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.


Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

{{ }}