Plan to fix Postal Service likely to pass Senate

Plan to fix Postal Service likely to pass Senate

POSTED: Wednesday, April 25, 2012 - 12:30pm

UPDATED: Wednesday, April 25, 2012 - 12:34pm

The Senate is expected Wednesday to pass a plan to save the struggling U.S. Postal Service, an effort that could save thousands of jobs and 100 mail processing plants now slated to be closed or consolidated next month.

The bill offers a lifeline to the deeply indebted Postal Service, which would otherwise cut Saturday service, delay delivery of some mail, and close hundreds of postal processing plants and post offices, triggering tens of thousands of more job cuts nationwide.

The House has yet to take up a different bill to reform the Postal Service. Congress faces a deadline of May 15, when a moratorium on postal closures expires.

The recession, declining mail volume and a congressional mandate to prefund retirement health care benefits have put the service in a bind. It reported a $5.1 billion loss for the year ended Sept. 30.

The Senate bill, offered by members in both parties, would force the Postal Service to ease off part of its plan to slow down the delivery of first-class mail, the kind of mail that most consumers use.

The bill would make controversial changes, including cuts to workers' compensation benefits, as well as a transition from door-to-door delivery to curbside delivery in some areas, such as suburban neighborhoods.

The Senate bill would also prevent the Postal Service from cutting Saturday delivery for two years, until the agency can prove such a cut is needed as a "last resort."

The cost of the Senate bill could prove a major sticking point with the House. The Congressional Budget Office says the bill would cost $33.6 billion over 10 years.

The tab comes from increased borrowing authority for the Postal Service, allowing it to borrow $11 billion more from Treasury. The Postal Service can currently borrow up to $15 billion, and has tapped $12 billion of that loan.

The other cost comes from elimination of regular billion-dollar payments, now required by law, to Treasury to pre-fund health care benefits for retirees. That $23 billion would ease financial pain for the Postal Service, but it also means less revenue to ease federal deficits.

Several Senate Republicans, led by Sen. Jeff Sessions of Alabama, tried to stop the bill's progress on Tuesday, saying the bill wasn't paid for in an appropriate way.

Earlier this year, the Postal Service said it was doing away with overnight delivery of many kinds of first-class mail, opening the door for closing 223 mail processing plants at a cost of 35,000 jobs.

The Senate bill would force the Postal Service to maintain some one-day delivery of first-class mail, mostly for items mailed within the same processing area -- saving 100 mail processing plants.

The Senate bill would also tap most of an estimated $10.9 billion overpayment in the Federal Employees Retirement System to pay down postal service debt and use up to $2 billion on buyout packages to entice long-time employees to retire.

Unions oppose the Senate bill, saying it doesn't provide a good long-term business model.

"We cannot give up the fight for positive reform," said Fredric V. Rolando, president of the National Association of Letter Carriers in a note to union members. "Our first task must be to do everything we can to defeat (the Senate bill) when it comes up for a final vote."

The U.S. Postal Service is, by law, an "independent establishment" of the executive branch. The agency doesn't normally use tax dollars for operations, except for its $12 billion loan from Treasury.

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