House Republicans stick to partisan line over USPS crisis

US lawmakers debated a rescue package for the US Postal Service yesterday in the House of Representatives, but once again controlling Republicans maintained a strong partisan line. Aside from a few minor inclusions, all significant proposals from the Democrats were defeated as the House Oversight committee prepared the Postal Reform Act – otherwise known as the Issa-Ross bill – for a hearing in front of the full House.

Democrats have made it clear the situation means the bill effectively stands very little chance of passing through the US Senate, in which they currently have the majority.

The Senate’s government affairs committee is expected to meet next week to mark up its own postal reform bill.

Control

Firmly in charge of the House bill, Oversight Committee chairman Darrell Issa wants to see a Restructuring Authority set up to take control of USPS in the event that the Postal Service slips into financial default.

The Authority would be able to alter union agreements in order to push through emergency restructuring, although yesterday the Committee did approve largely symbolic clauses insisting it did not want to interfere in collective bargaining.

Issa also wants to see a separate panel overseeing closure of $1bn worth of post offices through his bill. However, yesterday’s Committee hearing did add some provisions to limit closures of branches in rural areas to no more than 10% of post offices.

Financial assistance for the struggling USPS would come in the form of a $10bn extension to its debt limit, while if any surpluses are found to exist in pension funds – most likely the $6.9bn in the Federal Employee Retirement System – the money would be used as severance payments to cut the size of the work force.

Yesterday did see a little movement on the issue of the Postal Service’s current $5.5bn annual obligation to pre-fund the next 75 years’ worth of its retiree healthcare benefits within a 10-year period.

The Oversight Committee amended the arrangements so that USPS would pay only $1bn this year, then make up the extra $4.5bn in fiscal years 2015 and 2016.

Issa argued that in the private sector, banks sometimes allowed customers who could not repay loans more time to pay.

Democrats suggested that the Republicans were still more keen to see USPS fail, so that their preferred Restructuring Authority could take over management of the Postal Service. They said refusal by the Republicans to compromise would mean the bill will die in the Senate.

Postal rates

Elsewhere, yesterday’s hearing saw the Committee backing measures to ban special rates for certain mail customers. However, a door was left open for non-profits and charities to continue receiving special rates, subject to a review of the costs.

And, the Committee continued to mix its messages with an amendment to prevent a major rise in postal rates for loss-making periodicals services until the Postal Service has been shown to have improved the efficiency of its services.

The issue of whether USPS should be allowed to eliminate Saturday deliveries – which has not taken on a partisan split among Congressmen – saw a compromise idea creeping in.

Jason Chaffitz, the Republican Congressman for Utah succeeded in his amendment that would mean USPS being allowed to eliminate 12 delivery days each year, without “requiring” it to eliminate all Saturday deliveries.

Yet the rest of the bill nevertheless allows USPS to cut Saturday deliveries within six months of its enactment, an option it is likely to take up if allowed.

“Unconstitutional”

Following the hearing, Issa insisted that if his bill was not passed quickly by Congress, there would be an “automatic” taxpayer bailout of the Postal Service.

He said: “The United States Postal Service cannot become a taxpayer-subsidized make-work programme. To save the Postal Service, we must enact meaningful and immediate reform so we can maintain service to the American people and return it to financial solvency.”

Senator Tom Carper, who is a leading figure for postal reform in the Democrat-led US Senate, said following yesterday’s hearing that the partisan nature of the bill meant it “can’t pass the Senate”.

He criticised the Issa-Ross legislation for starting out with the assumption that “the Postal Service will undergo a complete financial collapse” before attempts are made to rectify the situation.

“Not only does this approach pass the buck in an unacceptable manner, it likely would be found unconstitutional,” he warned. “Letting the Postal Service go belly up would jeopardise our fragile economic recovery, the jobs of over 7m employees in the mailing industry, and the bottom lines of businesses large and small that depend on a healthy Postal Service.”

Super committee

House Democrats, meanwhile, appear to be seeking to push postal reforms through another route, via the Congressional “super committee” that is working with President Obama to deliver a $3 trillion national deficit reduction plan, which also could incorporate the Presidential plan to help USPS.

Yesterday the Oversight Committee Ranking Member Elijah Cummings issued recommendations to the super committee that included provisions to restructure the USPS healthcare benefits obligation with a longer-term payment plan.

The recommendations also sought to to unify USPS accounts so that the Postal Service doesn’t have some that are counted as part of the federal budget, while others are not.

Currently, while USPS operating budgets are not technically part of the federal budget, its pension funds are. Therefore, transferring funds from a surplus in USPS pensions is currently seen as taking money out of the federal budget – something the Republicans have labelled a “taxpayer bailout”, despite those surplus funds having originating from postal rate payers.