House Republicans hint that deal is possible over USPS "bailout"

House Republicans gave the first hints of a possible bargain with Democrats today, over short-term financial fixes for the US Postal Service to help them out of their financial crisis. The sentiments from House Oversight Chairman Darrell Issa came as he took part in a meeting to mark up his Issa-Ross bill, the Postal Reform Act, to begin the process of forming legislation that has bipartisan support.

With the Democrats angrily denouncing Republican attempts to label a return of USPS pension overpayments as a government “bailout”, Issa hinted for the first time that such an option could be part of a “transition cost” in getting USPS back on its feet.

“I believe that many of the things which I have called a ‘bailout’ or a ‘denial of the problem’ may ultimately be a part of how we create the headroom for the transition,” he said. “Because no company goes from a $10bn loss on $67bn revenue to break even without huge transitional cost.”

The hearing of the postal subcommittee of the Oversight Committee was marking up the Issa-Ross bill prior to consideration by the full Committee.

The Issa-Ross proposal would set the terms for the US Postal Service to be run by a control board if it fails to pay its federal healthcare or pensions obligations. A control board would then have the power to force USPS cutbacks, including a reduction in the work force.

Other measures in the Postal Reform Act would help to cut costs by allowing elimination of Saturday deliveries, but the bill would not allow fixes to USPS pension and healthcare overpayments and prefunding obligations.

Divide

The Issa-Ross bill in its current form merely widens the divide between House Republicans and Democrats.

The House Republicans want major cutbacks to be undertaken swiftly, with no reduction in Postal Service payments to the federal government pension and benefits systems, and a system of effective receivership to force USPS cuts if it defaults on its government payments.

The House Democrats want only a moderate, “compassionate” reduction of the workforce, believing that short-term fixes to multi-billion dollar federal pension and benefit overpayments and pre-funding requirements can offer enough time for USPS to respond to declining mail volumes.

Both parties appear to want more freedom for USPS to sell new products and services, while the issue of cutting costs by eliminating Saturday deliveries does not necessarily fall along a partisan divide.

Today, discussing a recent amendment from subcommittee chairman Dennis Ross – adding cost-cutting measures such as a move to scrap doorstep delivery – the Oversight Committee’s Ranking Member Elijah Cummings said: “This legislation has got to be bicameral, but this bill has been made even more extreme and even more objectionable to stakeholders than when it was first introduced.”

Cummings, who attacked the Republicans constant use of the word “bailout” in dismissing Democrat proposals to help USPS, said all the Issa-Ross bill would actually achieve would be setting an “artificial trip wire” for a new control board to take over the Postal Service and terminate workers without a severance.

He dismissed the legisation as not having a chance of being passed by Congress and signed into law since there was no bipartisan support.

Cummings, along with Congressman Stephen Lynch of Massachusetts, has introduced yet another piece of legislation as an attempt to drive the process forward – HR 2967.

It would authorise USPS to go into new lines of business like cheque cashing and new retail services, appointing a chief innovation officer to drive the new business. It would also set “common sense” measures to right-size the Postal Service and allow it to function like a business, Cummings said.

Issa

In reply to the accusations he was ignoring Democrat proposals, Issa insisted today that he did want to push for bipartisan support, and that his main priority was to get the Postal Service back to profitability.

The Congressman from California did attempt to reconcile with Democrat concerns about job losses, but said workforce costs had to be cut, and the options on the table were to “reduce the pay and benefits of those hard-working men and women”, or “right-size the number of people and fully compensate those who are no longer needed”.

Issa said the 100,000-200,000 workers eligible to retire over the next two years should do so.

“The last thing I want to do is to tell permanent postal workers that we are going to abruptly have them leave the service before they received the full pension that they anticipated and without any compensation,” he said.

The Oversight Committee chairman said there would be some difficulty with issues like the move to five-day delivery, since “there are Republicans and Democrats that do not want to go from six days to five days”, while others including the President and Postmaster General did want to cut Saturday deliveries.

Regarding the multi-billion dollar overpayments and prefunding requirements for the Postal Service, Issa complained that proponents were “not willing to risk not having a federal backstop” for the Postal Service pension and healthcare system.

If Issa is to support a restructuring of pension and healthcare systems, he said: “Any support I would have for temporarily abating that has to be based on an anticipation that eventually (the Postal Service) could fully meet that obligation.”

Congressman Issa also warned that any move to raise postal rates, as has been suggested in President Obama’s USPS rescue plan, would be a “fool’s errand”.

“Ultimately you can only go so far before you force more and more people out of using the post office,” he said.

Following Issa’s comments, Cummings said he appreciated the pledge from the Oversight Committee chairman to work more closely with the Democrats.

However, judging by later debate during today’s meeting, and refusal by Republicans to take on board any Democrat amendments, there remains a lot of persuading to do before a bipartisan bill can finally emerge.

Democrat Congressman Gerry Connolly, who has introduced his own postal reforms this year, said of the Issa-Ross Bill this afternoon: “Chairman Issa’s bill applies a combination of flagellation and bloodletting to a patient who everyone acknowledges is sick. Instead of bleeding USPS dry, we should give it the authority and flexibility to thrive in the 21st century.”