National Association of Postal Supervisors Legislative & Regulatory Update - Sept. 30, 2010

Postal Service Suffers Three Stinging Defeats

One of the most troubling weeks in Washington for the UnitedStates Postal Service is coming to an end, with three major setbacks. The first two came on Capitol Hill, as Congress wasdeparting for its election recess. The third was delivered by thePostal Regulatory Commission, denying the Postal Service'semergency rate increase request.

Dual setbacks from Congress

The USPS got shredded in the legislative buzz saw twice in the lastweek, first through Congress’ refusal to provide financial relief tothe USPS in a stop-gap government spending measure, then whenthe House stopped action on legislation to restructure the PostalService’s retiree health prefunding obligations.

Hyper-partisan pre-election warfare led to both of the legislativesetbacks, as Democrats avoided crossing swords with theRepublicans, even to contest false Republican charges that thepostal restructuring measure would represent a “governmentbailout.” It was proof that false charges on complicated mattersduring the “silly season” in Washington can sometimes trump thetruth.

Retiree health benefit prefunding restructuring fails

The first legislative defeat occurred in the House last week whenlegislation (H.R. 5746) that would restructure the Postal Service’sretiree health prefunding payments never made it to a vote in theHouse Government Oversight and Reform Committee.Congressional observers pointed to the fadeout as sparked byRepublican opposition, led bycommittee ranking RepublicanDarrell Issa (R-CA)who, in a

Washington Times

op-ed

, called thepostal restructuring bill a "government bailout." NAPS PresidentLouis Atkins was amongthosewho objected to Issa's use of theterm. Atkins in a statement called Issa’s characterization of therestructuring bill “totally inaccurate.” (Click hereto read PresidentAtkins’ statement.)

Left out in the cold on the CR

The second legislative setback came on September 29 when theSenateand theHouseleft the Postal Service out of astopgap funding measurepassed to ensure the federal government keepsrunning for the next two months. The Postal Service had soughtpostponement of at least $4 Billion of the $5.5 Billion payment dueSeptember 30 to prefund its future retiree health obligations. NAPSand other postal groupspushedfor inclusion. Last year Congressincluded the Postal Servicein the same short-term fundingmeasure (called a "Continuing Resolution"), but this year no luck,primarily due to Republican opposition in the Senate, claiming thatthe Postal Service could get by without

PRC says no to exigency rate request

The third setback for the Postal Service came earlier today whenthe Postal Regulatory Commissiondeniedthe Postal Service’srequest for an emergency postage increase, effective January 2.

Although the PRC in itsdecisionagreed with the Postal Servicethat the severe recent recession, and the decline in mail volume,qualified as an “extraordinary or exceptional circumstance” under the 2006 postal reform law, the Commission found that the rateincrease request “was not due to the recession, or its impact onmail volume, and instead an attempt to address long-term structuralproblems not caused by the recent recession.” In bitter irony, thosestructural problems include the burdensome retiree healthprefunding payments, which Congress just days before declined torestructure.

What's Next?

The consequences of these major setbacks are still reverberating,but this much is clear:

The Big Fix.

First, Congress is more likely than ever to address abundle of complex postal issues and craft a "Big Fix" bill next year.Whether that is good or bad remains to seen. Such acomprehensive measure could mandate delivery adjustments, postoffice closings, expanded USPS product authority, and changes toretiree health benefit prefunding.Sen. Tom Carper (D-DE) introduced acomprehensive postal bill(POST Act, S. 3831) just last week that deals with some of these issues. Many of Carper’sproposalsmirror legislative requeststo Congress made by thePostal Service. Carper is likely to reintroduce the measure in thenext Congress, probably in early 2011. NAPS most certainly will beengaged in the debate.

Real Cash Flow Problems.

If Congress in 2011 fails again toremove the financial rope around the Postal Service’s neck anddeclines to restructure the burdensome retiree health benefit