Forty-one years ago Congress told the
U.S. Postal Service to start acting like an independent business
and pay its own way. Every time the Postal Service tries,
something stands in the way: Congress.
Facing annual losses of $18.2 billion by 2015 and a
possible default this year, the Postal Service has a five-year
plan for profitability. It wants to end Saturday mail delivery,
close hundreds of letter-sorting facilities and thousands of
post offices and consider breaking union contracts to fire
employees. It also wants to set up an independent health plan,
raise postal rates and enter lines of business such as
delivering wine and liquor.
Each element of the plan has an opponent. Postal worker
unions are fighting the closings and job cuts. Direct-mail
advertisers and magazine publishers demand Saturday delivery and
low rates. Rural constituents -- for whom the post office is
their strongest link to the rest of the world -- and their
representatives in Congress protest post office closings.
“It’s the politics, but it’s also a belief that perhaps
radical surgery is not needed to save the patient,” Rob Atkinson, president of the Information Technology and Innovation
Foundation, said about lawmakers’ reluctance to allow bigger
cuts. “Tinkering here and there might work, it is hoped, and
the hard decisions and hard votes can be avoided. But it’s only
delaying the inevitable.”
Smallest Post Offices
The service today announced it will save $500 million
annually by cutting hours at as many as 13,000 offices instead
of closing the smallest outlets. It will shut down “very few”
offices in small communities, Chief Operating Officer Megan Brennan said at a news conference in Washington. Last year the
service said it would close as many as 3,700, or 12 percent, of
its post offices.
Visits to post offices have dropped 27 percent, or 350
million, since 2005, the service said. Tomorrow, the service
will release financial results for the first three months of
2012.
Congress is “not focusing on the Postal Service at all”
and instead is concentrating on the November election, said
Maurice McTigue, vice president of George Mason University’s
Mercatus Center, a public-policy institute in Arlington,
Virginia. Because of that, he said, “the solutions they’re
coming up with won’t help at all.”
After the Election
If Congress doesn’t let the service make the cuts it wants
or restructure, postal management will be coming back to
lawmakers after the election for more relief, said McTigue, a
former member of New Zealand’s parliament who helped overhaul
that country’s post office.
Senators who voted for an overhaul bill, which passed 62-37
last month, maintained that the prohibitions are reasonable to
give the organization’s employees and customers time to adjust.
“Our bill doesn’t prevent the Postal Service from making
changes or streamlining operations, but it ensures that it rolls
out changes in a deliberate and responsible manner,” Senator
Scott Brown, a Massachusetts Republican who co-sponsored the
Senate bill, said the day before it passed.
The U.S. Constitution gives Congress the power to establish
post offices, and federal law promises mail delivery to every
address. When the nation was founded, mail was the sole way to
communicate absent face-to-face conversation. In 1971, the
Postal Service was stripped of its Cabinet status and reborn as
a self-funded government entity.
Taxpayer Bailout
Now, the service, which is allowed to borrow only from the
U.S. Treasury, has hinted that a taxpayer bailout may be
necessary if it’s not allowed to make changes.
The service was self-sufficient until the U.S. recession
coincided with a shift to electronic communications. Mail volume
declined as digital commerce and correspondence increased.
First-class mail volume has fallen 25 percent since 2006 and 4.5
percent in the six months ending March 30, according to the
Postal Service.
Its mandate to serve even the most unprofitable customers -
- including mail recipients on the floor of the Grand Canyon in
Arizona -- hasn’t eased, even as Congress has increased other
funding requirements.
In a February cost-cutting plan, the service highlighted
the U.K.’s Royal Mail, where the government assumed $16 billion
in pension liabilities; Germany’s Deutsche Post, where the
workforce was cut in half; Belgium’s Bpost, where 40 percent of
employees were replaced by part-time workers; and Canada Post,
which cut its delivery to five days a week.
Health Benefits
Postal workers’ unions including the American Postal
Workers Union and the National Association of Letter Carriers
say deep cuts aren’t necessary. They blame the Postal Service’s
losses on a 2006 congressional mandate that the organization
pre-fund 100 percent of its projected health benefits
liabilities to ease concerns of a potential taxpayer bailout.
The Postal Service is seeking a reprieve from $11.1 billion in
those payments due in a few months.
The Postal Service drafted its own medical plan, saying a
priority is health care costs, which consume 20 cents of every
revenue dollar. Democratic and Republican lawmakers are
skeptical whether the plan would be more affordable and
concerned that losing the service’s more than 1 million
employees and retirees would increase costs for other government
workers.
Five-Month Debate
The Senate measure didn’t grant a new health plan and would
make it more difficult for the service to close facilities soon
enough to staunch its financial crisis. The bill’s passage
capped more than five months of debate about how to prevent
closings of as many as 3,700 post offices the Postal Service has
deemed inefficient or redundant.
Some of the same lawmakers calling for quick action on
postal legislation are asking Postmaster General Patrick Donahoe
to extend a facility-closing moratorium they helped broker,
which is set to expire May 15. The service wants to save $2.5
billion a year by closing mail-processing plants and $200
million annually in labor and operations costs by closing up to
12 percent of post offices.
“You have announced your intent to close hundreds of post
offices and processing facilities beginning May 15,” four
senators wrote to Donahoe in an April 30 letter. “However, as
last week’s debate demonstrated, there is considerable concern
in the Senate that this approach will unnecessarily degrade the
infrastructure, which is one of the Postal Service’s most
important assets.”
Tea Party Support
Senators signing the letter included Brown. He won election
with backing from the Tea Party, which supports cuts in
government spending.
“It’s just a process one goes through,” Donahoe said of
the letter in an interview after a May 4 postal board meeting in
Washington. “There are many different opinions.”
The U.S. House, which hasn’t scheduled debate on its postal
overhaul bill, drafted a measure that would create an
independent commission to oversee closings modeled on the
Defense Department’s base realignment process. Even if the
commission -- which would reduce the congressional role in
closing facilities -- wins House passage, analysts say its
enactment is improbable this year.
Representative Darrell Issa, the California Republican who
sponsored the House overhaul bill, called the Senate measure a
“special-interest spending binge” that would require the
Postal Service to keep excess facilities open and would delay
its financial collapse “for two years, at best, when reforms
will only be more painful.”
Control Board
The House measure would create a control board that could
oversee operations in the event of a Postal Service default, a
provision Donahoe has said he’s “very uncomfortable with.”
Politics come into play especially in rural post office
closings, said Atkinson, who served on presidential advisory
commissions during the Clinton and George W. Bush
administrations and founded the group he now leads that studies
innovation policy.
“Rural members don’t want to alienate the few but vocal
constituents who’d be inconvenienced by post office closings,”
he said.
The Senate bill would block the Postal Service from ending
Saturday mail delivery for at least two years. The service has
estimated $2.7 billion a year would be saved by that cut.
“It’s an election year, so they’re trying to delay the
pain here,” said Elaine Kamarck, a Harvard University lecturer
who led government modernization efforts during President Bill Clinton’s administration and who the Postal Service commissioned
for a 2009 report. “It would be pretty easy for some challenger
to go out and start drumming up complaints about their post
offices being closed.”
“There is going to be job loss,” she said. “The job loss
is going to be fairly difficult, and so Congress is trying to
just sort of delay the inevitable.”
Courtesy : http://www.bloomberg.com
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