities, infrastructure, and especially pricing. It is, in fact, the cheapest mail shipping method available amongst Western nations and most of the rest of the world.

It is also one of the only services that reaches virtually every American and does so on a daily basis. Besides the manufactured debt of the USPS, for all intents and purposes, it accomplishes its goals of getting the mail to you in a timely fashion.

It might be hard for many to comprehend the ramifications of the privatization of mail and shipping services currently administered by the USPS. However, one need only look to Europe to see that, invariably, prices will rise. Indeed, one need not look across the ocean when a glance at the domestic landscape would prove the same point. A glimpse of UPS and FedEx should be self-explanatory.

With this in mind, it is also worth noting that price increases will be especially true (and especially harmful) for rural areas where no competition exists.

Rising prices in shipping have long been a problem for businesses, especially the smaller ones. The removal of the USPS option might even be the death knell for many of them. As it stands, it is possible to put a business virtually anywhere in the country because of the availability of the USPS. However, removing those services will force a great many to move further into cities. Those unable to do so may be driven into extinction.

This plan for reduction of services to rural areas may also dovetail with the intentional increase in urbanization called for by UN plans such as Agenda 21. Removing Post Office services from rural areas would be just one more step in the designed inaccessibility of rural living.

This article was posted: Wednesday, August 8, 2012 at 5:59 am





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