Bailout BS: Darrell Issa’s Misinformation Campaign about the Postal Retirement Funds

March 3, 2013

The House Committee on Oversight and Government Reform, chaired by Congressman Darrell Issa, has a website entitled “Saving the Postal Service.”  According to the website, “H.R. 2309, the Issa-Ross Postal Reform Act, is the only legislation that saves the Postal Service from financial collapse.” 

Issa would save the Postal Service by dismantling it.  His legislation would end Saturday delivery, cut benefits to postal workers, remove the no-layoff clause from union contracts, eliminate hundreds of thousands of jobs, reduce the oversight authority of the Postal Regulatory Commission, and make it easier to close post offices.  Its BRAC-style task force would “consolidate redundant post offices” in order to save at least $1 billion a year — a goal that would require closing at least a third of the country’s 32,000 post offices.

Issa’s website features a cute little video called “Postal Crisis 101.”  An animation shows dollar signs moving from taxpayers to postal workers while the narrator explains that unless Issa’s legislation becomes law, the taxpayer is going to be on the hook for the cost of retirement benefits for postal workers.  The word “bailout” gets a lot of attention.

The video says that opponents of postal reform want “to cover this up with a fake accounting gimmick.  They call this an overpayment.” 

The video is just over a minute long, so there’s no time to explain the overpayment “gimmick,” but the website has another page that goes into more detail.  It’s entitled “Why the ‘Postal Overpayment’ Is Really A Taxpayer-Funded Bailout.” 

On this page, Issa attempts to debunk what he characterizes as three “myths” about the overpayments in the retirement funds by giving us what he calls the "facts."   But Issa's narrative about the funds omits many important details and gives a very distorted picture.  

It's rather ironic that this misinformation campaign was paid for with our tax dollars — the same tax dollars Issa says he wants to protect.  

Here’s a rundown of the three “myths,” Issa’s “facts,” and the rest of the story.  

January USPS Financials: $437 Million Loss or $261 Million Profit? Take Your Pick

February 27, 2013

The Postal Service has released its financial statement for January 2013.  Compared to January of last year, First Class revenues are down slightly less than 1%, while Standard Mail revenues are up 2.6%, Periodicals are up nearly 3%, and Packages are up over 4%.  Total revenues are up 4.4% for the month and up almost one percent for the year to date (YTD, October-January).

Considering how weak the economy is, those look like pretty decent numbers, but that’s probably not how the financials will be reported.  Instead, we’ll just hear the bottom line: A net loss of $436 million for the month, and a $1.7 billion loss for the first four months of the fiscal year. 

Those losses, however, include two key numbers that probably won't get much attention: the prepayments for the Retiree Healthcare Benefit Fund (RHBF) and the retirement incentives paid out to tens of thousands of postal workers.  The Postal Service shouldn't be paying into the RHBF at this point (at least not $5.5 billion a year), and the incentive buyouts were a one-time expense and not a regular operating cost.

If you put the RHBF payments and the incentive payments to the side, then, the bottom line looks a little different.  It shows that the Postal Service would have actually made a profit of $261 million for January and $482 million for the year to date. 

Here’s how the numbers break down.  Note that the Postal Service includes the retirement incentive expense in the "Personnel Compensation and Benefit" line, but if you look deeper into the financial statement, there's a line for “other personnel related expenses," which includes the incentive expense.  In the table, the incentive figures are approximate because in the financial statement they’re combined with other personnel expenses.  The numbers in the table were derived by comparing this year’s expenses to last year’s (which were minimal because there weren't any incentive buyouts).

Leveraging intellectual property: Where's Mr. ZIP when you need him?

February 26, 2013

Last week the Postal Service announced that it is partnering with Wahconah, a Cleveland-based clothing manufacturer, to develop a new line of "smart apparel" (also known as "wearable electronics") called “Rain Heat & Snow.” 

The USPS press release about the announcement can be found on the Wahconah site, but for some reason it has disappeared from the USPS website, leaving a trail of broken links in several news articles.  (Update: Dead Tree Edition has the explanation.)

The press release says the new line will “leverage the intellectual property” of the Postal Service.  That’s a fancy way of saying that postal management wants to exploit the USPS brand — and all the trust associated with it — to make a few bucks in the rag trade.

Many postal workers commenting on the postal news websites thought the idea was a joke, and Citizens Against Government Waste, a right-wing advocacy group, headlined its story: "CAGW on USPS Clothing Line: Could Be Ripped from the Headlines of 'The Onion.'"  CAWG proceeds to describe the idea as a "make-work" project for "hundreds of thousands of excess USPS employees."  

That's completely wrong, of course — the clothes will be manufactured by Wahconah, not postal workers (and there aren't "hundreds of thousands" of unnecessary postal workers) — but CAWG is right about one thing: "The project will certainly create jobs in the writers’ rooms of late night comedians who need material for their monologues."  

Save the Post Office had its fun with the idea in this slideshow, and the announcement was greeted with a considerable amount of derision elsewhere in the media as well:

  “Haute couture by the postman” (Washington Times)

  “Desperate U.S. Postal Service Tries to Find its 'Cool' Factor” (Reuters

  “USPS "Rain, Heat & Snow" clothing line but not on Saturday” (Breitbart Feed)

  "Forget Marc Jacobs: The Postal Service is Hot This Spring" (Corporate Intelligence)

  “USPS clothing line: Dress like the mailman?” (Christian Science Monitor)

While the Postal Service is to be commended for experimenting with new ways to make money, the clothing idea is pretty ridiculous.  There are enough companies selling clothes, and there’s no reason for the Postal Service to get into the fashion business. 

But in terms of “leveraging intellectual property,” there’s a lot to consider and many other possibilities worth exploring.


