Here is the text of a recent letter from Representative Gerald Connolly (VA-11) to all of his Congressional colleagues. In this letter, Congressman Connolly makes a well-reasoned case for Congress to pass responsible legislation to restore the USPS to a sound financial position.
What Does Postal Service "Bankruptcy" Actually Mean?
Dear Colleague,
By declaring itself to be ‘bankrupt’ imminently, the Postal Service has created a media firestorm. Remarkably, Congress has remained in the eye of the storm, even though the pending ‘bankruptcy’ is in large part our responsibility. In order to remain viable in this century, the Postal Service needs to have the authority and resources to thrive in the digital age. Without a clear new business model the closing of thousands of Post Offices, layoffs of employees, and reduction in mail delivery might actually make it harder, not easier, for the Postal Service to adapt. Instead of facilitating Post Office closures and mass layoffs, Congress should give the Postal Service new authorities to raise revenue and take advantage of its unparalleled retail network and trusted workforce because these two attributes are competitive advantages rather than liabilities. Senator Carper, Senator Collins and I all have introduced separate bills that provide new opportunities for the Postal Service to increase revenue. In addition to immediate fixes for the retirement prefunding and pension overpayment problems, Congress should help the Postal Service build a new business model rather than facilitate its demise.
Few news reports have noted that the Postal Service is not going to cease to exist or even dramatically curtail service. What ‘bankruptcy’ entails in the short term is a failure to make one installment payment into the Postal Service employees’ retirement savings account. Fortunately, whether or not the Postal Service makes this one installment has little to no impact on the retirement security of Postal Service employees. Why? Because the only reason the Postal Service would make this $5 billion payment is to comply with the onerous requirement that Congress imposed on the Postal Service in 2006: that it prefund 100% of its anticipated retirement costs AND its anticipated retiree health care costs. If this arbitrary retirement prefunding requirement had not been imposed by Congress in 2006 then the Postal Service would still be in the black right now, despite declining mail volume associated with the recession.
No other business or government agency in America is subject to that prefunding requirement, and for good reason. Setting aside 60-80% of anticipated pension costs is generally considered more than sufficient to provide for employees’ retirement security. In addition, the Office of the Inspector General and the Postal Regulatory Commission found that Postal Service employees and customers overpaid $50-$75 billion in pension payments that now reside in the U.S. Treasury, which the Office of Personnel Management refuses to return. Fixing either the retirement prefunding obligation or the pension overpayment would be a relatively painless way to preserve the Postal Service and provide the time necessary to think through the USPS business model of the future.
Whether or not the Postal Service’s pending ‘bankruptcy’ is a false or real crisis has little importance to the companies whose primary responsibility is to sell newspaper or television advertising. However, the real state of the Postal Service should certainly be of concern to Congress, not just because there are 600,000 middle class Postal Service jobs at stake, in addition to the private sector jobs associated with the $1 trillion postal industry, but also because we helped cause this problem and therefore have a responsibility to fix it.
There are many proposals to eviscerate the Postal Service whose only virtue is that they are painful. Closing thousands of Post Offices, abrogating employee contracts in order to conduct mass layoffs, and eliminating Saturday mail delivery would fail to address the underlying market shifts in mail service. Destroying the Postal Service wouldn’t just break faith with our founding fathers, who enshrined it in Article 1 of the Constitution, but also would have devastating ripple effects in a fragile economy.
Few commentators have noted that it is the Postal Service which enables many forms of online commerce, from clothing to shoes to DVDs which are purchased online. Few commentators have discussed the role of the Postal Service in delivering prescription drugs to seniors or in preserving the fabric of rural communities. Few commentators have noted laying off part of the 600,000 Postal Service workforce would exacerbate unemployment at a time when we should be creating rather than destroying jobs. The nostrums advocated by some would impede and degrade USPS’s ability to deliver on all of these services.
Those who advocate the unexamined downsizing of the Postal Service insist that ‘There Is No Alternative’ to mass layoffs, Post Office closings, and reductions in service that would hurt consumers. We cannot allow them to use a manufactured crisis to destroy an American institution that is vitally important to our constituents and our economy. Congress should fix the retirement prefunding requirement and/or the pension overpayment, then consider more fundamental business model reforms such as have been proposed by myself and many other members of Congress. Some of these longer term reforms, aimed at helping the Postal Service create a new business model, include giving the Postal Service the authority to engage in retail activity, the authority to offer services related to sending mail, the ability to install weather or other remote sensors on mail trucks, and the ability to generate and sell energy from postal vehicles back to the grid. I introduced legislation entitled Reform the Postal Service for the 21stCentury Act which would grant the Postal Service many of these authorities, and Senators Carper and Collins have introduced legislation that also would help build a new business model. These legislative efforts contrast sharply with proposals to dismantle the Postal Service using a process similar to bankruptcy receivership.
We should not panic because the Postal Service will not make one installment payment to fulfill a mindless Congressional mandate. By fixing the retirement prefunding requirement and pension overpayment and by giving the Postal Service the ability to construct a new business model for the digital age, we can ensure that our constituents continue to receive the affordable, reliable service provided for in Article 1 of the Constitution. The Postal Service only will be an anachronism if Congress fails to correct our own policy mistakes and fails to give the Postal Authority the tools it needs to succeed in this century.
Sincerely,
Gerald E. Connolly 11th District, Virginia
