NALC President Rolando’s seven-point proposal to the ‘super-committee’

President Rolando has written a letter to the members of the Joint Select Committee on Deficit Reduction, better known as the “super committee.” He outlines seven proposals the NALC urges the committee to consider. “Americans are begging you to act in a bipartisan manner to address the nation’s problems,” he wrote. “Bolstering the Postal Service, a service mandated by the Constitution, is a good place to start.

Oct. 15, 2011 — NALC President Fredric V. Rolando has written a letter to the members of the Joint Select Committee on Deficit Reduction, better known as the “super committee.” He outlines seven proposals the NALC would like the committee to consider.

October 11, 2011

Dear Member:

As a member of the Special Joint Committee on Deficit Reduction, you are charged with fairly reducing the deficit over the long run while doing all you can to attack the American jobs crisis in the short run. I write on behalf of the 280,000 members of the National Association of Letter Carriers (NALC), which represents active and retired employees of the U.S. Postal Service, a crucial infrastructure service of the U.S. economy and the hub of a $1.3 trillion industry that employs 7.5 million private-sector employees across America.

We believe the special joint committee should follow President Obama’s lead and address the crisis at the Postal Service in the legislation you propose to the Congress. Congress caused the USPS financial crisis in 2006—by mandating a crushing schedule of unaffordable payments ($5.5 billion per year) to pre-fund 75 years in advance future retiree health benefits—and Congress should fix it now without needlessly slashing service or damaging a major sector of the economy. No other agency or company in America is required to pre-fund future retiree health benefits, much less for workers that have not even been hired yet —the Postal Service should be relieved of this job-killing burden. Contrary to the conventional wisdom, neither the Internet nor the recession caused the crisis—over the past four years, the $21 billion in pre-funding payments caused 100 percent of the $20 billion in reported losses.

While we appreciate the president’s efforts to provide the Postal Service with short-term financial relief in his proposal to your committee, we believe a permanent solution to the pre-funding burden should be adopted. At the same time, we are bitterly disappointed and cannot support the president’s proposal to end six-day mail delivery service in 2013, a step that will slash service by 16 percent and generate modest short-term savings ($1.9 billion according to the Postal Regulatory Commission) and likely lead more mailers to abandon the system as delivery times rise.

The PRC review of the Postal Service’s five-day plan, issued in early 2011, concluded that that would hurt both rural and urban communities alike and negatively affect the elderly and small business owners as well. Five-day delivery will simply drive thousands of mailers who value six-day delivery (including prescription drug mailers, weekly newspapers and e-Bay businesses) from the system. As we did in our 2006 contract talks, NALC is prepared to find ways to make Saturday delivery more cost-effective in the current round of collective-bargaining. NALC urges the joint committee to follow the lead of 205 members of Congress from both parties who have co-sponsored H. Res. 137 in support of the continuation of Saturday delivery—a policy that will preserve 80,000 full- and part-time jobs in every congressional district in America.

The president’s postal plan includes several excellent proposals to strengthen the Postal Service. The plan would give USPS access to its $6.9 billion surplus in the Federal Employees Retirement System (FERS), help preserve the nation’s post office network by allowing the USPS to provide services for state and local governments, and allow the Postal Service the ability to better realign the costs of postage with the costs of mail delivery while keeping overall postage rates in line with general inflation. The plan also includes a restructuring of the Postal Service’s requirements to pre-fund future retiree health benefits—an essential piece of any Postal Service proposal.

NALC urges the special joint committee to include elements of the president’s proposal as well as provisions from several pieces of legislation now pending in Congress from members of both political parties. Among these are H.R. 1351 in the House, which now has a bipartisan majority of 224 co-sponsors, and bills offered by Senators Carper (S. 1010), Collins (S. 353) and Baucus (S. 1649) in the Senate. We believe the best approach to returning the USPS to solid financial footing and bolstering the tens of thousands of businesses that make up the broader postal industry would be to include the following measures in the deficit reduction package:

1. Adopt President Obama’s proposal to return the $6.9 billion FERS surplus to USPS:

There is no dispute over the existence of this surplus. Returning the funds to the USPS will restore its cash reserves, which could be used to pay down the USPS debt (run up to cover the cost of pre-funding), ride out the recession and/or pay for employee buy-outs.

