Members of a Senate committee said Thursday that the U.S. Postal Service, which continues to struggle amid ongoing financial losses and mounting debt, needs to make massive changes if it hopes to thrive in the digital age.
The hearing before the Senate Homeland Security and Governmental Affairs Committee came a day after the Postal Service said it would seek to raise postal rates by 5.9 percent – increasing a first-class stamp to 49 cents from 46 cents – in order to cope with its financial difficulties.
Congress is considering legislation that would revamp the Postal Service’s operations; if it passes, the proposed rate increase might be dropped. The chairman and the ranking member of the committee, Sens. Thomas Carper, D-Del., and Tom Coburn, R-Okla., introduced the Postal Reform Act of 2013 in August.
“Dr. Coburn and I believe that our bipartisan bill provides a road map to enable the Postal Service to return to profitability, not just in the near term, but to remain there in the long term,” Carper said. “If that happens, the rate request will go away. If it doesn’t happen, the rate request is there staring us and the Postal Service in the face.”
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Among other things, the legislation would save the Postal Service money by modifying health care benefits and pensions for postal workers. It also would change postal delivery options, including the eventual discontinuation of Saturday delivery. Other measures would require centralized or curbside delivery for new addresses and the option for existing addresses to convert from door delivery to centralized or curbside delivery.
The bill’s provisions to possibly eliminate Saturday service and points of delivery would address losses often attributed to the rise of digital communication. But Fredric V. Rolando, the president of the National Association of Letter Carriers, testified that most of the losses the Postal Service had reported in the last few years had nothing to do with a failing business model or the obsolescence of paper mail.
“Nothing better illustrates the double-edged nature of the Internet when it comes to the Postal Service,” he said. “Yes, it is displacing some letter mail – bill payment, for example – but advertising volume is now growing, and e-commerce is driving a major surge in package deliveries.”
Rolando and John F. Hegarty, the president of the National Postal Mail Handlers Union, instead attributed the Postal Service’s financial difficulties to a 2006 congressional mandate that changed the way the service funded its pensions. The change required the Postal Service to fund future retirees’ health benefits for the next 75 years within 10 years.
“This is something that no other public agency or private firm does, or would ever do, if allowed to adopt and implement a rational financial plan,” Hegarty said.
The goal of the payments was to set aside enough money that taxpayers wouldn’t have to shoulder the Postal Service’s long-term health care bill.
For fiscal 2013, the mandate requires the Postal Service to pay $5.5 billion, which it lacks the money to do. The legislation that Carper and Coburn proposed would decrease the size of the annual payments by extending the 10-year time frame to 40 years.
“The payment schedule was put into place for a noble purpose about seven years ago,” Carper said. “But the size of the payments have been crippling.”
Carper said his bill was a work in progress but that he hoped to have legislation passed before the holiday season.
Legislation also has been introduced in the House of Representatives, although it lacks the bipartisan backing of the Senate bill.