Washington, D.C. – U.S. Senator John McCain (R-AZ) today introduced the Postal Reform Act of 2011, a bill to restore the financial health and long-term viability of the United States Postal Service. The Postal Service is expected to end this fiscal year with a $10 billion loss, and by its own estimates faces a shortfall of up to $238 billion by 2020. At the end of this month, the Postal Service will not be able to make a required $5.5 billion payment to fund future retirees’ health benefits. This legislation is needed to ensure that future generations of Americans will have a viable Postal Service. This bill is the Senate companion to the legislation introduced by Representative Darrell Issa (R-CA) in the U.S. House of Representatives this summer.
Senator McCain submitted the following statement for the record upon introducing the Postal Reform Act of 2011:
“Mr. President, today I am introducing the Postal Reform Act of 2011, which will restore the financial health and long-term viability of the United States Postal Service. This bill is the companion to the legislation that Representative Darrell Issa introduced in the House of Representatives in June of this year. I thank Representative Issa for his leadership on this important issue.
“According to their own estimates, by 2020 the Postal Service expects to face a shortfall of up to $238 billion. Even with dramatic cost savings of $12 billion and workforce reduction of 110,000 postal employees in the past four years, the Postal Service is expected to end this fiscal year with a $10 billion loss.
“First-Class mail, which makes up more than half of Postal Service revenues, continues to fall at alarming rates and shows no signs of ever recovering. This, combined with 80 percent labor costs and labor contracts that contain ‘no-layoff’ clauses, points to the fact that the Postal Service is broken.
“Congress can no longer enact temporary fixes that avert financial crisis for only a brief period. Congress, the Postal Service, labor unions, and the mailing community must be willing to lay everything on the table and make hard choices now to save the Postal Service for the future. I believe the Postal Reform Act of 2011 will do just that.
“Two key provisions in this bill alone would save the Postal Service billions of dollars annually. First, the bill would create a Postal Service Financial Responsibility and Management Assistance Authority, which is modeled after the District of Columbia control board Congress created to address the fiscal crises the city was facing in the mid-1990s. This Authority, triggered by a Postal Service default on its federal obligations, would replace the Postal Board of Governors with mandates to cut costs, and put the Postal Service back on a path to financial solvency.
“The second key provision would create a Commission on Postal Reorganization that would use a BRAC-like process to consolidate and close post offices and mail processing facilities. According to the Postal Service, the ‘current mail processing network has a capacity of over 250 billion pieces of mail per year when mail volume is now 160 billion pieces of mail. Right-sizing the network is vital to the future of the Postal Service and its customers.’ Congress, however, continues to put up political road blocks that prevent these closings and consolidations. This bill will take politics out of the process and allow the Postal Service to right-size its operations.
“Other provisions in the bill would require arbitrators to take into account the financial health of the Postal Service if labor contracts move to arbitration. It would also exempt the Postal Service from the Davis-Bacon Act, the Service Contract Act, and other wage rules that increase contracting costs.
“Additionally, there are certain types of mail upon which the Postal Service routinely loses money. This bill would require that the vendors responsible for this mail be responsible for covering their costs. In Fiscal Year 2010, the Postal Service lost nearly $1.7 billion on these type of ‘underwater’ postal products that failed to cover their costs. For example, the Periodicals class of mail, which includes newspapers and magazines, has not covered its costs for 14 consecutive years, generating total losses of $4.3 billion over that period.
“The bill also contains common sense language that would mandate that Postal Service employees pay the same health and life insurance premium percentage as other federal workers. This is estimated to save the Postal Service $700 million annually.
“Finally, this bill will allow the Postal Service to move to 5-day delivery, at a savings of anywhere from $1.7 to $3.1 billion annually.
“We can no longer support temporary fixes to the Postal Service. If we continue to act in this irresponsible way, the American taxpayer will be the one that ultimately suffers in the form of higher postage prices and taxpayer bailouts. We must make hard choices now so future generations of Americans will have a viable Postal Service.”