While right wing politicians claim the trust fund is simply a “prudent” measure, no other agency or company has a similar burden. The real reason for the requirement appears to be the shifting of billions of dollars of the national debt on to the USPS, which is, conveniently, “off-budget”. The politically induced “bankruptcy” also provides cover for draconian legislation proposed by Darrell Issa, which would dismantle USPS bargaining agreements, and set up a postal “death panel” to gut the service’s infrastructure.

As far as “real world” financial results are concerned, USPS expenses remained level with the prior year, but revenue was down 3.5%. The decline in revenue reflected the continuing drop in mail volume, which dropped 6.3%, or 2 billion fewer pieces of mail. Standard mail, which had shown some growth last year, is down 7.3% in FY 2012 so far. The only bright spot in the volume numbers was the 33.6% increase in shipping services volume. While ecommerce driven package delivery is an obvious growth opportunity for the USPS, the problem is that it still represents just 15% of total revenue.

USPS Preliminary Financial Information (Unaudited) for November.

“The Postal Service is considering laying off nearly 25,000 workers, eliminating the Saturday delivery of mail and increasing the time it takes to receive a letter from two to three days,” said Hinchey. “These are changes that would have a negative effect on our economy, and Congress needs to take action now to alleviate the financial crisis the Postal Service faces. The Postal Service Protection Act would accomplish that goal.”

The Postal Service Protection Act would:

• Fix the Postal Service’s immediate financial crisis by allowing the USPS to recover the overpayments it made to its retiree pension funds — both the $7 billion overpayment to the Federal Employees Retirement System (FERS) and the $50 billion to $75 billion overpayment to the Civil Service Retirement System. In addition, the bill would eliminate the unique requirement that the USPS pre-fund 75 years worth of future retiree health benefits in just 10 years. No other agency is required to pre-fund these benefits.

• Establish new ways to generate revenue by ending the prohibition on USPS providing non-postal services, such as providing notary services, new media services and issuance of licenses; contracting with state and local agencies to provide services; shipping wine and beer, and allowing the USPS to provide services that mail systems in many other countries provide, including digital services.

• Create a blue-ribbon commission composed of entrepreneurs, representatives of labor and small businesses to provide recommendations on how the Postal Service can generate new revenue to succeed in the 21st century.

• Prevent the closing of rural post offices by giving the Postal Regulatory Commission (PRC) binding authority to prevent closures based on the effect on the community and employees. The bill would also prohibit USPS from considering whether a post office is turning a profit when making the decision to conduct a feasibility study for closure.

• Protect six-day delivery and protect mail-processing facilities by requiring strict standards for delivering first-class mail.

Hinchey and 37 other House members also sent a letter today to Postmaster General Donahoe opposing the planned closing of nearly half of the nation’s 500 mail processing and distribution centers, including those in Binghamton and Newburgh. Last week, Hinchey wrote to the Postmaster General in opposition to the proposed closure of the Binghamton and Newburgh facilities. The full text of the letter opposing the nationwide closure of mail processing and distribution centers follows:

December 8, 2011

The Honorable Patrick Donahoe
Postmaster General
U.S. Postal Service
475 L’Enfant Plaza, SW
Washington, D.C. 20260

Dear Postmaster General Donahoe,

The United States Postal Service (USPS) recently announced it would close roughly 252 of 500 mail processing centers. It also announced unprecedented cuts to first-class mail next spring that will slow delivery, and for the first time in 40 years, will eliminate the chance for stamped letters to arrive the next day. We strongly object to the decision to slow first class service and close processing centers.

We appreciate USPS’s attempt to reduce costs but the USPS is an essential service for the public and reductions would come at the expense of people who regularly depend on these services. The changes may provide short-term relief, but ultimately it would be penny wise and pound foolish because it would push more businesses onto the Internet. Americans rely on the USPS and the access to services to buy stamps and send packages. The elderly and underserved communities have a tradition of using the USPS and many do not have access to a computer to use email or social media websites.

First-class mail in the United States typically takes one to two days to arrive, but the changes would lengthen that to three days. It would slow everything from check payments to Netflix’s DVDs-by-mail, add costs to mail-order prescription drugs, and threaten the existence of newspapers and time-sensitive magazines delivered by postal carriers to underserved communities. A birthday card mailed first-class to a relative or friend could arrive a day or two late, if people don’t plan ahead.

As representatives of Congressional districts where our constituents depend on the services of the United States Postal Service, we strongly object to the decision to slow first class service and close processing centers.

Sincerely,

Congressman Maurice Hinchey

Hinchey Introduces Legislation to Help Stop Postal Service Layoffs and Service Reductions.

Cash-strapped Postal Service paying millions for unused building: MyFoxBOSTON.com

Read more: Cash-strapped Postal Service paying millions for unused building.

On Monday, December 5, the Postal Service filed a request with the Postal Regulatory Commission (PRC), asking for an advisory opinion to relax the service standards for first-class mail and periodicals. The NPMHU condemns this action as extremely short-sighted, and believes that substantial cuts in service like those being proposed could potentially contribute to the end of the Postal Service as we know it.