2. Implement the findings of either independent audit of the postal sub-account of the CSRS (by the Hay Group or the Segal Company) conducted in 2010:

H.R. 1351 (the Lynch bill), Title I of S. 1010 (the Carper bill) and the finance provisions of S. 353 (the Collins bill) all call for the OPM to more fairly allocate the cost of pre-1971 pensions.

Both independent audits found that the methods used by the OPM are unfair to the Postal Service. They are also unfair to postal employees whose contributions help fund the CSRS pensions. Implementing the audit will correct this unfairness and strengthen the Postal Service’s long-term finances because, under current law, any surplus in the postal CSRS account will be transferred to the PSRHBF in 2015. This will all but eliminate any unfunded liability for retiree health at the time. It will also raise the Postal Service’s level of pre-funding to well above that suggested by corporate best practices in the private sector, where only about a third of companies pre-fund at all and where those that do pre-fund have covered only about a third of future costs.

(Note: Whether the OPM has complied with a 1974 statute on pension funding or has the authority under the PAEA or P.L. 108-18 to change allocation methods is irrelevant. The methods adopted were grossly unfair to the Postal Service and to postal employees whose contributions fund the sub-account. Congress should mandate fairness in this matter.)

3. Repeal the remaining scheduled pre-funding payments mandated by the Postal Accountability and Enhancement Act of 2006 and hold the Postal Service to private-sector accounting and pre-funding standards:

The USPS should not be required to make any new contributions to the PSRHBF unless it has positive net income or its level of pre-funding falls below that achieved by large private-sector companies.

No other agency or company in America is required to pre-fund; it is done on a voluntary basis—generally when companies are profitable. The USPS should be treated like similarly situated private companies. According to an annual survey of Fortune 1000 companies by Towers Watson in 2010, only 37 percent of companies pre-fund their future retiree health benefits at all, and those that do have a median funding level of 33 percent. The USPS should not be forced to pre-fund, contribute the normal cost of future benefits or amortize unfunded liabilities for retiree health benefits when other companies and agencies are not subject to the same burden. Under private-sector accounting standards, participants in multi-employer health benefit plans like FEHBP are allowed to expense retiree health premiums on a pay-as-you-go basis. The USPS should be treated the same way.

(Note: At a minimum, pre-funding should be suspended until the U.S. economy recovers and/or the USPS returns to profitability. Pre-funding might be limited to 25 percent of USPS profits.)

4. Mandate the repayment of some or all of the Postal Service’s debt to the Federal Finance Bank (FFB) with funds from the Postal Service Retiree Health Benefit Fund:

The Postal Service needs the ability to finance its ongoing reorganization and to make investments that will help cut costs in the future.

The Postal Service had no outstanding debt in 2006 to the Treasury Department’s FFB; today, its debt is approaching $15 billion. The entire increase in the USPS’s debt since 2007 is due to the excessive pre-funding mandate included in the PAEA. That mandate has cost the USPS $21 billion over the past four years. No sensible company would use up all of its borrowing authority to pre-fund retiree health benefits for workers that have yet to be hired, much less for decades of such benefits for those that are already retired. This proposal would reverse this policy mistake.

5. Invest the assets in the PSRHBF more appropriately:

Given the 75-year time horizon and the long-term nature of the liabilities to be met with the assets in the PSRHBF, those assets should be invested more appropriately—as other companies’ post-retirement health benefit funds are invested. The PSRHBF is now invested exclusively in low-yielding Treasury securities. The OPM and/or the USPS should invest the PSRHBF’s assets in a well diversified portfolio of private-sector equities and corporate bonds.

6. Adopt President Obama’s proposal to allow the USPS to pay current retiree health premiums out of PSRHBF in 2012:

The USPS has already set aside $42 billion for future retiree health costs, enough to fund all its current retiree health benefit costs for decades. Yet under current law, it cannot access the fund until 2017. Allowing the USPS to use the fund for its intended purpose right away will help cover the $2.7 billion annual cost of current employees health benefit premiums.

7. Amend Section 101 of Title 39 (on Postal Policy) to preserve the mandates that protect small post offices and preserve six-day delivery:

The purpose for the financial provisions proposed above is to restore the Postal Service to fiscal health and to maintain universal service. Amending the basic postal policy of the U.S. to safeguard small post office and six-day service mandates would take these issues out of the annual appropriation process and ensure universal service at the level the public has come to expect. This provision will also save tens of thousands of jobs at a time when there is mass unemployment.

