Postal Service And Congress - A Lesson In The Tying Of Hands

Political Realities ^ | 02/07/13 | LD Jackson

[LD Jackson]

Well, I sincerely hope you aren't especially enamored with getting letters and junk mail on Saturday. If all goes according to the plan announced by Postmaster General Patrick R. Donahue, Saturday delivery of everything except packages will be eliminated in early August. As you can imagine, the outcry is no small thing. Neither was the outcry small when the USPS announced preliminary plans to close a number of smaller post offices in 2011. That outcry seems to have worked, as all the post offices are still open. This is due mainly to the refusal of Congress to allow the Postal Service to manage its own affairs. Imagine that, Congress interfering with what is basically a company that receives no taxpayer dollars and is still trying to become, and remain, profitable.

I have written a couple of times about the woes of the Postal Service. Admittedly, they are trying to manage a change in very trying times. With the advent of electronic communications, email, instant messaging, text messaging, Voxer, etc., the basic mail service of the Postal Service has drastically changed. Speaking for myself, I rarely send anything through what is commonly called "snail mail". It's just much quicker and more efficient to send it via the Internet. That isn't the fault of the Postal Service, but they are still charged with changing with the times and trying to become profitable.

Okay, so the Postal Service has to change. No big deal, many companies and corporations are having to change the way they do business to meet financial challenges. Again, these are times that have a knack for rapid change. Therein lies the real kicker for the Postal Service. Their hands are almost completely tied by Congress, who is charged with overseeing their operations. Besides not allowing the Postal Service to make the changes that would allow them to become more streamlined and hopefully, more profitable, Congress is also guilty of placing a huge financial burden squarely in the middle of their shoulders. This is a financial burden that no other corporation has to deal with.

(Washington Post) But change is not the biggest factor in the agency’s predicament — Congress is. The majority of the service’s red ink comes from a 2006 law forcing it to pay about $5.5 billion a year into future retiree health benefits, something no other agency does. Without that payment — $11.1 billion in a two-year installment last year — and related labor expenses, the mail agency sustained an operating loss of $2.4 billion for the past fiscal year, lower than the previous year.

Let's look at the Postal Accountability and Enhancement Act of 2006 and see what onerous requirements Congress has placed on the Postal Service.

(Wikipedia) The PAEA stipulates that the USPS is to make payments of $5.4 - $5.8 billion into the Postal Service Retiree Health Benefits Fund, each year, from 2007 to 2016 in order to prefund 75 years of estimated costs. This requirement also explicitly stated that the USPS was to stop using its savings to reduce postal debt, which was stipulated in Postal Civil Service Retirement System Funding Reform Act of 2003. This is in addition to deductions from pay for federal contribution to social services. This pre-funding method is unique to the USPS. In June 2011, the USPS had to suspend its weekly payment of 115 million into the fund because it had reached 8 billion dollars in debt and the retirement plan had a surplus of 6.9 billion dollars. The schedule rate of payment has been changed and the USPS is currently expected to make a payment of 5.6 billion no later than September 30, 2012.

Far be it from me to claim the mantle of a financial or budgetary expert, but it seems to me that the requirement of PAEA that the Postal Service pay in $5.4-$5.8 billion into a retirement fund for future employees is more than a little questionable. Does this not amount to an unfunded mandate of the worst kind? Individual states in our union have long complained how the federal government places mandates in their court, with little or no federal funds to help them meet those mandates. A lot of requirements and no money to help fulfill those requirements. Where's the wisdom in that?

Make no mistake, the Postal Service needs to make some changes to become financial stable. Dare I say the word, profitable? Taking into consideration the requirements of PAEA, there isn't a chance of that happening in the near future. Even if stopping Saturday delivery saves a couple of billion dollars, they will still be in the red, due to the $5.5 billion they are paying in every year to the retirement fund of employees that aren't even born yet. I ask again, where is the wisdom in that? How can we expect the Postal Service to rectify its financial situation, if Congress continues tying its hands at every turn?

Speaking of Congress, PAEA was passed by a Republican Congress and signed into law by President George W. Bush. I would like to know what they were thinking when they allowed this legislation onto the floor of Congress and out of the White House as the law of the land. Maybe they weren't thinking at all? Nah, that couldn't be it.

[agere_contra]

As you can imagine, the outcry is no small thing

Wrong. Nobody cares.

What a namby-pamby Government-loving article. Why did you post it?

[muawiyah]

There are another 9 million working people in businesses that depend on mail service working correctly. You may not be affected but they are. Since they are the ones paying the bills ~ through postage ~ it’s their business and none of yours.

[cripplecreek]

The postal service has plenty of their own problems but the biggest were created by congress. Personally I would dump PAEA, allow the postal service to set stamp prices at will, and decide hours locally. I’m also fine with ending Saturday delivery.

I’m in a location that doesn’t exist in some of the package routing and tracking software so if I order something, it has to go to the post office or I don’t get it.

[LD Jackson]

I don’t see how my post is a “Government-loving” article. I was merely pointing out that not all of the problems of the Postal Service are caused by the management. Congress has played a significant role in the decline of the USPS.

[cripplecreek]

I wonder how people would feel if congress were to step in and tell FedEx “You can charge this much and must set this much aside for retirees”.

[agere_contra]

Thank God Bush and Congress wrote this legislation. They pre-emptively prevented tax-payers from having to shoulder the pension-fallout from the chronic mismanagement of yet another entitled Government agency.

The USPS could set about reducing its disastrous inefficiencies. Instead it's bleating about having to pay for its own poorly-negotiated liabilities.

