Another Debt Crisis could mean more to the U.S. Postal Service and Retirees

While the Debt Ceiling debate is once again starting to make some headlines, not enough attention has been focused on rules put into place giving the federal government ways to still keep spending, no matter what.

In 2012, the Treasury Department created a list of “Extraordinary Measures” that would allow the federal government to continue to spend while still being technically closed. One of these measures has even allowed them to manipulate assets from the pension funds of not only federal employees, but state employees as well.

To quote the Treasury Department after the last “Debt Crisis”: the “Secretaries of the Treasury in both Republican and Democratic administrations” decided to use “their authority to take certain extraordinary measures in order to prevent the United States from defaulting on its obligations”, and from this grand decision four “Extreme Measures” can be taken by Congress to ensure the United States meets its obligations, and they are:

  1. Suspending sales of State and Local Government Series Treasury securities.
  2. Determining that a “debt issuance suspension period” exists, which permits the redemption of existing, and the suspension of new, investments of the Civil Service Retirement and Disability Fund and the Postal Service Retirees Health Benefit Fund.
  3. Suspending reinvestment of the Government Securities Investment Fund.
  4. Suspending reinvestment of the Exchange Stabilization Fund.

But why would Congress impose these new rules? One possible reason would be to rid the country of a vital resource called the United States Postal Service (USPS).

If one were to look at the demographics of this country, one would see that there are roughly 76 million Baby Boomers heading towards retirement who have all funded their 401(k)’s, paid into Social Security, and plan on taking it easy for the next 10 to 15 years.

The problem with this scenario if you are a member of the government and get paid by said government is that the next generation, Generation X, has only about 55 to 62 million people in it.

The major issue the United States is facing just happens to be a monumental demographics shift.

With the Baby Boomers (who happen to be earning the largest amount of taxable income) heading towards retirement, and with the following generation not only being much smaller in number but also earning much less than, the amount of tax revenue needed to pay for the entitlements of Social Security, Medicare, pensions, salaries for government employees, wars and welfare will fall far short.

Ultimately, the government has to come up with new ways to generate revenue from other sources, and one solution could be to tax the mail.

According to the USPS website, there is roughly $65 billion in revenue generated by the USPS on an annual basis, but not one cent of it is generated through taxes, as taxing the mail is not currently an option.

But what could be done is closing the USPS due to its insolvency, as it cannot meet its pension funding liabilities.

With this closing of the USPS, the burden of shipping goods would transition to private companies like FedEx and UPS, which the government could then tax in order to generate even more revenue, and the incentive to do this is extreme.

Again, there are roughly 76 million people heading to retirement and they all have one thing in common: they must enroll into Medicare, and due to current changes within Medicare prescription drug plans, one of the cheapest and most convenient ways to receive prescription drugs is through the mail.

With the possible closing of the USPS, Congress could create a means to force the largest segment of society, the Baby Boomers, to use overnight mail carriers like UPS and FedEx at a much a higher cost, while also being able to finally tax those deliveries.

All that’s needed up until the official closing of the insolvent USPS is a few more “Debt Crises” for Congress to loot the money from, which would then allow our government to close this vital resource that many retirees have become dependent upon in order to receive their medications.

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