Issa introduces bill to ‘prevent bailout’ of Postal Service

Rep. Darrell Issa, chairman of the House Oversight and Government Reform Committee, introduced legislation on Thursday to significantly reform the United States Postal Service in order to prevent the need for a “taxpayer bailout.”

The legislation follows USPS’s announcement on Wednesday that it will no longer pay money into its Federal Employee Retirement System in order to cut costs.

Issa said that such a solution was not acceptable.

“The Postal Service lost $8.5 billion last year,” he said in a statement. “It is going to lose, at least, $8.3 billion this year. And it is projected to lose $8.5 billion the year after that. Congress can’t keep kicking the can down the road on out of control labor costs and excess infrastructure of USPS and needs to implement reforms that aren’t a multi-billion dollar taxpayer funded bailout.”

The legislation does several things. It creates the Postal Service Financial Responsibility and Management Assistance Authority, “which will have 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. The Authority will be disbanded once USPS meets several benchmarks that ensure financial health.”

It would also create the Commission on Postal Reorganization, whose purpose would be to make recommendations to Congress on closures or consolidations with the goal of reducing USPS costs by $2 billion a year.

The goal, Issa said, is to “[encourage] USPS to modernize its retail network and enables USPS to act more like a business.” (Issa warns ATF not to retaliate against whistleblowers)

To that end, some regulations would be removed to make it easier for the Postal Service to do things like close postal facilities that are not profitable.

Benefits and salaries for Postal Service employees would be cut, putting them more on the level of what private sector employees receive for similar jobs. Oversight estimates that such measures will save $700 million dollars in the 2010 fiscal year, which ends in September.

Oversight estimates that the reforms will save the Postal Service $6 billion dollars a year when all of them have been enacted.

Among other things, the legislation will also permit USPS to move to five-day delivery of mail, and would alter the bargaining process between the Postal Service and the employee unions.

The Postal Service issued a statement that it was predominantly disappointed in the bill. (Issa camp says Washington Post wrong on Gunrunner story)

“While there are several provisions in the bill that we agree with, the bill appears to be based on the assumption that the Postal Service’s challenges result from too little regulation. The opposite is true. 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,” the statement says.

  • Pingback: H.R. 2309: Radically Downsizing the Government and Getting the Collective Bargaining Rights of Hard-working Postal Employees « The North Carolina Letter Carrier Activist

  • Americanius

    If prefunding the pension is a fiscal issue then abolish it and turn it into an employee contribution plan.
    Problem solved and everyone is responsible for their own retirement as it should be.

  • http://pulse.yahoo.com/_MNTSEJ6OUX727WCS3CO5APP6NM aloeafficiado

    I have seen part of this discussion, but two things that never come up are. It is only at the PO I have to wait in long lines. The clerks are probably $100.000 senior staf doing a job a young person would gladly do for $9.00/hr That reform would speed up service because we could fill up all the empty stations.

    Running and adapting an organization which is challenged by new technology is tough. However, you only win the challenge by   providing more and better service. To be fair, the PO is asking Congress to give them ways to provide other services, but Congress has created a lot of single function businesses that are more vu;lnerable to shocks that they would be if they were  part of a multi biz conglomerate. Examples are airlines and  Post Offices, Amtrak, too.

    I say they should divest those ventures that lose money. Hold an IPO to get our investment back and turn them loose to adapt and compete.

  • http://pulse.yahoo.com/_MNTSEJ6OUX727WCS3CO5APP6NM aloeafficiado

    Restrictive contracts with the air carriers contain the demand that none can undercut the USPS price. This costs us all.