Postal Reform Bill Doesn't Address USPS Problems

Brian McNicoll
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Posted: Jul 27, 2016 10:10 AM
Postal Reform Bill Doesn't Address USPS Problems

Despite a packed legislative agenda and shortened calendar, postal reform legislation has advanced in Congress. Both of the Senate bills shepherded by Sen. Tom Carper, D-Del., have stalled, but the “Postal Service Reform Act of 2016” passed unanimously through the House Committee on Oversight and Government Reform barely a month after it was introduced.

The legislation, offered by Chairman Jason Chaffetz, R-Utah, Ranking Member Elijah Cummings, D-Md., and others, includes a variety of measures members hope will shore up the Postal Service’s financial position. Unfortunately, the legislation fails to address either the financial situation or the need for the Postal Service to focus on its core mission of delivering mail.  

The goal of the legislation is to shore up the Postal Service’s dismal finances. It has lost more than $50 billion since 2007, and it is projected to lose another $4 billion this year. This would be easier to swallow if the Postal Service was excelling at its principle goal of delivering mail, but delivery times have actually worsened in recent years.

But the losses stem largely from ill-conceived side projects, such as functioning as a delivery service for a fish market in Manhattan and delivering groceries in San Francisco. And they’re probably even worse than stated because the equipment and personnel to engage in these projects are considered by the Postal Service to be part of routine mail delivery. No company could exist with the accounting techniques the Postal Service uses, and no bank would lend to such a business.

The legislation would raise the rate for sending a first-class letter to 48 cents. In April, rates were rolled back from 49 cents to 47 cents because of the expiration of a temporary surcharge in place to help the Postal Service mitigate the effects of the 2008 recession.

In response, the Postal Service lobbied to extend this temporary price increase permanently, but both the Postal Regulatory Commission and the U.S. Court of Appeals turned it down. It would be most unusual for Congress to pass legislation that overrules the judgment of both the regulator and the court.

The legislation also calls for postal retirees to enter the Medicare system, a measure so controversial it alone could bring down the bill. The Postal Service has fallen nearly $60 billion behind in its health care payments, and it says this provision is the only way to recover.

Shifting retirees to Medicare may move costs off the Postal Service’s bottom line, but it would seriously threaten Medicare, which currently can pay full benefits only until 2030.  The Congressional Budget Office has not provided a budget score yet, but a similar provision from an earlier proposal was determined to add $13.2 billion in costs to Medicare, which would move up that timetable considerably.

The National Active and Retired Federal Employees opposes this move as a step backward for retired postal worker’s health care. It says postal retirees – who make up a third of its membership – would be hit with higher monthly premiums -- a $122-per-month increase for largely the same coverage.

The bill “shoulders postal retirees with the responsibility of fixing the Postal Service’s finances in the name of expediency,” the group wrote in a letter to the House Oversight Committee. “It compromises fairness and breaks a promise made to now-retired postal workers and their survivors regarding their health benefits.”

NARFE also charged that the provision “changes the bargain regarding health benefits for postal retirees after they have retired, setting a dangerous precedent.”

The legislation also would enable the Postal Service to move immediately toward centralized delivery to business addresses and also for residential addresses if 40 percent of the residents who would be affected in a given community agree to the measure.

Postal unions have opposed this move because of the potential to reduce the number of letter carriers and shrink their union dues-paying membership. In Congress, Rep. Susan Davis, D-Calif., also has raised concerns about the impact of this provision on senior citizens and persons with disabilities.

Ultimately, the legislation seems designed to allow the Postal Service to offload its management mistakes onto taxpayers but protect its ability to pursue unproven lines of business. How about getting the Postal Service to do what we give it monopoly protection to do – deliver first-class mail – and scale down the rest.

Otherwise, we’ll continue to pay more and get less from this still-vital national resource.