The Times fails to explain that the $5.5 billion payment is not a normal, actuarially valid estimate of future retiree’s health benefits. It is a politically calculated number, equal to the amount the USPS was found to be overpaying its annual pension liabilities in 2003. The trust fund simply serves to keep postal funds flowing into the Treasury, artificially reducing the federal deficit.

The most glaring omission in the Times story is the fact that as of the end of the 2010 fiscal year, the USPS had amassed a total of $42.5 billion in the so-called “trust fund”. (See page 77 of the USPS Annual Report). The fact that the Times ignores this huge pile of cash, while parroting the cliche “The United States Postal Service has long lived on the financial edge” just shows how successful right wing politicians and the USPS leadership have been in shaping the perception of the USPS as a financial basket case, requiring draconian measures to “save” it. (Note: the $42.5 billion is in addition to the $50-75 billion the USPS is estimated to have overpaid Civil Service retirement fund since 1972. While there are differing opinions on that overcharge, the $42.5 billion in the trust fund is not in dispute).

The simple, undisputed fact is that without Congress’s prefunding requirement, the USPS would have zero debt, billions in spare cash, and a $15 billion line of credit. But when your goal is to shut down post offices, get rid of unions, and slash wages and benefits, you need a better story. The politicians have managed to come up with that story, and so far, the news media have swallowed it whole.

The USPS is facing a dramatic drop in volume due to competition from electronic diversion and the effects of the recession

Despite that, the USPS has, by downsizing its workforce and infrastructure, and negotiating concessions from its unions, managed to match its expenses to its revenues- breaking even, just like it was designed to do.

The ONLY reason the USPS is near bankruptcy is the skimming of over $5 billion a year in “trust fund payments” enacted by Congress and the Bush Administration in the 2006 PAEA law.

Without PAEA, the USPS would still face a challenging future, but it would be facing it with ZERO debt, and a $15 billion credit line.

Congress refuses to modify the trust fund requirement for one very simple, and very cynical reason: the “trust fund” is “on budget”, while the USPS is not. The trust funds don’t do anything to “guarantee” future retiree health benefits- they serve only to transfer some of the federal deficit to the USPS, artificially lowering the government’s accumulated debt.

The USPS’s immediate problem isn’t the Internet or the unions- it’s the age old problem of politicians with their hands in the till.

Caveats - I am a Postal Employee. Most of this information came from a website I highly recommend Postalnews.com