Facing default, Postal Service turns to Congress

Post Master Maxine Evans sorts mail behind an open P.O. box at the Ewell Post Office on August 22, 2011 in Ewell, Smith Island, Maryland. The USPS has cited a projected shortfall for 2011 of $8.3 billion, and the use of the Internet for pay bills and sending emails, for placing the post office in Ewell on a list of more than 3,000 post offices around the country that could be slated for closure. / Mark Wilson/Getty Images

WASHINGTON - The postmaster general is delivering a message to Congress: Help save the United States Postal Service.

Postmaster General Patrick Donahoe is among the witnesses scheduled to appear Tuesday afternoon before the Senate Homeland Security and Governmental Affairs Committee to discuss the Postal Service's mounting debt.

The USPS is facing a second straight year of losses of $8 billion or more. A decline in mail because of the Internet (circulation of mail is down 22 percent compared to five years ago) and the loss of revenue from advertising amid the economic downturn have taken a toll on the agency.

Postal officials say they will be unable to make this month's $5.5 billion payment to cover future employee health care costs because the agency will have reached its borrowing limit and doesn't have enough cash.

The USPS is a quasi-government run agency that receives no federal money and relies on postage to be self-funding.

Calling the situation "serious," Donahoe told The New York Times, "If Congress doesn't act, we will default."

Among the cost-cutting measures being considered: Eliminating Saturday deliveries, shutting up to 3,700 postal locations, and cutting as many as 120,000 workers - almost 20 percent of the Postal Service's work force.

U.S. Postal Service worker Magda Aguirre moves cartons of mail at the U.S. Post Office sort center on August 12, 2011 in San Francisco.

/ Justin Sullivan/Getty Images

Some changes would require changes in law. Postal service officials say, for example, they are legally required to provide universal service to 150 million addresses nationwide every week. Eliminating Saturday delivery or other services will require new legislation. Allowing mail trucks to make wine and beer deliveries might also bring in more revenue.

Drawing the ire of the postal workers' union is a website maintained by the House Committee on Government Oversight and Reform, which promotes the Ross-Issa Postal Reform Act. The website, "Saving the Postal Service," calls for no taxpayer bailouts, and would unilaterally rewrite collective bargaining agreements, cut reduced rates for non-profits and political committees, set up a commission to decide on closing of post office locations, and raise revenue by selling advertising space on mail trucks and in post offices. [There is no mention in the bill of eliminating lawmakers' franking privileges.]

APWU President Cliff Guffey chastised Rep Darrell Issa, R-Calif., for "wasting taxpayer money" with the site, and said the proposed law "would destroy the Postal Service as we know it."

Labor represents 80 percent of the agency's expenses, and critics of the union say postal workers pay less for their health benefits than other federal workers. Workers are also protected against layoffs.

[djseavy]

They're broke; the government is (for all purposes) broke, yet every time somebody farts, they all get a paid holiday. Perhaps if they ran their agencies the way private businesses have to, they wouldn't be on the brink of default.

[BulkMailTech]

There is one thing that has been driving the USPS to insolvency. A provision in the PAEA of 2006 that required the USPS to PREfund FUTURE retiree health benefits. This provision takes $5.5 Billion out of USPS revenue every year. If not for this requirement made by CONGRESS, the USPS would have actually had a profit of around $800 Million over the past 4 years. This $55 Billion fund is meant to ensure the funding for FUTURE retirees for the next 75 years. In essence, USPS is being required to put money aside for people who do not work for USPS yet and some that aren't even born yet. This fund was to be paid in only 10 years. There is no other business or organization anywhere that has to make such payments.

The USPS has also, due to a flaw in the formulas, OVER paid into the two pension funds by over $60 Billion. You can do the math here, and so can Congress. Congress will not talk about these over-payments or pre-funding requirements. They're too busy paying lip service to their constituents about keeping little bitty Post Offices open.

Cut out the PAEA funding and return the over-payments. Then, since there is already $23 Billion in that fund, USPS can take that $60 Billion and put $22 Billion into the future retiree health benefit fund, pay off the debt to the Treasury of $15 Billion and still have some left over for a rainy day.

But this is too simple for Congress to grasp. They, as well as the public, grab onto the Union Contracts as being the bane of the USPS. In specific, the No Lay-off clause. Think about this. When the last agreement expired in November 2010, hiring was frozen. Anyone on the rolls prior to that is protected against being laid off. Once the contract was ratified, hiring resumed. Those newly hired are not covered by the no lay-off clause, Besides, who would be laid off first anyway? That's right, the new people.

Another thing you don't realize in characterizing the Unions as evil money grubbing monsters. The APWU, realizing that we are all in this together gave up some financial issues to help with this problem. Specifically, we will be paying a larger portion towards our health benefits which, contrary to popular belief, were never, ever paid in full by the USPS. We also waived any Cost of Living Adjustments for all of 2011. COLA for 2012 is deferred until the same period in 2013. Our first chance of a raise is only if inflation causes the CPI to rise. The first general wage increase will be 1% starting in November 2013. That will make 3 years that APWU represented workers have gone without any raise in salary. Definitely the sign of evil money grubbing monsters. We're feeling the pinch too.

The blame lies solely with your CONGRESS. If you really want to do something, contact your representative and senator and urge them to support H.R.1351 which will go very far in resolving the current problem and resolve the over-funding problem.

In the latest contract, the APWU agreed to allow the USPS to hire a greater percentage of temporary workers as well as allowing management to post and fill "Non-Traditional" jobs. These jobs could be 4 10 hour days, or 5 6hour days and a 10 hour day or even just 5 6 hour days. Workers only need work a regular schedule of 30 or more hours to be considered full time.

