President Obama’s administration has finally recognized the desperate situation that the USPS finds itself in and has proposed 5 key initiatives to help the USPS save $20 billion over the next few years, including moving to 5-day delivery and allowing for a one-time rate increase beyond the annual CPI Rate Case.
While many applaud the Administration for finally weighing in on this critical topic, most blasted Obama for doing too little too late, and called for greater measures. Rep. Issa and Sen. Collins have even introduced new updated legislation.
Insiders suspect that some of the required initiatives will occur, like dropping Saturday delivery, but do not expect that any significant reforms can be implemented by September 31 when the USPS becomes insolvent and unable to meet required payments / reaches debt ceiling.
Stay tuned for further updates and if you want more details, check out the info and links below.
Obama’s proposal in the joint committee report. The following was shared with PostCom by the Coalition for a 21st Century Postal Service.
Provide Postal Service financial relief and undertake reform. The Administration recognizes the enormous value of the U.S.Postal Service (USPS) to the Nation’s commerce and communications, as well as the urgent need for reform to ensure its future viability. USPS faces a long-term, structural operating deficit that has been exacerbated by the precipitous drop in mail volume in the last few years due to the economic crisis and the continuing shift toward electronic communication. Absent legislative intervention, USPS will be insolvent by the end of September 2011 when it will be unable to make the statutory $5.5 billion Retiree Health Benefit prefunding payment to the Office of Personnel Management, will have exhausted its cash reserves, and will have hit its cumulative statutory Treasury borrowing ceiling of $15 billion. Bold action is needed to ensure that USPS can continue to operate in the short-run and achieve viability in the long-run. To that end, the President is proposing a comprehensive reform package that would: 1) restructure Retiree Health Benefit pre-funding in order to accelerate moving these Postal payments to an accruing cost basis and reduce near-year Postal payments; 2) provide USPS with a refund over two years of the $6.9 billion surplus in Postal contributions to the FERS program; 3) reduce USPS operating costs by giving USPS authority, which it has said it will exercise, to reduce mail delivery from six days to five days; 4) allow USPS to offer non-postal products and increase collaboration with State and local governments; and 5) give USPS the ability to better align the costs of postage with the costs of mail delivery while still operating within the current price cap, and permit USPS to seek the modest one-time increase in postage rates it proposed a year ago. These reforms would provide USPS with over $20 billion in cash relief over the next several years and in total would reduce the Federal deficit by $19 billion over 10 years.
Helpful Links on this topic:
Obama’s Joint Committee Report (go to page 23): http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/jointcommitteereport.pdf
Senator Collin’s response: http://postcom.org/public/2011/collins_reaction_to_obama_plan_.pdf
Senator Carper’s response: http://carper.senate.gov/public/index.cfm/pressreleases?ID=7cebd6ab-0ab2-4198-90fa-12ecd5cbe60c
Representative Issa’s response: http://oversight.house.gov/index.php?option=com_content&task=view&id=1448&Itemid=29