The Senate does postal reform: Highlights and low points of the Carper-Coburn bill


August 3, 2013

Senators Tom Carper (D-Del.) and Tom Coburn (R-Okla.) have introduced their version of postal reform legislation, the Postal Reform Act of 2013, a.k.a. PRA and S.1486.  A summary is here, and the whole bill is here.

The new bill contains several changes from the earlier Senate bill, S.1789, that should bring the House and Senate closer together and make the passage of legislation more likely.  In that sense, there’s been some progress, but unfortunately, it’s mostly in the wrong direction.

 

Comparing S.1789 and the PRA

A look at the earlier S.1789 and the new S.1486 suggests that several changes have been made to align the Senate bill with Issa's bill in the House.  Here are a few of them:

S.1789 had a section (201) that would have maintained overnight delivery standards for three years, which would have prevented the closure of many processing plants.  The PRA has deleted that section.

S.1789 had a section (203) that would have established retail service standards to help guarantee access to a post office.  One such standard, for example, would have put a limit on how far and how long you should need to travel to your post office.  That provision has been removed from the PRA.

The earlier bill had a section that would have helped protect historic post office buildings by giving federal, state, and local governments the opportunity to lease excess space rather than seeing the Postal Service close the post office and sell the building.  That section has also been deleted from S.1486.

Section 207 of S.1789, on “delivery point modernization,” would have authorized the Postal Service to convert how you get your mail — at the door, curbside, or centralized cluster box — even without your permission (which is now required).  The new PRA has a similar section.  But S.1789 said only that the Postal Service “may” change your mode of delivery.  The new bill requires the Postal Service to change your mode of delivery to the one “that is most cost-effective and is in the best long-term interest of the Postal Service.”  That’s much closer to Issa’s bill, which mandates 30 million conversions to save $4 billion.

The earlier Senate bill would have maintained Saturday delivery for two years.  S.1486 maintains it for just one year, and then in the second year permits the Postal Service to switch over to delivering just packages on Saturday.  In the third year, Saturday delivery could be ended completely.

 

What the legislation is about

At this point, it looks as though the new legislation that comes out of a compromise between the House and Senate bills will go a long way toward reducing services to the average citizen: In a couple of years, you’ll be getting no delivery on Saturday, you’ll probably be getting your mail delivered in a less convenient way than you now enjoy, and the delivery time will continue to slow down.  If your post office is still open, it will probably be operating part-time and there will probably be fewer windows in action.

While the new legislation may provide some relief to the Postal Service in terms of pension payments and funding of retiree health care benefits, the main goal seems to be giving postal management authorization to continue cutting services and slashing jobs.  Every billion dollars in cuts means something like 8,000 to 10,000 jobs lost.  Ending Saturday delivery and changing the mode of delivery for tens of millions of customers may save $5 or $6 billion, but it will also mean cutting 40,000 to 60,000 jobs. That’s no surprise.  The Postal Service’s five-year plan calls for reducing the career workforce to 400,000 by 2017.   A 100,000 more jobs remain to be cut. 

It’s truly amazing what’s going on.  Here we have millions of citizens who want to continue getting the postal services they’re used to and depend on, and we have 500,000 postal workers earning a decent living providing those services, at no cost to the taxpayer.  Yet somehow we find ourselves in a situation where members of Congress, postal executives, the big mailers, and the Postal Service’s “partners” (like FedEx and Pitney Bowes) have decided that the country can’t afford a decent postal system.  We’ll get the postal system that they want us to have. 

Postal reform legislation isn’t really about "saving" the Postal Service.  You don't save an institution by dismantling it.  Postal reform will shift more Postal Service operations into the private sector so that large corporations can get a bigger piece of the postal pie.  The changes encompassed by Issa’s bill in the House and the Carper-Coburn bill in the Senate may hurt millions of Americans and a lot of postal workers, but they will also make the rich richer — and that, after all, is what postal reform legislation is all about.

