USPS Reform Bill Greeted With Strong Opposition

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The battle for fiscal solvency for the United States Postal Service [USPS] continued on Capitol Hill Thursday as U.S. Congressman Darrell Issa (R-CA) introduced legislation that would implement sweeping structural reforms for the USPS.

 

The magazine industry, the letter carrier’s union and the postal agency itself has had mixed reactions to the proposed legislation.

 

Rep. Issa’s legislation, H.R. 2309, limits service to 5-days per week and requires all market dominant products to cover costs while maintaining the CPI price cap. Additionally, for classes below 90 percent cost coverage, rates are increased annually by 5 percent above the price cap.

 

The Magazine Publisher’s Association [MPA] commended Rep. Issa for taking up the measure of postal reform but stopped short of fully supporting it.

 

In a prepared statement the MPA says they are “deeply concerned about ‘cost coverage’ provisions contained in Rep. Issa’s bill that do not adequately take into account the effect of the USPS’ excess capacity on periodicals costs and could serve to further erode postal volumes.”

 

The group disagrees with the congressman’s proposal to require certain types of mail classes to incur rate increases 5 percent higher than CPI if their cost coverage is below 90 percent. They add that the bill seems inconsistent and the “MPA has long questioned the Postal Service’s calculation of periodicals attributable costs, especially in light of the enormous excess capacity within the Postal Service with respect to the processing of flat-shaped mail pieces like magazines. The proper way to improve ‘cost coverage’ is to reduce Postal Service costs to efficient levels, not to raise rates more than the CPI cap.”

 

American Business Media agrees with the MPA, saying the bill includes some provisions they have advocated for and others that could be potentially damaging to its members.

 

“Given the current data on periodical cost coverage and the anticipated CPI increases, the provision would likely result in a more than 20 percent increase in postal rates over the next three years from ABM members,” a prepared statement from the group says. “This provision is simply untenable and over the last few hours, ABM has already begun to mobilize its resources and align with allies to fight it.”

 

Rep. Issa’s legislation creates a Postal Service Financial Responsibility and Management Assistance Authority that has “a broad mandate to restructure the Postal Service and reduce costs in order to bring the institution back to fiscal solvency when the Postal Service goes into default to the federal government,” a news release from his office says.  Default would occur if the USPS could not meet a fiscal obligation to the federal government for more than 30 days.

 

This new Authority created under the bill would also have the power to require renegotiation of existing collective bargaining agreements and the power to unilaterally modify those agreements if renegotiation fails. The authority would also have the power to borrow $10 million from the U.S.Treasury to accomplish its mission of fiscal solvency.

 

The Commission on Postal Reorganization [CPR] would be created as a separate body under the new legislation, it would review postal infrastructure and recommend closures and consolidations on postal locations to Congress—if Congress did not outwardly reject the recommendations from the CPR they would automatically become law. The savings projected from this aspect of the bill are about $2 billion from closing financially unsustainable retail postal facilities, according to a statement from the congressman’s office.

 

“This legislation encourages USPS to modernize its retail network and enables USPS to act more like a business,” says Rep. Issa, according to a prepared statement.

 

The American Postal Workers Union is completely opposed to Rep. Issa’s legislation, with the group’s president, Cliff Guffey, saying that it’s “a reckless assault on postal workers and the Postal Serivce.”

 

Guffey contends that if the bill passed the American public would see drastic service cuts because the commission proposed by Rep. Issa would order $1 billion worth of post office closures in its first year and $1 billion worth of facility closures in the second. The group says the Authority created would have the power to cut wages, abolish benefits and end protections against layoffs.

 

The APWU contends that many of its fiscal problems lay with a government mandate that requires the USPS to pre-fund the healthcare benefits of future retirees, which they say costs the agency more than $5.5 billion per year and amounts to an overpayment to the Civil Service Retirement System account by $50 billion to $75 billion to date.

 

The APWU supports Representative Stephen Lynch’s (D-MA) bill, H.R. 1351, that was introduced in April and, according to APWU, wouldcorrect the overfunding of pension accounts and would allow “the cash-strapped agency to use the pension surplus to meet its retiree health benefits pre-funding obligation.”

 

According to a spokesman from Rep. Issa’s office, “Mr. Lynch’s bill does not make structural changes to cut costs, for instance that bill does not eliminate any of the costly regulations or unfunded mandates that USPS faces, but Chairman Issa’s bill eliminates fourteen of the most costly. The Lynch bill doesn’t address excess processing capacity or USPS’s expensive brick-and-mortar retail infrastructure, and Chairman Issa’s bill tackles this problem head on. What Mr. Lynch’s bill does do is infuse taxpayer money into the financially troubled institution without making any of the structural reforms necessary to restore solvency.”

 

Congressman Lynch did not respond to a request for comment on his proposed legislation or that of this new legislation.

 

USPS is in support of certain provisions of the legislation put forth by Rep. Issa, like the change in delivery frequency to five days. The proposal for new governmental oversight was an unwelcome suggestion.

 

“Our financial instability is the result of dramatic loss in volumes, coupled with restrictions imposed by Congress that have prevented the Postal Service from adequately responding to those losses in a business-like fashion,” a statement from USPS says. The group also wants to eliminate the mandate requiring retiree health benefit pre-payments.

 

“We strongly oppose a provision in the bill that provides for an additional $10 billion in borrowing authority from the U.S. Treasury,” a news release from USPS says. “The Postal Service does not need to incur additional debt—we need the money back that is already owed to us. We strongly oppose sections of the bill that would create more government bureaucracy and slow our progress on streamlining our operations.”

 

ABM has supported legislative solutions that address the overpayment of the pension system to move on a path to long-term viability.

 

Meanwhile, legislation in Canada has passed to force postal workers back to work in the country. The Canadian government is requiring Canada Post workers to return to work by Tuesday night. The USPS will resume accepting mail for Canada that was held in the USPS network since the work stoppage began. It is being released and transported in stages to Canada, where customers will experience delays due to the large volume of mail that was being held.

 

Full details of Rep. Issa’s bill can be viewed here.

 

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