Legislative & Political Dept.
A $75 Billion Catch 22
(This article by Legislative & Political Department officers Myke Reid and Steve Albanese first appeared in the May/June 2010 issue of The American Postal Worker magazine.)
In January, the USPS Office of the Inspector General (OIG) issued a stunning announcement: The Postal Service has been overcharged $75 billion in contributions to the Civil Service Retirement System (CSRS) pension fund. While this mistake, if corrected, would more than offset the Postal Service’s deficit from Fiscal Year 2009 and expected shortfalls in FY 2010 and 2011, returning the overpayment to the USPS is not a simple feat.
In January, Congress adopted H.J. Resolution 45, which re-established “paygo” rules. According to the paygo rules, for every disbursement from the Treasury there must be a corresponding way to pay for it. The purpose of this legislation is to establish “budget neutrality” in order to manage the growing deficit.
Correcting the $75 billion overpayment is hampered by these Congressional “scoring” procedures, which calculate the budgetary impact of proposed legislation. Although the Postal Service is not part of the federal budget, it is part of the “unified budget,” so the rules demand “offsets” when any changes are made to USPS payment schedules.
As a result, the solution to this $75 billion miscalculation is not clear cut. It is also not the first time that the Postal Service has overfunded its pension obligations. In 2002, the USPS was on track to overfund CSRS by $78 billion, and in 2003 was required to pay $27 billion for CSRS military credits. These earlier overpayments were corrected by legislation adopted in 2003 and 2006, respectively.
The most recent error was caused by an inequitable system used by the Office of Personnel Management (OPM) for computing the Postal Service’s bill to the CSRS pension fund. If this overpayment is corrected, the fiscal insolvency that has plagued the Postal Service would be eliminated.
To further complicate the issue, under a provision of the Postal Accountability and Enhancement Act (PAEA), the USPS is required to pay more than $5 billion each year until 2016 to pre-fund retiree healthcare benefits. There is more than enough money in the $75 billion pool to wipe out the pre-funding obligation and still have plenty left over — but the paygo rules make such a trade-off problematic.
We are continuing to explore possible solutions to this problem with OPM, the administration and the Postal Service.
Supreme Court Reversal on Campaign Finance
On Jan. 21, the U.S. Supreme Court issued a ruling that represents a real setback for campaign finance reform: The high court lifted restrictions on political spending by corporations.
The ruling, Citizens United v. Federal Election Commission, overturned two precedents — a 1990 Supreme Court decision prohibiting independent corporate expenditures in political campaigns, and a 2003 decision that upheld the part of the McCain-Feingold law that banned corporations and unions from paying for ads that urged votes for or against specific candidates 30 days before a primary and 60 days before a general election.
Although the Citizens United decision also will allow unions to increase their political spending during elections, it will give unprecedented power to corporate America. As a result of the ruling, big business will be able to use their wealth to dominate the airways with ads attacking legislators who oppose their agendas. The corporate world will enjoy increased influence on the outcome of elections.
Overturning the decision will not be easy. It is possible that the Supreme Court will reverse the ruling at some point in the future, but the more likely option would be for Congress to pass legislation to accomplish that goal. There has been some discussion among legislators about doing just that.
Healthcare Reform is Now Law
After a century of struggle, more than a year of debate, and several close votes in the House and Senate, on March 23, President Obama signed into law a sweeping healthcare reform bill. This historic legislation is a major victory for America’s middle class that will extend coverage to millions of people who are currently uninsured.
Despite many attempts at winning bipartisan support, virtually every step was accomplished along straight party lines: Not a single Republican in the House or Senate voted for healthcare reform.
Thanks to all the APWU members who helped build support for healthcare reform, which has been a major goal of the labor movement for more than four decades. The results of our hard work will begin to take effect later this year.
Healthcare Reform Highlights Effective in 2010