A manufactured postal crisis

September 15, 2011

Tom Larsen looks at the crisis of the U.S. Postal Service--and how it's being used as a cover to push for massive layoffs and privatization.

IN A recent New York Times article entitled "Postal Service is nearing default as losses mount" gives this grim forecast for the post office: "The United States Postal Service [USPS] 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."

But what is the source of these problems? The article continues, "The post office's problems stem from one hard reality: it is being squeezed on both revenue and costs."

Well, that's true! What these dire facts don't tell us is that the revenue and cost squeeze is completely manufactured by Congress and the executive branch. In December 2006, then-President George W. Bush signed the Postal Accountability and Enhancement Act (PAEA), which had the overwhelming support of both parties in both the House and Senate.

The act contains many restrictions on how the Postal Service can generate revenues--for example, even though it can't adjust prices (like Fed Ex or UPS can), "the USPS must compete with UPS and other private firms in the package delivery business."

While the act argues that the USPS must become more "businesslike," it is not allowed to compete like a business. Even though the Postal Service is mandated by the Constitution and has a "universal service obligation" to deliver mail to all Americans regardless of where they live (unlike private carriers), the Postal Service cannot exercise "unfair competition" with the private sector.

In effect, business says don't compete with us where it's profitable, only where it's unprofitable--but otherwise, act more like us.

The most significant new requirement from the PAEA is the establishment of the Postal Service Retiree Health Benefits Fund. This changes the "funding of its retirees' health care costs from an out-of-pocket or pay-as-you-go basis [how every other organization does it] to pre-funding these obligations."

The PAEA requires the USPS to prepay between $5.4 billion and $5.8 billion annually between 2007 and 2016 into a retirement fund. This represents 75 years of pension funding that Congress requires the Postal Service to fund in just 10 years. Removing the prepayment of this fund, as the American Postal Workers Union (APWU) claims, would allow the USPS to operate in the black.

BUT CONGRESS doesn't want that. The prospect of a USPS default has engendered the political climate where extreme solutions like that of Postmaster General Patrick Donahoe (chosen by Obama appointees) have become fashionable. He proposes to cut $20 billion of the $75 billion in annual costs by 2015.

To accomplish this goal, he wants to close many post offices, cut the number of sorting facilities by 60 percent and eliminate 120,000 postal worker jobs from its current 653,000. Cutting jobs is not a new idea. Only 10 years ago, the USPS had 900,000 employees. Donohoe's proposals share the spirit of the PAEA and demonstrate another continuity that the Obama presidency has with the former Bush administration.

However, the contract between the USPS and the union does not allow layoffs. To cut that many jobs would require breaking the union contract and severely truncating the union's power of collective bargaining.

This is where Rep. Darrell Issa (R-Calif.) comes in. Issa is advancing a bill that could abrogate the no-layoff clause of the USPS's contract with the American Postal Workers Union (APWU). The bill would create an emergency oversight board that would have sweeping powers to make drastic cuts in postal services and layoff hundreds of thousands of postal workers.

According to the USPS Office of the Inspector General, postal workers have overpaid $75 billion and $7 billion respectively into two pension funds. There has been some talk in the Senate of "recovering" those funds to ease the post office's financial woes. The Obama administration doubts whether these overpayments, in fact, exist--that is, it questions the conclusions of its own appointee. Issa has claimed that using these funds would amount to an "unjustified bailout" of the USPS.

Unlike the taxpayer bailout of the banks due to their shady investments, it is important to remember that the USPS receives no taxpayer support, and this agency's financial troubles are not due to poor management, corrupt practices or lax regulations--they are imposed by lawmakers. Most importantly, this money was earned by, and belongs to, postal workers.

Cliff Guffey, president of the APWU, says that Congress wants "to take my retirement fund that I put in and the Postal Service put in to pay for the retirement of the other Federal agencies that they haven't funded. That's just totally improper. They're taking our money and using it for other things in the federal government."

The cuts in services and jobs recommended by the Postmaster General (part of the Obama administration) may have different details than the Issa postal reform bill, but their objectives of breaking the power of the unions are not. Issa's legislation enables these "reforms" (and if nothing else moves the "debate" to the right). The Democrats will get to blame the Tea Party crazies; when in reality, like the bicameral and executive support of the PAEA, the attacks on the postal service and its employees are bipartisan.

Similar to education "reform," where impossible goals are set and programs are defunded, the politicians and the corporate media portray the USPS as a basket case that must endure harsh reforms or be privatized.

The postal "crisis" is a manufactured one engineered to provide a solution that will pursue a preexisting pro-big business, anti-worker agenda. Most of the new jobs that have been created since Obama took office are low-wage jobs without benefits. Like teachers, postal workers represent one of the last sectors of living-wage jobs that provide health care and a decent retirement to working Americans.

The proposals being considered to reform the USPS would not only harm postal workers and their families, but also harm communities all over the country who depend on them. If our leaders really thought that stability was important, at a time of increasing job insecurity and unemployment, they would be considering a different path for the USPS.

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