The Post Office Pension Ponzi Scheme.

• Author: Boehm, Eric

THE CORONAVIRUS PANDEMIC created all sorts of new problems for the U.S. Postal Service (USPS), but the most serious financial issue the agency faces was a crisis longbefore anyone had heard of COVID-19--and it won't be solved with a vaccine.

Like many other government entities, the USPS has over-promised and undersaved for its employees' retirements. The pension system for retired postal workers has a $50 billion unfunded liability--that's an accounting term for the gap between what actuaries expect the system to owe current workers and retirees for the rest of their lives and the revenue it's expected to take in from paychecks and investment earnings. Meanwhile, the USPS fund that's supposed to cover health care expenses for retired workers is facing a $70 billion unfunded liability, and it has less than half the assets necessary to cover expected future costs.

With each passing year, the situation grows worse. Even though the Postal Service reported a $2 billion uptick in operating revenue during the fiscal year that ended on September 30, 2020, expenses (largely due to the pension debt) increased faster. Overall, the USPS lost nearly $9.2 billion last year, up from about $8.8 billion of red ink the year before. Since 2007, the USPS has reported more than $86 billion in losses.

Retirement costs are also the main reason the Government Accountability Office declared, in a May 2020 report relying on data gathered before the pandemic hit, that the Postal Service's current business model was "not financially sustainable."

During the kerfuffle over mail-in balloting prior to the 2020 presidential election. Congress briefly appeared to care about the USPS' problems. Democrats in the House pushed for the inclusion of a rather arbitrary $25 billion bailout for the USPS in several iterations of COVID-19 relief packages, but a veto threat from then-President Donald Trump sunk those plans. Instead, Congress extended a $10 billion loan to the USPS as part of the relief package passed in December.

On the...