White House dusts off USPS reform plan to save $97B in 11 years

With the Postal Service warning that it could run out of cash by 2024, the Trump administration claims recommendations released by a White House postal task force more than a year ago would save USPS about $97 billion over the next decade.

Postal unions dismissed some of the recommendations as a “shot in the dark” when the task force, led by Treasury Secretary Steve Mnuchin, released them in December 2018.

David Williams, a member of the USPS Board of Governors, told the Senate Homeland Security and Governmental Affairs Committee last March that he could “think of no way” that the task force’s central recommendation — rolling back the ability of postal unions to collectively bargain for compensation — would address the agency’s financial problems.

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And yet, the task force recommendations have reemerged in the Trump administration’s fiscal 2021 budget request, which also prioritizes issues repeatedly stressed by USPS management and the Postal Regulatory Commission.

Those issues include greater pricing flexibility for “nonessential” postal services and redefining the level of service that USPS must provide to every address in the country.

A USPS spokesman said in a statement said the agency appreciates that the budget request recognized the need for legislative and regulatory reform.

“Both are essential to enabling the Postal Service to meet its obligations in a financially sustainable manner,” he said.

“In order to help advance the more significant changes that will need to be made, we have been developing strategies that recognize the impacts of financial trends in the coming years, and that outline the options available to the Postal Service and policymakers to return us to financial health,” the spokesman added.

The budget request doesn’t request funding for the Postal Service, however. USPS remains self-funded and continues to operate on the revenue it generates.

Margaret Weichert, the Office of Management and Budget’s deputy director for management, told reporters in a call Monday that the postal task force’s recommendations remain the administration’s “leading thinking on the Postal Service reform.”

Both the FY 2021 budget proposal and the task force recommendations it builds upon make no mention of OMB’s previous proposal to eventually privatize USPS.

The administration released that proposal in June 2018 as part of a larger government reorganization plan, but received bipartisan pushback from Congress less than a week later.

“When we rolled out the Postal Service proposal in June of 2018, we essentially said we were going to take the learnings from the task force that Secretary Mnuchin was leading and incorporate that in our thinking,” Weichert said. “So our thinking has evolved over the last 18 months.”

The FY 2021 budget request also goes beyond what the task force recommends by proposing to reamortize payments USPS was supposed to make to the Office of Personnel Management to pre-fund retiree health benefits.

The Government Accountability Office has found that the Postal Service defaulted on more than $42 billion in payments for retiree health benefits between fiscal 2010 and 2018.

The budget also seeks familiar federal retirement cuts and higher federal employee contributions toward health benefits that the Trump administration has proposed in previous years.

All told, the Trump administration expects that implementing these plans, plus the recommendations from the postal task force, would save USPS $97 billion over the next 11 years.

Congress, meanwhile, has taken its own steps toward postal reform. The House last week passed the USPS Fairness Act, which would undo the pre-funding requirement at the heart of the 2006 Postal Accountability and Enhancement Act that has accelerated the Postal Service’s financial losses.

The bill would also forgive all the pre-funding payments the agency has defaulted on over the past few years.

The bill has support from the National Association of Letter Carriers and the American Postal Workers Union, as well as the Postal Service, which considers it “an important part of the legislative and regulatory change.”

It also has backing from the National Active and Retired Federal Employees Association (NARFE), which had pushed back on previous bills that would have also required future postal retirees to enroll in Medicare Part B.

The unions, however, have pushed back on the postal task force recommendations, particularly a goal, as summarized by the Trump budget request, of “more closely aligning Postal Service employee wages with those of other federal employees.”

At a HSGAC hearing last March, Weichert said USPS employees under collective bargaining agreements have seen their pay “rise faster than some of the other elements in government,” such as federal employees on the General Schedule pay scale.

However, the task force also recommended more flexible pricing for mail and package products deemed “nonessential” that compete with private shippers, a longtime goal for USPS leadership.

Postmaster General Megan Brennan, for example, has sought freedom for USPS to set prices for these products beyond the rate of inflation.

The Postal Regulatory Commission, which is undergoing a 10-year review of the postal rate-setting system, has proposed keeping a price cap in place, but basing that cap on factors like declining mail density and the cost of pre-funding benefits.

The task force would also reduce operating costs through changes to “delivery processing, mode, frequency and increased use of private sector partners for processing and sortation.”

The recommendations also include letting USPS introduce more government services at retail locations and license access to the mailboxes at the nearly 160 million addresses it delivers to at least six days a week.

Lastly, the task force would also introduce more rigorous regulatory oversight if the Postal Service continues to fall short of its financial commitments.

“This proposal will restore solvency to the Postal Service and ensure that commitments to current and former employees are funded from business revenues rather than taxpayers,” the Trump budget document states.

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