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  • The Postal Crisis Easily Explained: How to Avoid a Taxpayer Bailout

    The House Oversight and Government Reform Committee meets Thursday to consider the most substantive postal reform plan under consideration in Congress.

    The debate in Washington triggered a spending spree from postal unions opposed to the reforms, including a national TV ad campaign launched last month. Now the Oversight Committee is striking back with its own video that explains the crisis and why the Postal Service needs to be fixed before taxpayers are left paying the bill.

    Mail volume has dropped by 46 billion pieces since its peak in 2006. As a result, the Postal Service lost $4.5 billion in fiscal 2011. But even with the decline in mail volume, retired postal workers still collect a pension. But who will pay?

    Opponents of reform would prefer Congress use an accounting gimmick, according to the Oversight Committee. Chairman Darrell Issa (R-CA) has another solution. He’s teamed with Sen. John McCain (R-AZ) and Rep. Dennis Ross (R-FL) to introduce the Postal Reform Act. The plan allows the Postal Service to operate like a private-sector business, cutting expenses while making structural reforms to avoid a multi-billion taxpayer-funded bailout. Issa spoke to Heritage about it last week.

    Heritage’s James Gattuso called the plan the most comprehensive postal reform bill in Congress. Without action from Congress, Gattuso warned that the prospects are grim:

    Congress should act quickly to address this not-so-slow-motion postal train wreck. The goal, however, should not be to “save” USPS or even to save mail delivery. Policymakers should not play King Canute, ordering back the advancing tides of technology to preserve an obsolete industry. Nor should taxpayers be asked to pay for such an effort. Instead, the aim of policymakers should be to remove barriers that are hindering efforts by USPS to adjust to the new digital world. This should include making it easier for USPS to close post offices, reduce its workforce, and trim services.

    UPDATE: Corrects fiscal 2011 financial figures for the Postal Service. The loss was $4.5 billion, not $10 billion, since the $5.5 billion payment to the government was postponed.

    Posted in Featured, Scribe [slideshow_deploy]

    18 Responses to The Postal Crisis Easily Explained: How to Avoid a Taxpayer Bailout

    1. Jeff, Illinois says:

      Wow . . what a distortion of the truth . . !!!!!!!!!!!!!! It's not about a bail out at all . . !!!!! Rather the GOP in 2006 tagged the postal service with a ridiculous requirement to have it pre-fund it's retirement benefits plan 75 years in advance within a 10 year period. Without that unintelligable requirement the postal service would be make a regular tidy profit. This is all about the GOP trying to demonize the postal service in the minds of the public so that they can FINALLY bring down the postal service institution and give the business to private enterprise . . !!!!! Wow, this kind of reporting should be criminal . . I'll be surprised if this comment gets posted !!

      • Sandy O says:

        The truth is, the postal service has always lost money since the day it was founded.

      • Elise says:

        Where are your sources that show this prepayment requirement and that the GOP has been trying to bring down the USPS? Also, what makes you think the postal service would be making a "tidy profit" without this alleged prepayment when mail volume has dropped sharply? Sources, please!

      • TimAz says:

        If in fact they are required to pay retirement benefits plan 75 years in advance within a 10 year period. This would indicate that the union leaders were able to secure a retirements benefits package that could never have matched the profit potential of USPS. So both the head of the USPS and the union leaders entered into a contract that both parties knew would bankrupt the USPS. As always the union employees and retirees are left holding an empty bag. It is the union leaders that continue to make the tidy profits as they ride the USPS and their employees all the way to the scene of the crime. The American citizenry refuses to remain in the roll of being blackmailed by public sector union leaders who are the only ones who walk away with their heads held high fat and happy with the destruction of everyone the used along the way. Had enough yet?

      • eagle275 says:

        Hey feff – what govt service besides the military makes a budget work?

      • Miguel says:

        Well Jeff, what you need to do is go back to 2006 and find out who supported the bill and in particular the funding of union workers retirement and health. Yes if you are right it must have been those "demonizing" republicans. But that is not true. We know who fights for the little guy, the working man, the middle class… and it was the Dems seeing a quick way to support the unions that pushed that part through in a totally bipartisan bill which had no "up or Down " vote.Thus it ws unanimous, Dems can take credit here too
        More left wing democratic demogogery

    2. LVK says:

      USPS really does need to reform, but it needs to be granted the ability to do so by Congress.

      Let's do a little "pro" and "con" here.
      Being way simplistic in this narrative.

      First, some "pros." At present, there is no more comprehensive delivery system in the U.S., one that is obligated to deliver to virtually any/all addresses nationwide (there are exceptions, of course, but those are relatively limited). No other delivery carrier has such a wide-scoped obligation; they can, and do, more or less "cherry pick" their deliveries and delivery days.

