The Honorable Darrell IssaUnited States House ofRepresentatives2347 Rayburn House OfficeBuildingWashington, DC 20515
Dear Representative Issa:
On behalf of the more than 362,000members of the National Taxpayers Union (NTU), I write to offer our support forthe many pro-taxpayer provisions of H.R. 2309, the “Postal Reform Act of 2011.”Your legislation would help to prevent a potentially massive taxpayer-fundedbailout of the United States Postal Service (USPS) by modernizing its structureand reducing its overhead costs.
The Postal Service faces many problems,including declining mail volume, an outdated retail network, and out-of-controllabor costs that eat up 80 percent of its budget. The USPS’s inability (sometimesbecause of Congressional edicts) to adapt to changing realities resulted in an $8.5billion 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 assoon as September, forcing the USPS to default on pension obligations or askfor a taxpayer bailout. This prospect is all the more chilling in light ofrecent federal “rescues” of other entities such as Fannie Mae and Freddie Mac.
The Postal Reform Act would take stepsto 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’ costlyinfrastructure footprint. The Postal Service has more retail facilities thanStarbucks, McDonald’s, 7-11, and UPS combined, many of which have average salesof less than $50 per day. H.R. 2309 would create the Commission on PostalReorganization to identify and recommend facilities for closure in order tosave at least $2 billion per year. It would also establish the Postal ServiceFinancial Responsibility and Management Assistance Authority that would becharged with a mission to cut costs and return the USPS to solvency. Among itspowers, this body would be authorized to make major financial decisions,including renegotiation of collective bargaining agreements, if and when theUSPS defaults on any obligation to the federal government. In addition, H.R.2309 would help to take other much-needed steps such as transitioning thePostal Service to five-day delivery and phasing in adjustments to employeebenefits to put them on par with those offered to workers at other types offederal agencies.
To be clear, NTU believes that thePostal reform process will involve many approaches. For one, Congress will needto carefully consider requiring that postal rates for all market-dominantclasses cover the costs of the products, so as to ensure that USPS appliesproper and consistent definitions of those costs. Moreover, policymakers shouldcontemplate a path toward introducing greater competition to mail delivery,ultimately allowing the USPS to function as a private rather than a quasi-governmentalentity.
Nonetheless, NTU agrees that H.R. 2309will help to transform the USPS into a more nimble agency capable of adaptingand surviving without the need for a multibillion-dollar bailout that Americantaxpayers can ill-afford. Any roll callvotes on the Postal Reform Act of 2011 will be significantly weighted inour annual Rating of Congress.
Sincerely,
Brandon Greife Federal Government Affairs Manager