How the Post Office Is Being Destroyed
By a Phony Budget Crisis
Congress, not the post office itself, is the problem
As every 6 year old learns, there is real and there is make believe. The massive Post Office deficit that is driving its management to commit institutional suicide by ending 6-day mail delivery, closing half of the nations’ 30,000 or so post offices and half it’s 500 mail processing centers, and laying off over 200,000 workers, is make believe.Local post offices all across the country, which function as community commons, including this one in Gerry, New York, are threatened with destruction because of Congress's shenanigans with the USPS budget. (Photo by Ross Griff under a Creative Commons license from flickr.com)
Here’s why. In 1969 the federal government changed the way it did accounting. It began to use what was and is called a unified budget that includes trust funds like social security previously considered off budget because they were self-sustaining through dedicated revenue.
At that time the Post Office was, as it had been since 1792, a department of the federal government like the Department of Energy or the Department of Agriculture. While generating most of its revenue from postage it also received significant Congressional appropriations.
In 1970 Congress transformed the Post Office into the U.S. Postal Service (USPS). The new quasi-public agency was intended to put the Postal Office on a more business like footing. The Postal Service was given was allowed to borrow to make needed capital investments and was given more flexibility in how it spent its money. In return Congress required the Postal Service to become self-sufficient. The subsidy, at that time running about 15 percent of total revenues (close to $10 billion a year in 2012) was phased out over the next 15 years. After the mid 1980s the only taxpayer funds involved in the Post Office, amounting today to $100 million a year, subsidizes mail for the blind and official mail to overseas voters.
In keeping with the new philosophy that the Postal Service should be independent, President Richard Nixon’s Office of Management and Budget administratively moved its finances off budget in 1974. In 1989 Congress did it by statute.
None of this made any difference, as exhaustively detailed by the USPS Inspector General in a 2009 report. The OMB and the Congressional Budget Office (CBO) continued to treat the postal service as part of the unified budget, the budget they use for “scoring” legislation to estimate its impact on the deficit.
And that’s where the make believe comes from.
In 2001 the Government Accountability Office (GAO) put the Postal Service on its list of “high-risk” programs because of rising financial pressures resulting from exploding demand from both the residential and commercial sectors. A year later the Office of Personnel Management (OPM) found the Postal Service had been significantly overpaying into its retirement fund. It seemed a simple matter to reduce future payments and tap into the existing surplus to pay for current expenses.
And that’s when make believe began to have a tragic impact in the real world.
How the Unnecessary Tragedy Unfolded
In late 2002, the CBO announced that this logical change in the retirement contribution formula could increase budget deficits in Congress’s unified budget by as much as about $3.5 billion a year, or $41 billion over the long haul. If the overpayments were used to delay future rate increases, the CBO added, future government receipts would decline, adding to the unified budget deficit.
To overcome the budget scoring objections Congress began what in retrospect we can see was little more than an exercise in rearranging the chairs on the Titanic. The final law allowed the Postal Service to use its overpayments to pay off its debt and delay increasing rates for 3 years. After that any overpayments were to be collected in an escrow fund that would be unavailable to the Post Office until Congress determined how the funds would be used. And then came the quid pro quo. The Postal Service became responsible for paying postal workers for the time they spent in prior military service. Up until then, as one might expect, these obligations were paid by the U.S. Treasury. Assuming that obligation essentially eliminated any Post Office surplus during the 10 year scoring window.
The House and Senate held 11 hearings on postal reform between 2003 and 2006. Senator Susan Collins, Chair of the Senate Governmental Affairs Committee commented, “two issues… united every single witness who has testified before our committee … a desire to see the escrow account repealed and the return of the military pension obligation to the Treasury Department.”
Bills to this effect were well received in Congress. But again and again the OMB and CBO stepped in to thwart policy makers. In 2004, as the bills were moving rapidly through Congress the Bush Administration stopped their progress by announcing its opposition,which they justified by the impact on the unified budget. The next year, on the day that a bill to help the Post Office with big bipartisan backing was brought to the floor of the House , the Bush Administration again threatened a veto because of its “adverse impact on the Federal budget”. Congress backed down.