Anyway, here are some of the highlights of the new Senate bill, along with some commentary and first impressions from a few of the stakeholders.

 

Pension Reforms

The PRA would require the Office of Personnel Management (OPM) to determine how much the Postal Service must pay into the two federal pension programs – the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS).  This reform is expected to reduce the amount the Postal Service pays into the funds and to result in a FERS surplus.  

The Postal Service could receive up to $6 billion of any surplus.  In addition, the bill would allow the Postal Service and postal unions to bargain over the extent of new postal employees’ participation in FERS and the Thrift Savings Program (TSP).

 

Health Care Reforms

S.1486 would eliminate the retiree health pre-funding and replace it with a less aggressive 40-year amortization of the liability.  This provision, combined with language allowing premiums for current retirees to come out of the account containing health care funds that the Postal Service has already pre-funded, could reduce the Postal Service’s total retiree health costs by roughly half.   Presumably that means that instead of paying $5.6 billion a year, the Postal Service would pay $2.8 billion.

Other provisions give postal retirees the opportunity to enroll in Medicare penalty-free, which is expected to increase Medicare enrollment among postal retirees and significantly reduce the Postal Service’s long-term retiree health liabilities.

In addition, the PRA would also allow the Postal Service and the postal unions to bargain over the creation of a new health plan for postal employees, either within or outside of FEHBP.

 

Closing post offices and facilities

The PRA would place a moratorium on service standard changes and plant closings for two years.

Carper’s summary of the bill says the PRA would codify the Postal Service’s current plan to find savings in its retail operations without closing post offices, but it’s not clear what that means.  The PRA has a section called “Preserving Community Post Offices,” but it’s hard to see how it will help stop post office closures.

The range of factors the Postal Service must consider before closing a post office would be expanded.  Right now the Postal Service must consider the “effect on community” and “effect on employees.”  Under S.1486, the Postal Service would also need to consider the effect on local businesses, the extent to which the community has Internet access, the extent to which customers would have access to time-sensitive mail, the proximity of other post offices, and whether substantial economic savings to the Postal Service would result from the closing. 

Expanding the range of considerations is helpful, but not very.  The Postal Service can always say it “considered” these other factors and decided to close the post office anyway.  That’s what it did back in 2011, when it was in the process of closing thousands of post offices, and that seemed fine with the Postal Regulatory Commission.  The Commission rarely issued a remand decision on appeals.  The Republican-appointed Commissioners consistently agreed that the Postal Service had indeed “considered” these factors, and that was enough to affirm the decision to close the post office. 

There’s nothing in the new bill that would strengthen the role of the PRC in dealing with appeals.  It would be helpful, for example, if the new legislation gave the Commission authority to overturn a closing decision, rather than simply remanding it for further consideration.  It would also be helpful if the legislation gave the Commission more authority to deal with “emergency suspensions,” so that it might stem the Postal Service’s practice of using the suspension provision to close post offices without due process.

 

Ending Saturday delivery

The PRA would preserve Saturday delivery for at least a year, and it would preserve package delivery for two years.  In the third year, Saturday delivery would end completely.

The bill says that any plan considered by the Postal Service for cutting the days of delivery would need to find ways to “ameliorate any disproportionately negative impact the change would have on customers and communities” that were singled out in the PRC’s 2011 Advisory Opinion on eliminating Saturday delivery.  That would include customers in remote and rural areas, customers who receive medications in the mail, small businesses, and newspapers.  How that could be accomplished is not spelled out.

 

“Delivery point modernization”

The title tells you everything.  "Modernization" used to convey "making things better," but in the “modernized” Postal Service, you'll need to get used to less convenient modes of delivery.  If you get mail delivered to your door, expect to be switched to a curbside mailbox or cluster box.  If you get mail at the curb, look for a cluster box down the block.

S.1486 would require the Postal Service to use the “most cost effective means of mail delivery,” and require centralized or curbside delivery for new addresses and business addresses.  It would also require the Postal Service to seek to convert residential addresses from door delivery to centralized or curbside delivery on a voluntary basis.

