[Vision2020] Postal Service Is Nearing Default as Losses Mount

Mon Sep 5 10:58:33 PDT 2011

Perhaps the Postal Service should not sponsor movies, bike races, and the
like. I realize it is a small monetary amount to compared to the debt,
however, it has always been an issue which irked me.

Janesta

On Mon, Sep 5, 2011 at 9:57 AM, Tom Hansen <thansen at moscow.com> wrote:

> The answer . . .
> [image: image.jpeg]
> Seeya round town, Moscow.
>
> Tom Hansen
> Moscow, Idaho
>
>
>
>
>
> On Sep 5, 2011, at 9:44, "Art Deco" <deco at moscow.com> wrote:
>
>
>   [image: The New York Times] <http://www.nytimes.com/>
>
>
> ------------------------------
> September 4, 2011
>  **Postal Service Is Nearing Default as Losses Mount**** By STEVEN
> GREENHOUSE<http://topics.nytimes.com/top/reference/timestopics/people/g/steven_greenhouse/index.html?inline=nyt-per>
> ****
> ****
>
> The United States Postal Service has long lived on the financial edge, but
> it has never been as close to the precipice as it is today: the agency is so
> low on cash that it will not be able to make a $5.5 billion payment due this
> month and may have to shut down entirely this winter unless Congress takes
> emergency action to stabilize its finances.
>
> “Our situation is extremely serious,” the postmaster general, Patrick R.
> Donahoe, said in an interview. “If Congress doesn’t act, we will default.”
>
> In recent weeks, Mr. Donahoe has been pushing a series of painful
> cost-cutting measures to erase the agency’s deficit, which will reach $9.2
> billion this fiscal year. They include<http://about.usps.com/news/national-releases/2011/pr11_wp_workforce_0812.pdf>eliminating Saturday mail delivery, closing up to 3,700 postal locations and
> laying off 120,000 workers — nearly one-fifth of the agency’s work force —
> despite a no-layoffs clause in the unions’ contracts.
>
> The post office’s problems stem from one hard reality: it is being squeezed
> on both revenue and costs.
>
> As any computer user knows, the Internet revolution has led to people and
> businesses sending far less conventional mail.
>
> At the same time, decades of contractual promises made to unionized
> workers, including no-layoff clauses, are increasing the post office’s
> costs. Labor represents 80 percent of the agency’s expenses, compared with
> 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest
> private competitors. Postal workers also receive more generous health
> benefits than most other federal employees.
>
> The Senate Homeland Security and Governmental Affairs Committee will hold
> a hearing<http://hsgac.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=a193192b-ca97-46ee-8f22-bc3db87df1f9>on the agency’s predicament on Tuesday. So far, feuding Democrats and
> Republicans in Congress, still smarting from the brawl over the federal debt
> ceiling, have failed to agree on any solutions. It doesn’t help that many of
> the options for saving the postal service are politically unpalatable.
>
> “The situation is dire,” said Thomas R. Carper, the Delaware Democrat who
> is chairman of the Senate subcommittee that oversees the postal service. “If
> we do nothing, if we don’t react in a smart, appropriate way, the postal
> service could literally close later this year. That’s not the kind of
> development we need to inject into a weak, uneven economic recovery.”
>
> Missing the $5.5 billion payment due on Sept. 30, intended to finance
> retirees’ future health care, won’t cause immediate disaster. But sometime
> early next year, the agency will run out of money to pay its employees and
> gas up its trucks, officials warn, forcing it to stop delivering the roughly
> three billion pieces of mail it handles weekly.
>
> The causes of the crisis are well known and immensely difficult to
> overcome.
>
> Mail volume has plummeted with the rise of e-mail, electronic bill-paying
> and a Web that makes everything from fashion catalogs to news instantly
> available. The system will handle an estimated 167 billion pieces of mail
> this fiscal year, down 22 percent from five years ago.
>
> It’s difficult to imagine that trend reversing, and pessimistic projections
> suggest that volume could plunge<http://about.usps.com/future-postal-service/ensuring-viable-usps-presentation.pdf>to 118 billion pieces by 2020. The law also prevents the post office from
> raising postage fees faster than inflation.
>
> Meanwhile, the agency has had a tough time cutting its costs to match the
> revenue drop, with a history of labor contracts offering good health and
> pension benefits, underused post offices, and laws that restrict its ability
> to make basic business decisions, like reducing the frequency of deliveries.
>
>
> Congress is considering numerous emergency proposals — most notably,
> allowing the post office to recover billions of dollars that management says
> it overpaid to its employees’ pension funds. That fix would help the agency
