|EcommerceBytes-NewsFlash, Number 2573 - June 27, 2011 - ISSN 1539-5065 2 of 7|
The day after the U.S. Postal Service unveiled its plan to suspend contributions to the federal employees' retirement fund, a prominent Republican lawmaker introduced legislation that would enact sweeping reforms of the troubled postal system.
Rep. Darrel Issa's (Calif.) Postal Reform Act would establish two new panels charged with broad oversight of the Postal Service and implementing structural changes to cut billions of dollars in annual costs. It would also mandate additional cost-cutting measures, including the move to a five-day weekly service schedule that the Postal Service has proposed and greater flexibility to raise rates.
"The Postal Service lost $8.5 billion last year. It is going to lose, at least, $8.3 billion this year. And it is projected to lose $8.5 billion the year after that," Issa, the chairman of the House Committee on Oversight and Government Reform, said in a statement. "Congress can't keep kicking the can down the road on out of control labor costs and excess infrastructure of USPS and needs to implement reforms that aren't a multi-billion dollar taxpayer-funded bailout."
The bill (available in PDF format here) would establish the Postal Service Financial Responsibility and Management Assistance Authority, an oversight panel that would take effect if the USPS fell into default on its federal obligations for 30 days. The body would have broad power to overhaul the Postal Service's cost structure, including the authority to initiate a renegotiation of collective bargaining agreements with postal workers. If the negotiations failed, the authority would be empowered to unilaterally impose a new agreement.
Additionally, the legislation would create a panel called the Commission on Postal Reorganization charged with evaluating the Postal Service's infrastructure and making recommendations to Congress on closing facilities and other cost-cutting measures. The recommendations would automatically become law unless Congress voted to reject them.
While the fiscal solvency of the Postal Service has been on lawmakers' radar for some time, prompting various legislative proposals to implement cost-saving reforms, Issa positioned his bill as a response to the USPS' plan to halt the employer contribution to the Federal Employees Retirement System (FERS), a move he argued would shift billions of dollars in costs to taxpayers. "This unprecedented action indicates the urgent need for these reforms," Issa said.
The Postal Service maintains that the payment cut-off, set to take effect June 24, is a necessary step to get its finances in order, noting that it has a $6.9 billion surplus in its FERS account. The USPS estimates that its plan to cut off employer contributions will free up about $800 million in the current fiscal year. It has warned that that it could run out of cash as early as October.
The announcement prompted an immediate response from the American Postal Workers Union, which vowed "to take every step necessary to ensure that retirement benefits are protected."
The Postal Service had a mixed reaction to Issa's bill. It praised the congressman for several provisions of the legislation, including the move to five-day delivery, which it estimates would save $3.1 billion annually. But it blasted the funding mechanism for the oversight panel that would be created if the Postal Service defaulted on its federal obligations. Under the legislation, that body would be authorized to borrow up to $10 billion from the U.S. Treasury, a loan that would be secured by USPS property as collateral.
The Postal Service also said it was disappointed that other cost-cutting measures were not included in the bill, such as the removal of the obligation to prepay employees' health benefits.
About the Author
About the author:
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.
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