The bill includes provisions for a waiver for physical hardship.  Unlike Issa’s bill, there doesn’t seem to be a provision allowing the Postal Service to charge a premium to customers who want to have a more expensive mode of delivery.  Also, in contrast to Issa’s bill, there’s no savings target or minimum number of conversions that must be achieved by a particular date.  The Postal Service could go at its own pace in making the conversions.

 

Revenue Innovation

The PRA would streamline the current rate-setting process and give the Postal Service more authority to set prices on its own.  Under the bill, the CPI rate cap would expire in 2016.  That's not going to make the big mailers happy, but there's no such provision in the House bill, so maybe it won't make into the final legislation.  

The PRA would authorize the Postal Service to offer services on behalf of federal, state, or local government agencies.

The PRA would allow the shipping of beer, wine, and distilled spirits.  That's not really a big deal — the Postmaster General said it would generate revenues of $50 million (a 0.08 percent increase in total revenues) — but it's likely to get the headlines.

 

First impressions

The text of the bill was just released late Thursday, so most of the stakeholders have not had time to review it. 

The NALC website just says, "The NALC is reviewing the text of it in detail now, but at first glance we find that there are major problems with this proposed bill. We will post a more formal review of the bill in the coming days."

The APWU website has this comment: “The APWU is reviewing the 194-page bill (S. 1486) and will provide a more complete analysis of the legislation once the review is complete. But after a quick review, President Cliff Guffey said, ‘This bill is fatally flawed. It is a betrayal of the working men and women of the United States Postal Service and it will not protect the USPS from the impending financial disaster Congress set in motion in 2006 with the passage of the PAEA.’”

NAPUS says it’s concerned that the bill would permit the Postal Service to abandon FERS and the Thrift Savings Plan (TSP) for future employees. It would also authorize each union to negotiate separately with the Postal Service over a postal-only health plan.  The earlier version of the Senate bill, S. 1789, would have required the unanimous consent of the four major postal unions.

NAPUS also notes that several post office protection provisions that were included last year’s bill have been excluded, including giving the PRC binding authority relating to closure appeals and the establishment of retail postal standards.

The Council for Citizens Against Government Waste (CCAGW) has “slammed” the bill.  The Council is opposed to the PRA’s moratorium on closing of facilities and post offices for two years.  “Any legislation that does not demand that USPS take swift steps to close excess postal facilities is unacceptable,” says CCAGW.

The Council also complains that eliminating the CPI price cap “will likely increase consumers’ transition away from USPS and toward electronic alternatives, therefore defeating the provision’s intended purpose of increasing revenue.” 

CCAGW also criticizes the bill for encouraging the Postal Service to pursue other forms of revenue, even if doing so means engaging in direct competition with existing industries.  “Not content with its monopoly over the mail,” states CCAGW, “USPS would be allowed to crowd in on other firms’ market share.”

Senator Bernie Sanders (I-Vt.) has already made clear he wouldn't support the Carper and Coburn bill.  "While we all understand that the Postal Service is experiencing financial problems today and that changes need to be made,” said Sanders, “providing fewer services and poorer quality is not the way to save the Postal Service. That is why I am strongly opposed to this legislation."

Senators Carper and Coburn know that the bill they've proposed is going to need to change.  On their committee's website, Sen. Coburn states, “This proposal is a rough draft of an agreement subject to change that I hope will move us closer to a solution that will protect taxpayers and ensure the Postal Service can remain economically viable while providing vital services for the American people.”  And Sen. Carper states, "This bill isn’t perfect and will certainly change as Dr. Coburn and I hear from colleagues and stakeholders, including postal employees and customers."  

This is good time to let Congress know how you feel about postal reform legislation.  You can send a quick email to Carper and Coburn on the Homeland Security committee website, or write directly to your elected officials.  USA.gov and contactingthecongress.org have all the contact info and addresses.

(Photo credit: Senators Carper & Coburn)

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