Tag: showdown

Financial Crisis Pits Workers Against Republicans In Postal Showdown

Saving the Post Office from financial ruin might seem nearly as hopeless as running for president on the Green Party ticket — but this time Ralph Nader, lifelong consumer advocate and perennial presidential candidate, has the numbers on his side.

While Congress considers closing post offices and drastic cutbacks in mail service because the United States Postal Service appears to be going bankrupt, Nader insists that the real cause of the agency’s distress is fiscal discrimination embodied in a 2006 law requiring the USPS to “prepay” 75 years of health benefits for its workers by 2016. “People were never informed about these huge prepays,” he told The National Memo. “No corporation is ever prepaid like that. No government agency ever prepays like that. The federal government owes the USPS $80 billion. And now we’re on the brink.”

Misconceptions about the Postal Service abound, according to Nader, who notes that the agency been fiscally independent since the old Post Office was reorganized as the U.S. Postal Service more than 40 years ago — and forced to rely solely on stamps and postage for revenues. “It hasn’t taken a dollar in tax money since 1970,” notes Nader. “What private corporation can say that? What Wall Street corporation can say that? What oil company can say that?”

The Postal Service confronts an immediate shortfall of $5.5 billion, which must be contributed to its healthcare fund by September 30 — money that Nader says the USPS would have readily available, were it not for those burdensome prepayment requirements.

What Nader does not mention is that the Postal Service has seen a decline in mail volume over the last two decades, owing mainly to email and other technologies that allow bills to be paid online and messages to be received digitally. And that decline seems likely to accelerate in years to come.

“I believe the postal service has passed a tipping point in terms of falling revenues,” said R. Richard Geddes, associate professor of policy and management at Cornell University and an expert on postal issues. “That’s because of the increasing use of and comfort with electronic document delivery over the Internet. The Postal Service’s mail volume has dropped almost 25 percent since its peak in 2006. That’s an enormous decline in mail volume we haven’t seen since the Great Depression. I believe we’re in a period of fundamental structural change, where its mail volume and revenues are going to continue to decline.”

In fact, the 2006 law was meant to shore up financing by relieving the USPS of some pension liabilities while providing for a smaller annual contribution toward eventual retirees’ health benefits. But the recession that quickly followed led to a massive drop in postal revenue.

So the Postal Service has structural problems — a declining revenue stream as fewer use regular mail and especially first-class postage — and competitors springing up left and right that face fewer restrictions on their ability to innovate as private corporations. But the immediate crisis is indeed a result of the 2006 Postal Accountability and Enhancement Act and its unprecedented financial requirements, which postal union leaders believe were designed to conceal massive federal deficits of the Bush years.

“The federal government has used the USPS as a means of hiding its deficit by implementing the 2006 law to prefund,” said Sally Davidow, spokeswoman for the American Postal Workers Union. “The whole purpose is to make the federal deficit look smaller,” she said, by transferring revenue into federal coffers from an independent agency.

By removing the burdensome prepayment requirement, Congress could lift the USPS out of its immediate fiscal hole, and prevent the regressive pain that might be inflicted as a consequence. Some Americans depend on the USPS far more than others, as Nader also points out. Ending Saturday delivery and closing regional offices, for instance,”hurts rural people, hurts the poor, hurts the elderly who aren’t Internet-connected,” he said.

As the second largest civilian employer in the country, moreover, the Postal Service is “the main source of decent middle class wages with security for minorities,” said Nader.

Yet to critics, the Postal Service appears to be an antiquated institution operating in a radically new media landscape — and one that hasn’t always changed with the times, for worse and in some ways for better. “The USPS has a universal service obligation, has to serve everybody. That’s part of the deal,” said the APWU’s Davidow. “They have to deliver to rural areas, poor areas where people don’t have other communication. UPS and FedEx aren’t required to go to sparsely populated areas.”

The Obama administration reportedly will seek additional time beyond Sept. 30 for the USPS to make its $5.5 billion annual payment for future beneficiaries. But Rep. Darrell Issa, the California Republican Chairman of the Oversight Committee in the House, wants legislation to renegotiate collective bargaining agreements in order to remove worker protections and make way for some 200,000 layoffs and additional office closures — which Postmaster General Patrick Donahue has said will be necessary for the USPS to remain viable.

