WSJ Op-Ed: The Post Office Is Delivering Amazon's Packages Below Cost (zerohedge.com) 188
schwit1 shares a pay-walled op-ed from the Wall Street Journal (also excerpted at the URL below):
The U.S. Postal Service delivers the company's boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon... First-class mail effectively subsidizes the national network, and the packages get a free ride. An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver...
My analysis of available data suggests that around two-thirds of Amazon's domestic deliveries are made by the Postal Service. It's as if Amazon gets a subsidized space on every mail truck... Congress should demand the enforcement of the Postal Accountability and Enhancement Act, and the Postal Service needs to stop picking winners and losers in the retail world. The federal government has had its thumb on the competitive scale for far too long.
My analysis of available data suggests that around two-thirds of Amazon's domestic deliveries are made by the Postal Service. It's as if Amazon gets a subsidized space on every mail truck... Congress should demand the enforcement of the Postal Accountability and Enhancement Act, and the Postal Service needs to stop picking winners and losers in the retail world. The federal government has had its thumb on the competitive scale for far too long.
Same with China (Score:1)
Same thing goes for all those packages from China. the USPS should at least break even not favor some over others!
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You can bet that the letter you send to Cousin Bubba in Buttfuck, Idaho, hand-delivered, doesn't cover the costs either.
Re: Same with China (Score:5, Informative)
The headline and summary are deliberately misleading. Amazon takes advantage of discounts for presorting and local delivery that any entity with enough shipment volume can also take advantage of.
Apparently, those discounts are excessive. As are the discounts for junk mail.
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That is fine, if the law giving the USPS a monopoly on first class mail went away...
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That is fine, if the law giving the USPS a monopoly on first class mail went away...
The problem with that is that the USPS delivers anywhere within the US which is important for the existence of a nation. They are even required to by law and for a uniform price. Other delivery services have no such restrictions and can pick and choose who to deliver to and for how much.
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Actually it does. The USPS has been subsidizing low package rates with first class postage rates for years. Why do you think the private carriers lobbied the Republicans to stab the USPS in the back with that crazy pension pre-fund plan that has the USPS running major deficits every year?
The private carriers may have wanted it but *Congress* did it, not just the Republicans, because the pension funds go directly into the treasury where Congress can spend them just like Social Security.
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The USPS pension funds go right into the treasury where Congress can get to them and there is no deal Congress can make that they cannot break.
Re:Same with China (Score:4, Insightful)
There is no rational reason that costs should be allocated equally across all classes of mail. Delivery of first class mail is the whole point of the USPS, and it is illegal for private companies to provide an equivalent service. If not for first class mail, there would be no reason to even have a post office, since there are already private alternatives for all other classes of mail. So it makes sense for FCM to bear the brunt of infrastructure costs.
Disclaimer: I believe that the historical need for FCM is obsolete and the USPS should be fully privatized. Packages should be delivered by UPS and FedEx, bills should go by email, bulk mail advertising should disappear forever.
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No USPS, no deliveries to those locations.
Capitalism doesn't work that way. For remote locations there is no incentive for UPS/FedEx to provide duplicate delivery against a competitor delivering below cost (urban and suburban postal customers subsidize rural customers). But once the USPS was gone, they would offer services. These would, of course, be more expensive than USPS, because the cross subsidies would be gone. But that is a good thing. There is no rational reason that one group of citizens should subsidize the lifestyle choice of anoth
Re: Same with China (Score:4, Insightful)
>subsidize...
You are forgetting the benefit to many for having the option of first class delivery to everyone, everywhere. E.g. if you want to correspond with (or sue) someone off the grid in bfe.
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Legal process service does not go through first class mail.
If you're referring to a summons, usually it is done through certified mail, which is a service of the USPS. Further, all service after the initial service is done via first class mail. That is changing in some areas of some states due to efiling, but service by USPS is still a critical part of the infrastructure on which the legal system depends.
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But once the USPS was gone, they would offer services.
Yep, just like ISPs provide universal service within their territories. Err, wait ... And even with effective monoplies, ISPs cannot be bothered to do this.
There is no rational reason that one group of citizens should subsidize the lifestyle choice of another group.
Universal postal service was originally considered important enough for subsidize to be used to provide a flat rate service. Whether that is the case today can be debated.
