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He has but one ball, and it's made of brass

Discussion in 'Sports and News' started by TigerVols, Oct 1, 2014.

  1. MisterCreosote

    MisterCreosote Well-Known Member

    And, what company wouldn't dump its pension obligations like a bad habit when the going gets tough?
     
  2. cranberry

    cranberry Well-Known Member

    Seventy-five years out? Well no, nobody does that. Congress is forcing USPS to fund pensions for employees who haven't been born yet.
     
  3. joe king

    joe king Active Member

  4. The Big Ragu

    The Big Ragu Moderator Staff Member

    None that I know of, including the USPS.

    Despite what you may or may not have read on the various websites run by interest groups, the 75 year thing has nothing to do with funding mandate -- the way you just stated. The USPS does not fund its pension 75 years into the future -- and it isn't putting aside money for the retirement of workers who haven't even been born yet, the way some of things you find wrongly state (in their appeals) when you go the various "save the USPS sites."

    Among other things that congressional act did (and I am not arguing for the act, just talking about what it actually does and doesn't do), it put the USPS on an accrual method of accounting for its liabilities. Same as private companies do. However you actually account for your future liabilities, that is the honest way of accounting.

    That "75 years" people have latched onto has to do with an accounting standard, not a funding or actuarial issue, the way you just said. First, the act requires them to fund the future liabilities of current or former workers (not workers that don't exist, the way some have ridiculously stated), and gives them 10 years to do it. That affects the actuarial estimates about mortality rates. So if you have a 30 year old worker, and say he is expected to live to 79, they now have 10 years to fund that worker up to 49 years into the future.

    For ACCOUNTING purposes, the act requires them to estimate their future liability over 75 years, and that affects estimates regarding new workers. They have to account for those future liabilities on their financial statements. ... but the act itself only required them to fund their current and former workforce. So there is no money in play from that.

    Once again, though, this kind of discussion is a smoke screen, because of all the misinformation thrown out there in the wake of that stupid act. The bottom line is that they can either be accounting for future liabilities and actually FUNDING those future liabilities. Or they can be ignoring them completely and using the money that could be funding them (to whatever degree they don't fund those liabilities) to paper over their operating shortfalls.

    If the USPS doesn't fund its future obligations at all, yes, it can bleed to death more slowly at the rate they have been going.
     
  5. The Big Ragu

    The Big Ragu Moderator Staff Member

    That is not true. I know those websites have repeatedly stated that "not born yet" thing, but the actual act mandated that the USPS fund the obligations owed to its current and former workforces.

    They somehow have managed to conflate an accounting standard (as I tried to explain in my last post) with the actual funding question, and it is getting repeated now.
     
  6. MisterCreosote

    MisterCreosote Well-Known Member

    It's just a coincidence that the USPS started racking up multi-billion-dollar losses starting the year the bill was enacted.

    [​IMG]
     
    Last edited by a moderator: Dec 15, 2014
  7. The Big Ragu

    The Big Ragu Moderator Staff Member

    Your coincidence is the point. Everything you see before 2006 isn't accurate, because the USPS was racking up more than $100 billion in liabilities over time and not accounting for them in that P&L you see. What the 2006 act did was force them to play catch up -- and do it in 10 years. If they had been accounting for their promised obligations all along (not even funding them, but simply accounting for them!), you'd see a chart that has a more even distribution of lines showing losses year after year -- which would still be accelerating over the last decade, because the USPS has had a harder and harder time making money.

    In a private business, let's say that rather than paying an employee $50,000, you pay him $45,000 and promise to put aside $5,000 toward a retirement benefit. Whether you actually do it or not, you have still incurred $50,000 of expenses (if you didn't put aside the $5,000, you have a $5,000 debt). Private companies treat those accruals as the costs they really are. Government entities don't. So what you see on that chart prior to 2006, shows a P&L that ignores really big costs (that any private business would have to account for) that the USPS was incurring along the way, but pretending as if they aren't costs.

    In 2006, Congress passed that act that forced them to play catch up on its past liabilities in a very short time (and gave them no flexibility). So what you see after 2006 moves the losses you should have seen in the years prior to 2006 to the years afterward 2006. Except at a certain point (was it 2010 or 2011?) they simply stopped complying with the 2006 act because they didn't have the money and their losses have been accelerating.

    The USPS still has $100 billion of unfunded liabilities -- not just the retiree health care fund -- which it has done zero to fund. And even operating on a pay-as-you go basis, the way it always has, it is now unable to even stay on that treadmill. Last year, year, on a pay-as-you go basis (just trying to meet the obligations of existing retirees), it was $500 million short.
     
  8. cranberry

    cranberry Well-Known Member

    Practically every story I've read on the topic -- dozens -- have used similar language. I don't have time to read through the bill.

    So, even if it's not true, there is a schedule of just 10 years to fully pre-fund retiree health care obligations for ALL current employees and retirees. That is insane. Nobody in the real world would operate like that.

    USPS is operating under a manufactured "crisis."
     
  9. LongTimeListener

    LongTimeListener Well-Known Member

    Ragu's belief that corporations fulfill their pension obligations is amusing. It's even more hilarious since I think he actually believes it and isn't just trying to sell it.
     
  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    Come on. You are going to start your usual bullshit -- ignoring the conversation and trying to shift it to some stupidity into YOU put into my mouth?

    I don't believe "corporations fulfill their pension obligations," whatever you mean by that. What are you in kindergarten?

    ANYONE can make a retirement benefit promise and not live up to it. Lots of companies do.

    I get it. I am being honest about the USPS and its finances, and responded to some things that were simply not true. ... and it's frustrating for you. I am a horrible person.

    I get it. Everyone loves the USPS.

    And it still loses money, and for years it hasn't funded billions of dollars obligations, and from an accounting standpoint it pretended like those costs didn't even exist.

    For what it is worth, any corporation can make a pension promise, and legally it doesn't have to prefund it. There are lots of entities that operate that way. What NONE of those corporations can do, that the USPS could, was not accrue those costs as debts along the way.
     
  11. LongTimeListener

    LongTimeListener Well-Known Member

    Yes, Ragu and Ragu alone knows that the 75-year funding is not really 75-year funding. Screw what anybody else says. And screw the fact that ***no*** other agency has to fund its pensions in this way.

    I know, Chicken Little. The whole thing is coming a-crashing down and we're headed for Armageddon. I have been waiting for more than a year for the euro to collapse, with the dollar not far behind. Alas, I remain in turgid state.
     
  12. The Big Ragu

    The Big Ragu Moderator Staff Member

    Sorry. Just saw this. Yes, they gave them just 10 years to prefund obligations they had previously ignored. It was obviously designed to hasten the death of the USPS. Yeah, the USPS could certainly have put off its insolvency (although who knows for how long) by using the money promised to its current workers to subsidize current operations for however long that was possible.

    But the act itself didn't create those obligations, and it didn't somehow take something that is profitable on an operating basis and make it unprofitable. The USPS has been struggling more competitively with every passing year, and its operating losses have been accelerating. It could certainly have died a slower death (maybe even a much slower death) -- however long it would have taken (with or without the subsidization of treasury "loans" that are realistically never going to be repaid). But if that was the plan, we can at least be honest -- current workers were never going to see the benefits they were promised in retirement (without the treasury stepping in, at least, and making good, in which case the USPS was being subsidized).
     
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