WASHINGTON — Helping the cash-strapped U.S. Postal Service by drawing money from federal retirement and health insurance funds could jeopardize those accounts and result in an indirect taxpayer subsidy to the independently funded mail agency, according to a new watchdog report.
Despite declining mail volume and the sagging popularity of snail mail, most of the Postal Service’s financial woes stem from growing labor costs, including billions of dollars required to fund active and retired postal workers’ health care and retirement benefits — part of the same retirement and health-care funds used by civilian federal employees.
President Barack Obama’s recent budget proposal and a series of reports by the Postal Service and postal regulators have concluded that USPS over the years has overpaid into federal retirement and health insurance programs, perhaps by as much as $142 billion.
Obama’s 2012 budget proposal recommends allowing the Postal Service to pay $4 billion less this year toward future retiree health benefits than otherwise required. The mail agency would have to pay about $1.5 billion of those costs in 2011 and make up the difference in later years.
The budget proposal would also adjust the size of the annual payments by taking into account a smaller postal workforce and would refund about $6.9 billion in estimated overpayments that USPS made to fund future annuity costs.
But Patrick McFarland, inspector general for the Office of Personnel Management — which oversees the federal retirement and health insurance funds — said Monday that drawing funds from those accounts to help USPS would amount to subsidizing it with general tax revenue, contrary to its role as a self-funding entity.
“The proposals would cause the government to assume responsibility for USPS retiree benefit expenses without a corresponding increase in government oversight,” he said.
Lawmakers are likely to raise the report’s conclusions during a House Oversight subcommittee hearing scheduled for today on the future of the Postal Service’s finances.
