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View from the Hill Blog: USPS Ė Donít Sink but Donít Swim

By Nicole Palya Wood, View from the Hill National Grange Legislative Blog (6/24/11)

  JUNE 24, 2011 --

On Wednesday, June 22, the Chairman of the House Committee on Oversight and Government Reform introduced a bill to restructure the United States Postal Service. Chairman Darrell Issa-CA, who authored this measure, assured its passage was necessary to “prevent another taxpayer bailout.” Included in this massive overhaul, (aka: robust list of new regulations), is a mandated decrease in delivery schedule, which the USPS welcomes but no fix to either of the major fiscal impediments that have crippled the soundness of the entity for the last 20 years.

Current mandates require the USPS to make pre-payments on retiree health benefits each year, which costs the organization about $5.5 billion annually.  Additionally, the USPS has requested access to the Civil Service Retirement System and the Federal Employee Retirement System, overpayments which are estimated at almost $7 billion. Yes, money they have overpaid, that the Federal Government is telling them they can’t have back. Kind of like a bank refusing you access to your savings account while they gain interest and hedge the liquidity. If you look at the car industry which got bailed out at lightning pace, these organizations even had their own banks.

On another note, the USPS does not receive a single tax dollar for operating expenses which came as a shock to me. You would think that if the government regulated you as stringently as they do the USPS, that the organization would get some benefits. I don’t even want to go down the path of how a Postal Service collapse would affect the economy. Currently it is the 2ndlargest U.S. government employer providing jobs to 7 million employees and generating $1 trillion of revenue annually.

The USPS is indeed predicted to run out of money as early as October of this year, and has already announced that it will suspend the biweekly payment to the Federal Employee Retirement Fund, of $115 million today. Yet, in a statement issued by the USPS in response to Issa’s bill, they strongly opposed a provision that would provide for an additional $10 in U.S. Treasury borrowing. “The Postal Service does not need to incur additional cost—we need the money back that is already owed to us.”

Proponents of the legislation believe that the USPS needs more regulatory oversight, while the agency says it needs the ability to respond to changes in the industry in a business-like fashion. Many companies lose market-share as the USPS has in volume, but unlike the private sector, the USPS is shackled in their ability to shrink and hedge operations, debt, labor costs and overhead. It’s like asking yourself why animals raised in captivity can’t compete in the wild…because they never had to.

Big changes are coming for the USPS, make no mistake. My charge for lawmakers as they restructure is to keep in mind that the reason they are unable to compete now and therefore react to massive volume decrease and a deluge of pension withdrawal is due to the same over-regulation and bureaucratic training wheels that this body thought was imperative 20 years ago. We cannot continue to speak with forked tongue, telling the USPS to keep their head above water, while also regulating them not to swim.  

-Nicole Palya Wood
National Grange Legislative Director

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