      USPS still provides pretty good service at a reasonable cost (but cost does not equal expense).
      As a moderate user (5,000 pieces 1st class mailed weekly), items I mail typically arrive in 1-3 days even LA-to-NY. Not bad for $0.44 per piece. Try to get that service, for that price, anywhere else. Not in Europe, surely. England as example. 600 mi. farthest point distance; 1 day delivery for 3-4 times the price as USPS. And don't even begin to think about Euro rates for parcels.

      With all this said, and oversimplifying to the max, USPS could do the following as initial cost-savings efforts:
      a) Go to 5-day home mail delivery, eliminating a significant no. of staff, many being paid at higher wage (T-6 level) due to the USPS concept of "rotating days off" among its regular mail carrier force (e.g., off Mon. in wk 1, Tues. in wk 2…Sat. in wk 6 & then Mon. in next wk 1 which gives mail carrier a conseq. Sat-Sun-Mon string off)
      b) Raise 1st class rates to $0.50 (+14% over current $0.44 stamp). Still a bargin vs. competitors and definitely vs. Europe.

      There are many, many, many other suggestions. These are just a few pieces of "low hanging fruit" "off the top."

    3. Lee Burns says:

      As history has proven over and over, change necessitates change. The telegraph ousted the pony express.
      Were it not for the telegraph perhaps we'd now be a- – deep in horses. Where would we put all the hay?
      You might notice the telegraph is now gone too. Time to get on the change wagon folks.
      Who need Saturday mail or even Wednesday mail?

    4. Kevin says:

      You nailed it Jeff. I've been reading a lot of different articles on this to see if it's being reported responsibly. It's not. A New York Times writer had the audacity to write
      "The postal unions avert their eyes. They say that the service ran into trouble solely because Congress has required huge payments for future retirees’ health care costs. Silly me: I thought funding benefits fully was a good thing."
      What an irresponsible way to spin the story.

    5. Linda Pierucki says:

      Yes, this IS a distortion of the truth-and I wont even refer to the bail-out issue: the problem is that Donahue's "plan" removes vital and often-used service from the most vulnerable of citizens-the rural, often low-income elderly, in favor of business bulk/direct mail. All figures and dollar amounts used to show postal losses are skewed by sending address only. As there are few bulk mailers in rural areas, and because city dwellers are using first-class mail far less than rural residents without email access, the current 'plan' removes service from rural residents who DO use the mail services in favor of the already over-served metropolitan areas. Because a large number of those items mailed TO these rural areas are not being counted in their favor, skewed figures show usage down and count against them. This is an effort-and not only by certain members of Congress, but by USPS authorities to throw the most profitable parts of the mail service to private corporations and remove universal service for all Americans, particularly rural residents. It's the perfect example of 'crony corporate capitalism'-and there are people on both sides of the issue who are guilty here.

    6. Terry says:

      Hey Jeff. The reality is that the postal unions have almost priced themselves out of jobs. I am one of the "private enterprise" you speak of. I have had former retired postal workers work for me (they were bored with retirement) and I was astonished at the lavish benefits they received – i.e. prescription (and not those cheap generics most insurance companies require the public to get) cost the retiree only $5.00. Office visit with the doctor – No Charge; full dental; eyecare. the works all at no cost to the retiree – fee coverage. I've worked with postal people for over 25 years. I've seen mail trays that needed to be moved not moved because the person standing there said it wasn't his job to move them and the union wouldn't allow it. So I, your customer, had to wait for the union person who's job it was to move them returned from lunch. Every single move within the Postal Service is dictated by "union rules". It's insane. The USPS has lost it's core mission which was to provide a service to the public. It's is staffed by unionworkers that are more concerned with getting out of work than efficiency. Efficiency equates to job security. The USPS is doomed to go the way of the auto industry unless drastic changes are made. That lack of efficiency is what had sealed the fate of it's workers. The wages required by the unions are two to three times the amount that is paid in the private sector for the same jobs in the "private enterprises". I agee that congress should not require the funding for retirement that you speak of, a burden that it was promised they would never have to shoulder under the old civil service rules, but when the rules change the private sector changes with them. We cut staff, broaden the duties of our workers, cut expenses, increase efficiency because we don't have the federal government to fall back on. Don't expect sympathy when the USPS has run itself into the ditch. Years ago it decided it didn't want to handle packages any longer – UPS was born and makes a huge profit doing what the USPS decided it no longer wanted to do. That should have been a tip off that the private sector is far more effective and efficiency should be increased at the USPS. All these years later, and they still don't get it.

