The massively loss-making US Postal Service is warning it will speed up cost-saving cuts if thenew US Congress copies its predecessor by failing to agree on urgently-needed postal
reform.US Postmaster General Patrick Donahoe yesterday appealed to members of the new Congress to agreeon bipartisan postal reform while leading postal legislators declared they had “made progress innarrowing our differences” but the APWU union warned it would “fight on” to resist cuts.
Donahoe described the failure of the 112th Congress to pass new postal legislation that could “quickly restore the Postal Service to profitability and put the organisation on a stable, long-termfinancial footing” as “disappointing”.
He said the Postal Service had responded to political discussions by modifying parts of itsfive-year comprehensive business plan, including the pace of consolidation of mail processingfacilities, while also reducing staff numbers by 60,000 and closing 70 mail processing facilitiesand targeting new revenues by increasing package volumes.
But Donahoe warned: “As we look to the coming year, we are on an unsustainable financial path.We are currently losing $25 million per day, we have defaulted on $11.1 billion in Treasurypayments and exhausted our borrowing authority. The Postal Service should not have to do businessthis way, which has undermined the confidence of our customer base and the $800 billion mailingindustry we serve. We will be discussing with our Board of Governors a range of acceleratedcost-cutting and revenue-generating measures designed to provide us some financialbreathing-room.”
He added: “We encourage the new 113th Congress to make postal reform an urgent priority, and towork steadily toward the quick passage of reform legislation. We will continue to work with leadersof our House and Senate oversight committees and all members of Congress to help make thishappen.”
USPS made a massive $15.9 billion loss in the year ending September 30, 2012, largely due to$11.1 billion worth of disputed employee health payments, compared to a $5.1 billion loss theprevious year. The agency wants Congress to remove the financial burden of having to prefundretiree health benefits as well as to give it more commercial freedom and permission to downscaleoperations and infrastructure in order to cut costs. Under its business plan, USPS wants legalchanges allowing it to determine delivery frequency and the ability to offer non-postal productsand services.
A hopeful note was sounded by two leading postal legislators, Democrat Senator Tom Carper,chairman of the Senate Homeland Security and Governmental Affairs Committee, and Rep. Darrell Issa,a Republican from California and chairman of the House Oversight and Government Reform Committee.Each introduced a postal reform bill in their respective chambers but neither was passed by bothparts of Congress due to disagreement over the prefunding requirement and USPS’ plan to endSaturday deliveries.
In a joint statement on the future of postal legislation in the 113th Congress, they said:“Although the 112th Congress did not come to a consensus around a package of reforms that canupdate the Postal Service’s network and business model to reflect the reality that it faces today,we remain committed to working with our colleagues in both the House and the Senate to reform thePostal Service so it can survive and thrive in the 21st century. While our approaches have differedin the past, we made significant progress in narrowing our differences in recent months, and ourcommitment to restoring this American institution to long-term solvency is unwavering.”
Meanwhile, APWU President Cliff Guffey said Congress’ failure to enact postal reform in 2012means the legislative fight to Save America’s Postal Service goes on. “New legislation must beintroduced this year to reform USPS finances and undo the mess Congress made when it passed thePostal Accountability and Enhancement Act (PAEA) in 2006,” Guffey said. The PAEA requires the USPSto pre-fund healthcare benefits for future retirees 75 years into the future and has driven thePostal Service to the edge of insolvency.
