USPS losing $25 million daily, waiting for Congress to fix ‘broken business model’

Joe Davidson
Columnist April 17, 2013

Postmaster General Patrick R. Donahoe entered the Rayburn House Office Building with an entourage a dozen staffers deep. Apparently granted status by association, the aides immediately cut to the front of a long line of regular folks who were waiting patiently, as the polite do, to go through security.

Donahoe and his crew then headed to Room 2154 for a
9:30 a.m. hearing on “Options to Bring the Postal Service Back from Insolvency.” There should have been an “(R)” next to the listing to let the audience know it would be a repeat.

Joe Davidson writes the Federal Diary, a column about the federal workplace that celebrated its 80th birthday in November 2012. View Archive

The plot is well known: Donahoe, as did the postmaster before him, makes yet another trip to Capitol Hill to plead for legislative relief that would allow the Postal Service to escape an ever-deepening financial sinkhole. Members of Congress, this time those on the House Oversight and Government Reform Committee, press the postmaster about cost-cutting measures he has taken or should consider, then call on themselves to take needed action.

The Senate approved postal reform legislation a year ago. The House continues to contemplate, but it is getting closer to a bipartisan deal, promised Chairman Darrell Issa (R-Calif.).

The hearing took four hours, a long time for not much new to be said. This would be boring if it weren’t so serious.

“The Postal Service is currently operating with a broken business model,” Donahoe told the panel. “We are losing $25 million every day and we are on an unsustainable path.”

Last year, the Postal Service lost $15.9 billion, almost seven times its deficit in fiscal 2008.

It was Donahoe’s first appearance before a congressional hearing since he had to back away from his loudly trumpeted plan to reduce delivery days from six to five. The plan, which envisioned an end run around Congress, was on shaky ground from the beginning.

Congressional action “specifically designed to prevent the Postal Service from changing its delivery schedule” forced a change in course, he said.

If Donahoe were to defy Congress, said Rep. Elijah E. Cummings (Md.), the top Democrat on the committee, “the postmaster would catch hell.”

The Postal Service announced its about-face a week before the hearing, so Donahoe was spared the rod.

He did get in this dig: “According to this law, we are now required to deliver mail as if it were the year 1983.”

That gets to the crux of the problem. The Postal Service is operating with paper and pencil rules in a digital world. Donahoe said the USPS needs greater flexibility, not just to implement five-day delivery, but also:

■“To develop and price products quickly.”

■“To control our health-care and retirement costs.”

■“To switch to a defined-contribution retirement system for new employees.”

■“To quickly realign our mail processing, delivery and retail networks.”

■“To develop a more streamlined governance model.”

■“And we need more flexibility in the way we leverage our workforce.”

The details that go with those bullet points can be very controversial. The unions won’t roll over, for example, to proposals that would control USPS health-care and retirement costs by pushing those costs onto employees. Donahoe said he sent letters to the postal unions and management associations Tuesday, asking them to renegotiate their labor contracts. Those letters will be welcomed like a tax audit.

Labor-management relations can be frosty in any organization. Donahoe’s proposals have not endeared him to the USPS working class.

At the hearing, he sat at the witness table with Fredric V. Rolando, president of the National Association of Letter Carriers (NALC).

In his written testimony, Rolando said Donahoe “wants to degrade [the USPS’s] last-mile delivery network by cutting Saturday delivery.”

Last July, 7,000 delegates to the NALC convention unanimously approved a “motion of no confidence” in Donahoe.

“[B]ecause we are convinced that the business strategy the Postmaster General (PMG) is following is doomed to failure,” Rolando said in his written statement to committee members, “we have called for the PMG’s resignation. We respectfully think you should too.”

Although Donahoe’s five-day plan was blocked, he views it as a delay, rather than a defeat.

“We announced that we would delay implementation of our new schedule,” he said, “until we gained legislation giving us the ability to move forward.”

Near the end of the hearing, Issa asked about the big news involving the Postal Service — the mail with suspected ricin sent to President Obama and Capitol Hill.

“We can actually track the mail back through the system” to determine which employees handled the mail,” Donahoe said. “We’ve got the absolute best detection systems going.”

There have been no known employee illnesses from handling those items, according to the Postal Service.

After the hearing, Donahoe told reporters “a fairly small number” of workers would come in contact with the suspect mail “because everything is automated . . . none of this mail would be hand-sorted.” He also said, however, that the mail would have passed through postal facilities in Memphis and Capitol Heights and on V Street NE in Washington — and a “couple hundred people” work in each facility.

Previous columns by Joe Davidson are available at wapo.st/JoeDavidson.

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