The proposals I have outlined will allow the Postal Service to regain its financial footing without the need for a dime of taxpayer money. They will also strengthen a crucial industry that employs millions of people and help the national economy recover from the global financial crisis. Americans are begging you to act in a bipartisan manner to address the nation’s problems. Bolstering the Postal Service, a service mandated by the Constitution, is a good place to start. It serves Red States and Blue States and has the overwhelming support of the American people (83 percent approval, according to a recent Pew Research survey). Show the American people that our representative democracy still works—Save America’s Postal Service.


Fredric V. Rolando

Latest News | Statement on GAO report on CSRS.

20 thoughts on “NALC President Rolando’s seven-point proposal to the ‘super-committee’

  1. we CAN’T LOSE our post office. It is HARD with the LACK OF JOBS here. If they shutdown the post office it will make the lack of jobs even harder for everyone!!!! Please from everyone that relays on the post office for financial or non-financial resources. DON”T SHUT IT DOWN in tucson Arizona or anywhere else.

  2. mp
    Remember NALC supported the 2006 act. I remember they said write and call your congressmen to get it passed. NALC doesn’t publicize that they supported it.
    Now it is coming back to bite us all.

  3. 2006 congressional act put in place with PRC to review any surpluses or deficits.

    PRC did it’s job well, with USPS OIG saying there is a surplus too.

    2011 congressional oversight committee ignores PRC committee’s recomendations and the problem of overpayment. Now all goes to another committee and another and another…

    Talk about not letting Congress’s first committe the PRC do the job it was given to do…and passing the buck…literally. TAX PAYER DOLLAR WASTE…WASTE…WASTE!!!!!

    This inefficientcy, incompetance, lack of focus, waste of taxpayer dollars, meaness and studidity of this brat pack mentality is pitifull. To all those who passed the buck and don’t really care about the middle class or those Veterans who already fought for your country, and those new veterans (proposed to be hired 1 for every 3 employees to be let go), newbies who will have the not so good as the other USPS employees benefits…benefits that used to include Workers comp also., because in 2011 some of the congress new committee that took on the whole post office, instead of letting the PRC who it appointed do it’s job, suggested to additionall fix the USPS problems in workers comp is to create a USPS disability program. DO you think they ever thunk of fixing workers comp? Gosh…How are all the taxpayers going to afford all these new committees? How are all the taxpayers going to pay for all the groups Congress will replace with new groups? How are all the taxpayers going to afford to fix the problems, Congress can’t seem to focus on to fix, and can’t trust their committess, like the PRC’s, recommendations to solve what Congress has appointed them to solve? ON and ON and ON and ON and ON no wonder there is so much apathy in government. It’s time for change.

  4. growingweary.
    I agree with you 100%. Neither the Dems nor the Rep. are honest or listen to the people. But I am complaining about the NALC. they keep saying and donating to the Dems. They say that the Dems are helping the working man. What a bunch a BS. They are in it for themseleves. Like I said I contributed to COLPCE for 8 yrs because the NALC says the money will go to get worker friendly politicians, mainly Dems. What has it gotten us?? The Dems had a majority in the house for 4yrs after the 2006 bill. They didnt do anything to save the PO. Now all of you and me are getting the results. SAY NO TO COLPCE!! Stop using our money to get Dems elected!

  5. …response to “ERICK”.
    so you really think the problem is all because of the democrats? i agree with you that a lot of the democratic politicians are lying pieces of trash that
    promote too many giveaways to able bodied adults instead of making that
    able bodied human earn his way. on the other side we have a bunch of lying
    war mongering republicans that like to start unneccessary wars and “police”
    the world by forcing their beliefs on others. on top of that, these republican pieces of trash love to promote corporate welfare programs, where their rich
    donor friends get masses amounts of taxpayor monies for just being “well connected.” so i think we are screwed either way erick. our politicians are basically corrupt and dishonest. look at the bigest scam of all. they take your
    social security and medicare dollars and promise you some coverage of
    return many years down the road. then they immediately spend that freaking money on stupid crap! then when you are old they will tell you sorry, we have nothing left and to stop looking for entitlements! entitlements? what the ****
    do they think you are paying for?! soc sec and medicare is simply a big
    freakin ponzi scheme! bernie is in prison for his ponzi scheme while the politicians walk free.