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Countries with privatized post offices: Denmark, Sweden, Germany
And people in DK are apparently having constant issues with postal services :/
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You're confusing Stalinism and Maoism with true Communism. I agree full Communism can never exist, but neither will a true Free Market, Capitalism, Libertarianism, etc. They are all idealized and rarely work in practice.
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I'm pretty sure they just subcontract the last leg to save cost. For non-priority items it makes sense. If USPS went away, they'd just run their own truck (or possibly a shared FedEx/UPS truck) and charge a bit more.
No, they would not. Some areas would simply not be served.
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I believe that the historical need for FCM is obsolete and the USPS should be fully privatized. Packages should be delivered by UPS and FedEx, bills should go by email, bulk mail advertising should disappear forever.
The same remote areas which private delivery services rely on the USPS for delivery would not be served by private delivery service and do not have ready access to internet services. So like these areas do not have internet service now, without the UPS they would not have delivery service now.
Whether people should be living in these areas without being required to make other arrangements for mail delivery, package delivery, and internet is an interesting question just like is universal postal service required.
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The post office is not losing money on packages from China. The Chinese government subsidizes the shipping to create those impossibly cheap rates. China has very long term goals and this is part of their master plan.
And that was an agreement negotiated by USPS, China, and eBay.
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Like many close observers of the shipping business, I know a secret about the federal government's relationship with Amazon: The U.S. Postal Service delivers the company's boxes well below its own costs.
Because the USPS is a government-funded charity with Amazon as the beneficiary? Because Bezos secretly owns the Post Office? Because Putin? Because ISIS? Is there any basis for this claim, or do we just have to accept it based on some random blogger's say-so?
Doesn't Sound To Different (Score:2, Insightful)
Doesnt sound to different to net neutrality honestly...
UPS Fedex (Score:1)
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In my neck of the woods UPS will be more than happy to never ring the door bell and simply put a sticky note on your door saying they left it at some corner store somewhere in the hood the next day. Try to get a corner store to deliver your package? They will simply tell you they don't have it and because it's a "UPS store" it will sit for 2-3 months before UPS agrees that it's been lost.
Luckily Amazon Prime items will simply be replaced but some third party resellers don't want to keep sending their stuff
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How do you get something shipped by USPS?
Check out UPS Mail Innovations. FedEx and DHL have similar offerings. The delivery is made by UPS, etc., to your local Post Office. The local Post Office delivers the package to you.
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and in my experience it cost the same as the USPS but add's 4-5 days to delivery *fuckin mouser
the only thing we get from amazon via the usps is if it fits in a bubbleope, so they can stop their bitching about loosing money on boxes
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With UPS the service is called SurePost and Fedex is SmartPost. Pickup is by UPS/FedEx and delivered to the local USPS where USPS does the final delivery.
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They optimize for cost, and since they're still using UPS and FedEx in many cases, that means the USPS costs are higher than these privately run companies.
I think the article is overstating the case, accounting is a somewhat subjective endeavor, and USPS rates make profit on some runs while taking a loss on others - putting the whole Amazon.com postal load on First Class mail is a gross oversimplification.
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The USPS is the delivery service of last resort. In some out of way places, it doesn't make sense to have more than one delivery service for the last leg of the trip. Also as a country, we've decided that it was worthwhile for our postal system to subsidize the US locations that are remote and that do not get much mail traffic at all.
Also, the article used the fixed costs of the post office to arrive at its final figure of what a fair share would look like. But of course, those fixed costs won't change even
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Total Nonsense (Score:2)
Re: Total Nonsense (Score:5, Informative)
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WTF country do you think I live in? That certainly ISN'T a basic principle in the USA.
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Really? Case closed? Fucking halfwit.
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It's worse internationally ebay and amazon rip you off left right and centre. .
I bought a couple of light stands £3 to ship to the uk £20 ship to Ireland from Amazon but anpost now have a thing called addresspal ship to stalbans and then they ship to your door 6 euro if the package will fit in their postoffice dimensions its about 4 euro for up to 20kg (40 pounds)
There is a pretty good chance it would be delivered by anPost anyway.
I'm looking at getting a little item the size of a bo
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"I want to pay less in taxes and for government services! Also I demand better quality of service from the government! And the private sector could do it better anyway, I wonder why they're not!"
