Government affairs

Legislative Updates

Senate committee holds hearing on Postal Task Force report

Today, the Senate Committee on Homeland Security and Governmental Affairs (HSGAC) held a hearing titled, “A Path to Sustainability: Recommendations from the President’s Task Force on the United States Postal Service” (USPS), in order to evaluate the findings and recommendations of the White House Postal Task Force that were laid out in their December, 2018 report (NALC write up here).

Witnesses for the hearing included: David C. Williams, Vice Chairman of the USPS Board of Governors (BOG); Robert G. Taub, Chairman of the Postal Regulatory Commission (PRC); Gary Grippo, Deputy Assistant Secretary for Public Finance at the U.S. Department of the Treasury and Task Force representative; and Margaret Weichert, Deputy Director of Management at the Office of Management and Budget, and Acting Director of the Office of Personnel Management (OPM).

The bulk of the hearing focused around evaluating and discussing the Task Force’s report and recommendations. Witnesses and committee members touched on a number of subjects including the pre-funding mandate implemented in the 2006 Postal Accountability and Enhancement Act (PAEA), the Universal Service Obligation (USO), the lack of governors on the Board of Governors BOG, upcoming vacancies on the PRC, and more.

In his opening statement, HSGAC Chairman Ron Johnson (R-WI) took time to note that postal finances are unsustainable and the $61.1 billion loss over 10 years is unacceptable. He went further to suggest that USPS is not a financially viable entity in the short or long-term, but notably did not bring up the principal driver of financial losses, the pre-funding mandate. However, he did note that membership of the BOG is so low that they are unable to achieve a quorum, which negatively impacts the Postal Service’s ability to enact steps to combat financial losses. He blamed bipartisan obstruction in both Congress and the Administration for this failure. Currently, the BOG consists of 2 governors out of nine (link to article on status of Board).

In his testimony, Governor Williams emphasized that the liabilities of the retiree health benefit fund liability (RHBF) are inaccurate, and if OPM were to calculate them correctly, the pension liability would drop by billions. He also noted that all proposals to improve the agency “must be aligned to the Postal Service's mission of binding the nation through universal service to Americans, giving them a level playing field, access to other Americans and to the world, providing affordable prices, providing reasonable rates and timely delivery, and respecting the sanctity of mail.”

PRC Chair Taub stressed in his testimony that when considering way to improve postal finances, he believes “the single most important thing that can be done is to clearly define the Postal Service's the Universal Service Obligation or USO. Only by defining the USO clearly can we begin to design a system that will fund the services required. It is our nation's mission statement for the Postal Service, and it needs to be clear.”

Mr. Grippo, the White House Task Force representative, focused on Postal Service finances claiming losses of $69 billion over 12 years and $140 billion in unfunded liabilities for retiree health, workers compensation, and debt. Mr. Grippo testified that USPS is not operationally viable under the current business model and “without a significant change in its business model therefore, the Postal Service will have insufficient cash to pay employee salaries and vendors. The only way to continue postal delivery of mail and packages in the U.S. and to avoid a disruption to the U.S. economy would be a taxpayer bailout of the Postal Service.”

Throughout the hearing, various Republican committee members directed lines of questioning to Mr. Grippo regarding the report’s recommendations that postal goods be differentiated between what it refers to as “essential versus non-essential” goods. Mr. Grippo defined the two as “essential goods” being consumer notices, person-to-person mail and parcels, transaction mail, medications, and more; while “non-essential goods” would primarily refer to commercial items such as marketing mail, catalogs, and the e-commerce delivery of packages. This line of questioning was used to introduce the concept of rate changes and with specific intention of raising rates for these “non-essential” or commercial items, which would directly benefit private shippers such as UPS and FedEx through more favorable pricing and thereby diminish Postal Service revenue.

Committee Democrats including Sens. Peters and Carper chose to focus much of their attention on the cause of USPS financial losses, the mandate enacted in the 2006 Postal Accountability and Enhancement Act that stipulates USPS must “pre-fund” decades’ worth of health benefits for its future retirees. In response, Governor Williams said the mandate has been devastating to the Postal Service, wiping out any ability for the agency to make investments, straining all areas of its budget, and forcing USPS to make such serious cutbacks that, “we can't understand fully the impact of what it is we're doing,” said Williams. When a comparison is made between USPS operational losses and pre-funding losses, “it tells you a story of an agency that's done well since 1970 until this happened [PAEA enactment in 2006]. At that point, it immediately fell into crisis. We were unable to even make the first payment of pre-funding and we've been unable since then.”

During the hearing, Chairman Johnson brought up the of ability of postal employees to bargain collectively over pay, specifically citing agreement with both Treasury and OMB witnesses that collective bargaining is an impediment to sound postal finances. On the subject of bargaining and nearly all proposals in the Task Force report, Treasury claimed that the administration could enact changes without Congress, making combatting this report of critical importance to NALC. In response to the hearing and misguided Task Force Report, NALC submitted comments for the record (link) and will remain actively engaged as ideas take shape in the House, Senate and within the administration.

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