“I firmly believe a big part of what’s going on here is that this is part of the assault on public workers,” Davidow said, referring to collective bargaining restrictions legislated in several states since the Republican sweep in the 2010 midterm election. “And there are people who would like to privatize the Postal Service. The potential for profits is in certain specific areas where there’s a high population concentration and high volume.”

To resist the proposed layoffs, postal workers rallied nationwide at regional Congressional offices on Tuesday. But this may only be the beginning of a long and bitter battle between Congressional Republicans and one of the largest forces of unionized workers in the United States.

Obama Can’t Celebrate Yet

WASHINGTON — The wounded are especially dangerous fighters. President Obama now occupies the high ground in the debt-ceiling debate, having called the Republicans’ bluff on the debt. He showed that deficit reduction is not now, and never has been, the GOP’s priority. He dare not get overconfident.

After thwarting the deal that House Speaker John Boehner was cooking up with Obama, Rep. Eric Cantor, the majority leader and Boehner’s rival, needs to show he knew what he was doing and recoup political ground. Cantor is likely to present Obama with spending cuts that the president once seemed to endorse as part of a large deal but will have to reject now that the big agreement is dead. There is still a lot of danger out there.

But it’s already clear that history will show that Boehner, the old war horse, was a better political calculator than Cantor, the self-styled “young gun.” Boehner saw an opportunity to make huge cuts in entitlement programs, shake off the severe damage done his party by Rep. Paul Ryan’s budget, and ignite a war between Obama and the Democratic base.

Boehner made what, in the larger scheme of things, were modest concessions on tax increases, getting three times as much in spending cuts. Only House Republicans can think that three steps forward and one step back constitutes retreat. Boehner lives in the real world. Most members of his caucus live in Foxland or Rushville, where talk shows define the truth.

Obama thought solving a big problem would outweigh any political difficulties his deal with Boehner might cause him. But Cantor saved Obama a lot of trouble. He protected him from a bitter intra-party fight and made crystal clear that preserving low taxes for the wealthy and for corporations is the GOP’s driving objective. Even the most resolutely centrist and cautious have been forced to concede this essential truth of American politics.

Senate Republican leader Mitch McConnell — he’s astute like Boehner, but less interested in policy — signaled on Tuesday that this whole adventure of tying a debt-limit increase to the quest for big spending cuts has become a losing strategy. His convoluted but clever proposal would make Democrats take all responsibility for increasing the debt cap. This gets the GOP out of its current box and forces Democrats to cast a lot of unpleasant votes. That would help Republicans take over the Senate in 2012, which is what McConnell cares about most.

Thus has the GOP forced its way into a sentence on which Democrats once held a monopoly: Yes, Republicans are in disarray. They’re divided among those who know Boehner was right, those like McConnell who want to get out of the debt-limit mess altogether, and the troika now running Republican House strategy (Cantor, Ryan and Rep. Kevin McCarthy) who need something to show for having brought the country to the brink.

The best way out of this impasse is, unfortunately, a political nonstarter: to work with the budget crafted by Sen. Kent Conrad, D-N.D., which shows you can get a lot of deficit reduction by mixing some spending cuts with higher taxes on the very wealthy. It’s a road Obama might usefully have considered earlier.

The rational alternative is a deal with enough cuts to satisfy a majority of Republicans and enough revenue to win over a sufficient number of House Democrats to make up for tea partiers who’ll never support a debt limit increase. If Boehner reasserts himself, that’s probably where things will go.

Here’s the worrisome scenario: Cantor takes every domestic spending cut that was discussed as part of the negotiations with Vice President Joe Biden, declares that the administration has blessed them, and packages them together for a vote.

Never mind that Cantor walked out of the talks before there was serious negotiation about defense cuts and revenues, and thus no real agreement. Cantor, who needs to embarrass the Democrats and pull Obama down from the commanding heights, was shrewd to get the administration talking early about cuts in domestic spending and to put a lot of its cards on the table. He can now play those cards against Obama by forcing the president to reject reductions he had once considered when a larger agreement looked possible.

This might look like a political game. But at this stage, House Republicans can’t afford to end this whole sorry episode with a whimper. The bang they are looking for could yet cause a lot of collateral damage.

E.J. Dionne’s email address is ejdionne(at)washpost.com.

(c) 2011, Washington Post Writers Group