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POWER TO THE PEOPLE! (Score:1)
If you can't complete with Amazon, FAIL ALREADY! We don't need no education! We sure don't need no thought control! Because, if you don't eat your meat, how can you have any pudding? How can you have any pudding if you don't eat your meat!
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That never made any sense to me.
If you want pudding then buy pudding If you don't want meat don't buy meat.
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Data (Score:1)
The important quote from the article:
An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver.
So this has nothing to do with Amazon specifically, but with:
Mr. Sandbulte is co-president of Greenhaven Associates, a money-management firm that owns FedEx common stock.
zerohedge and schwit1 are posting this because they don't like Jeff Bezos' Washington Post. EditorDavid posted it most likely because it will bring ad money, and slashdot stopped being news for nerds a decade ago.
Not a problem... (Score:1)
No subsidy in my case (Score:3)
The funny thing is that USPS doesn't deliver to my door. I have to go to the post office to pick up my mail. I got Prime thinking a Amazon would deliver to my door via UPS or FedEx. Since they deliver through USPS now, this makes Prime a bad deal for me, and I think I may cancel it soon.
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I have almost the same problem with Amazon shipments that are sent USPS (which is a fair number of them). My neighborhood has mailbox kiosks that USPS puts mail into. If a package won't fit in the kiosk, sometimes (depending on the USPS carrier) it will end up on my doorstop. There is also a good chance that I'll just get a slip of paper in my mailbox along with a notice that the USPS carrier "attempted delivery," and I have to drive to the post office the next day to pick up my package. I hate having
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If you live somewhere where you "go into town" to go to the post office, boy will you be in for a rude awaking when the USPS stops subsidizing your route. See, people in the cities (high pickup/delivery density) subsidize rural mail deliver because the fees are uniform.
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The costs can be significantly differently. On the final mile delivery alone, while a dense urban setting might cost $60 a year per recipient in carrier salary, a city neighborhood twice that. a suburban recipient twice that again, and for a rural recipient might be twice that again.
Marginal or Average cost? (Score:5, Insightful)
It makes a big difference.
It's normal buisness to price marginal goods based on marginal costs + profit. Average cost includes sunk costs. The truck and postman are already going, not taking the UPS handoffs won't save a penny (which is what's going on, the whole 'Amazon' part is just clickbait).
Re:Marginal or Average cost? (Score:5, Insightful)
I wish I had moderator points today. I can't believe I had to scroll down this far for somebody to explain what's happening.
USPS could hypothetically decide to increase rates so that Amazon needed to pay average instead of amortized cost. But that would simply force Amazon to use a different shipping company. The cost for Amazon would be minimal (but of course not zero). The cost for USPS would be a large amount of lost profit. They benefit from the extra volume of mail that Amazon ships and pays for.
By charging amortized cost the USPS is doing exactly the correct thing to maximize profits -- and that's in the interest of all postal customers.
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The USPS would still be m
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But I've noticed the USPS Amazon deliveries don't always coincide with regular mail deliveries.
That is quite common, but it won't be a special Amazon delivery. You'll find it's a general parcel run or larger items run that carries Amazon stuff and those are not scheduled. You're right USPS would not be going to your house, but they will already be in your neighborhood, and quite likely already in your street.
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The gripping hand is that USPS can't change prices without Congressional approval anyway.
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That's all covered in the definition of 'marginal cost'. IIRC postal employees volunteer for those shifts and get paid by UPS. They love the overtime.
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You could have looked up the definition of 'marginal cost' or you could try and make that point. Good choice.
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So you point out costs that were known parts of the marginal costs?
I didn't write the contract, I'm sure there were other marginal costs you haven't included. Nobody claimed to have listed _all_ the details. If you had bothered learning what a marginal cost was, you'd have kept your trap shut.
Subsidy, or Tax.... They are the same coin. (Score:2)
Why does it matter that it's Amazon? Unless EVERY individual transaction is profitable, across all levels, someone will be "taxed" to pay for someone else's "subsidy." This is extremely obviously clear in the case of (relatively zero-sum) governments, but it's also the case in corporate transactions. If I lose money on a business transaction, that loss needs to be covered (subsidized) by the profitability of another transaction (tax.)
