What if…



Tin foil hat? Crazy, kooky conspiracy talk? Or a beautifully designed master plan? What do the progressives want? Global governance. Climate change economy restructuring. Socialized medicine. No private property rights. No Constitutions or private citizens rights. How can they possibly achieve such far reaching goals? What if they could do it from a single event such as a virus pandemic? So maybe you don’t buy the pre-planned conspiracy angle. What about the never waste a good crisis angle? Either way this pandemic can grant all of the progressives wish list items in a single event.

Defeating Trump in the next election due to a crashed economy is only the tip of the iceberg. It’s amazing what a motivator fear is and what the public will agree to in an effort to mitigate that fear even if it’s just for appearances only. The end of the planet from the climate change hoaxers simply doesn’t sell. However threaten our very way of life right now, today, not in an ever moving years away deadline, works like a charm. It won’t take extending stay at home orders through the summer. Just a few more weeks will suffice to damage the economy enough to go past the tipping point (we may already be there). A staggered restarting of the economy will claim even more businesses. The roadblocks being legislated right now will guarantee more pain. It’s like a circular drain in which each little bit contributes to an ever growing spiral. Many of the failures we won’t see until months from now are already baked in the cake. They key point to all of it is that a large number of stakeholders involved in instigating a recovery are openly working against it. They are doubtless salivating at what an opportunity is right in front of them. Remake the world in their ideology. The best part (in their eyes) is the public will be clamoring for it.

COVID-19 warning

The Spellchek blog is NOT a valid opinion on medical advice so always consult with a physician first!

As always do your own research. Paying attention to this warning may save a life. This warning applies to people with healthy lungs as COVID-19 isn’t a respiratory disease. People with damaged lungs or diminished capacity may require a ventilator.

Texas strong? No Dubya wrong again

A weak conservative is more dangerous than a strong liberal progressive. Compromising principles to address temporary problems always leads to long-term failures. COVID-19 has magnified the issue of risking reliance on a global supply chain if a link in that chain (China) can hold you hostage.

Will the USPS really go bankrupt?

The narrative memo is in circulation and the left is not surprisingly promoting it across the media spectrum. The Postal Service needs a bailout NOW! Without one it will be out of business in a couple of months. Can it be that a virus has also eliminated a government agency? You’re certainly going to hear that over and over as the debate over what to include in a phase 4 COVID-19 stimulus rages on. Let’s review.

The primary argument from the left is that the only reason there is any problem at all with the USPS is the 2006 PAEA Act forced by the GOP. This essentially required the USPS to pre-fund employee health benefits. That’s it. Everything gets partisan and twisted to fit an agenda after that. Now that the COVID-19 pandemic has crashed postal volume due to the economic slowdown a crisis moment has arrived for the USPS. USPS revenues are 100% generated by delivering mail and parcels with a much smaller amount coming from product sales at postal facilities.

The left will proudly point out that the USPS doesn’t survive on taxpayer dollars as do other government agencies. They operate in many similarities as a private business by using incoming revenues to pay operating costs and fund employee benefits. However this is where they separate from the majority of private businesses. They have a full pension plan whereas the majority of private businesses have shifted to 401(k)’s and other defined benefit plans. Even more unique is a retiree health benefit plan. Seldom seen anywhere anymore separate from a pension is an employer paid retiree health plan. The USPS does and until the 2006 PAEA, they funded it on a pay-as-you-go basis meaning it was paid out of current year revenues as the bills came due.

An accounting review of the pension plan in 2002 found that the USPS was significantly over-funding its pension plan (the left won’t point this out). The left also won’t tell you that in 2003 the USPS presented its own proposal to fund a health benefit fund prior to the 2006 PAEA supposedly forced on them by the GOP. The PAEA received wide bi-partisan support but you won’t know that because it passed the House on a voice vote and the Senate through unanimous consent (meaning no recorded votes to hold politicians to later). The key takeaway is that the PAEA was set up to utilize the pension over-funding excess to be allocated toward the health benefit fund meaning virtually no additional monies out of the budget.

