The Postal Service's failure to deliver needed reforms

Monday, December 6, 2010; 7:56 PM

THE POSTAL CRISIS accelerates. On Nov. 12, the U.S. Postal Service announced a loss of $8.5 billion for fiscal 2010, on top of a total loss of $6.1 billion for the two previous years. USPS owes $12 billion, just $3 billion below its legal debt ceiling. That's a problem, since it has projected a loss again next year yet must make $6.7 billion in retiree health and worker compensation payments by October. Only structural reform to employee wages and benefits - currently 80 percent of the operating budget - can stave off disaster. But current negotiations between USPS and two unions representing more than half of its workers have so far produced no resolution.

The postal mess is especially poignant and depressing, because it epitomizes America's broader economic and political gridlock. To be sure, the Postal Service is the victim of society's technological success: In a world of text messaging and videoconferences, a "snail mail" business model is bound to wither. USPS has adapted, but not quickly enough. Postal rates remain under the control of inflexible regulators; Congress insists on six-day delivery and unprofitable local post offices in every district; federal law gives unions the edge in collective bargaining with postal management. The president's commission on deficit reduction recently endorsed reforms that would give USPS management flexibility to deal with such issues. But until now, no one has had sufficient incentive to make the tough decisions that could keep the Postal Service's debts from being the next multibillion-dollar commitment passed on to the federal taxpayer.

What's missing is leadership, from both Congress and the White House, which has been basically silent about the Postal Service's plight. At the moment, postal unions are lobbying Congress to release USPS from its requirement to pre-fund about $5 billion in retiree health benefits, which might enable USPS to meet union contract demands and balance its books - temporarily. Congress must say no. Pre-funding is the only leverage lawmakers have to force a long-term solution. Management has already cut costs about as much as current law allows. If unions can't or won't contribute more to the postal service's long-term viability, then Congress must pass a law allowing labor arbitrators to shape agreements that will. The postal crisis is an opportunity for both the new Republican majority in the House and President Obama to show that they have heard the voters' cry for more cost-effective government - and that they intend to deliver it.

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