Businesses should be free to decide if they want to lose money on transact
First Anti-trust rumblings, now this... (Score:2, Informative)
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Clearly. Instead of improving their product selection or their prices, they would rather waste money on propaganda.
that's news? (Score:2)
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This is a common misconception that is surprisingly difficult to dispel. A quick look on the USPS web site would have told you:
The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.
USPS is subject to all sorts of regulation that cost it a lot of money. During the Bush administration, a new law was passed that forced them to pre-fund retirement benefits to the tune of many tens of billions of dollars. They are on track to get there, but it is slow going.
Also, USPS can't determine its own rates. For instance, in 2016, it was ordered by regulators to decrease the
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Yes, the USPS is subject to stupid laws that make it less efficient. But it also receives huge indirect subsidies which (of course) it's not going to mention on its web site.
Why would you trust the USPS's claims about itself?
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Not paying taxes is hardly a subsidy when you are required by law to keep certain office locations open, inefficient delivery routes, and deliver to everyone in the US regardless of location.
really? zerohedge? (Score:2)
Why don't you go full on fearmonger if you are going to cite zerohedge?
Retired Green Beret Warns: "There Could Be A Nuclear Strike Against The US Coming Soon"
That was "news" from just yesterday.
Stop using zerohedge because that site is tabloid garbage.
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Environmental Nightmare! Dozens Of Highly Toxic Substances Have Been Found In Tap Water All Over America [zerohedge.com]
The End Of The Cycle: "Government Will Gladly Enter War To Cleanse The Balance Sheet And Cull The Herd" [zerohedge.com]
Story is a bit misleading (Score:5, Informative)
The story focuses too much on Amazon. It is a postal pricing policy that applies broadly. The fact is that if the post office has mispriced the service, it has done so for all participants, not just Amazon. This is done all too often by news outlets to pump up eyeballs on the story.
Sure, the Post Office should price its services correctly. But how do you know if it is wrong? Marginal cost is hard to estimate when you are driving the route already. And if the post office changed its pricing, it could well be that a different package last-mile business would step in. The post office is staffed with union employees, and it could be possible to beat the post office's last mile service on price if the price was raised $1.50 a package.
Asking congress to do what? (Score:2)
Wait 2 years, the current congress is a shitshow. and I am betting the "calculations" are really far off and in reality there is a "nothing to see here".
Amazon is a dynamic company (Score:3)
"My analysis of available data suggests that around two-thirds of Amazon's domestic deliveries are made by the Postal Service."
If your 'available data' is 6 months old, than your 'analysis' is outdated. Amazon does not sit still. This year (the last 6 months) all the deliveries to my building (44 units) have been by Amazon employed drivers. Even my hot pizza was delivered by an Amazon driver. In the past there was a mix of UPS & USPS, mostly USPS.
However you can expect USPS to continue to handle rural deliveries, and possibly at a financial loss.
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I'll take 6 month old data over an anecdote.
Amazon is not the problem... (Score:2)
Amazon is not the problem - as noted in the article EVERY parcel USPS carries is subsidized by 1st class postage.
"An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver... "
It isn't just parcels from Amazon that are subsidized, it is also the birthday present you send your nephew or the item you bought from an eBay seller and every other package shipped via USPS.
Yet again (Score:2)
Zerohedge.com is a right-wing opinion wank, not a- oh. Wall Street Journal. Whom have a paywall and - right, carry on.
Shipping is COMPLICATED (Score:2)
My wife and I run a small business (we sell a modest number of laser-cut models online). The cost of shipping our product is about 30% of our sales price - so we must work hard to minimise postage charges. USPS is vastly cheaper than UPS/FedEx/etc...and we avoid USPS "Flat Rate Shipping" because it's three times the price of doing it the traditional way. We always tell the post office desk staff "Ship the cheapest way possible" (no tracking, no insurance, no nothing) because the number of "shipping failu
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It sucks because the mailman can just put it in my mailbox (live in a condo, mailbox is detached), but everyone else has to deliver to the door.
Sure beats FedEx refusing to leave stuff unless I'm home to sign for it when they come -- in the middle of the day, when, like their drivers, I am also at work. Even better, there is no FedEx distribution center in my city like there is for UPS. So a "local pickup" requires a 45 minute drive.
