Bowing to reality yesterday the U.S. Postal service notified its half million employees that they were tearing up their union collective bargaining contract and withdrawing from the federal government’s massive health and retirement plans. The postal service also announced 120,000 layoffs in addition to the 100,000 that will leave the service through attrition.
But its decision to end its collective bargaining agreement with government unions and to end the highly vaunted federal health care program are the most revealing. Wisconsin Governor Scott Walker was assailed for ending that state’s collective bargaining agreements with state unions. The Governor and Republicans faced weeks of violent protests by union rank and file members. The Wisconsin case was a rallying point for leftist activist groups and union bosses.
Since Wisconsin’s initiative, other elected officials including those from liberal Democratic Montgomery County, Maryland just outside the nation’s capital have followed Walker’s initiative. They are proceeding across the country to tear up collective bargaining agreements to cancel lavish health and pension programs.
But the termination of the large postal service participation in the government health plan is a killer. It also could further doom the prospects for Obamacare which goes into full effect in 2014.
Officially the postal service is withdrawing its 480,000 pensioners and 600,000 active employees from the Federal Employees Health Benefits Program and replacing the program with a cheaper, more efficient health program.
Liberals have hailed the FEBHP program for decades and said it was the “model” for all future private and public plans. In 2003, for example, three liberal health care reform academics led by former Carter Health and Human Services official Karen Davis published a study on behalf of the liberal Commonwealth Foundation. They heaped praised on the program for its low cost and affordability
“Largely because of its ability to constrain cost growth reasonably well with limited government intervention, the program has been proposed by some political leaders and analysts as a model to replace the current Medicare program, to cover small businesses and the uninsured, or, in some cases, to cover the entire nation. “
This was just wishful thinking. Today the postal service demolished all the rosy projections about cost benefits. Anthony J. Vegliante, the USPS chief of human resources officer said it does not meet private sector health care standards and it is far more expensive than private insurers. He concluded ”So cost may be above the private sector, while value may be below the private sector.”
Government unions have vigorously opposed any changes or reform in the federal health program, which covers 8.5 million federal workers. But the postal service was aware the health costs were sinking them and a cost saving effort had to be implemented. They also were going to require that employees actually pay co-pays and premiums. How about that for radical change?
The Washington Post acquired a copy of a devastating financial analysis of the postal service. In the last four years it has lost $20 billion, including $8.5 billion in 2010. Over the same period mail volume has dropped 20%.
In deciding to tear up its health and pension plans, the postal service said it can do so because “exceptional circumstances require exceptional remedies.”
The document obtained by the Washington Post darkly concluded “The Postal Service is facing dire economic challenges that threaten its very existence. . . . If the Postal Service was a private sector business, it would have filed for bankruptcy and utilized the reorganization process to restructure its labor agreements to reflect the new financial reality,”
This is D-Day for government unions. Congress will have to approve the changes and you can expect an all out lobbying war by the unions and their political allies later in the fall. But the writing is on the wall.
On the bright side, all the professional protestors from Madison now have somewhere to go and something to do!
It’s the Star of Bethlehem rising in the East. There couldn’t be a clearer sign of what’s on the horizon.
If the marxists try to turn it into Armageddon, it will be a signal that they are beyond desperation. Nobody has sympathy for the post office. Everybody sees the UPS guys running.
Frankly, I expect Little Lenin to do all he can to hold down the confrontation. He doesn’t want a series of violent confrontations leading up to November 2012.
UPS has a private union.. FEDEX doesn’t have a union..
whatever.. at least UPS isn’t a nanny breast sucking union..
My main issue with unions is when they kill the host. UPS seems to be doing ok.
I agree.. it’s all about balance..
Some people don’t understand the difference between private (UAW excluded) and public unions..
The difference between the UAW and other private sector unions is that they have an anti-trust exemption under the law. Nice, cozy relationship with the government, there.
This fixes a large part of what I detest about USPS.
But the biggest problem I have with them is how they’ve exploited their constitutional mandate to provide vitally important communication to individual American citizens, and made of themselves nothing more than a garbage delivery service, turning your mailbox and mine into a cheap marketing tool for anyone with crap to sell and the price of bulk delivery.
If they would discontinue bulk rate service, or raise the price dramatically to reduce the volume by, say, ninety percent, I’d walk right down to my post office with a big box of donuts and leave with three rolls of stamps.
