On October 13 the House Government Reform and Oversight Committee moved H.R. 2309, the Postal Reform Act of 2011, out of committee. The bill was modified in a number of ways that will ease its passage in the House of Representative. The most important changes made the bill less objectionable to:
- periodical mailers;
- catalog mailers;
- non-profit mailers;
- rural communities that are facing the loss of Post Offices;
- communities losing a station or a branch;
- opponents of 5-day delivery; and
- opponents of moving delivery for those that receive delivery at the door or at the curb to cluster boxes.
Passage in the House of Representatives will depend on getting 218 Republicans to agree on the bill’s final language. To the extent that the bill is modified further, the most likely modifications will affect rural Post Offices, 6-day delivery, and door-to-door delivery.
All of the modifications to H.R.2309 that will allow passage in the House of Representative will reduce cuts in costs and revenue increases that the bill had contained when it was passed by the subcommittee.
The final version of the bill that passes the House of Representative will likely have cuts in costs similar to what the Postal Service has proposed in its network optimization initiative without the full elimination of 6-day delivery. H.R. 2309, as currently written, will likely cause the Postal Service to cut fewer rural Post Offices and slow the process of cutting stations and branches so its savings so its savings from its retail optimization proposal will be less than what it most likely has in its financial projections. The bill does not have savings from modifying benefits that the Postal Service also wants to do.
Congress’s Policy Choices
As it will likely pass the House of Representatives, H.R.2309, does not generate enough immediate cost savings or revenue increases to allow the Postal Service to stay within a $25 billion debt ceiling in the next three fiscal years. Congress has two choices if it wants to use H.R. 2309 as the basis for final legislation.
- Increase the debt ceiling to cover losses over the next few years. This could push the debt ceiling to nearly $30 billion. A doubling of the debt increase in this period increase the risk to the Treasury that the Postal Service cannot pay its debt down, and ensures that the Postal Service will be capital constrained for the foreseeable future.
The size in the increase in the debt will depend on how much the Postal Service needs in cash to cover transition costs to a smaller network. It does not include debt increases to make necessary capital investments to ensure the Postal Service can implement its modernization initiatives quickly. Therefore, it also means that upgrades to Postal Service vehicles, facilities, retail information systems and needed to make retail optimization work, and mail processing and delivery information systems.
- Allow the Postal Service to raise rates above CPI. Based on my back of the envelope calculations, an increase would likely be needed early in 2012 and probably a second increase in 2014 especially if the goal is to not revisit Postal Reform again before 2015. A long term-solution may also require a modification in the CPI measure and how it is applied beyond 2015. (See: Potental Rate Increases to Run Less than 6% Ave CPI over the Next 3 Years)
Alternatives to the rate increases listed in the above paragraph, Congress could smooth the rate increases by looking at increases the debt ceiling and modifying the CPI formula and how it is applied for rate increases in 2013 and beyond.
Capital Needs Cannot Be Ignored
Both of these options do not deal with the Postal Service’s capital and cash needs. These needs over the next 8 years are unknown but are likely to be at least $10 billion and could be 2 or more times that figure. The size of the cash and capital needs depend on the cost of:
- transitioning to a smaller footprint,
- upgrading information systems to fit the needs of a modern retail, processing, transportation, and delivery network,
- upgrading management of a modern retail network including support for contractors and Village Post Offices,
- replacement and upgrades to the vehicle fleet, and
- replacement and upgrades of sortation facilities to ensure they fit the new processing operating plan optimally including relocation of facilities as mail mix changes to more optimal locations and more optimal facility configurations.
The size of the capital and capital needs will need to enter into the discussion as to how much the debt ceiling must rise and/or how much rates must rise to ensure a profit making Postal Service by 2015 and a self-sufficient Postal Service by 2012 if not before. If the capital issue is not addressed now, along with everything else now on the table, Congress will likely have to revisit postal policy within 2 to 4 years.
For this bill to work, it must do away with the 5.5 billion dollar prepayment to health benefits which was enacted by congress under the republican lame duck session prior to G. Bush leaving office in 2006. Starting in 2007 the USPS has been mandated to pay 5.5 billion per year, up front. Do away with this strangle hold which is required of no other agency and the USPS will proper.
