Difficult reception for Obama's US Postal Service rescue plan

President Obama’s plan to help out the US Postal Service has been relatively warmly received by the mailing industry and postal unions, but received a frosty reception in Congress. Almost every group of stakeholders within the postal debate have opposed one or more of the measures proposed within the details of the $3 trillion national deficit reduction package from the White House.

The Postal Service itself was relatively quiet on yesterday’s proposals, with Postmaster General Patrick Donahoe appearing grateful for the assistance, which he described as potentially “helpful” in stabilising the finances at USPS as it heads towards the end of its $15bn government line of credit this fall.

US mailers have been pleased the President is – finally – getting involved in the debate over the future of USPS, which directly or indirectly supports eight million American jobs.

The industry fervently supports the Obama Administration’s offer to restructure USPS pre-funding requirements for its retiree health fund and the opening up of its $6.9bn federal pension fund surplus, seeing the pension and benefits mess as effectively causing unnecessarily high postal rates.

However, the sting in the tail for mailers in the Obama plan has been its offer of a one-off hike in postal rates to help out USPS – particularly as the proposal comes just a few weeks after Postmaster General Donahoe stated that he would not raise prices above inflation.

Art Sackler, the coordinator of the mail industry lobby group Coalition for a 21st Century Postal Service, said: “Raising postage rates would only hasten it; as postal customers would seek other, less expensive avenues to communicate. When a business is already losing customers, the last thing it should do is increase its prices.”

Unions

Postal unions also support select cuts of the Obama plan, particularly its two-year suspension of $5.5bn annual healthcare prefunding obligations and the return of pension overpayments, although they do not believe it goes quite far enough in reforming the system.

Along with its short-term assistance, a major contentious provision in the President’s proposal for the unions is allowing the Postal Service to move from a six-day weekly delivery schedule to a five-day week.

Representing 200,000 USPS mail carriers, many of whom would be among the first to lose their jobs with elimination of Saturday deliveries, the National Association of Letter Carriers vowed to oppose the five-day inclusion within the Obama plan.

“We will work with everyone involved, including members of the joint congressional committee, to build a strong Postal Service that will continue to provide exceptional service to the public six days a week,” said NALC president Frederic Rolando in a statement.

Congress

NALC pointed out that the Obama plan cannot become law unless Congress adopts the recommendations, and according to the early responses from members of Congress, it is clear there is no easy route for the plan through Capitol Hill.

Among the Senate’s postal reform advocates, Senator Tom Carper described the Obama plan as a “meaningful response” to the “very real and dire crisis” at the Postal Service – noting that some of the plan mirrored suggestions he made to the President earlier this month.

Senator Susan Collins, the key Republican in the bid for bipartisan support for postal reforms in the Senate, was more critical, stating her belief that Obama’s proposals to restructure health and pension costs would not prevent a USPS insolvency.

She also said that the Obama plan did “little” to reduce workforce costs, and that returning pension overpayments over two years, rather than immediately, “constitutes a demand from the President that postal customers give the federal bureaucracy a no-interest loan over the next two years”.

While appearing to call for more to address workforce costs, Collins opposed the Obama proposal to allow the move to five-day delivery. “Cuts in delivery and service standards are not the way to keep customers and gain new revenue,” she said.

“Cutting service and raising prices will only make matters worse and accelerate the Postal Service’s death spiral.”

Separate to the postal reform legislation being discussed, elsewhere in the Senate, an appropriations bill is moving forward that would protect six-day delivery – and requires change if the move to five-day is to be implemented.

House

Over in the House, the Obama plan drew expected cat calls from the majority Republicans, who continue to push their line that any financial assistance for the Postal Service is tantamount to a “bail out”.

Darrell Issa, the Oversight Committee chairman who is set to prepare his postal reform bill for the House floor tomorrow, said the numbers “do not add up” in the White House proposal.

He suggested the only proposal within the Obama plan that offered “clear savings” was the move to five-day delivery – which is included in his Issa-Ross bill.

The rest of the Obama plan Issa described as “fuzzy accounting”.

“The President’s plan to achieve savings for the Postal Service does so by sticking taxpayers with the tab,” said the Congressman from California.

“Rather than backing an effort to seek fundamental reform, the accounting gimmicks used in the plan are a thinly veiled attempt to offset continued operating losses with a taxpayer funded bailout.”

The minority Democrats in the House promised today to unveil more legislative proposals “to return the postal service to profitability”.

Oversight Committee ranking member Elijah Cummings and postal subcommittee ranking member Stephen Lynch said they will introduce the bill tomorrow as the Committee discusses the Issa-Ross bill.

The Innovate to Deliver Act of 2011, as their bill is called, will target profitability, personnel and performance, the Democrats said.

“The bill includes provisions to allow the Postal Service to function more like a business and reduce the restrictions that have hindered its ability to respond effectively to a changing market,” the Democrats said in a statement.