The postal service’s fiscal crisis and future viability (Rep. Edolphus Towns)

GAO’s report on the postal business model, required by the 2006
postal reform law, determined that the USPS business model is
unfeasible since it prohibits mail service from sufficiently reducing
costs in response to declining mail volume and revenue. GAO recommended
solutions that fell into three broad categories: reducing compensation
and benefits costs, reducing some operations and network costs and
generating revenues through product and pricing flexibility. It is
worth noting that due to the financial crisis at the Postal Service,
GAO issued this report a year earlier than was required by the 2006
postal reform law.

The committee also examined the USPS Inspector General’s report
entitled “The Postal Service’s Share of CSRS Pension Responsibility.”
The IG argued that the USPS has overpaid into the Civil Service
Retirement System by as much as $75 Billion. Employees who worked for
both the old Post Office Department before 1971, and the independent
Postal Service after 1971, receive pension payments that are funded by
the federal government and the Postal Service.

If these findings are correct, it puts the changes to the USPS
business model in a whole new light because the Postal Service would be
able to fully fund its retiree health care obligations for the next 75
years if it was allowed to access the funds. Congress could then
relieve the Postal Service of its requirement to pay an average of $5.5
billion into the health care trust fund for future retirees until 2016.
Taken together, these two steps would put the Postal Service on much
firmer financial footing.

Finally, the Committee examined a Postal Service report entitled
“Ensuring a Viable Postal Service for America: An Action Plan for the
Future,” which explained strategies for the Postal Service to cope with
its ongoing fiscal challenges. At the hearing, Postmaster General John
Potter’s testimony focused on the report that highly recommends cuts in
service as a way to deal with the budget shortfalls. The report
concluded that without bold, decisive and comprehensive action the
Postal Service will face “continual financial peril.” Furthermore, the
report states that without further action to rein in costs by Congress
and the USPS, the Postal Service will face a dramatic budget shortfall
of $238 billion in the next decade.

Evaluating these reports is an important part of the thorough review
needed to find solutions that will ensure the Postal Service’s
viability. We still need to get a firm handle on how much would be
saved by eliminating a day of delivery and a better understanding of
the impact of this proposal on customers and the postal workforce.
Furthermore, we need a model for change that carefully balances the
economic needs of the Postal Service with its core mission and ensures
that economic and social issues are fully addressed in all future
business and policy decisions.

Until we find solutions for the Postal Service and all those who
rely on it, we will continue to look closely at this issue. The
Committee is looking to bring together experts and interested parties
in a policy forum later this year, and we will continue to work hand in
hand with the Postal Service to protect retiree pensions and to put the
Postal Service on a sustainable path.