The left doesn’t like the fact that the USPS had to fund retiree health benefits for 50 years in a 10 year time span unlike any other government agency. In fact they’ll parrot the talking point that no one does that anywhere. Let’s clarify. The 1974 ERISA Act is what has guided private industry to pre-fund pension plans. We aren’t talking about USPS pensions rather their health benefit plans. Stands to reason then that other agencies or private industry businesses don’t do this as they generally don’t have retiree health benefit plans, does it? There is also a misconception about 50 or 75 years for pre-funding. The 50 year number comes from the original 10 year plan set up to establish a base fund for retiree health care benefits. The extension to 75 years comes from the secondary funding part of the Act that requires the USPS to make up any shortfall in funding between 50 and 75 years over a 40 year annual funding requirement. So the bulk was to come in 10 years and the remainder over the next 40. A favorite fake news item pushed by the left is that the Act included future employees not even born yet. The General Accounting Office’s Chief Actuary has testified to Congress that this a complete falsehood.

So what happened? The Act passed in 2006. The 2008 Great Recession hit and greatly diminished revenue meaning the USPS all of a sudden had a problem even funding its pension plan let alone having any excess to fund a health benefit plan. They have entirely missed several years of the 10 year schedule for funding. Other years they have partially funded it and it remains billions of dollars behind schedule. Now we have a pandemic and a forced government economic slowdown to further decrease revenue. Let the blame game begin. The left is all in the PAEA as the cause (those wascally republicans). Yet isn’t it because of the very nature of this unpredictable revenue stream that highlights the folly of a pay-as-you-go funding mechanism? It’s always great to ask future generations to pay for our retirement when all is well. When all is well. It clearly isn’t now. The left vilifies the GOP for the draconian measure of requiring any entity to fully pre-fund retirement benefits. Yet if this had always been the case the cost burden on the current budget would be drastically reduced. Let us not forget the USPS has no competition when it comes to letter delivery as services such as UPS and Fed-Ex are far too expensive. Also nothing has prevented the USPS from expanding its range of service offerings to better compete in an always changing market for information and parcel exchange.

Some will claim that Congress could have eased the requirements for the 10 year funding plan to better match the reduced market for mail delivery. Perhaps but since they weren’t making the majority of the annual funding requirements anyway would it have made a significant difference? Not to mention the narrative point pushed by the left that the USPS would be in the black were it not for the PAEA. Remember, no taxpayer funding dollars? Maybe the USPS budget should have included a rainy day fund as most States maintain as a course of normal business. Not just fund pensions and health funds for retirees but a fund for reduced revenues due to economic slowdowns. Cost too much? Once again, a private business adjusts employee compensation based upon ability to pay and they must compete in the open marketplace not in a protected closed industry like mail delivery. In other words you can’t have your cake and eat it too. If you wish to claim you can make it on your own then you must act accordingly. Otherwise you are just another taxpayer dependent government agency. The way they used to be until the Postmaster General successfully separated the USPS to go off-budget and keep Congress from raiding their budget as was common practice previously. Can’t blame them for not wanting to allow Congress raid their budget whenever there was a budget shortfall. Incidentally, I see this a lot in my business as a water plant operator. Cities and townships love to raid water rate revenue to make up any general budget shortfalls.

The bottom line is a decision for taxpayers. Bail out the USPS now and expect to do the same over and over as the new norm of economic shutdowns due to pandemics will be repeated. Retirement costs will continue to only accelerate over time making the pay-as-you-go model always a day late and a dollar short. Reduce benefits? Not an option without an act of Congress due to the 1970 Postal Act. You could have Congress repeal the 2006 PAEA requirement and allow the USPS to tap the billions set aside in the retirement funds to make up any revenue shortfalls. Isn’t that the liberal way? Pay for today with tomorrow’s dollars? Make it future generations problem. Or repeal the 1970 Act as well and fully privatize the USPS. The left would fight that to the death. It’s a true glimpse of why socialism fails. Government control of private industry. You can’t compete in capitalism with a private-public partnership. You have to go all in with government control or fully privatize. Nothing in-between works in the long run. A phase 4 COVID-19 stimulus bailout may buy time but won’t eliminate the problem. As sure as the COVID-19 virus will make a cyclical comeback so will the USPS budget problem.