Washington is talking about another bailout – this one involving an institution that no American will be surprised is seeking one: the U.S. Postal Service. Many in the capital are dead-set on a taxpayer-funded bailout, even threatening mail stoppages and more if they don’t get their way.
It is no secret that the Postal Service is in need of overhaul and modernization, and Congress must play a key part in addressing the problem immediately. But a bailout costing taxpayers any money is wrong because it puts taxpayers on the hook for the Postal Service’s failures, just as they were in the case of General Motors, Fannie Mae and AIG.
In an era of reckless government spending and skyrocketing deficits, making tough choices and streamlining government operations is exactly what Congress and President Obama should be focused on, not bailouts.
But many in Congress would just as soon pass a bailout or simply postpone making tough choices. I and others would rather fix it right the first time.
The challenges facing the Postal Service are enormous. Consumers have largely abandoned paper mail for email, mobile and other electronic communications. Since 2006, annual mail volume has fallen by about 40 billion pieces.
The financial metrics are staggering: The Postal Service lost $8.5 billion last year and will lose at least $10 billion this year and even more next year.
To their credit, Postal Service executives are working to address costs and streamline operations. But these measures are just skirting around the edges. The real cost is in manpower: 80 cents of every dollar goes to pay labor costs (wages and benefits). That staggering sum is dictated by three key factors, largely because of the Postal Service’s labor contract: pay, benefits and work-force size.
Media reports have indicated that, according to the Postal Service’s own economic analysis, postal workers enjoyed a 30 percent to 40 percent edge in pay and benefits over comparably skilled private-sector workers.
Work-force size is also too big for current mail volume. The postmaster general told Congress he wants to reduce the work force by 220,000 through 2015. Right now, more than 150,000 postal employees are eligible for retirement. Another 100,000 employees should be eligible for retirement by 2015.
To be fair, the problems illustrated here are not all entirely the Postal Service’s fault. Congress has played a part. The Postal Service has been prohibited by law from altering services such as reassessing Saturday delivery or revising delivery-to-the-door (vs. curb) policies. It can’t address special-rate deals or even consolidate retail and processing infrastructure without bumping against policies put in place by Congress.
So what is the solution? A top-to-bottom overhaul – paid for without a penny from taxpayers.
Rep. Dennis Ross, Florida Republican, and I have proposed legislation that would give the Postal Service the authority to tackle each of these challenges – and others. Sen. John McCain, Arizona Republican, has introduced a companion bill in the Senate. The Issa-McCain-Ross bill, officially known as the Postal Reform Act of 2011, will allow the service to restructure itself and reduce expenses.
The costs of this restructuring would be paid for by collateralizing the Postal Services vast property holdings (one of the ways Ford Motor Co. paid for its recovery without a government bailout). That means the taxpayer is protected – keeping a service that is essential, and bringing reform to a system much in need.
Stay tuned: you’ll hear talk from Washington about Postal recovery plans but to date, each one is just a bailout by another name. Someone else gets the benefit; you get the bill.
Taxpayers deserve an overhaul that delivers on a modern and efficient Postal Service and not another taxpayer funded bailout.
Rep. Darrell Issa, California Republican, is chairman of the House Oversight and Government Reform Committee.