Senate Democrats divided over deep cuts to U.S. Postal Services

Senate Democratic lawmakers from rural states are balking at legislation from the Homeland Security and Governmental Affairs Committee that would let the U.S. Postal Service close thousands of offices.

Sen. Bernie Sanders (I-Vt.) has convened meetings of Senate colleagues and staffs to overhaul the bill, which he believes could lead to the eventual privatization of the postal service.

The postal reform bill crafted by Homeland Security Committee Chairman Joe Lieberman (I-Conn.) was expected to reach the Senate floor as soon as next week.

ADVERTISEMENT
Now Senate Democratic aides say it is not likely to come up until after the Presidents Day recess, as senators engage in last-minute shuttle diplomacy to avert a nasty and potentially embarrassing floor fight. 

“It’s a massively complex series of issues, both short-term and long-term, in terms of solvency and sustaining postal service. That’s coupled with 535 members paying close attention to postal service in their backyards,” said a senior Democratic aide.  

A spokeswoman for the Homeland Security Committee said the postal service is already in a death spiral and must enact significant reforms to survive.

“The combination of all these factors has really crippled the postal service and it simply cannot continue on its current course. Something has to be done and something bold has to be done,” said Leslie Phillips, communications director for the panel.

“This postal service, which has been around since the founding of our country, it has to adjust to the changing times and it’s got to be restructured and must develop a whole new business model so that it can be a competitive 21st century business,” she said.

Supporters of Lieberman’s bill argue that some Senate and House Republicans are pushing even tougher changes that would “take a hatchet” to the postal service. They say Lieberman finds a politically viable middle ground.

But lawmakers from rural states worry about the Senate compromising with itself and getting pushed further toward drastic cuts in conference negotiations with the House.

Postmaster General Patrick Donahoe has told lawmakers he needs $20 billion in savings by 2015.

Democrats disagree over what steps to take to keep the service solvent.

The issue is a pressing one for lawmakers representing rural communities, where post offices often serve as community centers. Lawmakers representing less populous areas fret that eliminating processing facilities will lead to lengthy delivery delays for their constituents.

“Sen. Lieberman and Sen. [Tom] Carper [D-Del.] working with Sen. [Susan] Collins [R-Maine] and Sen. Scott Brown [R-Mass.] have come up with a bill and the bill is much less draconian than what the post office has proposed but I think it needs significant improvements and so do many, many members of the Democratic caucus and I think some of the Republican caucus as well,” Sanders said of the Homeland Security bill.

Sanders said he is working with Senate Democratic Whip Dick Durbin (Ill.). He said Sens. Jon Tester (D-Mont.), Max Baucus (D-Mont.), Tom Udall (D-N.M.), Mary Landrieu (D-La.) and Chuck Schumer (D-N.Y.), who represent large rural swaths, share his concerns.

He met with about a dozen colleagues on Thursday to explore options for reworking Lieberman’s bill.

Durbin has met with a variety of colleagues to help develop consensus within the Democrat caucus and avert a chaotic floor battle.

The postmaster general has offered a plan that Sanders said would lead to the closure of as many as 3,500 post offices — mostly in rural areas — and shutter 252 mail processing facilities. It would also end overnight delivery standards for first-class mail; eliminate Saturday delivery; end no-layoff clauses in collective bargaining agreements and eventually reduce the postal service’s workforce from 550,000 to 330,000.

Sanders says the Lieberman bill would allow many of those reductions in service to move forward.

“On perhaps the most important issue, the Lieberman bill is silent, which will in fact allow the postal service to slow down mail delivery standards and shut down half of the processing plants in America, which to my mind will lead to the eventual destruction of the postal service as we know it today,” said Sanders. “What we are fighting for is to maintain the one- to three-day delivery standards for first-class mail.”

The postal service says its delivery standards for first class mail would not change drastically, only from a one-to-three day schedule to a two-to-three day schedule.

Sanders says he recognizes the postal service needs to reform itself but he argues the deep cuts that would slow delivery will hurt more than help. He fears that slower service will push more businesses and individual customers to seek alternatives — such as FedEx — and further reduce postal revenues.

He and his allies believe the savings instead should come from freezing payments to the postal service’s well-padded retirement fund and recouping an $11 billion overpayment to the Federal Employment Retirement System. They believe this would give the postal service enough time to overhaul its operations and increase profitability.

Sanders has proposed allowing post offices to sell hunting and fishing licenses, gift-wrapping and notary services.

“What I want to do is to make the post office a much more entrepreneurial, consumer friendly institution so that it can be more competitive and raise new revenue,” he said. “Their business model is to change nothing and cut, cut, cut.” 

Sanders and his allies agree with some of the reforms endorsed by Lieberman and Carper but differ on the scope.

They agree that the postal service should expand non-postal services to generate more revenue, that payments to the retiree health benefits fund should be restructured, and the $11 billion overpayment to the Federal Employment Retirement System should be used to generate savings.

Sanders, however, says the Lieberman bill does not go far enough. He wants to establish a “blue ribbon” panel of entrepreneurial experts to help the postal service to devise new ways to make money.

And whereas the Homeland Security bill would restructure annual contributions to the postal service health benefits fund, Sanders says those payments can be reduced even more significantly.

The Lieberman bill would reduce the obligation to prefund health benefits to 80 percent of future liabilities.

Sanders says the fund now stands at $44 billion and earns 4 percent interest per year, enough to substantially reduce the prefunding obligation and use the savings to improve the service’s ability to earn revenue.

“A major financial burden to the post office is $5.5 billion that goes every year into future retiree health benefits,” Sanders said. “The fact of the matter is that just by accruing 4 percent interest every single year, the [postal service] inspector general has estimated that future retiree health benefits would be fully funded in 21 years, just by collecting the interest.”