      • Steven says:

        I have the highest craft wage in the Postal Service. I am an Electronic Technician who has worked for the service for 25 years. I make $62k. I am in no way complaining of this wage as I truly am grateful for it…but you think that is three times higher than the private sector?? Private sector skilled ET's make only $20k after 25 years with a company?? I have a Brother In Law who works as a driver for UPS. There pay can reach $120k for drivers depending on the amount of work they do. There is no driver for the USPS that even comes close to that. I would put their max pay (top step) at around $55k. Benefits? My wife worked for Discover Card and had better benefits than I. She had long term and short term disability benefits. She was out of work once for 6 weeks (for having lost one of our children at 7 months) I have sick leave and when I run out I am not getting paid. There is no safety net for me if I get sick with something like cancer etc. unless I have enough sick leave accumulated to cover for that time off. An HMO plan is about $150 every two weeks while Blue Cross/Blue Shield is probably around $120. We have a 401k plan which allows us to pay up to 10% of our check toward a retirement fund. Vacation is 2 1/2 weeks a year up to 5 years of service. Then goes to 4 weeks a year up to 15 years. Then 5 weeks from 15 years to retirement. So the question is…do you really think that the salaries and benefits are really just outrageous? As far as retirement and not having to pay for dental etc…I'm not sure which "retirees" you are stating are making these claims. There is not one health plan that is universal for retirees nor is it cheap. It's more expensive to have a health plan than when you are currently working for the P.O. because the service doesn't contribute near as much toward the health insurance premium as when you are working for the service. I will admit that there are Civil Service Retirees in the system. But that retirement was changed to FERS in 1984 I believe it was. Anyone working for the service after 1984 is on FERS. It is not this sweet deal retirement that you are claiming employees of yours have made to you.

    7. Carl Hulsewede says:

      I am a Letter Carrier for the US Post Office. I make less than the UPS Package Car Driver. We compare our wage charts and Union Contracts about every six months. Rep. Issa's Reform Plan would eliminate 220,000 Middle Class jobs. That is just from the US Postal Service. I do not think anybody has calculated how many supporting Mailing Industry jobs would be lost. Can the US Economy withstand this large amount of job loss?

      • Non Union Postal Gal says:

        There are only 560,000 postal employees how is getting rid of Sat delivery going to eliminate 220,000 jobs? I also work for the post office and what we make for what we actually do should be illegal. On Sat by the time the so called rural people get their mail it is late Sat afternoon. The government checks are not delivered on Sat and banks are if open are already closed. So who does it really hurt? Oh wait I know the unions. So let's make false statements so we can still launder money to the liberals.

    8. Jack Murphy says:

      The "middle class" jobs being eliminated are costing the taxpayer $48.6 billion in unfunded liabilities already according to GAO. In addition, GAO said yesterday for the past forty years, the allocation of payments to your retirement fund have been correct and you aren't owed a dime of the mythical $75 billion. Face it, the USPS unions have negotiated you out of a job and their failure to adapt to the 21st Century is what killed the USPS.

      Read Rep. Ross' highlights from the GAO report. Devastating to the Unions argument.

    9. LVK says:

      Don't disagree with any of the discussion topics of POVs.
      Relative pay levels vs. other similar industries, retirement plans, etc. All have their place, and all are good points.

      However, as a senior executive, but also as a former T-6 letter carrier for 11 years ( and all my 5 routes were on foot in the Sherman Oaks/Encino, CA hills – I literally "walked at work:), I feel the need to bring business management skills to bear regarding our USPS. Not to do so will give those others even more "ammunition" with which to distort the facts; something that they will do, regardless actions USPS may take.

      With that said, I've proposed some relatively simple cost saving steps would would go far in demonstrating USPS responsibility as a managed organization. There are many more, and all should be taken as a means of clear evidence that USPS is a good, well managed organization.

    10. Mark says:

      There is some truth in many of the comments, closing Saturday would eliminate 1 in every 6 city carriers.
      but a bigger savings could easily be realized by have the union protection of worthless employees eliminated. We have city carriers that walk at a pace of @ 75 to 80 paces per minute with 3 to 6 inch steps.
      This is not for any reason but to expand their time and get paid for being on the clock longer. Eliminate the hourly pay system and use a merit system and cut Saturday and you would see some serious savings.

    11. Mark says:

      Their motto"go slow, more doe", if the system was changed to an evaluted route system instead of the hourly pay system, we would see productivity increase drastically. This would casue carriers to steal time from themselves instead of money from the USPS. Also, do away with the walking routes where possible, mounted delivery is far more efficient and would save a tremendous amount of money and further reduce the need for as many routes. The USPS could pay for the initial boxesto be put up and the labor savings would pay for the investment with a coulple of months. Combine the union into one for Postal workers instead of four seperate craft unions and have the employees be more flexible in their duties, eliminating the "not my job" problem, or even get rid of the union protection and let the labor board protect the workers rights. If workers had o respect management and feared being fired for failure to perfrm their duties, then maybe you would see a better product and service.

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