It must also omit all union busting proposals submitted by D. Issa and the current republican administration.
It’s all about jobs……jobs……..jobs. The GOP just doesn’t seem to get this.
correction……..”prosper”
Nothing about overfunding retirement and healthcare,firing the most senior craft workers,not firing any of the inept freeloading managers,breaking the Unions,eliminating craft benefits and collective bargaining rights,eliminating craft healthcare and retirement…this is what HR 2309 will do.This biased,one-sided article is only about keeping costs artificially low for the mailers that have been ripping off USPS for decades.With the free postage for the fata**ed,crooked do-nothings in Washington,and the almost-free postage for non-profits,media mail,direct mailers,and on and on,it’s a wonder the USPS made money for decades.The trouble is the profits were stolen by Congress all these years.The liars in Congress(Car Thief Issa,et.al)are now hoodwinking the American public by saying that Congress and the taxpayer are subsidizing USPS,when in fact USPS has been subsidizing Congress! In spite of Congress’ meddling , a bloated,inept,overpaid,crooked USPS management,and free&below-market postage for everybody and his brother, the USPS is still solvent.The reason? The dedicated and hard-working craft worker who do all the work! It’s a crying shame that now they are being blamed for the present mess at USPS…but we must have a scapegoat…someone is to blame…
Sorry,the 2nd-to-last line of my previous post should read “craft workers”…I’m tired from working all day moving the mail while Management meddled, sat around,and watched…
Thats alright my friend , keep up the good work of informing the public..
We are all tired and that is what I think they are counting on. Beating us down until we give up. Don’t give up. I won’t my brother.
One item to be included in any Postal legislation should be: Get rid of the franking priviliges for all the fata**ed,crooked,freeloading do-nothings in Washington! Those lazy dunces have been robbing USPS blind for far too long!
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Why is it that govt that has no idea how the Postal System works can step in and tell us how to do things? I would suggest they get “involved” and go to various locations to plants and stations to see how operations really work. Instead of throwing out “ideas” of how to operate. And for once, for them to “think of others” and how they use our services instead of themselves and if they do or don’t use our services. Take themselves out of the equation and use some random individuals that do use our service and see how it really affects the general public. And be sure to do a variety of areas in the country. Not all areas are the same.
We always say people that can do and those that can’t manage. What we have found out that it goes to a higher level and those that can Manage and those that can’t are in Congress.
Maybe Issa can burn down all the “extra Post Offices” that he says need eliminated.
offer incentives for csrs employees to leave $ 1000. for every year of service… wipes out alot of older people, replace with younger, lesser paid workers// no overtime !!! should be put into place now !!
get rid of half the employees that dont touch the mail…. far too many…. thank you. god bless.
the sad thing about all the political posturing, deception, and special interest lobbying regarding the postal service is that all government is run this way through the politicians in congress. The ruling elite or one percenters will do what ever , whenever, however to stop organized labor from prospering. The postal service is the largest organized workforce in the U.S.A.
The tragedy of 9-11 is a tragic example of politicians ignoring problems and allowing the airlines to cut security, and under pay and train employees for profit. Wake up people and occupy wall street and congress.
pay 50K incentive plus 5 years services to those people from 50-59 as if they have served 20 years in USPS services. I guarranty more than 100K people leave, save USPS big money. Why those idiot management don’t do that?
I too am a postal worker but would like to let all those who hasn’t seen who voted for this in 2006 should reliaze that the Unions are the one who put this plan in with the congressman and senators and that the bill pass with noone voting against this in the Senate during the lame duck. So everyone needs to blame the unions and representatives also , Republican and Democrats alike since it pass without anyone voting against it
issa and ross and their republicans on the committee voted for this… and are pushjng it through…. democrats voted against it… lynch has over 2oo sponsors of his bill which has a much softer , rational approach….. DO NOT BLAME DEMOCRATS FOR THIS… THIS IS REPUBLICANS AGAINST THE MIDDLE CLASS… plain and simple.
we CAN’T LOSE our post office. It is HARD with the LACK OF JOBS here. If they shutdown the post office it will make the lack of jobs even harder for everyone!!!! Please from everyone that relays on the post office for financial or non-financial resources. DON”T SHUT IT DOWN in tucson Arizona or anywhere else.