> get through the short-term crisis, but would delay the day of reckoning on
> bigger issues.
>
> Postal service officials say one reason for their high costs is that they
> are legally required to provide universal service, making deliveries to 150
> million addresses nationwide each week. They add that a major factor for the
> post office’s $20 billion in losses over the past four years is a 2006 law
> requiring the postal service to pay an average of $5.5 billion annually for
> 10 years to finance retiree health costs for the next 75 years.
>
> But the agency’s leaders acknowledge that they must find a way to increase
> revenue, something that will prove far harder than simply slicing costs.
>
> In some countries, post offices double as banks or sell insurance or
> cellphones. In the United States, the postal service is barred from entering
> many areas. Still, the agency is considering ideas, like gaining the right
> to deliver wine and beer, allowing commercial advertisements on postal
> trucks and in post offices, doing more “last-mile” deliveries for FedEx and
> U.P.S. and offering special hand-delivery services for correspondence and
> transactions for which e-mail is not considered secure enough.
>
> Mr. Donahoe’s hope is to cut $20 billion of the $75 billion in annual
> costs <http://www.uspsoig.gov/foia_files/RARC-WP-11-007.pdf> by 2015. To
> do that, he wants to close many post offices and slash the number of sorting
> facilities to 200 from 500 and trim the agency’s work force by 220,000
> people, from its current 653,000. (A decade ago, the agency employed nearly
> 900,000.)
>
> The postal service has the legal authority to close facilities, although
> community opposition can make the process difficult. To placate critics and
> cut costs, officials say they would seek to run some postal operations out
> of stores like Wal-Mart or to share space with other government offices.
>
> Cutting the work force is more difficult. The agency’s labor contracts have
> long guaranteed no layoffs to the vast majority of its workers, and
> management agreed to a new no layoff-clause in a major union contract last
> May.
>
> But now, faced with what postal officials call “the equivalent of Chapter
> 11 bankruptcy,” the agency is asking Congress to enact legislation that
> would overturn the job protections and let it lay off 120,000 workers in
> addition to trimming 100,000 jobs through attrition.
>
> The postal service is also asking Congress for permission to end Saturday
> delivery.
>
> Given the vast range of stakeholders, getting consensus on a rescue plan
> will be difficult.
>
> Senator Susan Collins of Maine, like many lawmakers from rural states,
> vigorously opposes ending Saturday delivery, which would trim only 2 percent
> from the agency’s budget. Ms. Collins, the ranking Republican on the
> committee overseeing the postal service, said the cutback would be tough on
> people in small towns who receive prescriptions and newspapers by mail.
>
> “The postmaster general has focused on several approaches that I believe
> will be counterproductive,” she said. “They risk producing a death spiral
> where the postal service reduces service and drives away more customers.”
>
> The post office’s powerful unions are angry and alarmed about the planned
> layoffs. “We’re going to fight this and we’re going to fight it hard,” said
> Cliff Guffey, president of the American Postal Workers Union, which
> represents 207,000 mail sorters and post office clerks. “It’s illegal for
> them to abrogate our contract.”
>
> Senators Carper and Collins do back several of the postal service’s main
> ideas to avoid default, including recovering around $60 billion that some
> actuaries say the agency has overpaid into two pension funds. Although the
> Obama administration is working closely with the senators to find a
> solution, it has signaled discomfort with the pension proposals, questioning
> whether the postal service really overpaid.
>
> Meanwhile, Representative Darrell Issa, the California Republican who is
> chairman of the House Oversight Committee, says the pension proposals would
> amount to an unjustifiable bailout that would not solve the agency’s
> underlying problems. He is pushing a bill that would create an emergency
> oversight board that could order huge cost-cutting and void the postal
> service’s contracts — a proposal that not just the unions, but Senators
> Carper and Collins oppose.
>
> Fredric V. Rolando, president of the National Association of Letter
> Carriers, warned of disaster if partisanship keeps Congress from acting.
>
> “This is about one of America’s oldest institutions,” he said. “It survived
> the telegraph, it survived the telephone, and we have to do everything we
> can to preserve it and adapt.”
> **
> ******
> **
>
>
> ___________________________________
> Wayne A. Fox
> <wayne.a.fox at gmail.com>wayne.a.fox at gmail.com
>
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