by Bruce Moyer, NAPS Legislative Counsel

National Association of Postal Supervisors Legislative & Regulatory Update
Sept. 30, 2010

Postal Service Suffers Three Stinging Defeats

One of the most troubling weeks in Washington for the United States Postal Service is coming to an end, with three major setbacks. The first two came on Capitol Hill, as Congress was departing for its election recess. The third was delivered by the Postal Regulatory Commission, denying the Postal Service’s emergency rate increase request.

Dual setbacks from Congress

The USPS got shredded in the legislative buzz saw twice in the last week, first through Congress’ refusal to provide financial relief to the USPS in a stop-gap government spending measure, then when the House stopped action on legislation to restructure the Postal Service’s retiree health prefunding obligations.

Hyper-partisan pre-election warfare led to both of the legislative setbacks, as Democrats avoided crossing swords with the Republicans, even to contest false Republican charges that the postal restructuring measure would represent a “government bailout.” It was proof that false charges on complicated matters during the “silly season” in Washington can sometimes trump the truth.

Retiree health benefit prefunding restructuring fails

The first legislative defeat occurred in the House last week when legislation (H.R. 5746) that would restructure the Postal Service’s retiree health prefunding payments never made it to a vote in the House Government Oversight and Reform Committee. Congressional observers pointed to the fadeout as sparked by Republican opposition, led by committee ranking Republican Darrell Issa (R-CA) who, in a Washington Times op-ed, called the postal restructuring bill a “government bailout.” NAPS President Louis Atkins was among those who objected to Issa’s use of the term. Atkins in a statement called Issa’s characterization of the restructuring bill “totally inaccurate.” (Click here to read President Atkins’ statement.)

Left out in the cold on the CR

The second legislative setback came on September 29 when the Senate and the House left the Postal Service out of a stopgap funding measure passed to ensure the federal government keeps running for the next two months. The Postal Service had sought postponement of at least $4 Billion of the $5.5 Billion payment due September 30 to prefund its future retiree health obligations. NAPS and other postal groups pushed for inclusion. Last year Congress included the Postal Service in the same short-term funding measure (called a “Continuing Resolution”), but this year no luck, primarily due to Republican opposition in the Senate, claiming that the Postal Service could get by without

PRC says no to exigency rate request

The third setback for the Postal Service came earlier today when the Postal Regulatory Commissionde nied the Postal Service’s request for an emergency postage increase, effective January 2.

Although the PRC in its decision agreed with the Postal Service that the severe recent recession, and the decline in mail volume, qualified as an “extraordinary or exceptional circumstance” under the 2006 postal reform law, the Commission found that the rate increase request “was not due to the recession, or its impact on mail volume, and instead an attempt to address long-term structural problems not caused by the recent recession.” In bitter irony, those structural problems include the burdensome retiree health prefunding payments, which Congress just days before declined to restructure.

What’s Next?

The consequences of these major setbacks are still reverberating, but this much is clear:

The Big Fix. First, Congress is more likely than ever to address a bundle of complex postal issues and craft a “Big Fix” bill next year. Whether that is good or bad remains to seen. Such a comprehensive measure could mandate delivery adjustments, post office closings, expanded USPS product authority, and changes to retiree health benefit prefunding.Sen. Tom Carper (D-DE) introduced a comprehensive postal bill (POST Act, S. 3831) just last week that deals with some of these issues. Many of Carper’s proposals mirror legislative requests to Congress made by the Postal Service. Carper is likely to reintroduce the measure in the next Congress, probably in early 2011. NAPS most certainly will be engaged in the debate.

Real Cash Flow Problems. If Congress in 2011 fails again to remove the financial rope around the Postal Service’s neck and declines to restructure the burdensome retiree health benefit payment schedule, the Postal Service will undoubtedly come much closer to experiencing cash flow problems in 2011, problems far greater than it currently faces. It will have exhausted its borrowing authority, even if volume begins to return, and will have nowhere else to return.

Collective Bargaining Repercussions. Pessimistic cash flow forecasts and other signs of problems on the horizon with strengthen Postal Service management’s hand in its contract negotiations with APWU and the rural letter carriers that currently are underway. The unions know that they will need to make painful concessions in pay, benefits, and jobs. The only question is how deep those concessions will be and in what combination. Those contract talks are likely to end up in the hands of an arbitrator next year.

The arbitrator clearly will take the dismal financial condition of the Postal Service into consideration in rendering his decision, regardless whether Congress changes the law to expressly require the arbitrator to do that, a change the Postal Service is seeking. That outcome and the arbitrator’s decision itself will ripple into changes in pay, benefits and jobs for all postal employees, including supervisors.

November Doesn’t Entirely Matter. Finally, these observations are likely to remain accurate whether or not control of the House or the Senate changes hands as a result of the November elections. Only the speed and detail of the coming Congressional debate on a legislative “big fix” is likely to be influenced by which party is in control next year, important considerations nonetheless.

Bruce Moyer
NAPS Legislative Counsel

[scribd id=38505176 key=key-23hpbolegqovjemd5anb height="650" width="500"]

source: National Association of Postal Supervisors Legislative & Regulatory Update - Sept. 30, 2010