If Congress needs practice on how to avoid the fiscal cliff facing the nation’s finances, it can work on pulling the U.S. Postal Service out of a deep canyon of debt.
Each time the Postal Service issues a report, it’s incredibly bad news. The report released Thursday shows a $15.9 billion net loss for fiscal 2012, which ended Sept. 30. That’s three times the loss recorded a year earlier
“It’s critical that Congress do its part and pass comprehensive legislation before they adjourn this year to move the Postal Service further down the path toward financial health,” Postmaster General Patrick Donahoe said.
When the Senate approved bipartisan postal reform in April, Sen. Thomas R. Carper (D-Del.), a co-author of the legislation, said that the “bill ensures that the Postal Service will receive the resources it needs to survive, while addressing legitimate concerns raised by communities affected when postal facilities are closed or consolidated.”
That same day, Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, said that “the Senate postal bill has devolved into a special-interest spending binge that would actually make things worse” and called the Senate’s approach “wholly unacceptable.”
Despite that, a spokesperson for Issa, who has proposed a different legislative approach, said the congressman thinks that there is a good chance Congress will approve comprehensive postal reform. But the various legislative approaches, which we will explore in more depth in a later column, differ considerably.
“The Senate bill would provide short-term relief but inflict long-term damage,” said Cliff Guffey, president of the American Postal Workers Union. “It fails to sufficiently address the pre-funding requirement, which is at the heart of the crisis. The bill offered by Rep. Issa would destroy the Postal Service as we know it. It would lead to privatization and destroy hundreds of thousands of middle-class jobs.”
APWU supports a third bill introduced by Rep. Stephen F. Lynch (Mass.), the top Democrat on the federal workforce and Postal Service subcommittee.
In reaction to the latest financial report, Issa and subcommittee Chairman Dennis A. Ross (R-Fla.) said in a statement: “USPS has failed to take reasonable steps under its current authority to reduce losses over the past several years. The losses announced today underscore the need for postal reform legislation to cut costs and capture savings to achieve long-term solvency.”
Despite that statement, Issa and others in both parties have recognized USPS efforts to reduce losses, efforts that include the increased productivity of postal workers. In fact, as USPS losses fell to record levels last year, its productivity rose to new heights.
“Our productivity grew to a record level as we captured cost savings and improved productivity for the thirteenth straight quarter,” Chief Financial Officer Joseph Corbett said in a statement. “This year’s improvement is largely attributable to the reduction in work hours, which decreased by 27 million, or 2.3 percent, in 2012 from the previous year. Total work hours continue to decrease despite increases in the number of delivery points, which rose by approximately 1.3 million over the last two years.
“These work hour reductions reflect our efforts to improve productivity and to respond to the decline in mail volume. Since 2000, we have reduced work hours by a cumulative total of 504 million work hours, equivalent to 286,000 employees, or $21 billion in expense savings each year.”
It is only appropriate that Congress act to solve a postal financial crisis that legislators had a big hand in creating. More than $11 billion of the $15.9 billion loss, by far the biggest chunk, comes from required payments to pre-fund retiree health benefits. These payments are unique to the Postal Service, and they have nothing to do with mail delivery. USPS has defaulted twice on those payments since August. Without those payments, the net loss would have been $2.5 billion, not good, but more manageable.
“The 2006 congressional mandate that the Postal Service – alone among all agencies and companies in the country — pre-fund future retiree health benefits accounts for 80 percent of all Postal Service red ink, including $11.1 billion in 2012,” said Fredric Rolando, president of the National Association of Letter Carriers.
“The mandate has depleted Postal Service funds, forcing the USPS to give up any quarterly or annual profits, empty its bank accounts and exhaust its borrowing authority — not to modernize its vehicle fleet but rather to satisfy an unfair political mandate,” he added. “Without pre-funding, the Postal Service would have tens of billions of dollars in the bank, a full line of credit, and would be able to focus on the transitions required by an evolving society.”
It’s not only members of Rolando’s union and other postal workers who would suffer if USPS finances are not set right soon, according to an organization that represents business mailing associations and companies.
“If Congress fails to act,” said Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, “there could be postal slowdowns or shutdowns that would have catastrophic consequences for the 8 million private-sector workers whose jobs depend on the mail.”
Previous columns by Joe Davidson are available at wapo.st/JoeDavidson.