Politics

Postal workers protest USPS cost-cutting: What does postal reform mean? [VIDEO]

Susanna Pak Contributor

WASHINGTON — Postal Service workers protested outside lawmakers’ offices across the U.S. Thursday, calling for “no” votes on a postal reform bill that could stop Saturday delivery and end door-to-door mail delivery.

The Senate is expected to vote on the bill soon after Congress comes back in session next week. The U.S. Postal Service continues to lose money, saying it could face an annual loss of $21.3 billion and accumulate a total debt of $92 billion by 2016.

In 1971, the Postal Service transitioned from a federal government department to an independent agency of the government that does not directly accept taxpayer dollars. It’s currently borrowing from the Treasury to cover its mounting losses.
Where does postal reform stand, and what will change if a law is passed? Here’s a brief Q&A:

Q: What is postal reform?

A: Reform comes in the form of two bills. The Senate bill, S. 1789, is called the “21st Century Postal Service Act of 2011.” The House of Representatives bill, H.R. 2309, is called the “Postal Reform Act of 2011.” Both aim to improve and restore the financial standing of the U.S. Postal Service.

Q: Is the Postal Service funded with taxpayers’ money?

A: No. The Postal Service receives no tax dollars for operating expenses. It covers its costs by selling stamps, products and services.

Q: What is the USPS doing to cut costs?

A: It is restructuring its management of healthcare costs and pushing for laws that will allow it to reform its business model. The USPS is working with Congress to reduce annual costs by $22.5 billion by 2016. It wants Congress to pass laws that will allow it to 1) take back $11 billion in overfunding from its retirement fund and 2) eliminate Saturday delivery.

Q: Where can I read the postal reform bills?

A: The full texts of both the Senate bill and House bill are available online.

Q: Is postal reform necessary?

A: The short answer is yes. The USPS says it will continue to lose $25 million per day until (and unless) major changes take place. At the end of fiscal year 2011, the USPS reported a net loss of $5.1 billion. The loss would have been more than double if Congress didn’t pass a law allowing the USPS to delay a mandated payment of $5.5 billion to prefund retiree health benefits.

No other agency in the country is required to prefund retiree health benefits – and that has been a sticking point with the USPS.

Q: How much money is postal reform expected to save?

A: The Congressional Budget Office estimates the House bill would save about $20 billion by 2022. It estimates the Senate bill, if it becomes law, would actually cost $6.3 billion during that same period because lowering health care expenses would cause the USPS to cut spending less aggressively than it would without the legislation.

Q: What happens next?

A: Congress will be back in session on Monday. The Senate is widely expected to vote on its postal reform bill soon after returning.

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