The potential financial value of USPS assets

The Postal Service owns vast amounts of intellectual property — its brand and logos, the New Deal murals and sculptures in post offices, photos and historic materials, trademarks and images, patents and copyrights, trade secrets, and so on.

There’s been some debate about whether or not the Postal Service is taking full advantage of the value of this intellectual property (IP).  Some argue that the Postal Service should be doing more to capitalize on its IP to bring in much-needed revenue.  This article, for example, explores "How recognizing the increasing importance of IP in the postal/parcel industry and harnessing the power of disruptive innovation can revivify the USPS."  It's all about the Postal Service could monetize the untapped potential of its intellectual property.

Others argue that the Postal Service, as a government agency, ought to be sharing its intellectual property as a public service.  Why should the Postal Service prevent someone (as it sometimes does) from taking photographs of the murals in a New Deal post office?  They belong to the public realm and shouldn't be seen as proprietary.  

On the other hand, many businesses capitalize on USPS intellectual property for their own profit, with the Postal Service basically giving away valuable assets just for the asking.  That may be problematic at a time when the Postal Service needs to find new sources of revenue.

The USPS OIG recently opened a discussion about intellectual property on its "Pushing the Envelope" blog.  The OIG notes that compared to other industries, such as information technology and wireless communications, “the Postal Service has not significantly leveraged its intellectual property or fully recognized the potential financial and strategic value of these assets.”

A 2011 OIG report focused specifically on USPS patents and found that “the Postal Service currently does not manage its portfolio of patents to maximize commercial significance.”  The report is heavily redacted with most of the interesting details blacked out, but the bottom line is significant. 

The OIG estimated that the USPS commercial patents could be worth about a half billion dollars annually.  That’s just about how much the Postal Service says it will save by reducing hours at 13,000 post offices under POStPlan.


The Magical Postal Publicity Tour: Over 7,000 POStPlan Meetings, and Counting

February 24, 2013

The Postal Service is plowing ahead with its community meetings on POStPlan.  As of Friday, it had held 6,741 meetings, and it has scheduled an additional 474 through March 15.

That’s a total of 7,215 meetings — well more than half the list of 13,000 post offices that are seeing their hours reduced.  Before last week, implementation was complete at about 2,800 post offices.  On Saturday, another 737 joined the list, bringing the total number of post offices that have seen their hours reduced to over 3,500.   (The weekly meeting lists are posted on the USPS website here; you can see the entire list as a table here and spreadsheet here.  The implementation dates can be found here and here.)

About 3,500 of the meetings were held at the local post office.  These are usually rural post offices with small lobbies, so many of the meetings have been held with patrons crowded together and standing up.

Not that the meetings have lasted very long.  There's not much to talk about.  The decision to reduce the hours was made almost a year ago, and what the new hours will be comes as an announcement, not a matter for discussion.  There’s no need for a lot of talk about the options because there aren’t any.  It’s either reduce the hours or close the post office.

[View larger map]

The meetings are really just an opportunity for the Postal Service spokesperson to drive home the point that the agency is losing $25 million a day and billions every year so it must make cuts in service like reducing the hours.  

The local newspaper dutifully repeats what the Postal Service has said.  In most articles, there’s also a quote or two from citizens saying they're concerned about how reducing the hours will hurt some members of the community but it's better than losing the post office altogether.  The headlines say that the post office has been “spared” or “saved" or "will stay open" — as if closing it were really a possibility, even though virtually none of the 13,000 POStPlan post offices will close.

When the Postal Service witness for POStPlan, Jeffrey Day, was questioned by the Postal Regulatory Commission for its advisory opinion on POStPlan, he testified that while post offices would be reviewed annually to see if they needed to be upgraded or downgraded based on their revenues and workload, the meetings would not be repeated because "community meetings are very expensive."  When asked how much the Postal Service had budgeted for the surveys and meetings, he said he "didn't have that number offhand," and he couldn't even say if it was in the millions of dollars.

One wonders how much money the Postal Service has spent on these seven thousand meetings (with another six thousand to go).  Whatever they cost, it was a waste of money, at least in terms of getting feedback from citizens.  The outcome never depended on surveys and meetings.  The decisions were made in postal headquarters long before an average American weighed in.

But that's not what the meetings are about.  They are a publicity strategy to make it seem that the Postal Service is “listening” to its customers.  (The page on the USPS website about the POStPlan meetings is titled "We're listening.")

Even more, the meetings serve as a staged public relations event designed to get a message out: The Postal Service is hemorrhaging  billions, and the public must endure cuts in service if the agency is to survive.  

The meetings go hand in hand with the Postmaster General's trip to Montana last May — a publicity tour to show he was "listening" to people in small towns who were concerned about their post office closing.  (At the time, the PMG had already decided not to close post offices and to do POStPlan instead.)

The Postal Service has been doing a great job controlling the message.  We hear constantly about how everyone is using the the Internet and email, how declining mail volumes are pushing the agency deeper and deeper in debt, and how management has no choice but to reduce costs by whatever means necessary — closing plants and slowing down the mail, ending Saturday delivery, shifting over to cluster boxes, cutting hours at the post office.  

We don't hear anything about the possibility that these service cutbacks are actually about keeping postal rates down for large business mailers and dismantling the country's postal system so that corporate interests can grab a bigger piece of the pie.  

When you consider how much it would have cost to place ads in thousands of community newspapers and on hundreds of local TV channels, the Postal Service has probably found a bargain.  Whatever they cost to hold, the POStPlan meetings have provided great free publicity.  They were a perfect way to control the message.  And that’s probably what postal management was thinking when it decided to hold them. 

(Photo credit: POStPlan meetings in Cambridge, Illinois and Bushland, Texas)

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