February 18, 2011 – Legislative Council Bob Brinkmann’s overview of President Obama’s budget proposal

Obama’s Budget and the Postal Service

Earlier this week, the President released his budget. For the first time, it deals directly with the Postal Service’s financial situation, and specifically with the overpayment situation. It does not, by any means, go far enough but it nevertheless is an important start that will have positive political ramifications in the future.

Understand that the President’s budget does not legally change anything. It only is a statement of the financial state of the government, and what the executive branch sees as next year’s expenses and income, and also how they should be allocated among the various parts of the government and various programs. It does give a general view of the trend in outlays and income, and what the administration would like to do. Specifically, in its 1300 some hundred pages, it includes details about most of the government’s programs, and in this sense, is a statement of policy by the executive branch.

As to the details of the Budget, in terms of the Postal Service, it does favor giving the Postal Service $4 billion of forgiveness towards the retiree health payment in September 2011, and would favor re-amortizing the rest to make the rest of payments payment smaller. It would favor returning some of the FERS $6.9 billion overpayment back to the Postal Service over time, to the tune of $550 million per year. It also would favor eliminating the revenue foregone provision, to the tune of $29 million. That would be $29 million per year that the Postal Service no longer would get. While this is a very positive step, and would help in 2011 were it to be enacted, this relief is not a long term fix.

Moreover, please understand that none of this would go into effect unless the Congress (including the House Republicans) enacted this as their budget, a not-very-likely possibility. However, this move by the White House is significant, for it shows that the White House is paying attention to this issue, and is willing to act in a positive way if Congress presented the President with a reasonable solution. Prior to the release of this budget, the White House had not really weighed in on the Postal Service funding issues so directly.

Postal Organizations and Unions urge President Obama to take action on USPS Pension overfunding. Click to view January 12th letter (pdf)

source: National League of Postmasters