USPS Postmaster General Patrick R. Donahoe urged the US Senate yesterday to implementlegislative changes to the company’s business model and to allow the postal operator to pursue its
cost-cutting policy in order to raise revenues and reduce operating expenses.Speaking at a hearing before the Senate Homeland Security and Governmental Affairs Committee onWednesday, Donahoe highlighted the urgency of a postal reform following USPS’ announcement ofswitching to five-day mail delivery from August this year.
“To preserve our mission to provide secure, reliable, and affordable universal delivery service,the Postal Service needs urgent reform to its business model,” he said “The American people deservea financially healthy Postal Service. We will continue to work together with Congress to achievethat goal.”
In particular, Donahoe urged the Congress to allow USPS to sponsor its own health care plan andnot restrict it in its plans to switch to five-day mail delivery. “There is a substantialopportunity for savings – up to $7 billion dollars worth by 2016 – from moving to a much moremodern, responsive and customer-focused system. This would involve having the Postal Service manageits own healthcare. We would competitively select a large national provider.”
He also suggested that the company should make a transition to a new workforce based on aredefined “employee of the future.” This would include a personal retirement contribution plan foremployees joining the Postal Service after 2015 as opposed to a defined benefit plan. In addition,he asked for a ‘proper calculation’ of its Federal Employees’ Retirement System (FERS) surplus touse the money for reducing the company’s debts.
Senators expressed their dissatisfaction with USPS plans to cut Saturday delivery. SenatorsBernie Sanders and Peter DeFazio have introduced new legislation in order to prevent these cuts. “While we all understand that the Postal Service is experiencing financial problems today and thatchanges need to be made as the Postal Service adjusts to a digital world, these issues can be dealtwith in a way which strengthens the Postal Service rather than initiating a series of cuts thatcould eventually lead to a death spiral,” Sanders said.
“Congress must work together and pass legislation that will sustain the Postal Service, avertunnecessary closures that hurt communities and save American jobs. Most of the financial issuesfacing the United States Postal Service are due to short-sighted actions by Congress. Congress mustunshackle USPS so we can deal with these problems and allow the Postal Service to better compete,”DeFazio said.
Sanders stressed that fewer services will result in customers turning to other deliveryproviders. “Rural Americans, businesses, senior citizens and veterans will be hurt the most byending Saturday mail.”
The proposed bill by the senators suggests looking for alternatives to generate more moneythrough lifting legal bans on services such as legal documents, issuing hunting and fishinglicenses and allowing shipments of wine and beer. This would also allow customers to profit frome-mail and internet services.
During yesterday’s hearing, Cliff Guffey, the president of US largest postal union APWU, toldthe Senate panel: “Congress must end the mandate of the Postal Accountability and Enhancement Act(PAEA) that requires the USPS to pre-fund healthcare benefits for future retirees. Thisrequirement, which ostensibly was implemented to protect taxpayers in the event the USPS ‘goesunder,’ is instead drowning the agency in a sea of debt.”
He also urged the Congress to allow USPS to increase postal rates as PAEA forbids the company toraise prices above the rate of inflation. “This flawed law imposes a major liability on USPS, butprevents it from raising the revenue it needs to meet the obligation.”
However, Guffey stressed that additional service cuts would be ‘counterproductive’. “In 2012,USPS closed approximately 50 mail processing facilities, and plans to close 100 more this year. Ithas closed hundreds of post offices and reduced hours at thousands more. The Postal Service is onthe brink of cutting services in ways that will permanently damage it by making its services lessuseful. This would be a tragic mistake, and it is unnecessary.”
In response to Donahoe’s plan to eliminate Saturday delivery, the president of US NationalAssociation of Letter Carriers (NALC), Fredric Rolando, said: “Slowing mail service and degradingour unmatchable last-mile delivery network are not the answers to the Postal Service’s financialproblems. If the Postmaster General is unwilling or unable to develop a smart growth strategy thatserves the nearly 50% of business mailers that want to keep six-day service, and if he arrogantlythinks he is above the law or has the right to decide policy matters that should be left toCongress, it is time for him to step down. “
