Market Overview

CCAGW Calls for Congress to Stop the Next Bailout: The USPS


The United States Postal Service (USPS) announced yesterday that in fiscal year (FY) 2012, which ended on October 30, the agency lost a record $15.9 billion. That news adds yet another layer of gloom and doom to a jammed congressional agenda that is most focused on avoiding the “fiscal cliff.” The USPS's fiscal condition must be added to Congress's “to do” list.

“The USPS's dire financial situation is the result of the same legislative culture that has brought the country to the brink of fiscal ruin,” said Council for Citizens Against Government Waste (CCAGW) President Tom Schatz. “Congress has been in a state of denial and crisis avoidance rather than protecting the well-being of taxpayers. The downward spiral of the USPS has been well-known for years and yet Congress has refused to grapple with the issues facing the agency.”

The USPS has defaulted on two of its mandated future retiree health benefit payments since August. The agency is seeking the flexibility to close and consolidate postal facilities, move to a five-day delivery schedule (which would save an estimated $3 billion a year), force labor arbitrators negotiating contracts between USPS management and its unions to take the fiscal health of the agency into account when rendering its decisions. It is also seeking relief from its pension pre-funding requirements; had those requirements been lifted last year, the agency would still have posted net losses of $2.5 billion.

The 21st Century Postal Service Act (S. 1789), sponsored by Sens. Scott Brown (R-Mass.), Tom Carper (D-Del.), and Susan Collins (R-Maine) passed in the Senate on April 25, 2012 by a vote of 62 to 37. Unfortunately, the bill fails to adequately or permanently address the agency's long-term structural flaws. S. 1789 is a toxic and contradictory combination of provisions that both block the agency from taking necessary and prudent steps that could shore up and right size its business operations, while at the same giving it access to cash and allowing it to leverage its unfair advantages to enter non-postal markets and compete against private sector companies. A far better bill, H.R. 2309, co-sponsored by Reps. Darrell Issa (R-Calif.) and Dennis Ross (R-Fla.), would allow the USPS to shutter underused facilities and shift to a five-day delivery schedule. It would also introduce the structural changes the USPS needs to survive without a taxpayer bailout, including the ability to right size its bloated and overpaid workforce, institute flexibility into the work rules, and renegotiate contracts if necessary.

“Today, we saw the demise of Hostess, a 125-year-old brand that was driven into extinction by the unreasonable demands of just one of its unions. Today, 18,500 workers will all be sent to the unemployment office. In the case of the USPS, the unyielding demands of its bloated workforce, if not tempered with reality, could lead to a massive taxpayer bailout. Congress must act immediately to prevent a fiscal meltdown that is completely preventable,” said CCAGW President Tom Schatz. “Congress should pass legislation similar to H.R. 2309 to protect taxpayers from another bailout and retool the USPS for the exigencies of the 21st century.”

The Council for Citizens Against Government Waste (CCAGW) is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.

Leslie K. Paige, 202-467-5334

Luke Gelber, 202-467-5318

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