Revisiting Issa’s plan to replace military-pension cuts with postal savings

At least five lawmakers have proposed legislation to repeal a controversial pension cut for working-age military retirees included in the budget deal that President Obama signed last month.

Most of the bills would replace the estimated $6 billion in benefits savings with cuts in other forms of spending, from tax breaks for offshore companies to funding for Egypt and Pakistan.

One of the more debatable ideas came from House Oversight Committee Chairman Darrell Issa (R-Calif.), who proposed ending Saturday mail delivery from the Postal Service to replace the pension savings.

Republican House Oversight chairman Darrell Issa of California. (Brendan Hoffman/Getty)
Republican House Oversight chairman Darrell Issa of California. (Brendan Hoffman/Getty)

Issa pitched his bill as a measure that would “restore COLAs for military retirees while doubling savings.”

But the Postal Service is largely independent from the federal budget, so we wondered how the government could use savings from that agency to pay for military pensions.

The financially troubled USPS has estimated that it could save $17 billion over 10 years by ending Saturday mail. That’s more than twice the $6 billion in savings expected from the pension cut.

Issa argues that reducing delivery days for the Postal Service should count toward deficit reduction because taxpayers are likely to bail out the Postal Service if it became financially destitute — think of the government takeovers of Fannie Mae and Freddie Mac.

“Right now, the Postal Service has over $100 billion in unfunded long term debt, including retiree health care obligations,” said Caitlin Carroll, a spokeswoman for the congressman. “That $100 billion plus is a ‘contingent liability’ of the US government, to the extent that the Postal Service is never able to pay it off, and that Congress authorizes the Treasury to pay for it.”

Setting aside any questions about whether the government can claim savings from an agency that is “off-budget,” labor groups and lawmakers from both parties have spoken out against ending Saturday mail as a way to fix the Postal Service’s finances.

The National Association of Letter Carriers, a union that represents postal employees, has argued that Congress should instead end a statute requiring the agency to prefund health benefits for its future retirees.

According to the NALC, the prefunding mandate has kept the Postal Service from becoming profitable as it gains new revenue from package delivery and other services that have offset reduced mail volume. The agency ended 2013 with a loss of about $5 billion, which is roughly the same amount it owes each year for the prefunding requirement.

MORE: Postal Service lost $5 billion despite first revenue gain in five years 

The union, along with the postmaster general, President Obama and lawmakers from both parties, have called for either ending or restructuring the prefunding requirement.

“Reducing service to the public and degrading the postal network, just as the USPS is rebounding with an improving economy and the explosion in Internet-generated package deliveries, would be destructive to the Postal Service and harmful to the public,” said NALC president Fredric Rolando. “Lawmakers instead should address the damage they’ve done by requiring the USPS, alone among all public and private entities, to pre-fund future retiree health benefits.”

Follow Josh Hicks on TwitterFacebook or Google+. Connect by e-mail at  josh.hicks@washpost.comVisit The Federal Eye, The Fed Page and Post Politics for more federal news. E-mail federalworker@washpost.com with news tips and other suggestions.

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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