In 2006 Congress finally passed a new law. The Postal Service was allowed to tap into escrow money and pension obligations for military service were shifted back to the US Treasury. But again a quid pro quo was required that negated any financial benefits that would result. To achieve unified budget neutrality the USPS was required to make 10 annual payments of between $5.4 billion and $5.8 billion each to the newly created Postal Service Retiree Health Benefits Fund. The fund could not be tapped to pay actual retiree health benefits during those 10 years.
The level of the annual payments was not based on any actuarial determination. The numbers were produced by CBO as the amounts necessary to offset the loss of the escrow payments.
Remember, this all began because the post office discovered it had surplus funds. Unified budget accounting made sure it could never tap into this surplus unless at the same time it assumed new liabilities of an equal magnitude.
The Simple Solution
The solution to the post office financial deficit is simple. Give it back the money Congress, as a result of pressure from the CBO, has stolen from it over the past years. Then make future payments into the health fund for retirees actuarially based.
Once this artificially generated financial noose is removed from the postal service’s neck we can get on with helping it navigate the shoals of an uncertain future. To do this the postal service must build on its two most important assets: its ubiquitous physical infrastructure and the high esteem in which most Americans hold it. In combination, these assets offer the post office an enviable platform upon which to many new revenue-producing services.
But to do this Congress will have to remove another burden imposed by the 2006 law: a prohibition on the postal service offering non-postal services. Like issuing licenses (e.g. drivers, hunting, fishing, etc) or contracting with local and state agencies to provide services. Congress should also lift the prohibition on the post office shipping wine and beer.
In offering new services the USPS could learn from post offices in other countries. The French post office offers banking and insurance services. Remember that from 1911 to 1967 the US Post Office successfully and profitably ran a nationwide postal savings bank. The Swedish post office will physically deliver e-mail correspondence to people who are not online.
But before any of this will happen we need to fess up. The postal crisis is contrived. Let’s stop scaring ourselves silly with make believe deficit monsters and unshackle this national asset.
This work is licensed under a Creative Commons License
Portland Communities and Postal Workers United (PCPWU) has been fighting cuts and closures to the postal service for the past couple years. In May of 2012, ten activists were arrested occupying Portland’s University Station post office, which has since been closed. In April of last year, five protesters went to jail for a civil disobedience action at the Salem mail plant, which has now been dismantled. The same group has blockaded Dill’s Star Route trucks multiple times, demanding the company stop stealing family wage, union postal jobs. Seven PCPWU protesters were arrested in October, at the Portland Main Post Office, for refusing to leave when the district manager would not meet with them to discuss privatization.
Judge Bergstrom denied the motion for dismissal due to lack of a speedy trial. So now, three years later, the case continues.
"This means we will be getting some court dates sometime in the near future. So we wait until the court or DA gets new court dates set. If this case still doesn’t get set for trial in the near future, we will be able to raise the speedy trial issues again." R. L. M.
~No fear, no compromise and no surrender....
Occupy bike swarm blocks private truck at Portland mail facility
Eleven protesters invaded the office space of Portland’s senior US Postal Service management today. Slipping past security barriers on the third floor of the Main Post Office, the group occupied the hallway outside the offices of Brenda Jackson, transportation manager for the Portland district. Demanding a meeting with Jackson, the so-called “postal protectors” insisted that management stop subcontracting the trucking of “the people’s mail.”
Claiming concerns about safety, cost and corruption, the protesters engaged senior managers, postal security officers and finally the Portland police. After USPS manager Rick DeWolfe promised the “protectors” he would look into setting up a community meeting with Jackson and police dropped the threat of arrest, the group agreed to disperse.
”Postal truckers are losing work to a bankrupt, fly-by-night outfit, Dill Star Route Inc, in a corrupt, no-bid deal with local USPS manager Brenda Jackson,” declared Jamie Partridge, a protester and retired postal worker. “We intend to stop this attack on family wage, union jobs.”
