Senate approves "breathing room" for USPS in financial crisis

As America’s postal unions take to the streets outside the offices of various US Congressmen today, the US Postal Service appears close to getting a little “breathing room” in its budget crisis. The US Senate approved a emergency spending bill yesterday by 79 votes to 12 to keep the US government running until mid-November – with the legislation including wording that extends the deadline for a $5.5bn payment by USPS to the federal government until November 18.

The House of Representatives is on recess this week, but is expected to approve the legislation next week.

Extra time

Although only a delay to a potential default by USPS, observers on Capitol Hill suggest the extra time allowed for the USPS payment into its Retiree Healthcare Benefits Fund could be enough to allow Congress and the Obama Administration to agree a compromise over how to tackle the Postal Service’s financial difficulties.

USPS currently faces running into its $15bn government borrowing limit with prospects of recording an annual loss of $10bn at the end of this month, after posting an $8.5bn loss last year.

Yesterday, unaudited figures from the Postal Service were filed with regulators, revealing that for the first 11 months of this fiscal year, USPS losses have amounted to $8.7bn.

Only $2bn of this year’s losses-to-date are seen as “controllable” by USPS management – that is, related to mail operations and the 5.6% decline in mail volumes seen this year, rather than to workers compensation adjustments and the pre-funding payments mandated by Congress.

Several legislative proposals to address the problems are currently floating around Washington, but one of the most advanced proposals in Congress is currently the Issa-Ross bill from the House Republicans, which was marked up last week in the House postal subcommittee ready for a hearing by the full Oversight Committee, which could take place in October.

The Issa-Ross proposals, which do not propose fixing USPS pension and healthcare payment issues, were introduced into the Senate on Friday, but should find it difficult to gain traction with bipartisan support in the Senate for fixing multi-billion dollar pension overpayments and a highly demanding pre-funding schedule for future retiree benefits.

“Postal destruction”

America’s postal unions are united today in calling for Congress to reject the Issa-Ross proposals, which they describe as “postal destruction” legislation since it would require more cutbacks to balance the lack of resolution on USPS pension overpayments estimated by some to be as much as $75bn.

House Democrats, who appear to support the union view, are pushing their own proposals and have some bipartisan support in the Senate, but so far little hope of getting measures through the House.

Discussions continue among House Democrats and those in the Senate regarding their views on USPS troubles, with Democrat Senator and postal reform advocate Tom Carper awaiting the findings from the Government Accountability Office, having asked it to examine in detail the issue of USPS pension overpayments. Hopes are for the GAO audit to be completed mid-October.

The Senate’s Government Affairs Committee, chaired by Joseph Lieberman, has said it is keen on marking up a postal reform bill, and this could also happen in October. The committee met earlier this month, with Senators on both sides expressing support for some kind of reform of USPS pension and healthcare arrangements.

Commenting after yesterday’s continuing resolution was agreed by the Senate, Senator Carper said he was working in the hope that bipartisan agreement can be achieved on postal reform.

He said of last night’s Senate vote: “The continuing resolution approved by the Senate last night includes gives Congress and the Administration some much needed breathing room to continue to work together to come up with a comprehensive set of reforms that will address the Postal Service’s short and long-term financial challenges and ensure that this critical American institution will be able to serve the American people for years to come.”