The US Postal Service yesterday made a further plea to lawmakers to grant it the flexibility toadapt its delivery schedules and mend its “broken business model”, which is currently leading to
losses of $25 million per day.Just a week after being forced to abandon plans to cut Saturday mail deliveries after failing topersuade politicians of the need for delivery flexibility, Postmaster General Patrick Donahoe toldthe House Oversight and Government Reform Committee that the company’s losses would only get worsein the coming years unless the laws that govern the Postal Service are changed.
Although the US Senate approved postal reform legislation a year ago, the House continues todebate the subject, but chairman of the committee Darrell Issa said it was getting closer to abipartisan deal, according to The Washington Post.
Donahoe urged Congress to include delivery flexibility as part of comprehensive postal reformlegislation “to help return the Postal Service to long-term financial stability”. He also urgedpassage of other legislative provisions that would provide for: the ability to develop and priceproducts quickly; the ability to control healthcare and retirement costs; the ability to switch toa defined contribution retirement system for new employees; the ability to quickly realign mailprocessing, delivery and retail networks; a more streamlined governance model; and more flexibilityin the way the Postal Service leverages its workforce.
The US Postmaster General told the committee: “Contrary to the arguments we hear from someparties, it is not enough merely to resolve the prefunding of retiree health benefits. We canimplement our five-year business plan, close a $20 billion budget gap by the year 2017, and returnthe Postal Service to long-term profitability – but only if we gain flexibility in each of theseareas.”
He added: “If we don’t gain this flexibility, our losses will continue and we risk becoming asignificant burden to the taxpayer; it’s just that simple.”
Donahoe insisted that USPS had examined and undertaken “every reasonable and responsible action”within the current law to match volume loss with cost reductions, reducing its cost base by $15billion since 2006. “No other organisation, public or private, that I am aware of, can claim asimilar cost reduction while continuing to function at a high level. And yet, we have to go muchfurther and much faster – and we are prepared to do so,” he said.
Donahoe insisted that the $8 billion annual decline in the company’s most profitable productcategory, first-class mail, “is not the cause of our financial problems”. He added: “Our financialproblems are due to the restrictive laws that prevent us from fully responding to these changes inconsumer behaviour. Any private sector company could quickly adapt to the market changes we haveexperienced, and remain profitable. However, we do not have all of the flexibility we need to growrevenue, reduce costs and adapt to a changing marketplace.”
He explained that the company’s plan to introduce a new national delivery schedule designedreduce costs by approximately $2 billion annually was only announced after receiving legal advice, “ because the continuing resolution in existence at that time did not prevent us from taking thisfiscally responsible action. That law was set to expire on March 27, and we urged Congress not toact to block our new delivery schedule when it enacted the next continuing resolution to fund thegovernment for the rest the fiscal year.”
But the House passed a Resolution that included language “specifically designed to prevent thePostal Service from changing its delivery schedule. According to this law, we are now required todeliver mail as if it were the year 1983,” the USPS chief pointed out. “The Postal Service is aresponsible, law-abiding arm of the executive branch. Congress passed a law, we reviewed itcarefully, we complied with it and we informed our customers – which is what we did last week,” hesaid.
Observers noted that although Donahoe’s five-day plan was blocked, he views it as a delay,rather than a defeat. Donahoe said customers required certainty – “especially about something asfundamental as our delivery schedule. And so, we announced that we would delay implementation ofour new schedule until we gained legislation giving us the ability to move forward.”
He concluded: “We need Congress to pass comprehensive reform legislation this year, toaffirmatively grant us the authority to operate the Postal Service in a financially responsiblemanner and. Every day we record a loss of $25 million, every day our financial hole gets that muchdeeper. We cannot stay on our current path.”
Fredric Rolando, president of the National Association of Letter Carriers (NALC), also testifiedto the committee, claiming Donahoe “wants to degrade its last-mile delivery network by cuttingSaturday delivery”.
The American Postal Workers Union (APWU), which opposed the cut to five-day mail delivery,yesterday also called for urgent action from Congress to pass meaningful postal reform “thatrestores financial stability to the Postal Service without destroying service or harming postalworkers”. It claimed USPS had been “reneging on its commitment to lawmakers, communities, customersand postal workers” by consolidating more than 70 more mail processing facilities this year thatwere originally scheduled for possible closure in 2014.
The APWU called on the Postal Service to postpone any consolidations until Congress acts, andcalled on lawmakers “to move quickly to prevent the USPS from implementing the devastating cuts inservice the closures would cause”.
