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.
“We strongly oppose a provision in the bill that provides for an additional $10 billion in borrowing authority from the U.S. Treasury. The Postal Service does not need to incur additional debt — we need the money back that is already owed to us,” the statement said, referring to the surplus money paid into the FERS account. “We also strongly oppose sections of the bill that would create more government bureaucracy and slow our progress on streamlining our operations.”
USPS also reiterated suggestions it had made before, namely, that Congress allow it access to the surplus funds it has paid into FERS, an amount USPS estimates to be $6.9 billion, and that the Postal Service be exempted from pre-paying retiree health benefits.
“The Postal Service,” the statement warns, “is in danger of running out of cash as early as this October.”
National Association of Letter Carriers, one of the postal worker unions, had a more negative take on the bill. Attacking it for not removing the requirement of prefunding retiree health benefits, NALC expressed supreme disappointment with the bill, saying, “it proposes radical changes that would recklessly downsize the U.S. Postal Service in a way that would seriously damage the $1.3 trillion mailing industry and the entire U.S. economy.”
NALC also took exceptional issue with the idea of reducing delivery to five days, something it has adamantly spoken out against.
NALC President Frederic Rolando called the bill “a draconian downsizing plan and a misguided and unjustifiable attack on hard-working postal employees who provide the most affordable and highest-quality mail service in the world.”
“It seems the war on collective bargaining that we have seen in the states has come to Washington,” Rolando said.