The U.S. Postal Service, or USPS, just closed its 2019 fiscal year books in November, and things aren’t looking so good as it heads into the new year.
It has a whopping $120 billion in pension and other post-employment unfunded liabilities. That’s an amount equal to the GDP of Ukraine. It’s no surprise, then, that Congress has started looking for ways to remedy this. Unfortunately, its solution is the proposed USPS Fairness Act, which would eliminate the prefunding of health benefits — essentially putting federal workers on a plan similar to Social Security.
Here’s why that would be a bad idea.
See, pay-as-you-go systems, like Social Security, are where the revenue for current retirees’ benefits is generated from those who are actively employed. This means that future generations will be footing the bill for today’s workers. And with the U.S. population aging, that puts a heavy burden on the current and future workforce.