USPS provides essential services despite manufactured obstacles; delivery innovation and cost-savings being blocked by ulterior motives
This post originally appeared at Occupy Democrats
The fight against the United States Postal Service continues. While the Post Office looks for ways to save itself, Republicans, led by Representative Darrell Issa, continue to look for ways to destroy it. Representative Issa, leader of the House Oversight and Government Reform Committee, now wants to end all at-home delivery by the year 2022.
Before you can understand why they are doing this, you need to understand the problems facing the Post Office. Prior to 2006, the US Postal Service workers have a retiree health care benefit in addition to their pension. Before Congress passed the Postal Accountability and Enhancement Act of 2006 (or PAEA), the USPS operated under a pay-as-you-go model for retiree health care funding. In 2006, the Congress passed the Postal Accountability and Enhancement Act of 2006, and was eventually signed by then President Bush. The bill stated that the Post Office had to pre-fund its future health care benefit payments to retirees for the next 75 years in just a ten-year time span. In other words, they have to pay for health benefits for employees that A. have not even been hired yet and B. theoretically, have not been born yet. No other government or private corporation is required to do this.
“The confusion over 75 years may be due to an “accounting” and not an “actuarial or funding” issue. They only have to fund the future liability of their current or former workforce. This would include some actuarial estimate about the mortality rates of their current workers (i.e. how long they live). So a 25 year old worker would have an average life expectancy (from birth) of 78.7 years. Thus, they would have to project future retiree health benefits for this individual up to about 54 years in the future.
But for accounting purposes they must estimate the future liability over a 75 year period (according to OPM financial accounting guidelines). In this case, they would make some assumptions about new entrants into the workforce and addresses your second question.
Theoretically, these new entrants could include someone who is not born yet. While they have to account for these future liabilities on their financial statements they do not have to fund them if they are not related to their current or former workforce.”
So, why would Republicans do this? It could have something to do with hoping to get a private entity in there to take over where the Post Office left off. Or perhaps it has something to do with the fact that the Post Office has one of the largest unions, the American Postal Workers Union or APWU, with over 300,000 members. But one thing is for sure. Republicans are playing their same game of manufacturing a crisis, then promising to solve it with a solution that benefits them both finically and politically.
Republicans love to say that the Post Office is losing money, and that this was a way for them to save enough for employee benefits. They say that the Post Office is lagging behind because of technology and that their service is inefficient. But, have you ever considered what goes in to mailing a letter?
First off, you write a letter and put it out in your mailbox with the little red flag up. A worker will come to your door, and put it in their bag. Next, they take it to your local post office, where it is then sorted. After being sorted, it is then driver to the airport and loaded on to an airplane. After it is put on the airplane, it is flown across the country and loaded on to another vehicle. It is then taken to another sorting facility, put in to a vehicle and sent to the local post office. After being sorted at the local post office, it is put on a vehicle, put in the mailbox in front of the house of the person you were sending it to. All of the takes place with in a day or two. And all of this happens for 46 cents.
“Until 1971, mail delivery was handled by the Post Office Department, a Cabinet department in the federal government. Postal worker strikes prompted President Nixon to pass the Postal Reorganization Act in 1971, transforming it into the semi-independent agency we now know as the United States Postal Service. The USPS in its current form runs like a business, relies on postage for revenue and, for the most part, has not used taxpayer money since 1982, when postage stamps became “products” instead of forms of taxation. Taxpayer money is only used in some cases to pay for mailing voter materials to disabled and overseas Americans. USPS spokespersons have been adamant in emphasizing that they are not requesting taxpayer funds from the federal government to make this year’s payment. Rather, they say, the USPS is asking Congress to authorize access to an estimated $7 billion that they overpaid into the future retiree pension fund in previous years.”
So, where does the Post Office make their money? Aside from stamps and packages, a majority of the Post Office funds comes from magazine subscriptions, prepaid envelopes that are never sent back, and junk mail.
The solution to making the Post Office is quite simple. Repeal the Postal Accountability and Enhancement Act of 2006. But, Republicans would never do this, because their goal is not to save the Post Office. It is to destroy it. And that brings us to what happened on Wednesday of this past week. By a vote of twenty-two to seventeen, the House Oversight and Government Reform Committee passed the Postal Reform Act of 2013 (PRA).
Prohibit no-layoff clauses in future Postal Service collective bargaining agreements. “Postal employees would be subject to the same Reduction-in-Force authority as the rest of the federal workforce,” a summary of the legislation said. “Any employees who lose their job due to current restructuring will have preferential hiring status among Postal Service contractors.”
The legislation would also include classic austerity schemes, such as a prohibition against postal unions and management from negotiating protections against the closure of post offices, stations and branches, the consolidating of plants, the privatization of operations and layoffs.
APWU President Cliff Guffey says the PRA “Will lead to the demise of the Postal Service.” Please note, nowhere does it address the real problem facing the Post Office. And, it also does take steps to modernize the office to match the European model.
To see just how the USPS can transform itself, some analysts have turned to European countries to observe what can be done differently. In a May cover story for BusinessWeek, journalist Devin Leonard reported on the kinds of models that have emerged in Sweden, Germany and Finland. The Swedish service, Posten, and Germany’s Deutsche Post have minimized their participation in the national postal market, allowing them to work as smaller and more streamlined organizations. Posten runs only 12 percent of Sweden’s post offices, while Deutsche Post runs 2 percent of those in Germany – the rest are handled by other businesses. The U.S., in contrast, runs all of the post offices in the country.
