Obama’s budget proposes $25bn rescue package for USPS

For the second year running, US President Barrack Obama has sent a federal budget to Congress offering a multi-billion dollar assistance package for the US Postal Service. Obama sent his 2013 Budget to Capitol Hill today promising “bold action” to restructure USPS healthcare benefit pre-funding and provide a $11bn rebate from the federal pension surplus to help the struggling USPS.

The Budget would also allow USPS to end Saturday deliveries from 2013 and generate more revenues by gaining more freedom to provide services for State and local governments.

As with previous Presidential proposals that have not made progress in Congress, the 2013 Budget also proposes a “modest” one-time increase in postal rates above the USPS price cap, along the same lines as its 2010 “exigent” rate rise request, which was refused by regulators on the Postal Regulatory Commission.

The White House claimed its proposals, if enacted, would provide USPS with more than $25bn in cash relief over the next two years, but would also generate savings of $25bn over 11 years.

Laying out the proposals, Obama said in his budget: “The Administration recognises the enormous value of the US Postal Service to the Nation’s commerce and communications, as well as the urgent need for reform to ensure its future viability.

“USPS faces long-term structural operating challenges that have been exacerbated by the precipitous drop in mail volume in the last few years due to the economic crisis and the continuing shift toward electronic communication,” added the President’s Budget.

The US Postal Service is currently rapidly closing in on its $15bn government borrowing limit after posting multi-billion dollar losses the last three years, and a $3.3bn loss in the first quarter of its current fiscal year.

Overall, Obama’s 2013 Budget is seeking to reduce the federal deficit by $4 trillion over the next decade by cutting federal spending, with plans to fund it in part by increasing taxation on higher earners while reducing certain corporate tax breaks.

But as with last year’s Budget, which was defeated by his own Democratic party in the Senate leaving the nation’s government running on temporary funding bills, the latest bill is not expected to have an easy run on Congress, with observers suggesting the Budget may have to wait until the “lame duck” period at the end of this year when Congress is out of session.

Senate

Today’s proposals to rescue USPS include a number of the proposals contained within the postal reform legislation currently being considered by the Senate.

The major differences from the 21st Century Postal Act signed off by the Senate’s Homeland Security and Government Affairs are that the Senate committee proposed a two-year moratorium on eliminating Saturday deliveries, and did not call for an exigent postal rate rise.

Senator Tom Carper, one of those behind the Senate bill, insisted today that Congress and the White House were in agreement that key reforms and resources were necessary to allow USPS to “recover and thrive”.

“Just last week, the Postal Service announced that it lost $3.3bn in the first quarter of fiscal year 2012,” said Carper. “The fact that these devastating losses came during a period of the year that is usually the most successful for the Postal Service is truly shocking and underscores the serious nature of the crisis this American institution faces.

“The Postal Service has reiterated that if nothing is done, it could be insolvent in 2012. We can’t let the Postal Service fail on our watch,” added the US Senator from Delaware.

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