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I've gotten numerous Amazon packages via USPS.
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UPS and FedEx uses the USPS as final delivery. SmartPost is FedEx. FedEx hands off the package at a USPS hub. Then the USPS delivers it to my PO. Amazon does not use USPS directly in my area. Secondary sellers use USPS but not Amazon. In my 20 years of ordering from them I have never received anything directly through the USPS.
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Most Amazon packages come through UPS or an Amazon employee. What packages does Amazon even ship using the post office?
I'm a Prime member, and I get stuff from Amazon via the Postal Service all the time. ... and it sucks. I suspect that AMZN delivery contracts with off-duty USPS drivers here in the Puget Sound region, because I get the same crappy level of "service" from both.
Case in point. I ordered a phone case from Amazon, who shipped it USPS. It was supposed to come yesterday. It was supposedly out for delivery - then I got an Amazon email (not for the first time) saying "Sorry we missed you. We tried to deliver your pa
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More than once, our not-too-bright mail carrier marks a package as not deliverable and the reason is "receptacle blocked". That's odd though 'cause they put multiple letters, magazines, etc, etc in the same mailbox on the same day they tried to say it was blocked !! My guesses are either a) they forgot to load the package in their truck or b) it wouldn't fit in the mailbox, meaning they have to get out of their car, walk 40' to our door, knock, and hand it to someone. My money is on "b"....
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In our case, that "b" explanation wouldn't work - we have a large mailbox. The smaller Amazon boxes fit in it just fine... for the Saturday post lady.
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Around here the mail service is spotty, but Amazon uses mail and UPS about fifty-fifty.
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What really is galling is that many deliveries are made on Sundays... I've seen USPS delivery trucks going to my neighbors at both our regular residence and at our seasonal residence, on Sundays to deliver *just* Amazon packages. I often wondered how much money the USPS was making off of that kind of sweetheart deal, and now I know... We The People are subsidizing Jeff Bezos, Inc. and our normal USPS services are suffering for it.
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My stuff from Amazon comes about 75% USPS and 25% UPS.
A few years ago, Amazon used a few different local or regional carriers (can't even remember their names now) but it was only over a pretty short period of time too.
Re: Since when does Amazon use USPS? (Score:2)
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UPS will often deliver to the USPS for final delivery. Amazon Prime items usually don't come through USPS but plenty of third party resellers will.
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I don't know about the US but in Canada I will mainly get my stuff delivered via Canada Post or UPS. It all depends on what method is cheapest for that particular parcel. Usually the bulkier and heavier stuff shows up via UPS and the rest is Canada Post.
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Odd I got a shipment from Amazon on friday via USPS in my mailbox. Happens all the time.
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Zerohedge not the source. (Score:2)
Zerohedge is CNN level fake news, but it's just an associated bit of link farming. The story is in the WSJ.
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> It's almost as if a fedraly funded and fedraly regulated government agancy does a job better
Nope. I hate it when stuff gets sent to me snail mail. I never know when it's going to take a strange unexplained vacation to one of the coasts for a week or two.
Letter delivery also sucks. Half the time stuff doesn't go to the right house. It really makes you wonder about important and sensitive things.
If I could deselect USPS from my shipping options at Amazon, I would do so. I would pay extra to avoid the pot
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3. Eliminate the`requirement to fully prefund employee retirement health benefits - You do realize the Post Office is actually a privately owned company which just has a continual contract, right? This is one corporation you don't want screwing people out of their benefits once they retire. They should have the same protection as police officers and firemen do. (Wait...*looks at latest news about Chicago*...maybe I should rephrase that.)
Both you and the parent don't understand the exact nature of the prefunding problem. Congress has been requiring the USPS to prefund the next 75 years worth of benefits over a ten year period. That means they have to "fully fund" benefits for decades of employees they don't even have yet, over a far shorter period than is remotely reasonable.
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The 75 years is a requirement for ALL government agencies and it is for for accounting planning. It is the way the government plans if they will need buildings, personnel,etc.
What the 2006 law required to the postal office to do is start to set aside money to ensure that they can provide the benefits that they obligated them
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No one is going to read your wall of text.
Break up your text into paragraphs.
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Look for the drop-down box below the box in which you write your posting. It probably has "HTML Formatted" selected. Change it to "Plain Old Text".