Postal Service’s enormous deficit must be addressed
By Liza Béar | In Jacques Tati’s satirical comedy “Jour de fête” (1949), the village postman who delivers mail on his bicycle is dazzled by the speed and efficiency of the U.S. Postal Service, shown as a movie-within-a-movie in a tent at the county fair. He could scarcely have anticipated the dire financial straits in which the once-exemplary, well-equipped U.S.P.S. — the only delivery service reaching every address in the country — now finds itself.
Last month, U.S.P.S., which receives no tax dollars, reported a $3.2 billion deficit for January through March 2012, up from $2.2 billion for the same period a year ago.
John Dennie, who worked for 14 years as a letter carrier and for 14 years as a mail handler on Staten Island, explained the often-overlooked reason for the deficit, usually attributed to the growth of electronic communication.
“The reason for the deficits that the post office has been running since 2006,” said Dennie, “is the Postal Accountability and Enhancement Act (PAEA) passed by Congress in 2006, which, in part, restricted the Postal Service’s ability to compete with FedEx and UPS.”
FedEx and UPS are both members of a powerful corporate lobbying group, the American Legislative Exchange Council, or ALEC, founded in 1973. PAEA passed on a voice vote, with no record of who voted for or against it.
“But the most egregious part of PAEA,” Dennie said, “was the requirement that the Postal Service prefund its retirement benefits 75 years into the future in a 10-year window to the tune of about $5.5 billion a year.”
Over all, first-class mail continues to diminish. However, for business mail, bulk mail, parcel post and all other classes of mail, 2005, 2006 and 2007 were the highest years ever in volume.
Minus the prefunding obligation, U.S.P.S. would have accumulated a surplus of $611 million during the four-year period since the prefunding requirement was implemented.
Not all postal services are suffering. And U.S.P.S. is exploring new revenue streams, such as the popular Every Door Direct Mail, according to District Manager William Schnaars.
Designed to overhaul the Postal Service, the 21st Century Postal Service Act (S 1789), which passed the Senate in April, only partially addresses U.S.P.S.’s predicament.
“Supposedly, it changes the amortization schedule from 10 years to 40 years on the prefunding,” Dennie said. “It also calls for another $1 billion refund for overpayments made by the Postal Service to the Treasury for U.S.P.S.’s two different pension systems — Civil Service Retirement System and the Federal Employee Retirement System. According to most actuarial studies, they overpaid into both of those funds.”
Currently, S1789 is languishing in the House.
“If 1789 was passed by the House in its present form and went on to become law, it would refund $11 billion of the pension overpayments, to be used for early-retirement incentives, so that when the post office closes facilities they’ll be able to reduce their employee complement.
“Right now, the unions have a no-layoff clause in their contract. So if they close or consolidate a facility, those employees still have a job.
As for the bill’s plan of “cutting the hours of 13,000 rural post offices instead of closing them,” Dennie said, “That’s skirting the law. Title 39 US Code Section 404B states that you can’t close a rural post office solely for revenue reasons.”
Presumably impatient with the snail’s pace of the legislation’s progress through Congress, on May 17, U.S.P.S. announced the proposed consolidation of 140 of its 461 mail-processing centers. In New York City, the Staten Island plant is the only one on the hit list, the Bronx facility having been closed in October 2011. All mail from the Bronx is rerouted to the Morgan facility on Ninth Ave. and 29th St. in Chelsea, with consequent delays in service.
“At 5 o’clock you can see the 7-ton trucks lining up on Ninth Ave.,” said Frank Couget, 35, a shop steward and mail carrier at the Times Square Station Post Office for 12 years.
Other cost-cutting measures are threatened.
“The proposal to eliminate Saturday delivery — S1789 simply delays that for two years,” Dennie said. “And the beginning of these plant closings means the total gutting of the post office’s ability to maintain any kind of service standards. The service standards will be drastically degraded to the point where they’ll drive away the customer base, and they’ll be able to snag the post offices and privatize them.”
But Congressmember Jerry Nadler is determined not to let that happen. He supports restructuring the $5.5 billion annual Retirement Health Benefit prepayment requirement.
“As I strongly believe that the U.S.P.S. is a critical government service for the American public, I am firmly against the privatization of this service,” Nadler stated. “I’ve worked hard to preserve the stations in my district — including those in the Village — and have, fortunately, had a high degree of success.”
On Monday, a group calling itself Communities and Postal Workers United announced plans to begin a hunger strike on June 25 to call attention to what it says is the reason for the service’s financial failings.
“Not the Internet, not private competition, not the recession; Congress is responsible for the postal mess,” Jamie Partridge, a retired letter carrier who plans to travel to Washington from Portland, Oregon, for the hunger strike, said in an e-mailed statement. “Corporate interests, working through their friends in Congress, want to undermine the U.S.P.S. and bust the unions, then privatize it.”
Liza Béar is a New York-based writer and filmmaker