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Federal Diary: White House, Congress resist Postal Service goal of cutting delivery days

By Joe Davidson
Tuesday, February 16, 2010; B03

Mail volume in the United States has fallen off a cliff in recent years. It has dropped so sharply that U.S. Postal Service officials have pleaded with Congress to allow a cut in delivery days from six to five.

It's been a hard sell. Politicians are reluctant. Although polling data show that the public is willing to accept five-day delivery, people who count on votes for their livelihood are not at all eager to cut back on a service so basic, so trusted and so needed as the U.S. mail.

Count President Obama among that number.

His proposed budget for fiscal year 2011 states flatly "that 6-day delivery and rural delivery of mail shall continue."

The Postal Service is in a tricky situation: Its operations are not funded through tax dollars, but by the products and services it sells. Yet it needs congressional approval to make certain changes in how it does business. That includes the number of delivery days and the way the USPS funds retiree benefits, which we'll get to in a minute.

The budget does include, and Congress must approve, funding for free mail for the blind and for overseas absentee-balloting materials. Obama's spending plan essentially says the Postal Service won't get that money, almost $75 million, if it stops delivering mail six days a week (apparently not counting last week in my neighborhood).

Postal officials are not deterred. "The language in the president's budget on six-day [delivery] is boilerplate" that has been in every president's budget since the mid-1980s, said Gerald J. McKiernan, a spokesman for the Postal Service. "The White House is aware of our interest in a five-day plan, and we have discussed it with them."

More discussion, if not begging, will be needed before the White House and Congress are convinced that five-day delivery is the strong, albeit distasteful, medicine that the ailing postal operation needs.

A few months ago, the Government Accountability Office declared the Postal Service's financial situation at "high-risk." The length and severity of the recession have hit USPS hard. The number of pieces of mail it delivers dropped by an astounding 26 billion, to 177 billion, from fiscal 2008 to 2009. At the same time, the number of delivery points has steadily increased and the number of USPS employees has steadily declined.

Postmaster General John E. Potter told a Senate panel in August that the consequences of the recession "have been so severe that only a fundamental structural change will make it possible for the Postal Service to overcome costs that are insurmountable under our current business model."

He added: "In considering the structural changes that can produce the level of results that are necessary, we have concluded that reducing the frequency of mail delivery from six to five days a week can provide the financial relief that is necessary to restore the fiscal health of the Postal Service."

Congress did provide limited breathing room last year with legislation allowing postal officials to restructure the 2009 payment they are obligated to make to prefund retiree health benefits. Potter was happy with that, but he really wanted longer-lasting relief.

This temporary reprieve makes the future seem no less depressing.

The severe losses for 2007, 2008 and 2009 and the continued bleak trend for this year mean the Postal Service may not be able to pay all its bills come September and October, it said in a statement last week.

But the situation wouldn't be so dreary and Potter would not have needed the relief from retiree health benefit payments if the USPS had not overpaid $75 billion to the Civil Service Retirement System for retirees from 1972 to 2009, according to the Postal Service inspector general.

In a report last month, the office of Inspector General David C. Williams said: "If the overcharge was used to prepay the Postal Service's health benefits fund, it would fully meet all of the Postal Service's accrued retiree health care liabilities and eliminate the need for the required annual payments of more than $5 billion."

This does not mean the retirees got the extra $75 billion, and this is not the first time the Postal Service has been overcharged. In 2003 and again in 2006, billions were returned to the Postal Service by Congress.

The problem, according to the report, is the "method used to determine how CSRS pension costs for postal employees with service before 1971 are split between the Postal Service and the federal government is inequitable."

So even though the Postal Service isn't funded by the taxpayer, it is linked to Uncle Sam in ways that aren't always beneficial. The overpayments are examples, the IG's report said, of "the financial entanglements between the Postal Service and the federal government -- generally at the expense of the Postal Service."

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