It also seems that European postal systems have been experimenting with services for its Internet customers, as well. From BusinessWeek:
‘Many used their extra cash to create digital mail products that allow customers to send and receive letters from their computers. Itella, the Finnish postal service, keeps a digital archive of its users’ mail for seven years and helps them pay bills online securely. Swiss Post lets customers choose if they want their mail delivered at home in hard copy or scanned and sent to their preferred Internet-connected device. Customers can also tell Swiss Post if they would rather not receive items such as junk mail.
Sweden’s Posten has an app that lets customers turn digital photos on their mobile phones into postcards. It is unveiling a service that will allow cell-phone users to send letters without stamps. Posten will text them a numerical code that they can jot down on envelopes in place of a stamp for a yet-to-be-determined charge.’
These European postal services, however, have the financial leeway to experiment with digital services that our USPS currently does not — and the jury is still out on whether those services are profitable. But if Congress is able to figure out a way soon to get the USPS back on its feet, it will open the doors for the postal service to catch up to the 21st-century society it serves.”
Had the PAEA never passed, according to an analysis released in July, the Post Office would have operated under a $1.5 billion surplus.
By June 2011, the USPS saw a total net deficit of $19.5 billion, $12.7 billion of which was borrowed money from Treasury (leaving just $2.3 billion left until the USPS hits its statutory borrowing limit of $15 billion). This $19.5 billion deficit almost exactly matches the $20.95 billion the USPS made in prepayments to the fund for future retiree health care benefits by June 2011. If the prepayments required under PAEA were never enacted into law, the USPS would not have a net deficiency of nearly $20 billion, but instead be in the black by at least $1.5 billion.
Because of the PAEA, Post Office for the first and second time in history have defaulted on their pension fund. And because of inaction in Congress, there has not even been an attempt at fixing the real problem.
The PRA will now go to the House for consideration. Representative Issa’s plan would lead the “Elimination of more than 100,000 postal jobs and would dramatically cut service.” His plan would also dissolve all weekend service, something the Post Office wanted to do back in February to alleviate pressure from the PAEA, but Congress denied their right to do so. The plan is so devastating to the Post Office, that the plan is unlikely to pass anytime soon. However, it does lead to a future Post Office that the Republicans would like to see.
“The cuts, if implemented, would issue as an open invitation for private-delivery services to cash in by offering to fill the void created by those cuts.There are profits to be made by delivering mail to the front doors of Americans who can pay—and who want regular delivery on Saturdays. So it should come as no surprise that one of the first endorsements for Issa’s proposal came from the “Coalition for a 21st Century Postal Service,” a group that counts FedEx as one of its most enthusiastic boosters.”
No longer would that letter cost 46 cents. And have you ever tried to contact customer support at FedEx or UPS? It is a horrible experience. When you go to the Post Office, the employee may be testy at times, but if you were facing what they were facing every day, you may have a cynical attitude as well. But, any time I have ever went to the Post Office, the employees have always been nothing but friendly with me.
There is a few signs of hope for the Post Office, however.
Says Sanders, ‘While we all understand that the Postal Service is experiencing financial problems today and that changes need to be made as the Postal Service adjusts to a digital world, these issues can be dealt with in a way which strengthens the Postal Service rather than initiating a series of cuts that could eventually lead to a death spiral.’”
“Rep. Stephen Lynch (D-MA) has introduced bipartisan legislation (which has 193 co-sponsors) that would allow the USPS to spend more of its own money to pay down its deficits, including $6.9 billion in pension overpayments or other overpayments that may total as much as $25 billion to $50 billion. These are Post Office funds, not taxpayer dollars.”
Finally, the National Association of Letter Carriers President Fredric Rolando sent a letter to Representative Issa and Congressman Elijah Cummings, the ranking Democrat on the Oversight and Government Reform Committee. In it, he outlines the reform he feels would help save the postal service.
“1. Stabilize the Postal Service’s finances by reforming or eliminating unwise and unfair pension and retiree health financing policies that have crippled the Postal Service’s finances since 2006;
2. Strengthen and protect the Postal Service’s invaluable first-mile and last-mile networks that together comprise a crucial part of the nation’s infrastructure;
3. Overhaul the basic governance structure of the agency to attract first-class executive talent and a private-sector style board of directors with the demonstrated business expertise needed to implement a strategy that will allow the Postal Service to innovate and take advantage of growth opportunities even as it adjusts to declining traditional mail volume; and
4. Free the Postal Service to meet the evolving needs of the American economy and to set its prices in a way that reflects the cost structure of the delivery industry while assuring affordable universal service and protecting against anti-competitive abuses.”
The worst thing we can do is nothing. While it may seem the Post Office is antiquated, it still serves a very important function to the public. At the very least, to those who cannot afford the internet or cell phones. By privatizing the service, you ensure higher rates that many would not be able to afford. And make no mistake about it. The Republicans are doing this for two very specific reasons. To break up the union, which largely supports Democratic candidates and to make more money for corporations, which would support Republicans for destroying the Post Office, thus giving them more business.
“In Cranberry, Pa., the community is up in arms after getting a letter in April from the Postal Service saying cluster boxes would be going in new developments.
Community leaders say they understand the boxes are cheaper but they want a better plan that takes into account safety, access and maintenance. Township leaders and the postal service are holding talks over the boxes.
‘We understand what’s driving this is a cost savings,’ said Cranberry Township Manager Jerry Andree. ‘But you can’t just take a cluster box and drop it into the community without planning for its safety, use and access.’
For now, residents already receiving door delivery will see no change, unless the route is deemed dangerous because a dog bites a mailman or Congress changes the law, said Steven Hutkins, a professor of literature at New York University, and a postal service expert.
‘The big thing will be if they get approval in legislation to make the switch for existing door delivery customers,’ said Hutkins, who writes the blog Save the Post Office.”
Image c/o Flickr/NNECAPA