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Senate OKs buyouts, early outs for 100,000 in postal overhaul

Apr. 28, 2012 - 06:00AM   |  
By SEAN REILLY   |   Comments
The Postal Service calculates that ending Saturday mail delivery and closing excess plants will save it almost $7 billion a year.
The Postal Service calculates that ending Saturday mail delivery and closing excess plants will save it almost $7 billion a year. (Getty Images)

A sweeping postal reform bill passed by the Senate last week would shrink the agency's workforce by 100,000 over three years, largely with the help of buyouts and early retirement offers.

To help finance that, the bill would free up $11 billion in excess employee pension funds.

The legislation also would stretch out the timetable for the Postal Service to build up a retiree health care fund, thus saving the agency even more money in the coming years.

In all, the measure would remove $34 billion worth of current and future pension and health care obligations that the agency can redirect to other priorities, such as employee buyout and early retirement packages.

The Congressional Budget Office counts that $34 billion as a charge against the U.S. Treasury. And that has some Republican lawmakers arguing that it amounts to a massive bailout that would require offsetting cuts in other programs.

Another measure in the bill: a provision to cap postal executive pay at that of a Cabinet secretary, currently $199,700.

The Postal Service likewise is upset with the bill.

That is because it delays two big steps the Postal Service wants badly to take: transitioning from six-day to five-day mail delivery and closing 223 processing facilities.

The legislation would keep open as many as 125 of the 223 processing plants the agency wants to close for three years by barring the Postal Service from abandoning overnight delivery standards for mail sent to and delivered by the same facility.

The bill also would delay for a year the closing of any rural post office, most of which lose money for the agency.

The bill also would permit the Postal Service to end most Saturday delivery only after two years and only after it can show the step is financially essential.

The Postal Service calculates those two steps alone ending Saturday mail delivery and closing excess plants will save it almost $7 billion a year.

"Failure to act on these changes will ensure that the Postal Service's losses will continue to mount," the Postal Service's Board of Governors said in a statement that called the Senate bill disappointing.

If the bill were to become law, the Postal Service would be back before Congress in a few years seeking "additional legislative reform," Postmaster General Patrick Donahoe added.

Under a self-imposed moratorium begun late last year, the Postal Service pledged to postpone any planned plant or post office closings until mid-May in hopes that Congress would act by then. The Senate bill urges USPS to continue that freeze until a bill is signed into law. A USPS spokesman declined to say last week what the agency will do.

Just after the April 25 vote, Sen. Joseph Lieberman, a Connecticut independent who is the bill's lead sponsor, hailed the legislation as a means for the Postal Service "to stay alive through the 21st century." He called on the House to move quickly on its own starkly different measure so the two sides can hammer out a compromise for President Obama's signature.

But the bill appears to have little chance of soon becoming law. Rep. Darrell Issa, R-Calif., a sponsor of the House bill, quickly denounced the Senate legislation.

"Instead of finding savings to help the Postal Service survive, the Senate postal bill has devolved into a special interest spending binge that would actually make things worse," Issa said in a statement.

By contrast, Issa's bill would create a special control board to put the Postal Service's finances in order; it would also create a separate panel to decide what post offices and processing plants should be closed.

Although the bill won approval from a House committee last fall, it has yet to come up for a vote by the full House.

The standoff comes as the Postal Service's long-term financial outlook remains bleak. Online bill paying and other forms of electronic communications continue to sap first-class mail volume, the agency's most profitable product. Overall losses are running at $25 million a day, Donahoe said.

In response, the agency has unveiled an aggressive cost-cutting strategy to return to profitability. That approach, which calls for large-scale job cuts and plant closings, is colliding with election-year politics and Congress' reluctance to do anything that might further rattle a shaky economy.

In last week's Senate debate, some of the most adamant foes of the Postal Service's downsizing moves were lawmakers in tight re-election fights, such as Sens. Jon Tester, D-Mont., and Claire McCaskill, D-Mo.

Both added amendments that would make it more difficult for the Postal Service to close post offices.

Mailing industry representatives praised the Senate legislation as a step forward.

"They crafted a compromise bill and they've worked it well to move it through in an election year," said Tony Conway, executive director of the Alliance of Nonprofit Mailers. "I don't think anyone predicted this."

But while Senate passage puts some pressure on the House to act, Conway said, he was less certain that lawmakers would move before the November election.

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