Postal Service still losing money, but no movement on legislation

November 15, 2013
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The U.S. Postal Service  announced Friday that it ended the last fiscal year $5 billion in the red, bringing its net losses since 2011 to $27 billion.

Revenue from first-class mail continues to decline, and the agency has defaulted on three $5.5 billion payments into a health-care fund for future retirees. Yet Congress is unlikely to pass legislation this year to help stanch the bleeding, marking the third straight year lawmakers have failed to agree on a way forward for the struggling mail service.

A leading bipartisan Senate bill has hit a setback in the Homeland Security and Governmental Affairs Committee, which pushed back a scheduled a vote earlier this month amid concerns from Democrats over service cuts and rate increases the legislation allows.

(David Goldman/AP)
(David Goldman/AP)

Even if the committee votes before the Thankgiving recess, congressional aides acknowledge privately that the bill is unlikely to make it to the Senate floor this year. In the House, Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) pushed a bill through the panel in July, with only Republican support. It has not reached the House floor.

The sponsors of the Senate bill, committee Chairman Sen. Tom Carper (D-Del.), and the panel’s top Republican, Sen. Tom Coburn (R-Okla.), have said they want an agreement all sides can live with.

Carper “remains hopeful that the committee can proceed with a markup on the bill later this month,” a spokeswoman said in a statement.

But the long path to postal reform underscores the challenge of finding agreement on an issue that splinters lawmakers not just by party but by geography, by pro-union and pro-business sympathies, and by pro-government and anti-government philosophies.

“There’s a huge divide on how to approach postal [legislation],” said Art Sackler, of the Coalition for a 21st Century Postal Service, which represents large mailers.

“There are different philosophical and business views of how the postal system can right itself financially and still deliver services the American people expect,” he said.

The Senate bill, like the House measure, would reduce the burden of the health care pre-payment, which is responsible for about $11 billion of the Postal Service’s losses in 2012. It would allow the agency to eliminate Saturday delivery of letters in a year and gradually phase out mail delivery from the door to curbside boxes, to save on labor costs.

It also would allow the Postal Service to ship beer and wine, sales that are now prohibited. And postal officials could hike rates for bulk mailers.

Senators from rural states are raising the loudest objections to service cuts. In the last year, for example, hundreds of mail-sorting hubs have closed. Sen. Jon Tester (D-Mont.) and several colleagues say the closures have slowed mail delivery in his state to five from three days. He wants guarantees that the slow-down won’t be permitted.

“I’m not going to support something that does as much bad stuff as this bill does,” Tester said in an interview. “In the end, unless there’s changes, I think the bill’s in trouble.”

Tester said constituents complain routinely that they are not receiving letters and packages as quickly as they used to, especially since the Postal Service reduced plane service for mail delivery across the state and shut four of the state’s seven mail-sorting hubs.

Sen. Heidi Heitkamp (D-N.D.) is developing amendments to preserve Saturday delivery and halt further closures of mail sorting plants, an aide said.

In a statement, Postal Service spokeswoman Patricia Licata said “There are no standards of delivery in the state of Montana that entail 5-day delivery.”

Other provisions of the the bill have rankled mailers, who oppose lifting the cap on most rates for bulk mail.

That provision, Sackler said, is “totally unacceptable, and if unchanged would put the industry in the uncomfortable position of having to oppose legislation that remains urgently needed.”

The Postal Service is already seeking an emergency rate increase above the rate of inflation — a move that has angered industries like banks and publishers. Under that proposal, the cost of a stamp would increase to 49 from 46 cents, while the “additional ounce” rate for letters above 1 ounce would rise one cent.

On Friday, Postmaster General Patrick Donahoe said he will withdraw the rate hike proposal if Congress passes legislation to help stabilize the agency’s finances.

“If Congress is able to act and we’re able to get the reforms we need, we would walk away from the rate increase,” he said.

Donahoe said the Postal Service supports both bills now pending in Congress. He is pressing the Senate committee to add language that allows postal officials to require retired postal workers to enroll in Medicare instead of allowing them choose higher-cost insurance plans they now have access to under the federal health system. The Medicare change would save the Postal Service $8 billion annually, he said.

The Senate passed a bipartisan postal bill in April 2012, only to watch last-minute negotiations with the House fall short at the end of that year. Issa’s committee also passed a bill, but it did not get to the House floor.

“Members looking out for parochial issues that affect their districts,” said Aaron Fobes, a Coburn spokesman. “There’s something for everyone to be upset with. The postal service affects every town in America.”

Lisa Rein covers the federal workforce and issues that concern the management of government.
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