Thursday, February 17, 2011

The "Bailout" Talk Has Begun. Or Has It?

The Daily Caller today has an incendiary headline on President Obama's budget proposal regarding the Postal Service.  "USPS Gets Short-term Relief from Obama’s 2012 budget, But Some Call it a Bailout"  The headline suggests that that there are individuals who are familiar with postal policy who are willing to call what the President proposed a bailout.  However, the quotes of two conservative critics contained in the article suggest that finding anyone to use the word bailout took a great deal of effort.

Tad DeHaven, a budget analyst at the Cato had strong criticism but he did not call it a bailout.

“Surprise, surprise,” he said, “like on entitlements and everything else, they’re proposing to kick the can down the road with regard to the Postal Service’s long-term financial situation.”

DeHaven suggested that the long term solution was to privatize the Postal Service, but that even if that didn’t happen, the solutions being suggested were inadequate.

Members of Congress, he said, were unwilling to take the necessary steps because they get complaints from constituents when local post offices close or when stamp prices go up. Instead, he said, they come up with “gimmicky fixes that are very myopic at a time when they could use this long term vision.”

“But such is the nature of a politician, they operate on election cycles,” he added.

Looking at the budget, he was unimpressed. “It just continues to perpetuate an anachronism, and it demonstrates to me a lack of bold vision.

Tad Dehaven's statement presents a serious proposal from a libertarian thinker.   The Postal Service should be privatized and the proposal doesn't go far enough to put it on that path.   Whether you agree with his statement or not, it would be hard to suggest that he called the budget a bailout.  In many ways the tone of his criticism is similar to the criticism of Senator Susan Collins, who has already proposed legislation that promotes more changes.

Mike Schuyler, senior economist at the Institute for Research on the Economics of Taxation who has frequently written conservative critiques of the Postal Service, supports the proposal

I do not regard what’s specifically in the budget as a bailout,” he told The Daily Caller.

“My reaction as an economist is 100 percent funding is a highly prudent thing,” he said, regarding the over funded FERS. But, he continued, “if you’ve got over 100 percent funding, and you need money, taking the money out of an over funded account probably makes sense. So I have no problem with that.”

Moreover, he said, “I do not think that allowing the Postal Service to reschedule its payment for the retiree health benefits fund is a bailout. If the Postal Service was told you never have to pay it: that would be a bailout.” 

Mr. Schuyler only called what was not proposed a bailout. 

The Daily Caller is clearly trying to create new fodder for talk radio and conservative commentators.   It is clear that the most knowledgeable people on the right are not willing to add to this talk.


Anonymous said...

It does not matter what it is called, as long as it happens.

Anonymous said...

Regarding the comment "Moreover, he said, “I do not think that allowing the Postal Service to reschedule its payment for the retiree health benefits fund is a bailout. If the Postal Service was told you never have to pay it: that would be a bailout.”


lin said...

postal service should never, never, ever be privatized. Thee only ones who want this are the ones who are rich and want to fatten their own pockets. The people we deliver to have high and I mean high expectations of us, the way we are trained also includes us to be very very trustworhty and to be respectful of their personal mail and packages. If it were to go privatized it would be all but impossible to find missing items because with out a doubt the blame would just be pushed back and forth. Also the privatized who go to hire are they really going to scrutinize like they should or just hire friends and family. This is the wrong time with how Americans feel about trust to even consider privatizing!!!!!!!!

Anonymous said...

The postal service is not to be ever, ever, ever privatized. Thee American people have little trust and faith in our system now I really do believe this will break the camels back for you senators, and or congress men/ladies. If they have one thing left to trust in its who is delivering their mail. And thats by a strict running organization. Privatizing will not be as strict as to who they hire and you all know that without even having to think that hard!!!!

Anonymous said...

GW needed the money to help pay for his wars in 2006

kellycpp said...

To say the obvious surely is repetitive but perhaps of some value still.

The pre-funding of future retiree health benefits as a fair mandate for USPS is never addressed by "libertarian thinkers" simply because it does not fit in the political objectives of privatization (or as in the recent Wisconsin effort) the elimination of collective bargaining for public employees. It is much more effective to simply repeat talking points which stir the base disinterested in any real examination of the specifics of any argument. What has already been paid into the fund would exceed what allot of other organizations have in their system, private or public. I speak as one of those future retirees.

Overpayment refunding (FERS/CSRS) realism is demonstrated by the tepid response in the Obama budget proposal (DOA) to what would be a mandate worthy of civil action in private industry. Decades? Really? This is indicative of the proposition that a refund of overpayments are not going to be realistically achieved anytime soon. This will likely result in an actual bailout when the USPS finally runs out of borrowing power and no legislative remedy has been fashioned by the current divided political assembly.

None of these obvious points of fairness is meant to gloss over any actual structural misalignment of existing postal organizations. The technological changes affecting the USPS (and other 20th century organizations) are real and pressing. Not one to overly praise efforts of management of the USPS on most occasions, I see monumental efforts being made to streamline the organization such that in 5 years the postal system will be a totally different organization. Of course, different interests have different visions (e.g., Cato Institute) so no prediction on my part would do this subject justice. But management, faced with the reluctance of Congress to treat the USPS fairly in bringing all accounts and mandates to a mutually equitable resolution, will have their options constrained and forced. As usual, in corporate America, the burden will fall on the middle class worker to adjust the balance while sustaining the actual ingredients of an unfair system bound to protect the interests of those who can wield influence bought at the high price of the dissolution of that middle class. Does this sound familiar?

Be careful what you wish for.

Anonymous said...

I feel that the USPS should do what any other person/business would do if it overpaid someone, refuse to pay the the 5 billion a year for future retiree health care bill and tell Congress to take those monies out of the overpaid account. Then ask Congress to send the USPS the other billions left in the OVERPAID OPM account.
If Congress didn't like that take the USPS to court, meanwhile bank the 5 billion and get the interest like any other Corpation would. Seeing that Congress wants the USPS to be run like a business and NOT the PUBLIC SERVICE that our forefathers envisioned.

Anonymous said...

actually,the Postal Service pays the 5 billion dollar pension pre-funding from monies loaned from the government on a line of credit with a 40 year repayment schedule.