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The U.S. Senate on Wednesday approved a major piece of legislation that would implement an array of changes at the U.S. Postal Service in an effort to help the money-losing agency return to financial stability.

After two days of debate over a long list of amendments, the 21st Century Postal Service Act passed the upper chamber by a vote of 62 to 37. The measure now heads to the House, where Republican members have introduced legislation that would establish a very different framework for overhauling the struggling agency.

The bill that cleared the Senate would authorize the Postal Service to proceed with a number of the cost-cutting measures that it has proposed, including the restructuring of its employee benefits programs and the shift to five-day weekly delivery, though it could not implement that move for two years from the enactment of the bill into law.

The measure would also return to the Postal Service an $11 billion overpayment that the agency made to prefund workers' pensions under the Federal Employees Retirement System.

Critics of the bill, such as Tennessee Republican Bob Corker, have charged that that repayment is an unfunded liability. Speaking on the Senate floor shortly before the final vote, Corker reminded his colleagues that a vote for the bill "is a vote for increasing the deficit."

But backers of the bill warn that without action, the Postal Service will hit its borrowing limit later this year, leaving it to default on its payments and potentially shut down certain services. Buffeted by the economic downturn and the sustained drop in mailing volumes, the Postal Service reported a $5.1 billion net loss for fiscal 2011. The red ink continued to run in the first quarter of the current fiscal year, when the agency posted a net loss of $3.3 billion.

"The United States postal service is in trouble," said Connecticut Independent Joe Lieberman, the author of the Postal Service reform bill. "It's not going to survive if the status quo prevails. It needs to change. This bill provides for change but in a way that we think is balanced and reasonable."

The Postal Service has estimated that it stands to save $19 billion in operating costs within three years of the bill's enactment.

The bill, co-sponsored by Susan Collins (R-Maine), Tom Carper (D-Del.) and Scott Brown (R-Mass.), passed with amendments tacked on that would bolster the process by which members of a community can protest the planned closure of their local post office, and it would bar the Postal Service from shuttering rural branches unless there is another location within 10 miles.

But an amendment introduced by West Virginia Democrat Joe Manchin that would have imposed a two-year moratorium on closing post offices and other facilities was voted down, despite the senator's warning that the aggressive closure plan the Postal Service has advanced would adversely affect many residents of the rural state that he represents. Manchin and fellow West Virginia Democrat John Rockefeller both voted against the bill in the final vote.

Lieberman acknowledged the concerns about closing postal facilities, but stressed that the agency is running out of money and time, and that to bar it from closing any locations for two more years would invite "a kind of death spiral for the United States Postal Service."

"Without change, this Postal Service of ours will die," he said.

The final bill did include an amendment expressing that it is the sense of the Senate that the Postal Service should postpone further facility closures until a comprehensive reform bill passes both chambers. That amendment, introduced by Arkansas Democrat Mark Pryor, is meant to prevail on the Postal Service to extend its voluntary moratorium beyond the May 15 date that the agency had previously announced.

The senators also approved an amendment that would cap compensation packages for Postal Service executives.

The bill requires the Postal Service to submit to Congress a detailed plan for a return to profitability, and an amendment that passed by a voice vote would direct the agency to expressly address the impact any of its cost-cutting proposals would have on small businesses.

Kentucky Republican Rand Paul offered an amendment that would prohibit the Postal Service's heavily unionized workforce from bargaining collectively, a provision that is not far from the anti-labor measures included in the reform bill pending in the House. But Paul, like other critics of government unions, noted that roughly 80 percent of the Postal Service's costs are connected to its workforce, arguing that any serious effort at turning around the agency's finances must rein in the bargaining power of the unions.

"The problem really is labor costs," Paul said. "Before we close one post office, before we end Saturday mail before we ask citizens (to endure) poorer service or higher prices, perhaps we should look at the root of the problem."

But that amendment, which was easily defeated, was a non-starter for the bill's authors.

Collins, who herself supported another amendment that would limit postal unions' ability to fund political campaigns (it was also defeated), countered that Paul's collective bargaining ban would go too far, undoing decades of precedent in the workforce's position in labor negotiations.

She also noted another change that had been incorporated into the bill that would stipulate that an arbiter in any labor dispute must consider the dire financial predicament of the Postal Service before making a final ruling, language that was meant to serve as a check on the power of the unions.

"There is no justification to completely removing the right of workers to collectively bargain," Collins said.

See the USPS Postmaster General and the USPS Board of Governors' reaction to the passage of the bill.

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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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