  6. Oh…P.S. Perhaps our union dues should be on a sliding scale according to the money we make. I just lost 20+ hours a week because of the new clerk contract, not to mention the immediate loss in my retirement annuity, my annual leave and sick leave…should I say thanks? That’s what I get for 18 years of devoted service to the organization, but I guess I should just be glad I have a job, eh?

  7. I think it’s great that Rolando has reached out and requested a bi-partisan (is there such a thing, oh yeah, they had a bi-partisan vote when they quickly decided to give GM and AIG, etc., etc. money they didn’t deserve! OUR MONEY!!!)…Rolando is on the right path, maybe we should just all have one union! But, John, has some very good points about the attack on us Baby Boomers. I am starting to believe in Soilent Green.

  8. Its all of your fault. By supporting the Socialist Democrats election after election, you caused what is going on in this country. You and the unions opened it up for the Republicans and the Tea Party to get in and decimate the working people of this country. Don’t give to COLPCE! I gave to COLPCE for 8 yrs. When the healthcare bill was passed and supported by the unions against the wishes of the people I cut COLPCE OFF! They will just continue to give money to the people who will screw this country. Remember the president was supported by the unions and now he is stabbing us in the back with 5day delivery.

    You Fools!!

  9. Mr.Honore that $15billion is still outstanding that is why the service has reached it’s statutory limit on borrowing. We are not talking about payments to any retirement system or payment to fund health benefits. If that were repaid why wouldn’t the service borrow from it’s available line of credit at the F.F.B. and bring itself out of the crisis it is in? According to the U.S.P.S. Consolidated Financial Statement released this year they have about 900 million dollars of credit margin. The U.S.P.S. sells postal bonds (obligations) to the Treasury in return for cash payments. At one time they sold bonds to the general public and operated a banking system but F.D.R. eliminated those services to the public. Other nations (Japan, Great Britain ,Ireland, Germany) still have that arrangement.

  10. Makes perfect sense. That’s why they’ll reject it. Their motivation is to destroy the USPS. When the USPS falls apart, the American Economy will go into a downward spiral without any chance of pulling out and recovering. Then, only the rich will be ok. The rest will remain groveling at their feet. This is what Issa and his ilk want. There is another solution…

  11. Re:President Rolando:An Amendmentt to the Constitution can eliminate the Postal Service at anytime! The only things guaranteed in life are death and taxes!

  12. It is hard for us to realize the fact that the rich have always controlled this country and always will! If we are getting tired of being frustrated with this reality it is time to check out real estate prices in Canada.

  13. YEP ! That’s what I said , Congress has for the better part of 40 yrs. abandoned it’s duty to the Postal Service and is still doing it ! Can’t put 10 pounds of stuff in a five pound bag folks !

  14. Mr ORourke: Of the 15 billion borrowed from the US Treasury by USPS, every penny of it was returned to the Treasury PLUS an additional SIX BILLION over the past four years! The 21 billion to pre fund future retiree health benefits. (Which by the way was used to artificially reduce the federal deficit in spite of the fact that the money belongs to USPS and not the federal government!)

  15. President Rolando you sir are an idiot. Why don’t you show everyone here what your tax returns look like. About your union paid credit cards, car, trips, hotel stays. You are killing the memberships chances for a decent contract with your stupid, selfish and stubborn insistence on preserving a six day delivery week. 99% of us are not willing to sacrifice our wages and benefits, just so that a small group of junior employees whom will be laid off regarless of what deal finishes up this mess can keep their jobs for a few months longer. Is nobody paying attention!

    President Rolando is basically willing to get us all cuts in salary and benefits, so long as he doesn’t loose any more union membership dues. This recession has hit them hard, but it has hit us even harder. Do not allow this moron to lead you astray. I am most definitely not willing to have an even smaller paycheck in order to provide these bozos with better cars better offices and more extravagant conventions. If it comes to a vote vote HELL NO! To preserving six days.

