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Sunday, August 31, 2014         

NEW YORK TIMES


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Amid capitol turmoil, postal service crisis drags on

By RON NIXON

POSTED:



WASHINGTON » In early 2009, John E. Potter, then the postmaster general, delivered a dire warning to Congress: The U.S. Postal Service would run out of money unless lawmakers stepped in and passed legislation to help the agency stabilize its finances.

"We are facing losses of historic proportion," Potter told a Senate committee.

Since then, the post office has seen revenue for first-class mail — the agency's cash cow — decline by $2.4 billion. It has defaulted on three annual $5.5 billion payments into a health care fund for its future retirees. It has also exhausted its $15 billion borrowing limit from the Treasury Department. More recently the agency has asked for permission to raise its postage prices to help cover costs.

But in the face of such grim developments, Congress has yet to heed the warnings of Potter and his successor, Patrick R. Donahoe, and pass legislation to help the agency.

The slow pace of reform of the Postal Service, which has experienced a net loss of about $41 billion since 2007, has frustrated postal unions, customers and some lawmakers. The agency's financial woes, they said, have taken a back seat to other issues.

"Certainly larger, more visible issues like the debt ceiling fight and the government shutdown have gotten in the way," said Art Sackler, co-coordinator of the Coalition for a 21st Century Postal Service, a group of larger postal customers, including FedEx. "But the Postal Service is hanging by a thread, and Congress needs to move forward with legislation to address the problems the agency faces."

With more offices than Wal-Mart, McDonald's and Starbucks combined, the Postal Service reach extends into virtually every U.S. household. But as people have increasingly turned to email and online bill paying, the agency's giant distribution network and workforce have become too big for the smaller volume of paper mail.

An even bigger cause of the financial decline is a 2006 law that requires the Postal Service, unlike any other government agency, to pay $5.5 billion a year into a health fund for its future retirees. The majority of the agency's losses, about $32 billion, are due to the health funding requirement, financial documents show. The requirement was instituted to ensure that the costs of retirees would be covered in the face of anticipated declines in revenue, but the postal unions now say that future retirees are adequately funded and that the $5.5 billion annual payment is overkill.

"Congress created the problems and it can fix them by taking away the requirement that no other government agency or business has to face," said Jeanette P. Dwyer, president of the Rural Letter Carriers Association, a postal workers union.

Last year, the Postal Service's operating revenue was $65 billion, but its operating expenses were $81 billion. To put that in context, $65 billion is about the amount the Pentagon has spent so far on the F-35 fighter jet program.

Members of Congress said they had tried to move forward on postal reform legislation but had been sidetracked by other issues, including fights over the budget and the government shutdown last month.

A House committee did pass a postal reform bill, but it is unclear when the bill will be brought to the floor for a vote. The Senate has drafted a postal reform bill but has yet to take a vote on its version of the legislation. A Senate session to finish writing the bill last week was postponed to give lawmakers and postal customers additional time to review it.

Ruth Y. Goldway, chairwoman of the Postal Regulatory Commission, which oversees the Postal Service, said some of the delay lay in the complexity of trying to reform so vast an agency.

"It took about 10 years for Congress to pass the postal reform legislation it passed in 2006," Goldway said. "It's difficult to find a solution that pleases everyone."

As a result, the agency has made decisions on its own to stem its losses. It has reduced its workforce, consolidated mail-processing plants and reduced the office hours of thousands of small rural post offices.

But several moves have prompted objections from Congress, postal customers and unions. Last year when the agency proposed closing 3,700 small rural post offices to save about $500 million a year, members of Congress from small rural communities defeated the plan. The Postal Service agreed instead to reduce the number of hours at the offices.

A Postal Service plan to end Saturday mail delivery caused an even bigger stir. The Postal Service said the plan would have saved about $2 billion annually, but Congress, under pressure from businesses and constituents — particularly older adults who said they needed Saturday delivery for medications — moved to keep Saturday mail delivery in place.

Rafe Morrissary, vice president for postal affairs at the Greeting Cards Association, a trade group that supports Saturday delivery, said that while the group supported Congress' stepping in to stop the post office from making drastic changes, lawmakers needed to do more.

"The reason that the Postal Service keeps making these desperate attempts to cut costs is because of the lack of action by Congress," he said. "Everyone agrees that something needs to be done to save the agency."






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