Postmaster General John Potter, left, and GAO director Phillip Herr. (Max Frumes/MEDILL)
WASHINGTON — The U.S. Postal Service could eliminate Saturday delivery without losing any “career jobs” to help solve its financial crisis, Postmaster John Potter told a congressional committee on Thursday.
During a House Oversight and Government Reform Committee hearing, Potter stressed the urgency of moving to five-day delivery, something that along with other changes would decrease estimated losses from $238 billion to $115 billion in 10 years.
“I think that the time to change for the change in the frequency of delivery is now,” Potter said. Rep. Stephen Lynch, D-Mass., chairing the hearing, recommended action soon, echoing a Government Accountability Office report that suggested urgent action.
“Doing nothing is no longer a viable option,” he said.
“If we wait, the flexibility is limited and would go away.”
Rep. Gerry Connolly, D-Va., took issue with the USPS’s estimate of cumulative losses totaling $238 billion by 2020.
“It looks like a scare tactic to make us make decisions that may not be popular,” Connolly said.
Phillip Herr, a director of the GAO testifying alongside Potter, said the number is the worst-case scenario.
Postal Regulatory Commission Chairwoman Ruth Goldway
Postal Regulatory Commission Chairman Ruth Goldway recommended a more deliberate approach. She said that cutting service could accelerate the declining volumes of mail.
“Now is not the time for sweeping changes to the postal service,” she said in her written testimony.
That spurred a searing response from Rep. Jason Chaffetz, R-Utah.
“I find it shocking that you inject so much subjective analysis,” he said. “When do you think we should get to serious change?”
The American Postal Workers Union has denounced the five-day work week. In testimony submitted to the Senate Subcommittee on Financial Services last month, APWU President William Burrus said five-day mail delivery “would be the beginning of the demise of the Postal Service.”
Potter not only paid the criticism no mind, but took it a step further, suggesting another way to cut costs would be to have long-term contract employees work fewer hours.
“We no longer have eight-hour jobs in all locations,” he said. He faulted constraints like the union agreements from optimizing the work place, threatening potential legal actions.
“We’re going to fight vigorously in negotiations this year and if necessary in litigation,” Potter said. We’re going to go after issues that are constraining us. I could go on forever. It does talk about eliminating a lot of unnecessary facilities.
Health care v. Pensions
There were two separate issues that had caused confusion in their similarity and overlap.
On the one hand there was the pension fund issue, which could result in $75 billion being returned to the Postal Service, according to a report by the Postal Service’s inspector general.
When the Post Office Department became the Postal Service, employees that belonged to the Federal Pension Fund began contributing to the Postal Service. The Federal Pension Fund collected full contributions based on final pay only paying out partial benefits based on 1971 salaries.
The inspector general conducted a study that showed the $75 billion overcharging. Based on those findings, the PRC has begun the process of reviewing those figures, which could result in the money being returned. The Office of Personnel Management’s director of planning and policy said that the OPM’s accounting methods were correct.
Lynch came down on the side of USPS on this issue.
“I fall on the side of the postal service at least when how it’s been presented thus far,” he said. “I would encourage you to reconcile.”
The PRC plans to issue the report on the pension issue by the summer.
Second was the issue of health care benefits. The postal service has to pay $5.5 billion a year for retiree health benefits. Last year, PRC permitted the Postal Service to only pay a fraction of that.
Rep. Darrell Issa, R-Calif., wanted a longer term fix.
“This was a one-year kick-the-can-down-the-road fix,” Issa said. “We must have a plan that would bring right-sizing, solvency and a continued level of high service at the post office.”
Potter said the postal service is going to need similar relief going forward, recommending reworking the system in a way that would save $4.6 billion, according to the USPS.
The PRC plans to issue a report by December 2011. Lynch urged the PRC to do so before that.
“Time’s a-wasting,” he said.