A key bipartisan US Senate committee has passed proposed legislation designed to save the US PostalService from bankruptcy, although the proposals have drawn strong criticism from union
representatives.The Homeland Security and Governmental Affairs Committee voted 9-to-1 to pass the draftlegislation, with certain amendments, which proposes to claw back US$6.9 billion (€5 billion) inpension overpayments to relieve its most pressing current financial challenges and finance pay-offsor ‘buy-outs’ to persuade up to 100,000 employees to leave the service – a move USPS estimatescould save it $8 billion per year. The proposal would also cut worker compensation benefits forsome retirees, and force USPS to maintain Saturday mail services for at least two more years.
Committee chairman Joseph Lieberman said: “I think we’ve offered a solution to the problem,and we’ve done so in a bipartisan way.”
The committee made some significant amendments to the proposed 21st Century Postal ServiceAct, including stripping out a controversial measure that would have forced postal retirees to dropout of the federal healthcare system and instead enrol in Medicare, if they are eligible.
The Senate panel agreed to retain one of the most controversial measures, which prevents theagency from cutting its Saturday service for at least two years while it studies the move. Underthe proposal, USPS could cut Saturday service in two years if it is seen to have tried all othermeasures and is still unable to break even. Senator Lieberman said he saw this two-year delay as away of “easing into something we’re going to have to do in the end”.
But the American Postal Workers Union (APWU) said the proposed legislation as agreed by thecommittee “would severely weaken the USPS”, providing short-term financial relief, but inflictinglong-term damage on USPS, by forcing it “to dismantle its retail and mail-processing network”.
APWU president Cliff Guffey said: “Mail will be delayed as a result of the elimination ofhundreds of mail processing facilities and thousands of post offices, stations and branches.” Hesaid the bill also would allow USPS to eliminate Saturday mail delivery after two years “and woulddegrade delivery to customers’ to doors no later than 2015”.
Guffey added: “These drastic cuts will severely damage the Postal Service. It will make theUSPS less relevant and drive away customers.” He said the bill would return approximately $7billion in overpayments the USPS made to the Federal Employees Retirement System (FERS), but itwould not return $50 billion to $75 billion in overpayments to the Civil Service Retirement System(CSRS). He claimed two independent actuarial studies concluded that USPS has overpaid the CSRSaccount by $50 billion to $75 billion.
Earlier bills had contained provisions that would return the CSRS overpayments, but the new “compromise” bill excludes that provision, Guffey added. In addition, although the bill wouldrestructure required payments to pre-fund healthcare benefits for future retirees, it would not doenough to relieve the Postal Service of the pre-funding obligation. “No other government agency orprivate company is required to make these payments,” Guffey said. “By failing to provide moresubstantial financial relief, S. 1789 [The 21st Century Postal Service Act] will harm the USPS andits customers. The Postal Service desperately needs funds to modernise its mail processing andretail networks, so it can continue to serve the American people.” He said several other provisionsof the bill were deeply troubling to the APWU, and that the union will work to improve the billwhen it comes to a vote before the full Senate.
Meanwhile, Postmaster General Patrick Donahoe is confident that a government fix could pullUSPS out of a death spiral, but he fears another economic downturn could thwart its chances ofrecovery. The agency is approaching its current $15 billion government borrowing limit, and expectsto report as much as $10 billion in losses for the last fiscal year, and is pinning its hopes on acongressional overhaul to get back on its feet. Donahoe told a Reuters Summit in Washington onTuesday that prolonged economic pain would deliver a fresh blow to the almost-bankrupt PostalService’s chances of becoming profitable again.
“My biggest fear from a Postal Service standpoint is that the economy continues to lag andjust doesn’t generate the commercial interest that we need to continue to grow Standard Mail andpackages,” he said. He estimated that a sharp downturn in the US economy could cause mail volumesto plummet 30 per cent to a worst-case scenario of 118 billion pieces of mail per year by 2020,compared to about 168 billion pieces this year.
Total mail volume has fallen about 20 per cent since 2006 as the growth of email and onlinebill payments coincided with a recession that caused businesses to limit spending on catalogues,advertisements and other standard mail. Donahoe said the Postal Service expects total mail volumesto fall about 24 per cent by 2020 but a poor economy could accelerate the drop. One bright spot hasbeen an uptick in catalogue volumes in the last few months, he observed.
USPS lost about $20 billion in the four years to 2010 and is nearing a deadline for a $5.5billion payment it cannot afford. The payment, to pre-fund retiree health benefits, was due inSeptember, but Congress extended it to 18 November. Donahoe said he believes lawmakers will extendthe deadline again in a continuing budget resolution expected to fund the government for the nextfew months. Several lawmakers have already offered bills proposing solutions to the agency’sfinancial crisis, but the US House of Representatives and the Senate have so far taken differentapproaches toward overhauling the Postal Service. “My other big fear is that I can’t get thelegislation resolved to get all the things done that we need to get done,” Donahoe said. “Thatwould be problematic for the entire industry.”
