Following the collapse of plans for ending Saturday mail delivery, the U.S. Postal Service will explore the possibility of an emergency rate increase and seek additional cost-cutting concessions from its employees. But as both options quickly came under attack, the odds of success on either front seemed dim.
“It really does seem that no matter what route we try to go down, there is a strong political interest saying ‘That’s unacceptable,’”said Mickey Barnett, chairman of the Postal Service’s Board of Governors.
The five-member board unanimously agreed last week to cancel plans to shift to five-day delivery the week of Aug. 5. The board said it had no choice after Congress barred the move in the latest federal spending bill.
Barnett and Postmaster General Pat Donahoe are likely to be grilled about the decision at a Wednesday hearing of the House Oversight and Government Reform Committee.
The hearing’s theme is “options to bring the Postal Service back from insolvency.” Also scheduled to testify are Gene Dodaro, head of the Government Accountability Office and Fredric Rolando. president of the National Association of Letter Carriers.
Cutting Saturday delivery would have saved $2 billion per year, the Postal Service said. Because of the Postal Service’s worsening financial condition, the board told USPS leaders to reopen contract talks with postal unions with the aim of cutting labor costs further. It also instructed the Postal Service to evaluate an “exigent” postal rate increase that would go beyond the routine inflation adjustments now allowed.
Objections arose immediately.
Union leaders said their members have given up enough to help keep the Postal Service afloat. At the National Rural Letter Carriers’ Association, whose latest contract was signed last summer and expires in 2015, President Jeanette Dwyer called the proposal to reopen negotiations “another misguided attempt to grow the Postal Service by cutting.”
By giving up pay raises and accepting other concessions, rural carriers “have shown their dedication to the Postal Service not just on their routes, but also in their sacrifices at the bargaining table,” Dwyer said.
Three years ago, the mailing industry banded together to defeat the Postal Service’s last attempt to win an exigent increase, said Jim Cregan, executive vice president for government affairs at MPA-the Association of Magazine Media. “If necessary, we’ll fight the fight again,” he said.
Like the USPS board and other lobbyists on postal issues, Cregan saw passage of comprehensive postal legislation as essential. But it’s unclear when such a bill will be introduced, let alone approved. And while the Obama administration again endorsed allowing the Postal Service to go to five-day delivery in its 2014 budget request, the White House needs to be more engaged politically, Cregan said.
As email and Internet bill-paying continue to eat away at profitable first-class mail traffic, the Postal Service’s losses mounted to almost $16 billion in fiscal 2012.
A key part of its cost-cutting agenda has been ending Saturday delivery. After years of waiting for a congressional green light, Postmaster General Pat Donahoe announced in February that the agency would go to five-day mail delivery this August, while continuing Saturday package delivery. At the time, Donahoe entreated Congress not to get in the way.
In the fiscal 2013 continuing resolution signed this month, lawmakers instead extended a prohibition against cutting mail delivery. In a legal opinion issued a few weeks before, the Government Accountability Office affirmed that the prohibition remained in effect.
Although the USPS board had earlier approved Donahoe’s decision to end Saturday delivery, it reversed course last week because of the likelihood of a lawsuit, Barnett said.