Only "serious" cutbacks can save US Postal Service, says Issa

Only “serious” cost-cutting structural reforms can save the US Postal Service, said the Chairman of the US House of Representatives Oversight Committee, Darrell Issa, on Friday. Issa, the Republican from California who is staunchly opposed to any kind of taxpayer assistance for the strugging USPS, said the Postal Service had to cut its workforce costs and rightsize its infrastructure to cope with the “permanent decline” in mail volumes stemming from increasing competition from electronic communications.

The Congressman was responding to the latest financial results from USPS, revealed last week, showing continued multi-billion dollar losses from the USPS, which is getting dangerously close to its $15bn debt ceiling.

While USPS wants Congress to help provide some “breathing room” for major structural changes with some short-term assistance on multi-billion dollar pension and benefit payments, Issa continued his line that doing so would be a “bailout” he cannot support.

He said: “The Postal Service’s announcement of yet another multi-billion dollar loss underscores the need to enact meaningful reforms in order to avoid a taxpayer-funded bailout. These deficits clearly cannot be closed by bailing out the Postal Service with taxpayer money or allowing the postal service to amass obligations to employees, retirees, and taxpayers that are unlikely to be fully met in the future.”

Issa, who last year described the ultra-conservative “Tea Party” lobby as “not angry enough” about government spending, remains a powerful figure within the Republican-controlled House of Representatives, and along with his subcommittee colleague Dennis Ross of Florida stands in the way of the pension and benefits reforms USPS believes should be made.

“The Postal Service must adapt its outdated brick-and-mortar model to meet current customer needs,” Issa said on Friday. “Only serious cost-cutting structural reforms that reduce workforce costs and rightsize infrastructure can save the Postal Service and prevent a multi-billion taxpayer funded bailout.”

The Postal Service has been acting to cut its costs this year, and is in the process of cutting 7,500 mid-level positions from its 570,000-strong workforce and is reviewing 3,700 post offices for closure. Combined, the actions would slim operating costs by a billion dollars per year according to USPS executives.

And, speaking to reporters on Friday, USPS chief financial officer Joe Corbett said the next stage of cost-cutting at the Postal Service would be reducing its processing infrastructure to match reduced mail volumes – something that would effect “multi-billion-dollar” cost reductions, he said.

Nevertheless, USPS needs time to make its changes before the cost reductions start to bear fruit.

Following last week’s hard-won Congressional deal between the Republicans and Democrats on the US debt ceiling, the USPS must still progress through a similar partisan divide to avoid running out of cash this October.

Carper-Collins

In the Senate there is already some bipartisan agreement, with both the Democrat Senator Tom Carper and Republican Senator Susan Collins proposing legislation to fix massive USPS overpayments into federal pension funds even while House Republicans deny overpayments have been made.

Senator Carper is aiming to introduce a bipartisan bill to save the US Postal Service when Congress returns from its August recess, with hopes of a hearing for the bill in September.

He said on Friday: “The U.S. Postal Service is sinking quickly, and if we do nothing, we face a future without the valuable services the Postal Service provides. We have the opportunity to keep it afloat, but we must act now. I urge Congress and the Administration to join me in pushing for this much-needed reform so we can prevent the Postal Service from going broke by the end of the year.”

A Carper-Collins compromise bill would likely include proposals for returning billions in pension overpayments to USPS, potentially to help with its $5.5bn annual retiree health benefits fund obligation.

However, the other major legislative priority for USPS to cut its operating costs – allowing it to abandon Saturday deliveries – was not included within Senator Collins’ proposal this year, despite being supported by Carper.

Speaking in Congress just before the start of this month’s recess, at his re-appointment hearing, Postal Regulatory Commission vice chairman Mark Acton said the Postal Service did need major structural reforms, but also needed some breathing space in order to make those reforms.

Commenting at his reappointment hearing in front of Senator Carper, Acton said of the need for Congress to help with the USPS pension and benefits situation: “Even though I don’t regard that as a long-term repair for what needs to be done, it can give us all time to think about what needs to be done going forward.”