The protesters included retired postal workers, a minister, a small business person, seniors, and a union organizer, all of whom declared themselves impacted by postal privatization.
Declaring “we’ll be back!” the “protectors” vowed to interfere with private mail transport, if postal management did not reverse the subcontracting. The group has blocked or interrupted Dill mail trucks four times this summer – with people, with a car and with a bike “swarm”.
Occupy Portland’s bike swarm joined “postal protectors” to block a private mail truck leaving the Mt. Hood Distribution Center (US Postal Service) today, demanding that postal management stop subcontracting the trucking of “the people’s mail.” Claiming concerns about safety, cost and corruption, the blockaders left after police ordered them to disperse. No arrests were made.
”Postal truckers are losing work to a bankrupt, fly-by-night outfit, Dill Star Route Inc, in a corrupt, no-bid deal with local USPS management,” declared Jamie Partridge, a blockader and retired postal worker. “We intend to stop this attack on family wage, union jobs.”
Calling themselves “postal protectors for the 99%,” the protesters included retired postal workers, a small business person, seniors, a teacher, an immigrant worker and a teamster, all of whom declared themselves impacted by postal privatization.
Chanting “We’ll be back!” the “protectors” vowed to further interfere with private mail transport, if postal management did not reverse the subcontracting. The group has blocked or interrupted Dill Star mail trucks four times this summer – with people, with a car and today with bikes.
Seven postal trucking positions were recently eliminated at the same time as the subcontractor, Dill Star Route trucking, hired twenty drivers to do twice as many mail runs as were previously needed, according to Partridge. The company is being paid $59 per hour for each driver, while the USPS is paying for the gas and lending the company postal trailers (in violation of postal rules) and leasing nine tractors for Dill Star use (at $30,000 per month). According to union officials, postal drivers are sitting on standby without work, up to 500 hours a week, while many of the extra Dill Star trucks are running empty or have very little mail.
The "financial emergency" is phony. Since 2006 the USPS has been forced to spend nearly 10% of its budget pre-funding retiree health benefits 75 years in advance. No other U.S. agency or private business faces such a crushing financial burden. Not only would the postal service have been profitable without the mandate, the USPS has also over-paid tens of billions into two pension funds.
COSTLY CUTS, CLOSURES, and CONTRACTING-OUT
In the past year, the Postmaster General has closed 30% of mail processing plants, reduced hours by 25% - 75% in half of post offices, put 10% of post offices up for sale, subcontracted trucking and mail handling, eliminated tens of thousands of family wage, postal jobs and delayed mail delivery.
The USPS own studies (revealed at the March 22, 2012 meeting of the Postal Regulatory Commission), showed that big mailers leave the system as a result of such delays, costing more in lost revenue than is saved by lowering labor costs, not to mention the dramatic increase in trucking costs as mail is transported hundreds of extra miles to be sorted in the closest still open facilities.
Postal workers have seen their wages cut by 25% for new hires. Bottom-tier Postal Support Employees (truckers and clerks) and Mail Handler Assistants now make less in wages and benefits than the non-postal, non-union sub-contract workers.
The postal service is not broke. Subcontracting work is unnecessary and costly. However, the agenda of corporate America, their friends in Congress and in postal management, according to the CPWU, is to cripple the USPS, to soften it up for union busting and privatization. The USPS is a $65 billion annual business with over $100 billion surplus in its pension and retiree health benefit funds, over 30,000 post offices and 200,000 vehicles. Postal activists claim that America is being confronted with a huge transfer of public wealth to for-profit, private corporations.
To contact US Postal Service management:
- Brenda Jackson, transportation manager (trucking), 503-294-2402
-Lisa Shear, senior plant manager (mail handling and mail processing), 503-294-2206
-Kim Anderson, Portland district manager, 503-294-2500
Portland Communities and Postal Workers United
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