April 26, 2012

THERE ARE THREE ways to evaluate the Senate’s newly adopted plan to deal with the financial crisis at the U.S. Postal Service (USPS), which is losing more than $20 million per day and has almost exhausted its $15 billion credit line from the Treasury.

One is to compare the bill with what’s politically possible. By that standard, the bill helpfully trims the Postal Service’s workforce — which accounts for 77 percent of costs — by 100,000 over the next three years, mostly through early-retirement incentives. The legislation also would eliminate some of USPS’s debt to the Treasury and stretch out payments to a retiree health-care fund, saving billions more. And it passed with an admirably bipartisan majority of 62 votes.

By a more important measure, what the Postal Service actually needs to be solvent, the Senate bill falls disastrously short. In February, USPS management spelled out a five-year plan to cut $20 billion in costs and restore long-term viability. The plan required ending mandatory Saturday delivery, downsizing a bloated network of mail-processing facilities and restructuring the employee health insurance program. The Senate bill enacts none of these reforms.

In fact, the legislation makes some of them harder to accomplish. It requires Saturday delivery for at least two more years and puts a one-year moratorium on the closure of rural post offices. What few workforce reductions the bill does impose are paid for by creative accounting: shifting $11 billion in Postal Service “overpayments” from the federal civil service pension fund. Stretching out retiree health-care prepayments reduces a major cost-cutting incentive. The Congressional Budget Office estimates that the bill will increase deficits by more than $6 billion over the next 10 years.

In short, the demands of the Postal Service’s various “stakeholders” — from advertisers to unionized employees — triumphed over the public interest. “If this bill were to become law,” Postmaster General Patrick R. Donahoe candidly remarked, “the Postal Service would be back before the Congress within a few years requesting additional legislative reform,” i.e., another bailout.

Finally, you can compare the bill to a genuine legislative solution, such as the amendment that Sen. Bob Corker (R-Tenn.) unsuccessfully proposed. Mr. Corker’s measure would have allowed five-day-a-week delivery immediately, permitted USPS to set prices more freely and eliminated costly no-layoff provisions in USPS’s labor contracts. Mr. Corker’s proposal has much in common with a House bill drafted by Rep. Darrell Issa (R-Calif.); what little hope remains for genuine postal reform now lies in an eventual House-Senate negotiation.

Albeit in exaggerated form, the Postal Service exemplifies much of what ails the American public sector. For Congress, the effort to bring this proud but technologically obsolescent entity into the 21st century is a dress rehearsal for the broader task of putting all necessary public services on a financially sustainable footing. The results so far are not encouraging.