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  • Senate Postal Reform: A Lot of Money, Little Change

    With nine days to go before the U.S. Postal Service (USPS) faces default, a Senate committee on Wednesday is expected to vote on a new plan to address the crisis. The plan takes a few steps in the right direction, but it falls short of the comprehensive reform that is needed.

    The immediate problem for USPS is a $5.5 billion payment to the federal treasury to fund retiree health benefits that is due on November 18, and it doesn’t have the money to pay. But USPS’s problem is much deeper than a cash-flow hiccup: in the face of plummeting mail volumes, USPS is losing money at an accelerating rate. Without comprehensive reform, it will fail, potentially saddling taxpayers with billions in costs annually.

    On Wednesday, the Senate Homeland Security and Government Reform committee is expected to vote on a package of reforms (S. 1789) sponsored by a bipartisan group of Senators led by Joe Lieberman (I–CT), the committee’s chairman. The plan would allow the postal service to save money by replacing door-to-door service with curbside deliveries, requiring labor arbitrators to consider the financial state of USPS in their rulings, lifting the ban on delivery of wine and beer, and reducing worker compensation costs.

    But the Senators balked on many of the key big-ticket reforms that USPS management had urgently requested. Saturday delivery of mail will still be mandated (at least for two years), blocking billions in possible savings. USPS is permitted to close processing facilities but only after lengthy procedures are followed. The workforce would be trimmed by 100,000, less than the 220,000 sought by USPS.

    The legislation would also provide USPS billions in cash from taxpayers. Specifically, it would hand over some $7 billion in supposedly “surplus” contributions the government has made to the Federal Employees Retirement System. Such temporary surpluses, however, are common and are typically erased by normal financial swings or amortization over time. Transfer of the entire pot to USPS leaves taxpayers vulnerable if USPS later falls behind (which, given its condition, is not unlikely) while allowing needed structural reforms to be delayed.

    Meanwhile, the $5.5 billion payment due to Treasury on the 18th for retiree health care benefits is tucked under the rug. The bill replaces the current 10-year amortization schedule with a 40-year payment period.

    USPS, and mail delivery itself, faces an uncertain future. Comprehensive change is needed to prevent massive losses and virtual bankruptcy. The reforms being considered by the Senate, however, fall short—while putting taxpayers even more at risk for the consequences of failure.

    Posted in Featured [slideshow_deploy]

    8 Responses to Senate Postal Reform: A Lot of Money, Little Change

    1. Liam Skye says:

      "The legislation would also provide USPS billions in cash from taxpayers. Specifically, it would hand over some $7 billion in supposedly “surplus” contributions the government has made to the Federal Employees Retirement System. "____Wrong, wrong, and wrong. ____The $7 billion being returned to USPS has been deposited in the Treasury by USPS and its employees. Not a single cent of it was contributed by taxpayers – not a single red cent. The funds are not supposedly surplus – they are known to be surplus and nobody, including Tea Party Republicans and the GAO, is disputing that fact. Mr. Gattuso's snide implication to the contrary is apparently based on his unfamiliarity with the issue. Nor has "the government" contributed to the USPS FERS fund – again, not a single red cent.____So that is strike one, strike two, and strike three. Mr. Gattuso's failure to research his topic and bring himself even to a level of being conversant with the issues has led him to strike out.

      • Missy D says:

        Why doesn't everybody know that the Gov't gets paid by the USPS? The Gov't does not support them, so why is the Senate even involved? I would like to think that the USPS would know it's own problems better than Uncle Sam who doesn't know how to run any business. For years I have heard postal workers say that 1 day a week that they work is unnessasary. How much would that save them if they cut one day per week from each postal worker? Maybe Senate can do the math!

    2. Stirling says:

      As with any government program everything boils down to the pensions and benefits that eventually become unsustainable due to the changes in the economy and inovation in the marketplace. Maybe in a country which the government ran everything they could control the peoples choices and the system would work, but the variable is the people which have freedoms to throw a monkey wrench into the central planners calculations. The U.S. Postal Service (Like most bearacracies and public unions) have not had to change with the times as their private sector counterparts which do not have a safety net to fall back on when they become ineffiecient and outdated. I personally wish more government programs would fail just to acellerate the change which is nessesary to return government to a sane and responsible size.

    3. Mike says:

      Let the PO fail and auction ALL it's assets to pay down the national debt. I will not miss the PO, will you really?

      • Liam Skye says:

        I wouldn't miss it much but I think small businesses would – the alternatives are MUCH more expensive. Selling all its assets, especially real estate, is something that should be looked at if only to quantify the effect it would have.

    4. T Hendrickson says:

      It would be nice if you would have educated yourself a bit more on the truth behind the postal services money problems because you seemed to have missed certain book keeping games involved being the prime reasons. I say educate yourself because the only other possible reason for the ommissionwould be dishonesty and I like to give people the benefit of the doubt.

    5. Mary says:

      Why doesn't anyone ask the Postmaster General how much of his salary and benefits he is giving back. It is reported he makes twice the salary of the President. It is also reported that all top execs get their health benefits paid for in full. This is not the case for the hourly employees. Wake up people, hourly workers are not the issue. Inefficent operations and overpaid CEO's is the problem. I read so much that we don't even need a PO any more…than why can't they cut Sat. delivery? Don't say its for the rural areas. There is not one thing I get on Sat. that couldn't wait until Monday.

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