Friday, January 1, 2010

The Postal Service, President Obama, and the Budget

In the next sixty days, President Obama will have two opportunities to lay out administration policy regarding the Postal Service.  These opportunities are the State of the Union address and the President's budget for FY2011.

Up to now, President Obama has mentioned the Postal Service only to illustrate the fact that private firms can compete with a public health care plan last summer.   His comments suggested that the financial problems of the Postal Service were serious enough to generate the attention of the White House.

Unless there is some economic miracle, the Postal Service will have a negative impact on the Federal budget and budget deficit for at least the next three years.   The financial challenges of the Postal Service was not recognized in last year's budget and the adjustment to the retiree health care payments were made in such a way that budget scoring was not required prior to passage.  This year, the need for adjustments to the retiree health plan payments before the end of at least the next two fiscal years is known prior to the writing of the budget.  Therefore, the budget should recognize this fact.

The Postal Service's need for an adjustment to its retiree health payments forces the Obama administration to find cost reductions in other programs in order to meet budgetary goals, and in particular begin the wind down of the stimulus related spending.  This shift in priorities from spending to stimulate the economy to reducing the deficit will likely be the theme of the President's budget and a major theme of the State of the Union Address.

The Postal Service's negative budgetary impact should force the Obama administration to enter the debate about the future of the Postal Service in the budget documents submitted to Congress, and possibly as a mention in the State of the Union address  In particular, the President's budget should recognize that the Postal Service is in serious trouble and lay out both how far the administration is willing to go to help the Postal Service deal with its immediate financial troubles and how the administration wants to approach the process of finding a new business model and regulatory framework for the Postal Service to ensure that the Postal Service becomes truly self sufficient.   Now is the time for stakeholders who would like to see Presidential leadership in setting a future for the Postal Service, postal customers, and postal employees to ensure that this happens.


Bleep said...

The biggest potential area for savings of the immediate nature would require Congressional action like anything else. However, currently FERS retirement employees cost the Postal Service and the whole of the Federal Government 5% additional wages over the old CSRS employees.
Many private companies have ceased or intend to cease matching employee contributions to 401 ks.

However, the Postal Service and Federal Government cointinues to match up to 5% of FERS employee contributions (a 5% wage premium) per person per year.

With the recent FERS sick leave change to allow them to use unused sick leave for retirement credit there should be no premium over other employees.

Anonymous said...

Congress schould take away the 2% penelty for civil service employees up to 3 to 5 years or they could add 3 to 5 years. Getting civil service out would be a good idea since they cost the postal service the most.

Anonymous said...

Bleep doesn't know what the bleep he's talking about, as do most. The reason that FERS employees get the matching 5% is because CSRS employees receive 2% per year worked towards their Federal pension as opposed to the 1% that FERS employees receive. The 5% was negotiated as a concession to that. As far as the big potential for savings, start with the bloated 200+ year old managerial structure that has survived and grown despite other businesses having to streamline. Stop with the mailing discounts for work that can be done cheaper in-house. Most of all, target the wasteful spending that perpetrates the USPS. Once that is done then you can talk about how competitive salaries of the rank and file are, you know, the people that actually move the mail and have contact with pretty much every single American. Yes, the Americans that site the USPS as the most trusted govt agency there is. I find it ironic that lawmakers whose ratings are at an all time low will be making crucial decisions for the highest rated agency. Did I say ironic!

Anonymous said...

Bleep read the fine print before commenting.FERS receive 1% credit per year towards their pension. Example 25 years = 25% of 3 high years. FERS employees will only get credit for 50 per cent of unused sick leave until the year 2014, when they will receive 100 percent credit. Plus they only receive credit for 1 percent while CSRS receive 2 percent. So in year 2014 if FERs has 1000 sick Hours only 1% of that amount, while CSRS 2% of same amount of sick leave.

Anonymous said...

Unless the Postal Service agrees to cut management positions along with the real working jobs of clerks, carriers and mailhandlers, then there is no need to discuss anything else. Nothing will change. Manager to worker ratios should be sought out and disclosed and compared to competitors' figures for the same.

Anonymous said...

Heres an idea why don't we just make Washington pay for all the mail that they just sign there names on instead of putting a stamp on. Must move 200 tons of paper + out of there each year.
No more free ride.

uncommonsense said...

First of all expecting the President or Congress to recognize an expense in the budget before reality forces it upon them is unrealistic in my opinion. The easy thing for the administration to do will be to punt the ball at least through the election cycle. If necessary they can do what they did last year. The beautiful thing to the politician about that solution is that it doesn’t increase the deficit. CBO scoring looks out 10 years. If congress relieves the USPS of $4 billion in payments this year and requires the payment be made instead in 7-8 years from now like they did last year then in their magic world the budget deficit is unchanged.

Second it is by no means certain that the USPS will not be able to come up with the cash for the 5.5 billion dollar payment this year. At the end of the FY the USPS had $4 billion in cash. They can borrow another $3 billion this year. Through the 1st 2 months of the USPS fiscal year the losses have been about $400 million less than it had expected. It is looking more and more like the USPS can make the $5.5 billion payment this year anyway. This would mean no impact on this year’s federal budget from previous federal projections.

Anonymous said...

The only problem with the post's advice that President Obama should include the Postal Service in his budget is that it is illegal. Check out Title 39 United States Code Section 2009(a)(2). It provides that the receipts and dispbursements of the Postal Service Fund shall NOT be included in the President's budget as sent ot Congress, nor in the Congressional budget for that matter. This is of course the provision that makes the Postal Service off-budget, and it is rather cavalier of you to ignore that fact.