This allows the USPS to fill positions that may not have 8 hours of work every day. It alleviates the problem of having a worker on Stand By for 2 hours every day. I am sure that you have heard about the USPS paying workers to do nothing. Sure doesn't sound like a stonewalling tactic to hold the USPS hostage to a contract.

Also consider that USPS Management agreed to the terms of this contract just a few months ago as something they could live with as well as the APWU.

[JrAceFarrel1960]

If a section of the United States does not have a postal code, what would that do too the society that has a glitch in the ways of being identified, also would resetting Google bring a trillion jobs if needed to be changing street signs alone in reconfiguring America,resetting Google so it cant be reconfigured is to have is run smooth ,all you need is to pack it full and do it,whats the pay off problem hmmm

[jwolfe2010]

Government needs to adopt a business attitude and project what future technology brings to their service or product. The Post Office is just one example of government's ineptitude: projecting long term economic and business health for a service that was heading for closure 20 years ago was adamantly ignored/debated and shoved under the rug. Instead of reinventing the Post Office to continue to provide jobs for postal workers, they gave use 'forever' postage and higher shipping costs.

Didn't someone cry "it's time for CHANGE" three years ago? Where is this "CHANGE" that we are all waiting for???

[focusonjobs1]

Congress can start by paying back the 75 billion owed USPS for overpayment to the Postal Service's Civil Service Retirement System. They have been doing the same thing with the overpayments as they do at the end of the year when social security has monies left over, they spend it.

[realtimecoffee]

Ah the costs of kicking the can down the road are finally coming home to roost. My apologies for the horrible mixed metaphor.

[aldrich617]

One wonders at how many of these negative comments about the USPS
are paid for by agents of patrons with a financial interest in the
demise of a popular public institution. If they were to take over
the USPS rates would go up, service to remote areas decline, and worker compensation would be diverted to the accounts of a few politically well-heeled executives. The third imbecile son of the
second marriage of the elite would feel bad if he didn't have a company to run into the ground, so what better place to put him
than the PO - a worker oriented thing.

The sad fact is that the Congress has been purloining the over-payments to the pension system by the USPS for many years, and
they fiercely resist calculating the true amount of their theft.
They now, led by the admitted car-thief Rep. Issa (see Wikipedia)
want to rob the USPS again to the tune of 5 billiom+ a year,
requirements that would no doubt be excused if his (here unnamed)bosses were to seize control.

[RobAla]

Here we have another example of federal government mismanagement. Along with Social Security, Medicare, and goofy lending agencies like Fannie and Freddy - how can anyone in their right mind advocate that we go to a single payer federal government run health care system? Are you nuts? Track records mean something.

We need to reduce the scope and size of the federal government to what it can do best, and let the states handle the rest. This centralized mess in Washington has proved to be a horrible failure. We need to get back to a limited federal role.

[Dusty05]

There are so many things to addressed based on the many posts. Around 83% of the USPS volume is Bulk mail, it takes 3 pcs of Bulk mail to generate the revenue of 1 First Class letter and cost no more to process or deliver. When a person conducts business on the internet they trigger the mailing industry to send a mail piece usually Bulk mail. Do you ever wonder why you get "JUNK" mail? The mailing industry is over a $1 trillon dollar a year business. Take that away and the jobs and many of you will blame it on upper management of the postal service. Sure D. Issa would like to get his hands on some of the money but there are many more just like him. Fedex and UPS are in business to make money, the Postal Service is in business to break even. The Postal Service will NEVER see the $$ that they have over-paid, it has been spent. Postal employee's have good middle class jobs, they pay taxes they help support this country in many ways. If Fedex and UPS were regulated the same as the USPS they would not have lasted 5 years. You can't have it both ways but we do now. It works for them and would work for the USPS if our so called leaders would put their hands in their-own pockets and stop trying to put them in someone elses.

[realtimecoffee]

Junkmail just kills trees and generates landfill. Let them pay full rate. If the direct mail industry can't cope then bye bye. It's Darwin calling.
Then split all delivery routes into two groups. One gets delivery M-W-F the other TU-TH-Sat. With less junk to pack the loads will be lighter anyway and you can get the same coverage with half the manpower. Worst comes to worst your mail gets to you one day late, but USPS payroll is cut in half.

That's if you even want to save this dinosaur anyway. Eventually it will go the way of the Pony Express.

[askagain]

realtimecoffee - Here are some facts. 1) Bulk mail subsidizes first class mail delivery, not the other way around. Without bulk mail, a postage stamp might cost a dollar or more. 2) The trees used to make paper are fast growing trees. They are not the hardwood trees used to make furniture that take years to mature. 3) Paper disintegrates quickly unlike tin cans or plastic bottles.

[peidmontcitygirl]

I was just listening to a news program with The Post Master General talking and President of the USPS workers assn. talking about how they don't need Congress to give them money, they just need Congress to give them access to their own "pre-paid" accounts that hold monies in advance for employee pensions, etc. These are not taxpayer dollars, but dollars earned by the Post Office as a result of its business operations. These accounts have plenty of money for the Post Office to continue to restructure itself as a privately run and self-sustaining business, with modifications for leaner operations. Why does the account I just saw on TV sound so different from what's in this article?

[nuttyworld]

And who proposes the pension? Postal union? Oh, what a surprise. See, unions are not really on the ball are they, or they would realize that the spending cannot be sustained. Why is that so difficult to understand? Unions have outlived their usefulness. Do unions work for nothing? Just asking.

[retm-w]

See you don't even read, it's about the health insurance that the republican congress made them pay 10 years in advance, so their friends at the insurance companies could line their pockets. Do you work for nothing? just asking.