Congressman Issa Speaks – Presents His Postal Reform Act

We have all heard the stories of how cash strapped the United States Postal Service is.  Last year the USPS lost something like 8.5 billion dollars and this year they are on target to lose about the same.  It’s not as though the Postal Service hasn’t been doing anything to curtail their costs, they’ve actually done quite a bit.  For instance, over the last four years, the USPS has eliminated 110,00 career jobs and cut costs by 12 billion dollars.  Certainly nothing to sneeze at but it’s still not nearly enough.

Mail volumes continue to decline as people become more comfortable with doing their banking and receiving their credit card statements, etc. on line.  Emailing an online birthday card, Christmas Greeting or Mothers Day Card also cuts into revenue.

It’s been said, I don’t know how true it is, that for every penny a gallon that gasoline goes up, it costs the Postal Service 8 million dollars a day.  Wow!  We’re all well aware how much gas has gone up over the past year, so that alone is a massive cost increase.  You can budget for some of the gas increase but when prices take off like they have, it can be pretty hard to forsee.

A major problem for the USPS with gas prices is that once they rise so fast,  the Postal Service cannot react fast enough.  A normal business could increase the price of their product or tack on a surcharge.  The Postal Service has to request a rate increase and being a government agency (sort of independent) it takes almost a year to get the rate hike.  In the meantime, the USPS is hemorrhaging.  This is absurd.  The Postal Service needs to be able to operate more like a private business.  Let’s see if Congressman Issa’s Postal Reform Act can help the Postal Service survive.

Some highlights of the Postal Reform Act:

  1. The legislation creates the Postal Service Financial Responsibility and Management Assistance Authority (Authority) which will have a broad mandate to restructure the Postal Service and reduce costs in order to bring the institution back to fiscal solvency when the Postal Service goes into default to the Federal government. The Authority will be disbanded once USPS meets several benchmarks that ensure financial health.
  2. The legislation empanels a separate body, the Commission on Postal Reorganization (CPR) to review postal infrastructure and recommend closures and consolidations to Congress, that will ultimately save the Postal Service at least $2 billion a year. If Congress does not reject the CPR’s recommendations, they become law. The legislation will also remove several legal hurdles that USPS currently faces when it comes to reducing costs, including allowing financially unsustainable retail postal facilities to be closed
  3. The legislation will eliminate the benefit disparity between the postal workforce and other federal employees, which would have saved $700 million in fiscal year 2010, and it will ensure that postal wages are comparable to the private sector. The bill will also make several changes to USPS revenue and contracting policies.
  4. 5-Day Delivery: Allows USPS to move to 5-day delivery of mail.
  5. Health and Life Insurance: Requires USPS employees to pay the same health and life insurance premium percentage as other federal workers. This provision is phased in to apply to union employees after their current bargaining agreements expire.
  6. Advertising: Authorizes USPS to sell advertising space on USPS facilities and vehicles. All advertising must maintain at least 200% cost coverage and be consistent with USPS’s integrity.
  7. Mediation Arbitration: Modifies the collective bargaining process to the 2003 Presidential Commission recommended mediation-arbitration process. Also requires arbitrators to take into account total compensation comparability and the financial situation of the Postal Service in any decision.

Those are some of the highlights.  I think the various Postal Service unions (there are about a half dozen or so) will be quite interested in all of them but 3, 4, 5 and 7 in particular.  Number 5 will mean Postal Employees will be paying more for their health insurance benefits.  Right now the costs are negotiated that’s why Postal Service Employees pay less than federal workers for the same insurance plan.

Number 2 above could potentially be huge savings.  There are many small and very small post offices around the country.  A significant number of those could easily be closed and the area that they serviced could be serviced by a nearby larger office.  In many cases the USPS wants to contract out Postal Services to private convenience stores or something similar.  Perhaps grocery stores.

I thought number 6 was interesting too.  Selling advertising on Postal Vehicles and in Post Offices.  I think it’s a great way to generate more revenue as long as it doesn’t over power the appearance of their vehicles or buildings.

According to Issa, “This legislation encourages USPS to modernize its retail network and enables USPS to act more like a business.”   Well,  we’ll see.  I’m afraid that congress may make detrimental changes to the bill or overrule office closings when they get complaints from their constituents.

What do you think?  Just Asking.

More Postal Reform Act highlights.

Here’s the actual Postal Reform Bill.

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