  16. John, thank you for telling it like it is! I think the only thing that will eventually help change what is happening to the USPS and the country as a whole is for all the unions and protest groups to come together and form a common sense list of demands to right the wrongs that are going on in our government and the USPS. Upon reaching the agreement on what the real working class wants, everyone shuts down the entire country until the demands are met. You can’t tell me that if we all ban together that change will not happen. The wealthy can not force anyone to work or make them profits if we all walk out and shut them down. Google the postal strike in the past and you will see that it was also illegal then but sometimes you must take whatever steps are necessary for your own survival against the controlling forces that are out to ruin you and your family’s existence. In the case of the USPS, we that the real cause of our problems is congress and the way the USPS is run by a bunch of unqualified morons. The public wants their post office to survive and the communities where all the offices are located will suffer needlessly if they are shut down. They would not only lose the benefit of the use of the p.o. near to them but look at how all the jobs being lost would impact local economies. Do we really need more foreclosures, business closures, higher unemployment, lost tax revenues, etc.? How can we force businesses to bring back jobs to the US? How about we look at what started sending them out of the country in the first place. Maybe we need to end all these free trade agreements and start putting back tariffs on imports that would make it unprofitable to import what could be made here. Isn’t that common sense?

  17. Pat O’Rourke – I have always thought the Postal Service and stamp buyers were getting screwed anyway, veterans come out of the military with 2-34-5-6-7-8 years of service go to work for the postal service and retire , who then pays for those years of military service the postal service does- now how is that fair to the stamp buyers?

  18. Donahoe is a lier just like all these other politicians. This is no overpayment to the retirement plan left, that is the truth of it. The politicians have already spent it and used it to become wealthy themselves and to keep up the charade and life style. That is the reason they refuse to offer incentives to senior people by just giving them years added on to their service. It would be no money out of anyones pocket, but it would fall on the prepaid retirement funds, which according to everyone there is an over payment of 75 Billion dollars. So why not add on time to service as an incentive and retire these people??? I’ll tell you why…the politicans have themselves lied to us all, there is no money left, they have drained all of it out as soon as we the people put it in, that is why they are so afraid of giving incentives. There is no money in these retirment funds, prepaid or other wise…they just want us all to die and go away, so the truth will not come out. These so called Congressmen and women, as well as Senators have stood by and let these thieves loot the national treasury and now they don’t know what to do because the truth might get out. They want to do it the hard way, by forcing out hard working people who is close to the end of their working lives, without a thought to their loyalty to their job or country or their years of sacrafice…yes, I said sacrafice! You damn fools. You think it has been fun working for these government agencies, having to listen to idiots tell you what to do because the worst were the ones that got promoted, because the real prerequisit for qualifications was who you were sleeping with or who you were related to, or who you were friends with, or how much you had on somebody in a higher postion? Anything but qualifications, or education, or incentive, or willingness to take on any job. Some of the worst people get promoted for all of the wrong reasons. And then there is the Welfare Agency aspect of the whole thing. Affirmative Action, which in many cases for years turns out to be nothing but reverse discrimination, because of quota mandates. This is the stuff no one wants to talk about, no one wants to admit. And then everyone wonders why we are in the shape we are in. And then we have the stupid politicians, greed is the word of the day, and lies come in a close second. The whole situation is a no win situation, with a life time of crap to have to put up with, but to hear some of these stooges that think we (the actual workers with no connections and on the wrong end of affirmative action) have it so good, makes me want to gag. I feel like that guy in Shawshank Redemption that was sitting in front of the parole board trying to get that bunch to see the truth, I have gone through so much crap with all of these crooks, that at this point, frankly…I just don’t give a damn anymore, Sonny! At this point it will be a miracle to get a bunch of crooked politicans to do the right thing. Just remember what they have done at voting time and vote them all out, and I do mean All of Them. J.

  19. Me thinks the smartest thing the mailhandlers and carriers could do is tell
    Donahoe to go pound sand and take their contract to arbitration. After all,
    look what Donahoe did to the clerks, lying to them by saying he was agreeing to
    the contract and then several months later going to congress to try
    to have them “set aside” the parts of the agreement Donahoe disliked.
    This Donahoe knucklehead cannot be trusted even just a little bit, just look at his actions. Take your case to arbitration. Donahoe is making threats to the carriers/mailhandlers that he has this november deadline and that is it. tell him there is no need to wait till november, head to arbitration today!! don’t negotiate with a liar!

  20. I see President Rolando makes mention of $15 billion owed to the Fed. Financial Bank,an arm of The Treasury. If you owe The U.S.Treasury $15 billion dollars isn’t that owing American taxpayers the money? Every time we buy a savings bond we lend the gov’t. money in return for future repayment with interest. It seems The Treasury has loaned $15 billion of that money to the U.S.P.S. and in so doing has used public monies to help support it’s operations! It would be the same as you or I taking out a loan from a bank to finance a house or car. It makes you wonder what else the service is hiding from it’s employees!

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