Lawmakers still searching for Postal Service life raft

Democrats and Republicans both agree the Postal Service needs congressional help to better its budget, but getting there is a tougher problem.

Lawmakers are still searching for ways to keep the Postal Service running full time while cutting back on the billions of dollars it has been losing every year.

Two lawmakers from across the aisle said the Postal Service needs congressional help to shore up its failing business model during a Feb. 4 event at the Bipartisan Policy Center in Washington.

How exactly Congress will close the deficit gap and reform the Postal Service is a matter still up for debate, but changing the pre-funding health benefits requirement seems to still be on the menu.

“If you think about the Postal Service we’ve got our CEO, our managers; who is the board of directors for the Postal Service? … The United States Congress is the board of directors,” Sen. Heidi Heitkamp (D-N.D.) said. “What has the United States Congress done? They have exacerbated this problem by passing regulations on prepayment that no other business in America has to meet.”

Pre-funding health benefits has been a contentious issue for the Postal Service since Congress mandated it in 2006. Congress required the Postal Service to fund health benefits for retired employees upfront instead of paying retirees’ health bills as they arose.

Playing catch-up to pre-fund those benefits has left the Postal Service with an $8 billion a year bill.

One proposal to eliminate the burden on the Postal Service’s budget has been to move postal retirees to Medicare when they turn 65-years old.

“Eighty-six percent of the Postal Service that reported losses since 2006 [attribute that] to this pre-funding,” said Jim Sauber, chief of staff for the National Association of Letter Carriers. “The Postal Service should act more like a business, where in the private sector … it’s standard practice that at age 65 people enroll in Medicare. It would add two-tenths of 1 percent to Medicare spending over the next 10 years, but it would have real savings” for the Postal Service.

Sauber added that Medicare would give postal retirees access to discounted prescription medications.

Getting fiscal conservatives to sign on to that policy may be a hard sell.

“Right now, if you look at current trends on Medicare, it is not a pretty sight in 9 to 11 years and so when we look at adding to that burden that is not good,” Rep. Mark Meadows (R-N.C.) said. “Some of the reforms that happened in 2006, I think we have to address that.”

Meadows said he’d like to find a solution that can pay for the Postal Service’s bill, but also offset the expense, which would require the help of the Ways and Means Committee.

“I’m not one to shift around cost,” he said. “We are at least trying to look at that, but just not to try and hide the cost, but to try to adjust it and make it work.”

The Government Accountability Office still has not made a ruling on how adopting Medicare would affect the fund or postal workers.

Lori Rectanus, the director of physical infrastructure issues at GAO, said numbers are flying fast and furious on what the integration would cost.

“What we would want to see is a true consensus among the stakeholders as to what numbers we are talking about, what it means for Medicare now, what it means in the future and also what it means for the Postal Service because even if we did the integration the Postal Service would still need to put aside money for the [Federal Employees Health Benefits Program] part,” she said.

Rectanus agreed that the prefunding requirement was draining on the Postal Service, but the Postal Service is still losing money and has a “fundamental business model that is not working.”

Rethinking the Postal Service model

To deal with the failing business model, Heitkamp, Meadows and other policy analysts all threw in ideas that could help turn around the Postal Service.

Heitkamp suggested reexamining the closing of the processing centers as a potential way to better business. She questioned the closing of processing centers as a means of reaping financial benefit.

“It has dramatically affected the speed to which the mail is delivered,” Heitkamp said. “When mail has to go from Minot [N.D.] down to Bismarck [N.D.] to be processed to be sent back up to Minot to go out to the communities, you can’t tell me that that is going to be faster.”

Heitkamp said that is the opposite of what Amazon is doing by building warehouses all over the nation for faster service.

Another idea is integrating other services, like banking within post offices.

Sauber said there are 68 million Americans without bank accounts and many rural areas do not have banks.

“I don’t think it’s so outlandish, a lot of countries have postal banks, a lot of them have started up in the last 10 years. It’s not rocket science … we don’t want to compete for mortgages or business loans, but for payment services and just basic financial services, there are millions of Americans that have to go to payday lenders,” Sauber said.

But Robert Shapiro chairman at Sonecon LLC disagreed.

“There frankly is no basis to believe that the Postal Service has any expertise on the banking business and to try and rescue an institution which serves a vital public service in a market which is being compressed by technological change, by entering another business simply has no economic basis,” Shapiro said.

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