Destroying the Postal Service in Order to Save It

Wednesday 21 September 2011
by: Allison Kilkenny, Truthout News Analysis

President Obama announced in his deficit reduction proposal Monday that he supports allowing the US Postal Service (USPS) to stop delivering mail on Saturdays, among other revenue-generating proposals, such as allowing post offices to sell items other than stamps.

Strangely, while the president did make reference to refunding the $6.9 billion the Postal Service made to the Federal Employees Retirement System (FERS), he failed to address the $50 billion to 75 billion in overpayments to the Civil Service Retirement System (CSRS).

Audits performed by the Postal Service's Office of Inspector General and the autonomous Postal Regulatory Commission both confirmed that the Postal Service has been bleeding money by overpaying into worker pension funds, placing the figure at between $50 billion and $75 billion.

It seems odd that the president would recognize the one area of hemorrhaging (FERS) without mentioning this second, far greater source of revenue loss, especially considering the White House's own proposals stand to save the USPS "only" $20 billion over the next few years.

The New York Metro Area Postal Union, APWU, and AFL-CIO view this failure to focus on an obvious way to save the USPS as a sign of ineptitude, a nefarious desire to see one of America's oldest public services destroyed, or an unhealthy mixture of both. As a result, the organizations put out a statement demanding that Postmaster General Patrick Donahoe resign immediately. If Donahoe fails to resign, the groups state, they call upon the Postal Board of Governors to fire him.

The press release makes specific reference to Donahoe calling upon Congress to nullify part of the union's contract in order to allow him to lay off 120,000 workers. Less than three months earlier, Donahoe had praised the agreement with the APWU, which he claimed would save the USPS $3.8 billion.

"The New York Metro Area Postal Union [NYMAPU] concludes from his actions that Postmaster General Patrick R. Donahoe is either a well-meaning incompetent or a duplicitous agent of forces who actively want to destroy the Postal Service and have it privatized," the statement reads. "Whichever case is true, Donahoe is violating his oath of office and failing to meet the requirements of his position to be responsible for the overall operation of the Postal Service. Donahoe has contracts remaining to be negotiated with the three remaining postal unions. NYMAPU questions how the other postal unions can bargain in good faith with Postmaster Donahoe after his actions following the contract with the APWU."

Additionally, NYMAPU calls for an independent investigation into the "unprecedented sweetheart retirement package" given to Donahoe's predecessor, former Postmaster John E. Potter.

While the USPS scrambles to save itself from harsh austerity measures, Potter is currently enjoying $3.1 million in pension benefits, in addition to a separate pension established for him by the Postal Board of Governors in 2001 (estimated at $1.35 million,) and accumulated deferred compensation in awards and incentives (another $881,000).

Meanwhile, HR 1351, the bill to save the USPS, collected 205 co-sponsors thus far and has been referred to the House Oversight and Government Reform Committee where Darrell Issa, the enemy of the public employee, will review it.

It is Issa who took the unprecedented step of drilling Donahoe about the union's agreement back in May, calling it too generous, while the union was still voting on the measure. Afterward, Issa penned the "Postal Reform Act," which would dismantle the Postal Service as we know it, giving Congress the power to tear up union contracts and close down post offices without hearings.

What chance does a little bill have against a force like that?

Issa's own plans will generate $10 billion, at least $40 billion short of what the minor accounting tweak would save the USPS. So, why is the White House ignoring the option of refunding the CSRS? The answer may be, in the words of the unions, acts by "well-meaning incompetents" or "duplicitous agents" who seek to destroy the Postal Service and privatize it.

The White House is probably relying on analysis by high-ranking Postal Service employees such as Donahoe, who - if Potter's retirement package is any indication - will be well fed even if the USPS closes its doors tomorrow.

Other members of Congress, who have not signed onto HR 1351, may have little experience using the Postal Service, which generally serves lower-income Americans. If you can hand off packages to your assistant to FedEx overnight, you might not see the need for Saturday mail delivery service.

Then, there are the duplicitous agents like Issa, who has made no secret of the fact that he sees giant government initiatives like the Postal Service as a waste. This is the end game of electing anti-government officials to government positions. They end up destroying government services.

Issa recently demanded that the USPS "right-size" its workforce, but apparently the "right size" in Issa's world isn't just a Postal Service he can drown in a bathtub, but one he can flush down the drain.

