Share

POLITICS

Unraveling the myth that the Postal Service must fund retiree health benefits 75 years into the future

By |
Politics,Beltway Confidential,Sean Higgins

One of the more irritating things about journalism is the ability of a partisan assertion to become a fact through constant repetition. People with axes to grind make a claim, then friendly groups and bloggers repeat the claim until it becomes widely-cited enough to gain the currency of truth. Such is the case with the claim that Congress has required the Postal Service to fund its retiree health benefits 75 years into the future.

The claim has often been made by the two main postal employees unions, the National Association of Letter Carriers and the National Rural Letter Carriers Association. NALC President Fredric Rolando even made the claim in an op-ed for the Washington Examiner.

Here’s how he put in that column:

So, what about the oft-cited multibillion-dollar sea of red ink? It has little to do with the mail and much more to do with politics. In 2006, Congress mandated that the Postal Service do something no other agency or company in the country has to do — prefund future retiree health benefits. Moreover, lawmakers set a highly aggressive level — prefunding for the next 75 years, paid within a decade.

The mandate accounts for 80 percent of all USPS red ink, $11.1 billion alone in just-completed fiscal 2012. Without it, the Postal Service could readily have weathered the tough economy.

From there the 75 years claim has repeatedly been cited by liberal pundits, leftwing activist groups and bloggers, usually with the spin that this is a Republican plot. That in turn has caused it to be cited by liberal lawmakers and even mainstream media outlets like Reuters, Time, and the Washington Post.

Well, the 75 years claim is a fiction. The 2006 law that supposed did this, the Postal Accountability and Enhancement Act, contains no such provision. The actual figure is 50 years. You can read the full text of it here.

Here’s what it says under the section 8909a, “Postal Service Retiree Health Benefit Fund”:

Not later than June 30, 2017, the Office shall compute,  and by June 30 of each succeeding year shall recompute, a schedule including a series of annual installments which provide for the  liquidation of any liability or surplus by September 30, 2056, or  within 15 years, whichever is later, of the net present value determined under subparagraph (A), including interest at the rate used in that computation. (Emphasis added)

In other words, it is a 50 year time-frame. That is not insubstantial, but it is reasonable given current life-spans.

As Postal Service spokesman David Partenheimer told me via email:

PAEA did not require the Postal Service to prefund 75 years of retiree health benefits over a 10-year period. Rather, pursuant to OPM’s methodology, such payments would be projected to fund the liability over a period in excess of 50 years, from 2007 through 2056 and beyond (with rolling 15-year amortization periods after 2041).

I am hardly the first to debunk this. A December 2012 Government Accountability Office study noted the claim was bogus too (see page 13 of the pdf/page 7 of the report). The House Oversight and Government Reform Committee notes it is a myth on their website too.

I asked both the NALC and the NRLCA to provide anything they had to back up the 75 years claim. They sent nothing. An NRLCA spokesman simply told me it was “widely cited.”

It is, but that don’t make it so.

 

 

 

View article comments Leave a comment