…” made of themselves nothing more than a garbage delivery service…”
Too right. For 3 of the last 7 mail delivery days 100% of my mail was subsidized junk mail and went straight in the recycle bin before even entering the house.
That’s what I’m talking about! Death to Bulk Rate!!!
How will Democrats react? Obviously the GOP isn’t going to bail out the Post Office and I can’t see the public, who have all probably used this thing called EMAIL and Fedex before, going along with a bailout of the UPS benefits system. Now we find out that once again lavish pensions and health benefits can cause the downfall of a major company, just as they did with the automakers and State/municipal budgets, and that government organizations simply cannot adapt with the changing market forces.
Also, is it possible for the government to basically auction off chunks of the UPS to private mail carriers or entrepreneurs and business men, etc? I mean their vehicle fleet is enormous and they have a lot of office space all over the country and hundreds of thousands of employees (although I think most of them are part-timers – I could be mistaken though) and then the full-time employees could just join the enlarged private companies?
Its a damn good thing they arent trying to build a plant in SC…NLRB would be on them like white on rice. Didnt Barry hold the USPS up as an example of how the Govt. competes with the private sector?
Vegliante’s next press release: “We’re not tearing up our contract with the unions, we’re just Walkering away from it” .
I’m hopeful the USPS just goes away! Certainly, FedEx and UPS would be complete fools to even entertain taking on the historic mail handling and route systems except for packages and overnight mail. Mail and especially banking, legal and business activities should be forced to the internet…where its much cheaper, faster and certainly much safer.
Hopefully, if folks can get them out of business pretty quick we can add them to the current 9.1% unemployment roll by Christmas.
I would love for you to tell me who is going to help all the senior citizens learn how to bank on line. Get back to reality. Everyone does not live their lives on line.
You obviously don’t follow my commenting on here (which is probably a good thing) but you’ve missed my jesting on this one. The led and fed poltical zealots on here believe every service remotely connected with the government is evil and should be destroyed last week. Guessing they’ve never head of ‘cutting your own nose off to spite your face’ or simply ignorant of their own culpability towards excessive government spending.
The post office is the last source of true privacy. We have the right to privacy, or do we? The internet, facebook, banks, and gps know where you are the transactions you conduct. Good citizens have nothing to worry about, or do they? In the wrong hands unscrupulous people know what you have and where you are too. Hmmmmmmm something to think about. PRIVACY
It costs me the price of one stamp to mail a letter to a friend across the Country and the price of one stamp to mail a letter to friend 20 miles away.
The Market says WTF?
If mailing rates were priced by distance and difficulty, the USPS would be in much better shape.
I am a postal worker. Let me say that up front. But there is SO MUCH misinformation about this issue. Its not just that people are sending emails and the mail volume is dropping, the Postal Service has been forced to overfund retirement medical costs for future retirees 75 years into the future! Just tell Congress to give us the 70 billion that they stole, and the Postal Service will be able to last a lot longer into the digital age. And for those of you that don’t want advertising mail, that is a major source of revenue. YOU may not like the ads, but others do. I work in Consumer Affairs and if those market ads are not delivered on the expected days, we get a lot of calls.
As far as the stamp costing the same for alaska as across town…that was done deliberately. Thats called universal service. If it was based on cost, the big city folks would pay 20 cents and that guy in rural alaska would be charged 3 dollars. So they decided, lets keep it simple for LETTERS and have one rate. For packages, the distance you ship it determines the rate.
Thanks for the info. I am glad you spoke up.
The USPS employee is not the underlying problem here.
TIM…speaking of Alaska, there’s a fellow/lady (UNALASKA) on here who is extremely argumentive in believing the USPS is taxpayer funded. I’m thinking a $3 stamp might be appropriate for he/she.
Save a job….buy a stamp.
I refuse to do all my business online. It’s a proven fact that when a computer gets to my last name, it blows it’s mind. We were astounded to find that it even happened at the IRS. There is no way I would do my bill paying online and have a computer wipe out my account and somebody say…oops…we’ll get it straightened out next month. It has happened to family and friends…it ain’t gonna happen to me!
Though I think it odd that in the small town I moved from…the post office hired someone with a criminal record.
The Commonwealth Foundation http://www.commonwealthfoundation.org/ is a think tank for liberty focused on Pennsylvania state policy. The Commonwealth FUND http://www.commonwealthfund.org/ looks for a larger government role in health care. Easy to confuse the names, hard to mistake their missions. Would you please correct this in your post