The big lie seems to be working, most Americans now believe that the U.S. Postal Service is on the verge of a financial collapse. The explanation seems logical: email, too many post offices, unnecessary six-day delivery, overpaid and underproductive workers. Unfortunately, these are half-truths, misinformation or outright lies. It is true that the nature of mail has changed because of the Internet but it is also true that three biggest years in volume in the 236-year history of the Postal Service were 2005, 2006 and 2007, well into the Internet era. The bigger impact upon the Postal Service was the financial collapse of 2008.   

But the root cause of the financial distress that the Postal Service is going through is overwhelmingly caused by Congressional mandates that were imposed upon the Postal Service. Congress passed the Postal Accountability and Enhancement Act (PAEA), which was signed into law by President G.W. Bush on December 20, 2006. Under the guise of modernizing the Postal Service for the 21st Century, it actually doomed the Postal Service. If not for the PAEA, the Postal Service would be functioning fine even with the impact of email and the financial collapse of 2008.

One of the provisions of the PAEA was to mandate that the Postal Service fully pre-fund future retiree health benefits for the next 75 years, and to do it within a ten-year window.   This means that the Postal Service is required to send to the U.S. Treasury $5.5 billion each September 30.   Remember, this is to pay for the future retirement health benefits of people who haven't even been born yet. The Postal Service is the only entity that is mandated by law to do this. No government agency, corporation or organization is required to fully pre-fund future retirees' health benefits.

But that is not the worst of it. Both the Postal Service's Office of Inspector General (OIG) and the independent Postal Regulatory Commission (PRC) commissioned audits to look into possible overpayments that the Postal Service has made into the Civil Service Retirement System (CSRS). Both audits show that the Postal Service has overpaid at least $50 billion into the pension fund over the years.

There is a piece of legislation, H.R. 1351, introduced by Stephen Lynch (D-MA), which now has 183 co-sponsors, which calls upon the Office of Personnel Management (OPM) to do an audit to determine the definitive amount of the overpayments to CSRS and transfer that amount to the future retirees' health care funding. Basically, it is a bookkeeping adjustment that saves the Postal Service billions and does not cost American taxpayers any money at all.

What also isn't being told to the American public is that the Postal Service workforce has been reduced by over 100,000 workers in the past four years through attrition and that the American Postal Workers Union (APWU) and the United States Postal Service (USPS) negotiated and signed a 4 year collective bargaining agreement in May of this year. The agreement, which was hailed by Postmaster General Patrick Donahoe, saved the USPS $4 billion in labor costs over the life of the contract. In exchange for the givebacks, including the creation of a lower-tier (non-career) category of worker, no pay increases for two years, postponement of cost-of-living adjustments, the union won an extension of its no-layoff clause.

Within three months Postmaster Donahoe was calling upon Congress to pass laws to gut the new contract enabling him to layoff 120,000 workers. Nothing has changed between May when Donahoe signed the contract, and August when he made his frantic call to Congress. Enter Darrell Issa. Representative Issa (Rep-CA) is the chair of the House Government Oversight and Reform Committee. After the contract had been negotiated, and while members of the APWU were voting either up or down on it via a mail ballot, Issa called hearings on the contract before his committee. During that hearing Postmaster Donahoe was called out by Issa and Representative Dennis Ross (FL) on his negotiations.

Since that time Donahoe has abandoned any pretense of honoring the contract, or fulfilling his responsibilities to the American people who depend upon the Postal Service.

One clear action that needs to be taken is for Postmaster General Patrick Donahoe to tender his resignation. If he doesn't, he should be fired. It would also be wise to institute a complete investigation into the unprecedented retirement package his predecessor John E. Potter received. Their legacy has been a damaging one.

Cutting back on service by reducing delivery, closing post offices and mail processing facilities will damage the ability of the Postal Service to carry out its mandate for universal service.  To the people who most depend upon the Postal Service: the elderly, the disabled, the poor, and small business owners, it will be devastating. The impact on a local community when a post office is closed is only negative.

Mail and package delivery will still have to take place if the Postal Service fails. It will take place by a privatized system that does not employ union workers making a living wage and it will not provide universal service to those who need the Postal Service the most. What is taking place is a kind of "wisconsining" of the Postal Service, an excuse to break postal unions and siphon off the profitable aspects of mail delivery to private enterprise and demanding that those most in need sacrifice again.

The saddest part of all of this is that is doesn't have to happen. It would help to start by telling the truth about the financial crisis. After that was done it would be easy to remedy the problem. What is needed is for President Obama and Congress to do their jobs on behalf of the American people by lifting the suffocating Congressional mandates that have prevented the Postal Service from doing its job. Pass and sign H.R.1351 and then you won't have to close 3700 post offices, cut back in delivery, close hundreds of mail processing facilities and lay off 120,000 workers.