Postal Service Legislation Attracting Controversy

Being able to compete is important to any business, especially to the Postal Service. Language in both Senate and House versions of a bill designed to overhaul the Postal Service includes changes to the accounting method used to price shipping products, according to GovExec.com. The recommendations in the Treasury report takes the Postal Service out the loop in determining its own rates and the Postal Service is seeking a more equal role. The White House threatens to veto the bill with its current language.


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Open market competition with other private companies, such as UPS and FedEx, is expected in the language of these bills. The way both versions read, the Treasury secretary would consult with the Postal Service to recommend such an accounting method, according to GovExec.com.

Input from a private accounting firm would be added and any recommendations would be submitted to a newly created Postal Regulatory Commission for final decisioning. The commission provision was created to reduce subsidization of the Postal Service’s competitive products with revenue from its first-class mail. GovExec.com reports that separate funds would also be established for its competitive products and first-class mail.

The new accounting rules for the separation of the Postal Service’s competitive products and first-class mail will help ensure that the agency does not price its products lower than competitive prices for comparable products. The Postal Service does not object to these changes but is asking for changes to the proposed guidelines, allowing them a more active and equal role in setting their own product rates, according to GovExec.com.

This postal legislation was sponsored by Representatives John McHugh (R-NY) and Thomas Davis (R-VA) and passed the House this week. The Washington Post reports that the Senate version has been drafted by Senator Susan Collins (R-ME) and Thomas Carper (D-DE) and now submitted for industry and union feedback. McHugh ran resistance among the big mailers, unions, and the Postal Service as the bill progressed. This legislation has come about after ten years of effort and has broad-based support in the mailing industry.

Senator Jeff Sessions (R-AL) said in a prepared statement, “We wanted an opportunity to review the bill. Several senators spent a considerable amount of time looking at the legislation. We believe it’s better than the House legislation and our hope is that it will be improved in conference,” according to GovExec.gov.

An issue covered in both bills is the return of responsibility for the funding of the military cost of postal retiree pensions. The Postal Service would take on some $27 billion into their budget and allow billions in civil service retirement savings previously held in escrow for the Postal Service, according to the Washington Post.

The Civil Service Retirement Systems allows military service time to be added to a postal retiree’s pension and have been paid by the Treasury through appropriations. Through legislation passed last year, the Postal Service is now responsible for its own pension costs relating to military service. This is seen as a hindrance to addressing the Postal Service’s long-term financial problems.

It is said that the federal deficit will be harder to reduce with this reassumption of that sizable financial responsibility. Treasury Secretary John Snow opposes the reassumption of these pension costs for Postal Service retirees. Snow testified before Congress, saying that allocating these pension costs to the Postal Service was “a fair and equitable allocation of costs” and “financially prudent,” according to the Washington Post.

The Senate bill is apparently designed to encourage older workers to take retirement. The Washington Post reports that workers injured on or after September 30 reduces disability payments by 50 percent if they are eligible for retirement. Some of these workers cannot return to work after being injured at work.

The Washington Post reports that workers injured at work, with a dependent, are allowed to receive 75 percent of their salary for their disability. This is essentially a tax-free disability payment. If they elect, the injured workers can continue to receive these payments if they are eligible for retirement benefits.

Another issue corrected in the revised language concerns the use of smaller planes by the Postal Service at smaller airports in Alaska that cannot handle larger planes stipulated in a 2002 law. According to GovExec.com, Senator Ted Stevens (R-AK) said in a prepared statement, “These rural communities rely on small carriers for access.”

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