Overview: It’s a short-term fix, not a long-term solution

The Senate bill will not fix the Postal Service because it provides only short-term financial relief from the uniquely unfair and excessive burden to pre-fund future retiree health benefits and it fails to offer a viable business model for the 21st century. See Lazard report on USPS (PDF).

• It embraces Bush administration policies included in the 2006 Postal Accountability and Enhancement Act (PAEA) that have crippled the Postal Service:

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   1. The mandate to massively pre-fund its future retiree health costs. This burden, which no other agency or private company in America faces, accounts for 85 percent of the Postal Service’s $32 billion in losses since 2007, and 96 percent of the $3.2 billion loss in the second quarter of Fiscal Year 2012.
   2. The rigid price controls on postage rates for letters that have suppressed postal inflation to less than half the level of private-sector delivery price inflation.
   3. The grossly unfair allocation of Civil Service Retirement System (CSRS) pension costs for pre-1971 service. See the Policy Legacy of the PAEA (PDF).

• It targets the elimination of 18 percent of all postal jobs (approximately 100,000 positions) and therefore mandates a downsizing strategy that will drastically cut service, drive more business away and do more harm than good. (See Section 102(c)(2) of S. 1789.) Slashing jobs in the midst of a jobs crisis would also weaken the nation’s economic recovery.
• It will force the Postal Service to degrade its chief asset, the six-day-per-week last-mail mile delivery network, to fund future retiree health benefits that are already massively pre-funded. The USPS has set aside $44 billion for retiree health, enough to cover decades of future premium costs, while all other government agencies, and two-thirds of Fortune 1000 companies, have set aside nothing. (Source: Towers Watson annual survey, Accounting for Pensions and Other Post-Retirement Benefits, 2010.)
• It will seriously undermine the Postal Service’s ability to build on its growing success in the delivery of residential parcels and e-commerce packages. USPS shipping revenues were up 10.3 percent in the second quarter of Fiscal Year 2012, rising from $6.6 billion to $7.3 billion. (Source: USPS 10-Q report, Quarter II, 2012.)
• It attacks the rights and benefits of postal workers by amending the collective-bargaining provisions of the law to favor postal management and slashing workers’ compensation benefits for injured workers.
• The May 15, 2012 plant closing deadline, or the grudging support of other unions, cannot justify votes for S. 1789. It was an artificial deadline created by the postmaster general. Indeed, even after the Senate passed the bill, the USPS went ahead with its announcement on plant closings anyway, dropping only 20 planned consolidations and stretching out the schedule over three years instead of two. The Senate could have enacted a simple moratorium on closings until a good bill with a viable business model could be fashioned.