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POLITICS: PennAve

Postal Service tries to stem red ink

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Politics,Congress,PennAve,Sean Lengell,Tom Coburn,Postal Service,Tom Carper

The U.S. Postal Service has long vowed that neither bad weather nor gloom of night will keep it from delivering the nation's mail. But sagging incomes, rising debt and the nation's increasing reliance on electronic communication are threatening the organization like Mother Nature never could.

To keep the post office's financial head above water, its board of governors recommended a 3-cent emergency rate increase to mail a first-class letter, bumping the price to 49 cents. If approved by the independent Postal Regulatory Commission, it would follow a 1-cent rate increase that went into effect early this year.

The proposed rate bump, which likely would kick in early next year if approved, would generate an estimated $2 billion annually.

But with the agency facing $15.9 billion in debt and expected losses this year of $6 billion, the new stamp price would fall far short of solving the financial crisis.

While the Postal Service is a federal agency, it doesn’t receive money from the government — yet still needs congressional approval to make any major structural changes.

Whenever the organization has proposed a cost-cutting measure like closing post offices, the move has caused an uproar among lawmakers and ordinary Americans, who view their local post offices as the symbolic and tangible center of their communities.

But Postmaster General Patrick Donahoe is trying once again to convince Congress to allow his agency to end Saturday delivery and stop door-to-door delivery for new residential and business addresses — a move that could save $2 billion a year.

"The choice is simple: greater flexibility and authority now, or massive taxpayer exposure and service degradation later," Donahoe told the Senate Homeland Security and Governmental Affairs Committee.

But many say the biggest factor harming the Postal Service's finances is the unique structure of its employee pension programs. A 2006 law requires the organization to prefund its programs for the next 75 years, and the agency has struggled to make the $5.5 billion annual payments.

The mandate, the only one of its kind for a government agency, has brought the pension plans to the brink of collapse.

In a move to streamline Postal Service operations, the Senate committee's chairman, Sen. Tom Carper, D-Del., and its top Republican, Sen. Tom Coburn of Oklahoma, have cosponsored legislation to give the organization more flexibility to set prices on its own. Under federal law, the agency cannot raise prices more than the rate of inflation without approval from its regulatory panel.

The measure also would makes changes to the way the Postal Service pays into its pension funds and would preserve Saturday delivery for at least a year.

"The best way to help the Postal Service gain a sustainable financial footing is through comprehensive postal reform legislation," Carper said.

But the bill, which hasn't passed out of the committee, faces roadblocks as many lawmakers from both parties and unions say its changes would fail to fix the pension problems, lead to higher rates and create a morale-busting, two-tier workforce.

The bill would "drive the Postal Service into a death spiral,” National Association of Letter Carriers President Fredric Rolando told the Senate committee.

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Author:

Sean Lengell

Congressional Correspondent
The Washington Examiner