The announcement that Postmaster General Patrick Donahue plans to stop delivery of first class mail on Saturdays, starting in August, marks the latest turn in a long-term scheme to privatize the US Postal Service and break its unions.
The cutback to five-day-a-week delivery is supposed to save $2 billion but it is only one of a series of cuts being pushed by right wingers who are hoping to degrade the Postal Service so they can carve it up and let private carriers such as UPS and FedEx take over the profitable package delivery and overnight mail services.
The “austerians” also propose closures or cuts in hours at rural postal offices, closure of processing centers where mail is sorted and privatization of postal truck routes, with plans to slash as many as 220,000 of the Postal Service’s 650,000 employees. Among the targets for job losses are members of four major unions — the American Postal Workers, Letter Carriers, Rural Letter Carriers and Mail Handlers, all of whom are resisting the cuts even as they have cooperated with efficiency measures.
Although the Postal Service’s financial woes are popularly blamed on the loss of first-class mail volume due to competition from email (see the cover story by Andrew Leonard), a closer look reveals that the financial troubles have much to do with extortion by Congress.
In December 2006, the lame-duck Republican Congress passed HR 6407, the Postal Accountability and Enhancement Act. The bill required the Postal Service to make payments of $5.5 billion per year between 2007 and 2016 to pre-fund postal retirees’ health benefits 75 years into the future. No other agency or company is required to pre-fund such obligations that far into the future, the postal unions have noted. The Postal Service not only was forced to use its limited borrowing authority to make those payments to the US Treasury, but it also effectively uses postal workers’ retirement funds to subsidize the national debt in a manner similar to the raiding of Social Security trust funds.
The same law also prohibits the Postal Service from raising its rates to cover the actual cost of delivery, or seeking new revenue streams. A recent 1-cent increase in first-class stamps only covers the increase in inflation. A nickel increase might erase the deficit.
Before the bill was passed in 2006, the USPS was profitable and debt-free. From 2007 to 2012, the Postal Service reported losses of $31.8 billion, with 85% of those deficits a direct result of the pre-funding mandate, the Delivering For America coalition reported. Pre-funding of retiree health benefits accounted for 94% of the Postal Service losses in the first half of fiscal year 2012.
In fact, USPS reported a $100 million operational profit during the first quarter of FY 2013 (ending Dec. 31). It earned $17.7 billion in revenue and had $17.6 billion in expenses, excluding $1.4 billion in payments for health benefits for future retirees. The decline in first-class mail was more than offset by gains in standard mail and in package deliveries.
We agree with Sen. Bernie Sanders (I-Vt.), who worked to pass a bipartisan bill in the Senate last year that would have allowed reforms without cuts in postal service. “The postmaster general cannot save the Postal Service by ending one of its major competitive advantages,” Sanders said. “Cutting six-day delivery is not a viable plan for the future. It will lead to a death spiral that will harm rural America while doing very little to improve the financial condition of the Postal Service. Providing fewer services and less quality will cause more customers to seek other options. Rural Americans, businesses, senior citizens and veterans will be hurt by ending Saturday mail,” Sanders added.
David Morris of the Institute for Local Self-Reliance in Minneapolis wrote at Truthout.org that closing local post offices and ending next-day first-class mail delivery to local areas could place a significant burden on the most vulnerable of our citizens. William C. Snodgrass, owner of a pharmacy in North Platte, Neb., told Morris his store mails hundreds of prescriptions a week to residents in mostly rural areas of the state that lack local pharmacies. If first-class delivery were delayed to three days and Saturday mail service also were suspended, a resident whose medicine was mailed on Wednesday might not get it until the following week. “A lot of people in these communities are 65 or 70 years old, and transportation is an issue for them,” said Snodgrass. “It’s impossible for many of my customers to drive 100 miles, especially in the winter, to get the medications they need.”
The Senate passed the bill last year that would update the Postal Service’s business model, allow it to ship beer and wine, recoup more than $11 billion it overpaid into pension funds and protect rural post offices. But the House has resisted action. The Republican platform calls for privatization of the Postal Service and Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform, has proposed HR 2309, which would set up a new authority with a mandate to restructure the Postal Service and reduce costs “in order to bring the institution back to fiscal solvency.” That is, break the unions.
In March 2012, a USPS witness at the Postal Regulatory Commission acknowledged that a study ordered (but later stopped) by the Postal Service indicated that the combined effects of all the service cuts under consideration, including elimination of Saturday delivery, would reduce mail volume by 10.3%. “The practical effect of such a drastic reduction in mail volume would mean that the lost revenue from customers could actually EXCEED the projected savings,” Delivering For America noted.
“USPS executives cannot save the Postal Service by tearing it apart,” said Cliff Guffey, president of the American Postal Workers Union. “These across-the-board cutbacks will weaken the nation’s mail system and put it on a path to privatization.”
Bob Sloan of the Voters Legislative Transparency Project noted that the American Legislative Exchange Council (ALEC), with the support of right-wing “think tanks” financed by the Koch brothers and other right-wing billionaires, had been pushing for privatization since the 1990s and the “point man” behind the Postal Accountability bill was John McHugh (R-N.Y.), who had been promoting “postal reform” legislation since 1996. He was the sponsor of HR 6407 in 2006.
From 2003 through passage of HR 6407 in 2006, the right-wing cabal worked diligently, getting articles published in favor of privatizing the USPS.
A trio of independent studies by actuarial companies in 2010 found that the Postal Service had a surplus of between $50 billion and $75 billion in its Civil Service Retirement System pension account and up to $7 billion in its Federal Employees Retirement System account.
Rather than shrinking the Postal Service by cutting services and degrading the delivery network, the Postal Service should develop a new business model that looks for new revenue streams.
As more American order products online, there is tremendous potential for boosting USPS revenues from parcel deliveries.
Congress also should relax the constraints on the types of products and services the Postal Service can provide.
Congress also should give the Postal Service more flexibility in pricing its products to reflect the actual cost of providing services.
Remember that providing postal services is a constitutional responsibility. Article 1, Section 8, directs Congress “To establish Post Offices and post Roads.” Nothing about subsidizing oil companies.
President Obama just delivered his State of the Union speech, and he had some great proposals that don’t stand a chance of getting through the teabagger House. We will have more on that in the next issue, but in the meantime, as Congress enters another round of negotiating over budget cuts to stave off the “sequester,” don’t forget to make it clear to your member of Congress and senators that any vote to reduce Social Security benefits, including the “chained CPI,” will get them a primary challenger who will get your vote, regardless of whether President Obama signed off on it. — JMC
From The Progressive Populist, March 1, 2013
Blog | Current Issue | Back Issues | Essays | Links
About the Progressive Populist | How to Subscribe | How to Contact Us