With job cuts looming, Congress mails it in
by karlhenk
Detroit — The U.S. Postal Service is nearing a historic default, writes The Associated Press, but in reality, the only historical aspect of the mail industry’s money woes is the ineptitude of Congress tasked with controlling its finances.
Before I go further, this has nothing to do with a Republican-led House of Representatives or a Democratic-led Senate; this has to do with the failure of nearly every one of the 535 elected representatives in Washington, most of whom voted for a seemingly inconspicuous piece of legislation six years ago, but who refuse to overturn or modify it despite the promise of tens of thousands of job losses from USPS.
This is relevant because Congress is the only entity that can save the post office from complete insolvency, at least in the same way that Ryan Seacrest is the only person who can save America from another television series about the Kardashians. Like Seacrest, Congress created a monster — though to be fair, it was clear neither could have accurately predicted the future horror — but both could act as a savior by reverting to 2006 form.
The U.S. Postal Service is the second largest civilian employer in America.
That was the last year that E! didn’t have a Kardashian-themed show as part of its lineup, and also the last time Congress didn’t mandate to the post office a $5.5 billion annual retiree health-care prefunding requirement.
Yes, every year, Congress requires the post office, still the second-largest civilian employer behind WalMart, to make pension contributions that exceed even the wildest parameters of reality. The post office — in a 10-year span — is forced to fund 75 years’ worth of retiree health-care benefits. That’s on top of its normal benefit contributions, which annually double the $5.5 billion total.
To be fair, The Postal Accountability Enhancement Act seemed logical when signed into law in 2006. The postal service delivered more mail that year than it ever had since its inception in the 1600s. The pseudo-government entity could use its profits to cover future expenses. That’s exactly what happened during the ensuing years.
Postmaster General Patrick Donahoe has promised massive restructuring and job cuts at the post office unless Congress can act to overturn a retiree heath-care prefunding mandate.
But the economy quickly soured and mail volumes took a tailspin and Congress felt no need to reverse course.
It wasn’t until last year, however, that Congress decided to discuss reversing course, the same year the post office lost $5.1 billion.
And this year, with a hat tip to Mahoning County Commissioner John McNally IV, Congress has introduced 60 bills to rename post offices, and zero to actually fix postal flaws.
The post office is no longer technically profitable in its current state, though that’s akin to racking up thousands in credit-card debt while sitting on 10 times worth of extra cash in your savings account.
Ax the prefunding mandate and you completely alter the broken business model.
There have been multiple bills suggesting fixes, including some reducing delivery days and others slashing the work force, but none have hit the president’s desk, despite an overwhelming consensus of a simplistic solution: change the past.
Some Congressmen are even willing to swallow their pride.
Tim Ryan, a Democratic Congressman from Ohio, told me last year that he voted for the 2006 PAE Act, which is more than most representatives will admit, considering the bill passed the House by unrecorded voice vote.
Tim Ryan
“It’s a different time now,” Ryan said. “It looks like for the next few decades and more, [the pensions] are secure.”
The post office already has accumulated about 50 years’ worth, according to calculations, which means there’s enough pension cash for everyone, including postal workers not yet born.
The illogical requirement gets even battier when you consider the alternatives. The post office, unless saved by Congress from Congress, will likely slash 35,000 and consolidate mail processing centers nationwide.
The plan gives the appearance of significant cost-cutting measures, until you consider what’s actually going to happen.
Take for instance, Youngstown, Ohio, which is set to lose its processing facility and 500 jobs. Instead, mail will be rerouted to Cleveland, about an hour north. This means a letter traveling from Boardman, just south of Youngstown, to Austintown, just west of Youngstown, will travel 150 miles to Cleveland and back — 10 times the distance than it would have traveled if routed through Youngstown.
In a nutshell, you have a constitutionally-mandated business that since 2006 has been forced by the government to start each year $5.5 billion in the hole, is now burning through cash at the rate of $25 million each day. The alternative is to immediately cut 35,000 jobs, increase travel distances and delay delivery, adding to the post office’s archaic image.
Of course, neither will happen, at least this year. Congress will continue to delay post office closures and layoffs until after the election, as hundreds — even thousands — of layoffs on any Congressman’s resume is lifelong political ammunition for his or her opponents.
That, by definition, is called “mailing it in.”
But if Congress keeps it up for much longer, nobody will be mailing anything.
BizKarl 