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Federal Eye
Posted at 06:00 AM ET, 10/13/2011

The Postal Service isn’t owed a big refund, GAO says


(Timothy Fadek - BLOOMBERG)
Transferring tens of billions of dollars in federal worker retirement accounts back to the U.S. Postal Service would not address its long-term debt problems and would force unfunded liabilities on to taxpayers, according to a new government report.

Eye Opener

The conclusions set for release Thursday by the Government Accountability Office run counter to the opinions of postal regulators, the postal inspector general and congressional Democrats, who say Congress should refund as much as $75 billion to the Postal Service for improperly overpaying federal retirement accounts since the 1970s.

A draft copy of the GAO report was provided to The Federal Eye by congressional sources in advance of its official release.

Though declining mail volume, closing post offices and ending Saturday mail deliveries capture most of the country’s attention when it comes to the Postal Service’s future, soaring labor costs are most responsible for USPS’s financial condition — and the big reason why Congress can’t decide how to fix the problem.

At issues are laws passed in the 1970s that spun off the Postal Service as a self-funding, semi-independent federal agency and required it to start paying billions of dollars in to the Civil Service Retirement System.

In recent years as mail volume started to fall and USPS started seeking relief, the Postal Regulatory Commission, the Postal Service inspector general and two independent accounting firms concluded that those pension calculations set in the 1970s forced the Postal Service to overpay the CSRS by billions of dollars.

But GAO concluded otherwise, writing in its report that “We have not found evidence of error of these types. Any attempt to refund money to USPS “would be a significant change from a policy” in place since the 1970s, it said.

Returning money to the Postal Service for past and future retirement payments would cause as much as $85 billion in losses for taxpayers “which must then be paid by the federal government through tax revenue or borrowing,” GAO said. And any refund “would not be sufficient to repay all of USPS’s debt and address current and future operating deficits.”

Notably, GAO’s report did not challenge proposals by the Office of Personnel Management to refund about $6.9 billion USPS has paid into the newer Federal Employee Retirement System. Proposals submitted by the White House would allow USPS to use the refund to offer early retirement offers or buyouts to workers in lieu of layoffs.

But GAO’s broader conclusions about CSRS poke big holes in the arguments of congressional Democrats and postal labor unions who believe USPS also should be refunded the money. Union leaders contacted Wednesday declined to comment on the report before reading it in full.

House Republicans have said such repayments would amount to a taxpayer bailout.

“There is not now nor has there ever been an overpayment,” said Rep. Darrell Issa (R-Calif.), whose House Oversight and Government Reform Committee on Thursday is set to approve a bill he drafted that would establish a financial control board to slash USPS expenses and likely force layoffs.

“It has simply been a disingenuous claim used to justify legislative proposals that would use billions of taxpayer dollars to cover-up declining Postal Service revenues,” Issa said. “Straightening out the facts about this argument the Postal Service has pushed, as its financial situation has deteriorated, should help Congress focus its energy on real solutions to cut costs and reform the Postal Service.”

In the Senate, Thomas Carper (D-Del.), a longtime proponent of postal reforms, appeared to agree with Issa, calling on lawmakers to table discussions of CSRS refunds and to focus instead on areas of agreement, including paying back the $6.9 billion from the FERS.

Congress gave USPS until Nov. 18 to make its annual $5.5 billion payment, and with the deadline fast approaching, Carper called on his colleagues to “develop a robust reform package that will address the Postal Service’s short and long-term financial challenges.”

We’re getting closer, folks. Stay tuned.

Follow Ed O’Keefe on Twitter: @edatpost

Further reading:

Full Federal Eye coverage of the U.S. Postal Service

Postal Service could end Saturday mail under Obama’s deficit plans

Fact Checker: Cain’s misleading pitch for his ‘9-9-9’ plan

The Fix: Why Herman Cain can win

Romney seen as the ‘inevitable candidate’

Obama plays defense on jobs bill with Senate Democrats

For more, visit PostPolitics and The Fed Page.

By  |  06:00 AM ET, 10/13/2011

Categories:  Eye Opener, Postal Service

 
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