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US Senate leader says Postmaster General has “damaged reputation”

Friday, February 8th, 2013

Senate Majority leader Harry Reid yesterday cast doubt on the legality of the US Postal Service plan to abandon Saturday deliveries later this year without the prior approval of Congress.

And, he said Postmaster General Patrick Donahoe had “damaged his reputation” in Washington with this week’s surprise announcement that USPS will go ahead with a move to five-day-a-week mail delivery from 5th August with or without Congressional approval.

The Senator from Nevada described this week’s announcement by USPS as “short sighted”, adding that it will “deal a crippling blow” to Americans and particularly small businesses.

Reid said postal reform was one of his top priorities for this session of Congress, but said in his view, “cutting down mail delivery to five days per week will not save the Postal Service from insolvency”.

Legal?

USPS has not been entirely clear on how it intends to get around the Congressional mandate to provide mail delivery six days per week.

On Wednesday, Donahoe told reporters that the most recent government funding bill, which runs until the end of March 2013, granted the power. If there was “disagreement” as to the wording of that bill, the Postmaster General said Congress could clear up the confusion in passing the next continuing resolution to keep the federal government running beyond 27th March.

The USPS Inspector General has suggested in the past that if the Postal Services refuses to accept the $100m-a-year that the federal government pays it to cover overseas voting mail and reduced rates for the blind, it may also escape the six-day-a-week delivery mandate.

However, the Senate Majority Leader disagreed with Donahoe’s interpretation of the law. Reid said yesterday: “Such a drastic policy change cannot be enacted without approval from Congress.

“The Postmaster General relied on flawed legal guidance to claim that he can circumvent Congress’ authority on the matter. The Postmaster General’s actions have damaged his reputation with Congressional leaders and further complicates Congressional efforts to pass comprehensive postal reform legislation in the future.”

USPS said on Wednesday that it hopes to save $2bn a year by eliminating Saturday deliveries for mail. Package delivery services will remain in place on Saturdays, as will deliveries to PO Boxes.

This week’s announcement was part of an accelerated cost-cutting plan that directly resulted from last year’s failure by Congress to pass postal reform legislation at a time when USPS recorded a $16bn annual loss, taking it up to its government credit limit of $15bn.

The Postal Service has expressed confidence that it will not shut down because of its massive losses, and will continue to refuse to make multi-billion dollar payments to the federal government to cover its Congressionally-mandated obligation to pre-fund future retiree health benefits. But with mail volumes continuing to decline, and operational losses mounting even beyond the defaulted federal payments, USPS needs to find more ways to cut costs or generate revenue.

Little appears to have changed in Congress with respect to abandoning Saturday delivery, with the Democrats controlling the Senate appearing to oppose the move along with some Republicans in the upper chamber, while Republicans controlling the House of Representatives support the cost-cutting measure.

A Senate hearing will look at the USPS “crisis” on Wednesday (13th February).

The US postal regulator, the Postal Regulatory Commission, said on Wednesday that it was “unable to evaluate” whether the USPS plan to abandon Saturday deliveries would need an Advisory Opinion following the 2011 assessment of a similar plan. It said that details of the new USPS plan would not be made available until March.

Customers

The views of a number of major USPS customers has been cautious support – mourning the loss of service, but understanding the need for it, backing the least painful way that the Postal Service can return to financial sustainability in the modern postal era.

The Alliance of Nonprofit Mailers said the USPS five-day plans were “unexpected but unsurprising”, and said that with the Postal Service losing $25m a day, it had to find ways to cut costs.

“Nonprofit mailers, who depend on affordable and reliable mail delivery, wish that Saturday delivery were continued,” said the Alliance. “But we have to deal with the world as it is, not as we wish it were, and the reality is that letter mail volume is declining in virtually every advanced economy in the world. Nonprofit mailers will adapt to the proposed change.”

The Association of Magazine Media, whose members will find it harder to get weekend editions to their readers with the loss of USPS Saturday delivery, said “substantial” operational changes would be needed at publishers to cope with the move.

But, the Association’s president, Mary Berner, said her group had said it would be willing to make the changes “if the shift to five day delivery and resultant cost savings for the Postal Service were part of a comprehensive package of long-term reforms”.

Berner said: “The Postal Service appears to have taken this consideration to heart, proposing the changes go into effect six months from now.”

However, the National Newspaper Association took a harder line against the USPS proposals, stating that the move to five-day “forgets the importance of money in the mail for small businesses”, as well as the “thousands” of communities depending on local newspaper delivery on Saturdays.

NNA president Merle Baranczyk, said: “It is regrettable the inaction of Congress to deal with the unfair requirements it imposed upon the Postal Service in 2006 has led USPS to make such a discriminatory choice.

“NNA disagrees with both the policy decision and the legal reasoning behind it. We hope to still work with the Postal Service on a plan to ensure timely delivery of newspapers.”

Unions

The postal unions, who have long opposed cutting Saturday delivery on the grounds of the jobs it would cost and the reduction of service they believe would push more customers away, this week condemned the USPS announcement.

They believe much of the Postal Service’s financial problems can be tackled with reforms to pension and healthcare funding arrangements, and the return of a multi-billion dollar pension surplus.

Cliff Guffey, president of the American Postal Workers Union, said this week: “USPS executives cannot save the Postal Service by tearing it apart. These across-the-board cutbacks will weaken the nation’s mail system and put it on a path to privatization.

The National Rural Letter Carriers Association held a vote of no confidence in Donahoe on Wednesday, with its board voting unanimously to demand the immediate removal of the 73rd Postmaster General.

The union representing 104,718 full and part-time rural letter carriers said it was considering what kind of legal and political options it has to challenge the USPS announcement,

“To act unilaterally and without reasoned legal justification puts the entire Postal Service at risk and is ample reason for the Postmaster General’s immediate removal,” said NRLCA president Jeanette P Dwyer after the confidence vote. “Congress still makes the law of the land. All citizens, companies, and even the government, including the United States Postal Service, must obey the law. The Postmaster General simply cannot decide to ignore laws when he thinks it’s convenient for the Postal Service to do so.”

Source: Post&Parcel

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