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USPS Default Could Have Been Avoided

For Immediate Release

07/30/2012 - The Postal Service’s default on a $5.5 billion payment to the U.S. Treasury due Aug. 1 is the result of a congressionally-manufactured financial crisis and could have been avoided, APWU President Cliff Guffey has charged.

Although the default won’t have immediate consequences for mail delivery or on employees’ pay, the Postal Service’s precarious financial situation is forcing the agency to scale back overnight mail delivery, close half of the nation’s mail processing centers, and slash hours at post offices, the union president pointed out. And businesses, communities and individual customers are bracing for more severe cuts in the months ahead.

“It doesn’t have to be this way. Despite what some would have us believe, the Internet is not killing the Postal Service — and neither are costs associated with postal operations. In fact, the USPS continues to be an engine that drives our economy,” Guffey said. The USPS is the backbone of a $1 trillion mailing industry that employs nearly 9 million people, and generates approximately $65 billion in revenue annually.

The primary source of USPS financial difficulties is a 2006 law — the Postal Accountability and Enhancement Act — that requires the Postal Service to pre-fund retiree healthcare benefits 75 years into the future, and to do so in a 10-year period. No other government agency or private company bears this crushing burden. Yet, with typical twisted logic, some in Congress portray attempts to correct the pre-funding fiasco as a “bailout.”

“The pre-funding payments — not the Internet and not losses from postal operations — are responsible for 82 percent of USPS red ink since the pre-funding mandate was implemented,” Guffey said. (The 2006 law also prevents the Postal Service from raising postage rates to off-set the payments.)

“The postal debacle is a manufactured crisis, and it is being exploited by those who want to privatize the Postal Service. The House Republican leadership’s bill to ‘fix’ the Postal Service couldn’t be clearer,” he said. H.R. 2309, which was introduced by Rep. Darrell Issa (R-CA), would require the USPS to close hundreds of plants, shut tens of thousands of rural post offices, end Saturday delivery, and empower a financial control board to tear up union contracts. “Rep. Issa’s bill will not save the Postal Service; it would destroy the Postal Service as we know it. In fact, the bill is so bad that House Republican leaders are reluctant to bring it up for a vote before the election,” he added.

“Does the Postal Service need to modernize to meet the challenge of the Internet? Absolutely. First-class mail has declined, especially since the onset of the Great Recession, and the trend is expected to continue.”

But the Postal Service cannot innovate while it is drowning in a sea of unwarranted debt.

The Postal Service’s transition to the digital age will require substantial capital investment, and it will result in a more efficient, low-cost and agile service that can serve businesses and individual customers in the digital world and those left out. Some of the services the USPS could offer include: a one-stop shop for many federal, state and local government services; standard e-mail addresses for every physical address; electronic bill payment services for the “unbanked;” computer terminals and high-speed Internet access for rent by the hour or by the minute; and conversion services from paper to digital mail and vice versa.

“The American people are counting on Congress to save this beloved institution. Will they rise to the challenge or will they hasten its demise?”

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