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White House Pulls the Plug On Postal Reform

(This article was first published in the November/December issue of The American Postal Worker magazine)

Congressional action on postal reform appears to have failed due to the Bush Administration’s opposition to key provisions of the bills now pending in the full House and Senate. While an opportunity to address the issue remains a remote possibility in a tentatively scheduled “lame duck” session after the elections, White House resistance almost certainly means that Republican leadership will block action on it through the remainder of the 108 th Congress.

The reform bills now pending in the House and Senate are the result of several Congressional hearings, hundreds of meetings, and often-contentious negotiations, and had earned bipartisan support in both chambers.

White House opposition could mean that the legislative process will begin anew next year, and the so-called “reform” proposals made by the President’s Commission on the Postal Service to cut postal workers’ pay, benefits and bargaining rights would be back on the table.

It’s All About the Money

White House opposition is based on worries about the deficit. A provision in the Postal Civil Service Retirement System Funding Reform Act, passed in 2003, transferred from the Treasury to the Postal Service the responsibility for paying the retirement benefits earned by postal employees when they served in the military.

The USPS argues, and the APWU agrees, that since the government pays for the military service credits held by employees of every other federal agency, this $27 billion obligation should be paid by the Treasury. Furthermore, approximately 90 percent of the obligation was incurred before the USPS was established as an independent organization in 1971. But, under federal budget accounting rules, a transfer of the cost of postal employees’ military service retirement benefits from the USPS back to the Treasury Department would increase the federal deficit.

For the same reason, the Administration also opposes releasing from an escrow account billions of dollars in USPS overpayments to the Civil Service Retirement System. The 2003 law authorized the USPS to reduce its annual payments by $3.5 billion in Fiscal Year 2003 and $2.7 billion in FY2004. Without the law, CSRS would have been overfunded by $71 billion.

Savings for the first three years were to be used to pay off the USPS debt to the Treasury, but for FY2006 and later years, the law provides that the savings be held in escrow, pending further congressional action. Continuation of the escrow requirement greatly concerns mailers, because money held in escrow cannot be used to support the postal system. But the Administration claims that removal of the escrow would add $3 billion (this year) to the budget deficit. The USPS would like to use the funds to set up a separate account for retiree health benefits.

Because the Postal Service has said that it must raise rates in 2006, there is an urgent need to resolve these two issues before rate-case preparations begin. According to a report by the Congressional Research Service, if there is no resolution, the new rates for 2006 will reflect $3 billion for an escrow fund that cannot be used, and $1.5 billion for repaying the Treasury for the past military service of present or former postal employees.

APWU’s Position

Throughout the process, APWU’s position has been consistent. We favor pricing flexibility, relief from military retirement payments, release of the escrow account, and other modest changes that would not threaten service to the public or the pay, benefits, and collective bargaining rights of employees.

Postal workers, consumers, and small businesses succeeded on a number of fronts during the creation of bills in the House (H.R. 4341) and Senate (S. 2468), when both bodies rejected the anti-worker recommendations of the President’s Commission. Although these bills are not perfect, they are among the few examples of bipartisan cooperation in the 108 th Congress.

APWU remains opposed, however, to a provision in the Senate bill that would reduce workers’ compensation benefits for employees injured on the job. For this reason we urge Congress to adopt the House bill.

Looking Ahead

Unfortunately, failure to enact postal reform legislation this year will mean that the Commission proposals rejected by Congress in the 108 th Congress, could once again be under consideration next year under the 109 th Congress. While it would be possible for legislators to start with the provisions of the two existing bills, it also is possible that the two chambers will start from scratch and ignore the progress made to this point on a wide range of issues, including excessive “worksharing” discounts for the mailing industry.

For example, APWU, working with our friends on Capitol Hill, secured an important victory with the passage in the Senate Governmental Affairs Committee of an amendment offered by Sen. Joe Lieberman (D-CT) to limit excessive discounts, which drain much-needed revenue from the Postal Service. Committee members voted 9-8 in favor of the amendment before unanimously approving the Senate reform measure, the Postal Accountability and Enhancement Act (S. 2468).

Their counterparts on the House Government Reform Committee also passed their version of the bill, including an identical “worksharing” provision, by a unanimous vote.

Floor action had been originally scheduled for June 2004, and it is unlikely Congress will have time to enact these bills before adjournment. Even if the House and Senate were able to pass their respective versions, party leaders would be required to appoint “conferees” from both chambers to resolve differences between the two bills.

The full House and Senate would then have to vote up or down on the “conference report.” The final version of the bill would then be sent to the president to sign or veto. With White House opposition, it is unlikely that anyone will try to push through a bill that’s likely to attract a presidential veto.

Acknowledging Friends of the USPS

While it looks like postal reform legislation – including badly needed financial relief for the USPS – will not be approved by the 108 th Congress, APWU would like to thank members of Congress and their staff for working with us to produce legislation that would be good for APWU members and for the long-term viability of the Postal Service.

We gratefully acknowledge the hard work of the offices of Sens. Susan Collins (R-ME), Joe Lieberman (D-CT), Tom Carper (D-DE), Daniel Akaka (D-HI), Richard Durbin (D-IL), and Arlen Specter (R-PA).

On the House side, we could not have gotten as close as we did without the efforts of Reps. Tom Davis (R-VA), Henry Waxman (D-CA), John McHugh (R-NY), and Danny Davis (D-IL). These four House members early on pledged to stick together on postal reform. They truly were a bipartisan force intent on protecting all the stakeholders of the USPS.

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