Lawmakers work to prevent need for US Postal Service bailout

Key lawmakers from both parties, and in both chambers, agree that the United States Postal Service needs to make some serious changes.

But the legislative prescriptions to bring stability to the USPS are not all on the same page on several crucial issues, including healthcare and retirement costs, a potential roadblock to bipartisan efforts to overhaul the struggling agency.

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Rep. Darrell Issa (R-Calif.), the chairman of the House Oversight Committee, on Thursday became the latest member of Congress to introduce legislation on the matter, with USPS expected to run a deficit north of $8 billion for a second consecutive year.

The California Republican says his legislation is aimed at preventing a taxpayer bailout of the Postal Service, which currently doesn’t use taxpayer dollars for operating costs.

“If we don’t do something about it, this’ll end up more like Freddie and Fannie, where not paying attention to solvency eventually catches up and now we’re putting billions and billions into it,” Issa said on CNBC Friday, comparing USPS to Fannie Mae and Freddie Mac, the government-sponsored mortgage giants.

But Issa’s legislation also does not touch what USPS says some of its major problems are: required pre-payments for retiree health insurance and overpayments into retirement programs.

Three other proposed legislative reforms — from Sens. Susan Collins (R-Maine), Tom Carper (D-Del.) and a measure backed by most House Democrats — deal more directly with USPS’s $5.5 billion healthcare payment and the billions of extra dollars the service says it has paid into the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS).

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Carper, the chairman of a Senate Homeland Security subcommittee with jurisdiction over USPS, said the bill he introduced in May “gets Congress out of the way by providing the flexibility and tools necessary to address the problems plaguing the Postal Service in an effective way.”

Collins, the ranking member of the full Homeland Security panel, has said that “Congress must pass a reform bill that fixes an inequity and provides real reform in the USPS’s operations.”

As it stands, USPS has already taken steps to cut costs. On Wednesday, it announced that it would save some $800 million this year by suspending payments to FERS. Earlier this year, the service said it was eliminating district offices and thousands of jobs in a bid to save $750 million a year.

USPS has also asked to be able to scrap Saturday delivery, but has said the healthcare and retirement payments are “core issues” that need to be addressed.

For their part, Issa and other Republican members at House Oversight reject the idea that USPS has overpaid between $50 billion and $75 billion into CSRS and close to $7 billion to FERS, while also dismissing claims that the agency’s healthcare mandate is unfair.

Committee Republicans, citing a report from the Office of Personnel Management inspector general, say that the USPS is essentially trying to refight a battle from four decades ago, when the agency agreed to the current formula for paying into CSRS.

They also say USPS would have an “unaffordable burden” down the road if it did not continue pre-paying for healthcare benefits, and that interest rates are a major cause for what they say is both a temporary and projected FERS surplus.

But, as those more sympathetic to the USPS assertions on CSRS note, the OPM inspector general did not question the estimates from the Postal Service inspector general, the Postal Regulatory Commission, and two independent companies that put the CSRS overpayments at $50 billion to $75 billion.

The OPM inspector general also agreed with a proposal that could lead to the Postal Service recouping extra money it put into FERS.

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Meanwhile, the bills from Carper, Collins and Rep. Stephen Lynch (D-Mass.), the ranking member of the House Oversight subcommittee that oversees USPS, would all give the agency some leeway in using overpayments for the billions it owes in retiree healthcare.

Carper’s office says the senator has been discussing a more united approach with Collins, and that the two lawmakers are likely to have a bill ready for public consumption by the time the Senate recesses in August.

But the Maine Republican and the Delaware Democrat have at least one of their own bridges to gap: Carper, like Issa, is willing to allow USPS to go to five-day delivery, something the agency says will save some $3 billion a year.

Collins is skeptical of that idea, saying it disproportionately affects rural residents. The Postal Regulatory Commission is also doubtful the move would be as much of a cost-saver as USPS says.

Issa says his bill, among other things, would save at least $6 billion annually by, among other things, creating a new commission to shed excess USPS facilities and a solvency authority to cut costs.

But the agency, while applauding certain parts of the legislation, says it will also add too many extra layers of bureaucracy.