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NTU Supports the Many Pro-Taxpayer Provisions of H.R. 2309, the "Postal Reform Act of 2011."
August 8, 2011
The Honorable Darrell Issa United States House of Representatives 2347 Rayburn House Office Building Washington, DC 20515
Dear Representative Issa:
On behalf of the more than 362,000 members of the National Taxpayers Union (NTU), I write to offer our support for the many pro-taxpayer provisions of H.R. 2309, the “Postal Reform Act of 2011.” Your legislation would help to prevent a potentially massive taxpayer-funded bailout of the United States Postal Service (USPS) by modernizing its structure and reducing its overhead costs.
The Postal Service faces many problems, including declining mail volume, an outdated retail network, and out-of-control labor costs that eat up 80 percent of its budget. The USPS’s inability (sometimes because of Congressional edicts) to adapt to changing realities resulted in an $8.5 billion loss for 2010 with another $8.3 billion projected for this year. Moreover, a $15 billion line of credit from the Treasury could be exhausted as soon as September, forcing the USPS to default on pension obligations or ask for a taxpayer bailout. This prospect is all the more chilling in light of recent federal “rescues” of other entities such as Fannie Mae and Freddie Mac.
The Postal Reform Act would take steps to update the USPS business model and alleviate the threat it poses to taxpayers. One of the most promising changes is the attempt to streamline the USPS’ costly infrastructure footprint. The Postal Service has more retail facilities than Starbucks, McDonald’s, 7-11, and UPS combined, many of which have average sales of less than $50 per day. H.R. 2309 would create the Commission on Postal Reorganization to identify and recommend facilities for closure in order to save at least $2 billion per year. It would also establish the Postal Service Financial Responsibility and Management Assistance Authority that would be charged with a mission to cut costs and return the USPS to solvency. Among its powers, this body would be authorized to make major financial decisions, including renegotiation of collective bargaining agreements, if and when the USPS defaults on any obligation to the federal government. In addition, H.R. 2309 would help to take other much-needed steps such as transitioning the Postal Service to five-day delivery and phasing in adjustments to employee benefits to put them on par with those offered to workers at other types of federal agencies.
To be clear, NTU believes that the Postal reform process will involve many approaches. For one, Congress will need to carefully consider requiring that postal rates for all market-dominant classes cover the costs of the products, so as to ensure that USPS applies proper and consistent definitions of those costs. Moreover, policymakers should contemplate a path toward introducing greater competition to mail delivery, ultimately allowing the USPS to function as a private rather than a quasi-governmental entity.
Nonetheless, NTU agrees that H.R. 2309 will help to transform the USPS into a more nimble agency capable of adapting and surviving without the need for a multibillion-dollar bailout that American taxpayers can ill-afford. Any roll call votes on the Postal Reform Act of 2011 will be significantly weighted in our annual Rating of Congress.
Sincerely,Brandon Greife Federal Government Affairs Manager