The Postal Service and its RHBF

[donquixote99]

The RHBF is a fund that Congress created for the Postal Service to pay into, to make sure that money would be available in the future to pay health benefits for postal retirees. Hence the name Retirement Health Benefits Fund. The Postal Service is supposed to pay a lot of money into this fund, something over 6 billion a year nowadays. It hasn't met its target for contributions it all years, but altogether there's now about 47 billion dollars in this fund.

A basic question, if you think to ask, is who's got the 47 billion? The answer, really, is nobody. That's because the fund is set up for all the money to go into government bonds. The Treasury gets the money from the Postal Service, and they make bond accounts that say they owe the money to the Postal Service. As for the money itself, it goes into the Treasury's general fund and gets spent.

The supposed reason for creating the RHBF was that if the pay as you go cost of retiree health benefits for postal employees got too large for the Postal Service to pay, then Congress might be on the hook for it. But the situation with the fund is that in the future, when the Postal Service wants to spend the fund on benefits, Congress is on the hook for it, because Congress has to fund the repayment of those bonds. The money will come from taxes in the future or from borrowing in the future by the federal government. Just the same as if the federal government was 'bailing out the post office.'

So really, the only difference between having an RHBF and not having one is that for the time being, it makes the Postal Service Income Statement look bad, while the Treasury looks a little better. Basically, the Postal Service is funding the Treasury to the tune of $6.5 billion or so a year. Of course someday, presumably, the Treasury will fund the Postal Service, and the Postal Service will be better off. That's if Congress doesn't kill the Postal Service in the meantime because it 'loses money.' Money the government took from it, and spent!