CBO score could blunt momentum for Senate Postal Service reform bill

Supporters of a Senate measure to overhaul the cash-strapped U.S. Postal Service’s (USPS) operations are pushing back on a recent Congressional Budget Office (CBO) cost estimate that found the bill would lose $6.3 billion over a decade.

The bipartisan legislation’s backers, both on and off Capitol Hill, have questioned some of the assertions that the CBO made in reaching its conclusions – including in its estimates for delivery standards and retiree health care costs.

“Our bipartisan bill will put the Postal Service on firmer financial footing and doesn’t leave taxpayers on the hook,” Sen. Susan Collins (R-Maine), one of the bill’s four authors, told The Hill in a statement.  “It’s not a bailout and does not shift responsibility for the Postal Service’s red ink to the American people.”

But with USPS saying it might run out of money as soon as this August, some interested observers are saying that the score from Congress’s official budget analyst could blunt the legislation’s momentum.

Rep. Elijah Cummings of Maryland, the top Democrat on the House Oversight Committee, told The Hill that the budget-cutting mood on Capitol Hill made the CBO projections on the postal bill even more important.

“I think that anytime you get a bad score from CBO, in this climate, it’s not helpful,” said Cummings, who has said he likes many of the proposals in the Senate bill. “That means we’re going to have to work extra hard to figure this out."

Any measure passed out of the Senate would likely also have to be melded with legislation from the House, where Republicans have pushed a bill that differs significantly from the Senate proposal.

The Senate legislation would allow USPS, after two years, to scrap Saturday delivery and to use a surplus in a federal retirement fund to ease thousands of employees into retirement.

USPS is also currently required to spend billions of dollars a year over a decade as a prepayment for retiree health care costs, and the Senate bill would spread those payments out across 40 years.

In its projections, CBO said that the proposals on retiree health care and incentivizing retirement would also lead to the agency rolling back its budget-cutting efforts.

“CBO expects that lowering health care expenses would lead the agency to alter its cost-reduction program by cutting spending less aggressively than it would without the legislation,” the office said in its projections on the postal bill.

The CBO score also predicts that there is a 50 percent chance that USPS would move to five-day delivery, and thus cuts the projected savings from the move in half.

But Sen. Joe Lieberman (I-Conn.) has said he fully expects USPS to be able to make the switch. Sens. Tom Carper (D-Del.) and Scott Brown (R-Mass.) joined Lieberman and Collins in authoring the postal reform bill.

Senate aides also say that if their legislation was given full credit for the health care, retiree and delivery savings, the bill would be scored as saving roughly $18 billion over a decade.

With mail traffic declining, Postmaster General Patrick Donahoe has said his agency needs to reduce annual costs by $20 billion by 2015, and that neither congressional proposal gives his agency the flexibility it needs.

The Postal Service had also said last year that it would not close any facilities until May, giving Congress time to hash out a postal overhaul.

The agency had said it was considering whether to close up to 3,700 local post offices and 252 processing centers, an idea that especially concerned lawmakers from states with significant rural populations.

With all that in mind, the Senate bill’s supporters expect the chamber to start taking the bill up this month, although consideration of the bill could be pushed to after the President’s Day break.

Senate Majority Leader Harry Reid has expressed an interest in passing the bill, which cleared the Homeland Security panel in November.

On the other side of the Rotunda, the full House has yet to consider the GOP postal reform bill. A House Republican aide said the chamber expected to act on the legislation, which passed the Oversight Committee last October, before August.

Unlike the Senate bill, CBO did score the House postal legislation as a net saver, projecting the bill would bank $18.5 billion for the unified budget over a decade.

But both House and Senate aides say that scoring postal bills presents a peculiar challenge for CBO, in large part because of the Postal Service’s unique budget status.

USPS, like the Social Security Trust Fund, is considered “off-budget,” which essentially means that the Postal Service is supposed to support its operations through its products and services.

On the other hand, the agency’s spending for pensions and retiree health care are classified as “on-budget,” and the U.S. also has a unified budget that combines the two.

Given all that, CBO projected that the Senate postal legislation would result in $25.6 billion in off-budget savings over a decade, and $31.9 billion in on-budget costs. 

But supporters of the Senate bill also suggest that the CBO score might not sway too many votes in the chamber, given that the legislation already has faced some skepticism from lawmakers on both ends of the ideological spectrum.

Some on the right, like Sens. Tom Coburn (R-Okla.) and John McCain (R-Ariz.), say the bill does not do enough to put USPS on firmer financial ground.

Coburn and McCain are sponsoring the Senate version of the House bill, which would empower a new oversight board to recommend cost savings through post office closures and other measures.

And on the left, Sen. Bernie Sanders (I-Vt.) and others are concerned that, as it stands, the Senate legislation would allow USPS to slow delivery standards and close processing centers.

But even with those differences, and the CBO score, outside parties like the Coalition for a 21st Century Postal Service have urged the Senate to pass its postal overhaul quickly.

Art Sackler, the coalition’s coordinator, has said that, given the time crunch USPS faces, both the House and the Senate need to pass their bills so lawmakers can hammer out a compromise.

“Try to imagine the economy without the Postal Service,” Sackler told The Hill. “That’s why this is so urgent.”

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