Issa set to grill postmaster general over finances, union contract

House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) will probe into the deeply troubled finances of the U.S. Postal Service Tuesday and will grill the postmaster general about a new tentative contract with the postal workers union that increases wages and limits layoffs.

The new three-year contract announced March 14 disappointed House Republicans, who think it is overly generous to mail carriers.

“They have had big financial trouble for a number of years. We think the postmaster has gone a long way in the contract negotiations to where they need to be. It’s no surprise that if the numbers don’t pencil out, we think they should go a little further,” Issa told The Hill Friday.

{mosads}On Tuesday, Postmaster General Patrick Donahoe and American Postal Workers Union President Cliff Guffey will be asked about the fact that the contract limits outsourcing and layoffs and provides a 3 percent raise over three years.

Issa’s questioning of the postal workers’ contract echoes debates in Washington and state capitals about the cost of benefits that public sector workers receive. A Federal Aviation Administration reauthorization bill is hung up in Congress over union provisions and the Republican governors of Wisconsin and Ohio are embroiled in battles over public workers’ collective bargaining rights.

The hearing will also examine the controversial issue of ending Saturday mail delivery, which the USPS has been seeking congressional permission to do since 2010. Issa said that the postmaster general is now leaning less toward canceling it.

Committee Republicans want to preserve Saturday mail, but doing so will be difficult with an $8 billion deficit, a committee aide said Friday.

A committee aide noted that retailers are heavily against suspending Saturday mail since they want residents to receive coupons on Saturday when they are free to go out and shop.

“Personally I would like to see Saturday service retained. And personally I’d like to see everyone with a mail box hooked to their house,” Issa said. He added that every aspect of USPS has to be examined however.

He said that the committee will be looking at dynamic estimates that indicate the post office could lose money if it Saturday mail causes too many customers to stop using it.

The prime driver of the USPS deficit has been overpayments to its pension fund based on an outdated headcount of postal workers. By September USPS will no longer be able to borrow to make up its shortfall. 

USPS wants Congress to change the law so that it no longer has to pre-fund its pension fund 100 percent, but Congress will be reluctant to do this unless USPS does more to lower its costs, including through the closure of unneeded facilities, an aide explained.

“There will come a day of reckoning on the pension funds,” Issa said.

He said one part of the solution may be to allow USPS to be credited with the money it is expected to receive once it sells off 2,000 office locations.

He estimated that this could yield around $2 billion, which would go toward meeting the $5.5 billion pension shortfall.

On March 29, the Government Accountability Office issued a new report on canceling Saturday service. 

It said that USPS may be able to save $3.1 billion per year, as it projects, but only the transition to five-day service is done correctly.

Last week, the independent Postal Regulatory Commission estimated the savings would only be $1.7 billion per year. Its five commissioners were split on whether USPS should make the move.

GAO in its report once again recommended that Congress and USPS look a wide range of options to fix the post office’s finances. This includes using more cost-efficient delivery, such as cluster boxes, closing unneeded facilities, relaxing delivery standards, cutting wages or raising prices.

Issa said that Oversight is aware that any solution to the USPS woes will have to be bipartisan.

“We have to have a deal we can take to both sides,” he said.

Issa’s committee is also continuing to work on lowering overall federal personnel costs more widely by passing a bill to extend the two-year federal pay freeze announce by President Obama in December.

That freeze did not apply to step-increases, and Issa is looking at extending the pay freeze to that as well. An aide said a bill is now expected by the summer. 

Issa told The Hill that the 2012 Budget Resolution due out Tuesday from House Budget Committee Chairman Paul Ryan (R-Wis.) will include the expanded pay freeze at the suggestion of the Oversight Committee.