Searching for consensus on US postal reform

With the clock ticking loudly regarding the survival of the US Postal Service, a fractured Congress remains a major threat with reforms so desperately needed, writes James Cartledge Efforts toward major postal reform legislation being passed in the United States appeared to be gathering a little more momentum yesterday, as a fresh hearing was held into the financial troubles of the US Postal Service.

But as the chairman of the Senate Committee on Homeland Security and Governmental Affairs called for a compromise bill to be prepared for consideration by the full Senate, Joseph Lieberman warned: “We’ve got a lot of work to do.”

Yesterday’s committee hearing saw the Obama Administration – in the form of the Office of Personnel Management – revealing that the White House is devising a plan to help the struggling USPS, but that plan may be some weeks away.

The White House intends to include postal aid within its national deficit reduction plan, including a 90-day delay on a $5.5bn payment that USPS owes the federal government – something Postmaster General Pat Donahoe later said would make little difference, since he does not plan on making the payment anyway.

The Obama Administration, which was castigated by Senators yesterday for taking so long to act on the plight of USPS, also wants to give the Postal Service access to the $6.9bn it has overpaid into the Federal Retirement System. But it does not want to give up the $50-$75bn estimated to have been overpaid into the Civil Service Retirement System, with the OPM still questioning whether that is an overpayment.

Although he quickly squashed Donahoe’s hopes of getting postal reforms through Congress by the end of September, Lieberman said yesterday that he did not want to wait “a few weeks” for the Obama rescue plan to materialise to get legislation moving.

“I would like to give the Administration a couple of weeks to tell is where they are with this, and then I would like to have a mark up to take to the Senate floor,” said the Independent Senator from Connecticut.


A sense of urgency was beginning to show among the Congressmen, as the packed committee hearing heard that next summer could see the end of USPS deliveries if action is not taken, with the USPS expected to record an above-$8bn loss for the second year in a row at the end of this month.

However, the safe passage of postal reforms through Congress is still anything but certain.

Senator Thomas Carper, something of a leader on postal reforms in the Senate, said he believed there was a growing consensus, and urged his colleagues to focus on those areas of agreement.

Carper said: “My hope is in today’s hearing we may have taken the amount on which we agree from 50% to 70% – what we should now focus on is that 70%.”

At present, the Senate is very much the easier side of Congress in which to gain a bipartisan compromise on postal matters. Disagreement among Senators over how to fix the Postal Service are much less partisan than in the House of Representatives.

There are still some clear areas of disagreement in the Senate – notably the extent to which the Postal Service should be able to close post offices and break union contracts to lay off workers, and also whether Saturday deliveries should be abandoned.

Yesterday’s hearing saw a fairly broad consensus among Senators that USPS needs more freedom to operate as a “business”, with more flexibility to develop new products. There is also agreement that pension and healthcare arrangements, which Congress itself has responsibility for putting in place, need to be corrected. USPS proposals for how to do that still need analysis, Senators said yesterday, though the Postal Service was praised for attempting to find options.

Support is firm in the Senate for any actual overpayments to be handed back to the USPS, but the Committee Chairman pointed out that even with Senate approval, getting the rest of Congress on board will be very difficult.

“This is not going to be a slam dunk in this Congress,” Lieberman said, adding that a Plan B may well be needed. He also pointed out that even if the short-term finance problems were solved, that would not clear up the long-term problems at USPS the way the market is changing. “We’ve got these enormous changes going on around us,” he said.

Reducing service levels

While the House of Representatives argues over whether financial assistance for USPS is a “rebate” or a “bailout”, reducing postal services appears to be a major sticking point for the Senate.

There were strong feelings expressed yesterday over the Postal Service’s hopes to reduce its service levels for overnight delivery in order to cut costs, and to move from six day per week deliveries to five.

Senator McCaskill of Missouri warned of a “death spiral” if USPS reduces the quality and extent of its services.

Senator Susan Collins of Maine, the Republican force behind postal reforms in the Senate, opposes five-day delivery, and yesterday spoke out against post office closures and the impact that both could have on the local newspaper industry. Earlier, Tonda Rush of the National Newspaper Association had warned that USPS proposals as they stand would be “devastating” to the industry.

But, Collins also recognises the need to right-size the USPS network.

“There are undoubtedly some post offices in Maine and elsewhere that can be consolidated, and relocated in with retail stores, but these is not an option for many rural areas,” she said. “But, the worst thing for the Postal Service is not to be able to pay its payroll, and that is a very real possibility if we do not act now.”

On the other side, Carper is more supportive of five-day delivery, particularly as he sees few other options for making serious reductions in the Postal Service’s $73bn in annual operating costs.

“I’m not sure there is a way to solve this through negotiations between the Postal Service and organised labour, to find a way to continue with six-day-a-week delivery, but to do so at the same time as saving real money – between $2bn and $3bn,” he said yesterday.

Although Carper warned yesterday that one of the major problems for USPS at the moment is the uncertainty that customers have that the Postal Service will even exist beyond next summer, he was optimistic that Congress can move beyond its differences this fall.

He said: “The situation is dire – but not hopeless, I think we can find a way to do this.”

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