Postal losses: Congress can't solve simple problems
The U.S. Postal Service has recorded a $15.9 billion loss for the past fiscal year.
Congress, not surprisingly, continues to compound the problem.
The U.S. Postal Service long has been noted for its inefficiencies, its unaffordable workforce, and spending that could not be supported by its revenues. It also has been victimized by changes in the way we communicate, relying on the cheaper and quicker options of email and text messaging, as well as electronic bill payment, and competition. Those trends will only accelerate.
The Postal Service's loss in 2012 resulted primarily from defaults on more than $11 billion in payments Congress had directed the agency to pay into a fund for future retiree health benefits.
Postmaster General Patrick Donahoe said, "It's critical that Congress do its part and pass comprehensive legislation before they adjourn this year."
But he is wrong. This cannot become another taxpayer bailout. The taxpayers cannot be asked to subsidize an agency and workforce that cannot help itself.
The argument is simple: Postal officials claim the agency's financial woes are partly the result of the funds Congress requires the service to set aside for future retirees. They say they cannot afford to pay the $11.1 billion to cover health benefits for future retirees as mail volume plummets. They say that without the pre-funding and other labor-related expenses, the Postal Service "only" lost $2.4 billion in the fiscal year that ended Sept. 30.
Now, seriously, does anyone truly believe that mail volume is going to increase? Or that labor costs, health care costs for retirees and pension costs will decline?
No? Well, then, who is supposed to pay the expenses for retiree health care and pension costs if the Postal Service can't? The taxpayers?
In any REAL business, when revenue falls, costs must be slashed, correspondingly and, often, painfully. Ask those workers who have seen their pension benefits eliminated and are paying more every year for their health care coverage. There is no alternative, short of raising prices. The postal service has tried that. And, in its case, it has accelerated the flight of customers to alternatives, for package handling, and electronically for bill paying and staying in touch.
Donahoe claims he has cut costs through buyouts and improved productivity - but obviously not enough.
So what does it all have to do with Congress? The postal service sought permission last year to get out of paying the $11 billion. The Senate approved a bill to give the agency $11 billion in cash by refunding payments made to a federal pension fund. The House stalled action on a bill to eliminate Saturday service and give Congress some control over labor contracts.
Last week, House Oversight Committee Chairman Darrell Issa (R, Calif.) and Rep. Dennis A. Ross (R, Fla.), who leads a panel overseeing the Postal Service, said in a statement the agency "has failed to take reasonable steps .?.?. to reduce losses over the past several years."
And that is the bottom line.
Congress needs to stop interfering in the process, make clear there will be no further bailouts, and allow the postal service to make the cuts necessary. The level may have to be reduced, but pre-funding for retiree benefits, (pensions and health care), remains essential - to protect the American public and the employees entitled to the benefits.