Committee Weighs Proposals to Save the U.S. Postal Service

WASHINGTON – Homeland Security and Governmental Affairs Committee Joe Lieberman, ID-Conn., Ranking Member Susan Collins, R-Maine, and Federal Financial Management Subcommittee Chairman Tom Carper, D-Del., Tuesday praised Postmaster General Patrick Donahoe for offering a bold plan that attempts to stave off the U.S. Postal Service’s (USPS) imminent bankruptcy. But they did not endorse all of his proposals.

At a hearing entitled “U.S. Postal Service in Crisis: Proposals to Prevent a Postal Shutdown,” the Senators heard testimony for and against those proposals, which include shrinking the Postal Service workforce by 220,000 and eliminating Saturday delivery service. Carper and Collins each have introduced reform legislation to keep the USPS solvent, and three bills are pending in the House.

Without a legislative resolution, the Postal Service could default on a $5.5 billion payment to a federal government retiree fund as early as next month. If no long-term changes are made, the Postal Service will run out of money by next August or September and could possibly stop delivering mail.

Lieberman said the Committee would debate legislation as soon as possible after the White House submits its own proposal.

“It’s hard to believe it has come to this,” said Lieberman. “The U.S. Postal Service is not an 18th Century relic. It is a 21st Century national asset. I have an open mind on the various proposals that have been made but the bottom line for me is that we must act quickly to prevent a Postal Service collapse and then carefully enact a bold plan to secure its future. If nothing is done, the Postal Service will run out of money and be forced to severely slash service and employees. That is the last thing our struggling economy needs and the last thing our country needs.”

Collins said: “The USPS is seeking far-reaching legislation to allow the Postal Service to establish its own health benefits program, administer its own retirement system, and lay off its employees. This is a remarkable turnabout from its previous proposals. I appreciate that the Postal Service has now proposed several ‘Big Picture’ ideas, but many details remain unclear. As we search for remedies, we must keep in mind a critical fact: The Postal Service plays an essential role in our national economy. The Postal Service has to preserve the value and service it provides to its customers while significantly cutting costs and streamlining operations. The major solution to the financial crisis should be found in tackling more significant expenses that do not drive customers away and lead to further reductions in volume.”

Carper said: “The situation facing the Postal Service is dire, but it is not hopeless. There is a way the Postal Service can get through this crisis. We need a bipartisan, bicameral consensus around the reforms necessary to restructure the Postal Service’s finances and transform its operations to reflect the uncertain future it faces. Congress and the administration must work together and focus on the areas of agreement and build a package that is humane, smart and effective, and that can prevent postal default and insolvency and set the Postal Service on track towards stability.”

A combination of business lost to the internet and the nation’s economic problems has led to a 22 percent drop in mail with a revenue loss for the USPS of more than $10 billion over the past five years. This year the Postal Service will run up an $8 billion deficit for the second year in a row.

The Postal Service also will bump up against its $15 billion credit line with the U.S. Treasury soon, which could force it to default on a $5.5 billion payment into the health care fund for its retirees scheduled for the end of this month.

Donahoe says the USPS would save $20 billion and return to solvency by 2015 if it eliminates Saturday delivery; closes approximately 3,700 post offices; shrinks its workforce by 220,000; pulls out of the federal employee health care plan and creates its own; does away with a defined benefit retirement plan for new employees, offering them instead a defined contribution plan; and requests the return of $6.9 billion in overpayments to the Federal Employee Retirement System.

So much of the nation’s progress is interwoven with Postal history. A lot of the roads we use today – like I-95 – started out as colonial-era Post Roads. As our nation pushed west before the railroads were built, the Post Office created the Pony Express to keep the nation connected with its frontiers. And the Post Office’s subsidies for air mail in the early days of aviation helped jump start the fledgling airline industry.

Through the centuries, the Postal Service not only helped stitch together the nation, moving commerce and culture coast to coast and to all points in between, it also bound together our towns and neighborhoods, with the local Post Office often serving as a center of civic life – and many still do.

In addition to Donahoe, witnesses at the hearing included John Berry, Director of the Office of Personnel Management; Phillip Herr, Director, Physical Infrastructure Issues at the Government Accountability Office; Thomas Levy, Senior Vice President and Chief Actuary at The Segal Company; Cliff Guffey, President American Postal Workers Union; Louis Atkins, President National Association of Postal Supervisors; Ellen Levine, Editorial Director, Hearst Magazines; and Tonda Rush, Director of Public Policy at the National Newspaper Association.