The usual FR union-hacks can't bear the idea of a Government agency not having its liabilities paid for by the tax-payers in perpetuity. I am so surprised.

[agere_contra]

If FedEx were a Government agency - run with the typical crushing inefficiency of all Government agencies - and its pension liabilities were likely to end up on the back of the taxpayer in the case of failure then I bet people would be just fine with Congress trying to rein in the disaster before it happened.

[cripplecreek]

You aren’t being honest and that really says there’s no point in even arguing the issue with you.

[LD Jackson]

I am far from being a union hack. I can’t stand unions, for the most part. What I am disinclined to believe is smart is for the Postal Service to be forced to fund 75 years of retirement benefits for future employees, in advance. That’s total ignorance.

We can cut the Postal Service to the bone and it will not address this mandate from Congress. Again, that is total ignorance.

[cripplecreek]

What cracks me up is the complaint that we’ll be forced to fund their retirement. What the hell do they think will happen if we were to close the postal service?

[blueunicorn6]

It all depends on whose ox is being gored.

[Buckeye McFrog]

I suspect that before August gets here Congress will stop them from ending Saturday mail too. The entire junk mail industry has built their process around filling your mailbox with junk on Saturdays.

When they tried to close some post offices one of the ones that made the list around here was in a heavily populated area. A neighborhood where many of the residents were Democrats and Government Union employees. As you can imagine the hue and cry was overwhelming. To the point I suspect that office was specifically targeted to generate just such an outpouring of “you can’t close our post office” public lobbying.

I can think of many other rarely used locations in sparsely populated areas that would have made much more sense to close.

[zeugma]

I wonder how people would feel if congress were to step in and tell FedEx “You can charge this much and must set this much aside for retirees”.

If FedEx demanded and recieved a monopoly from the government for certain classes of delivery (like the USPS has for 1st class mail), then perhaps they would be under congress' thumb the same way the USPS is.

The USPS is at least a constitutional service, unlike much done by Fedgov today so I don't have as big an issue with it as I do most government agencies.

To establish post offices and post roads;  (Art. 1 Sec. 8)

 

[cripplecreek]

The 1st class mail monopoly is one that FedEx, UPS etc don’t really want anything to deal with. Personally I would let the private carriers take over everything right down to the local post office. (Have them deliver to the local offices and let the locals deal with it from there)

I was talking to the UPS driver a couple weeks ago at the post office and he pointed out that I can send a letter anywhere in the USA for 46 cents flat (with 20 cents per additional ounce). If I send the same letter through UPS its going to cost me at least $10 and possibly considerably more depending on “zones” and rates.

[CatherineofAragon]

This may be a naive question, even a dumb one, but I’m truly curious. Instead of going for drop-in-the-bucket solutions, why is the Postmaster General not going in front of the cameras and talking about the main problem, which seems to be prefunding of benefits? Backroom deals, or something?

[muawiyah]

No ~ it's all pretty much up front ~ there are several problems that fall into this category that were known since USPS was established.

Door Delivery

Small rural and far suburban post offices

Periodicals class

Non profit organization postage rates

Rural delivery extension

City Delivery post office box service

What you have with all off these items are politically potent constituencies who are sufficiently influential to get Congress to PROHIBIT CHANGE ~ in order to keep a service beneficial only to them which had been established under the former Post Office department.

I"d add Zone 12 but it's not as important as it used to be.

The financial and resources balancing acts to maintain sufficient cross subsidization to keep these things going is literally mind-numbing. Here I have been retired for 8 years and BINGO I'm still able to argue the case on every single one of them ~ not quite mind-numbing, but haunting!

The USPS is usually able to keep its expenses within 2% of its income ~ month after bone tired month for years on end ~ and yet the 2006 Senate decided that they could make a show of reducing the deficit by taking $5.3 billion per year from USPS.

That hit them upside the head with an oil-soaked 2X4 ~ and it's not been the same since that time.

This is the prefunding for retiree medical insurance benefits 75 years from now!

That the Senate acted in total ignorance is pretty obvious, but when informed they made no effort to correct their problem. I believe a couple of their members thought a privatized USPS would arise out of the wreckage. Yet, even if you could privatize the mails that list of problem areas I provided above would still exist ~ and the cross subsidization would need to be continued in some manner.

The current postal management has proposed several different plans for eliminating the cross subsidization problems, in part. Nobody has ever proposed a comprehensive program for fixing them ~ except me ~ and I retired ~ and don't give a darned either way at the moment. The Republicans imagine it's a union problem ~ yet the cross-subsidization involves a good $35billion ~ you'd need to whack clerk/carrier salaries by more than 50% to get that kind of savings. The Democrats imagine it's a public service problem ~ yet they figure as long as the Postal Rate Commission can get away with stiffing the rate payers there's no sense stirring up the hen house.

[muawiyah]

like Daryl Issa there are some folks out there who think saying anything about USPS other than ‘sell it’ is pro-government. Nevermind that the Founders kinda sorta stuck the federales with the mails ~ it’s better to fix something than wake up some morning to find out the mails are no longer available.

[Mr. Lucky]

The problem with your story is that UPS is prohibited by law from delivering a 1st class letter, so claiming to know what they would charge is a little self serving.

The other problem is that there are lots of places in the US where the post office won't deliver 1st class mail, at any price, but UPS, Fedex (or even Deutsche Post) will deliver packages.

[CatherineofAragon]

Seems to me that 2006 act should be addressed directly, but what do I know.

Thanks for your response.