“A service-oriented business such as the USPS should not be cutting service in an effort to save money” said National President John Hegarty. “At such a critical time for the USPS and for the American economy generally, the Postal Service should be improving service and attempting everything in its power to grow the business rather than degrading service. This misguided action is the definition of “penny wise and pound foolish,” as it will simply drive more and more customers away, sending them to the internet, and to our competitors.” Hegarty added: “I agree that the Postal Service can justify acting and reacting to its financial situation in crisis mode, but that does not mean it should be in panic mode, making knee-jerk decisions that could ultimately ruin the Postal Service.”

Another part of this plan is to shutter more than 200 mail processing centers around the country, and eliminate over 200,000 career positions over the next few years. At precisely the time when the economy is trying to rebound, the last thing that is needed is the addition of 200,000 more workers to the unemployment rolls.

The NPMHU and the other major postal unions have been advocating Congressional passage of H.R. 1351, which would give the Postal Service access to its own money, namely billions of dollars which have been overpaid into the CSRS and FERS retirement systems. Access to these funds would put the USPS on sound financial footing, and give the agency the time to turn its business around, without ruining service. Senator Bernie Sanders of Vermont also has recently introduced a postal reform bill in the Senate, S. 1853, which we also support.

This latest move by the Postal Service is a follow-up to the September 21, 2011 release of its “Proposal to Revise Service Standards for First-Class Mail, Periodicals, and Standard Mail.” The September 21, 2011 document actually was an Advanced Notice of Proposed Rulemaking, which the NPMHU commented on. Below are excerpts from those comments:

At the very outset of its Proposal, the Postal Service candidly acknowledges that one of its core missions over the years has been to build up its mail processing and transportation networks to the point where those networks are sufficient “to achieve” the Postal Service’s current service standards for First-Class Mail and Periodicals, “particularly their overnight service standards.” See 76 Fed. Reg. at 58,434 (emphasis added). Yet in what can only be described as a defeatist—and self-defeating—response to “sharp revenue declines associated with falling [mail] volumes,” id., the Postal Service is now proposing effectively to abandon that core mission by: (i) eliminating the expectation of overnight service for First-Class Mail and Periodicals; (ii) substantially narrowing the two-day delivery range and substantially enlarging the three-day delivery range for such mail; and (iii) dismantling to a large degree the robust processing and transportation networks that have enabled the Postal Service “to achieve” its current service standards for such mail, “particularly their overnight service standards.”

The Postal Service’s Proposal is ill-conceived and should unceremoniously be laid to rest. By increasing the delivery time for most First-Class Mail and Periodicals by one day, and by eliminating the expectation of overnight service for such mail, the Postal Service would effectively be abandoning what it itself acknowledges has been one of its core missions over the years and conceding that it is no longer capable of fulfilling that mission on behalf of the American people.

On its face, this is a defeatist approach to the Postal Service’s current financial difficulties. In an effort to reduce its costs, the Postal Service is proposing to severely downgrade its current service standards and dismantle its current mail processing and transportation networks, in a truly radical fashion that is guaranteed to result in a further precipitous decline in Postal Service revenues. Nothing in the Proposal indicates that the Postal Service has made any kind of careful assessment of these revenue losses; nor has the Postal Service compared those revenue losses against the Proposal’s anticipated cost savings, which are themselves overstated. To put it bluntly, the Postal Service has failed to come to grips with the distinct possibility that adoption of its Proposal would not “bring operating costs in line with revenues,” but instead would exacerbate the Postal Service’s current financial difficulties and beget further downgrades in service standards, in a true “death spiral.”

Before embarking on the untested and dangerous path of severely downgrading its service standards and repositioning itself as a provider of second- or third-tier shipping services, the Postal Service should painstakingly exhaust all alternative means of “bring[ing] operating costs in line with revenues”—including means that are calculated to augment rather than further diminish the Postal Service’s revenue streams.

The Postal Service is expected to issue a Notice of Proposed Rulemaking shortly. At that point, interested parties will be allowed to file additional comments and reactions.

We also expect the PRC to invite comments on this proposal, and possibly to hold hearings inviting testimony. We urge all mail handlers to become active in this fight. Write to your members of Congress in support of H.R. 1351 in the House and S. 1853 in the Senate, and stay tuned for further notices as to how you can make your voices heard in this process.

via USPS Moves Forward its Ill-Advised Plan to Reduce Service Standards – National Postal Mail Handlers Union.

Unfortunately for postal workers and their customers, however, the accounting gimmicks enacted into law by Congress and the Bush Administration in 2006 require that the USPS hand that profit over to the Treasury. Not only that, but the USPS is required to borrow another $350 million from the Treasury, so that money can also be handed back to the Treasury for the so-called “trust fund” for potential future retiree health benefits.

The end result of all of this politically inspired money shuffling is that the postal service is forced to book a net loss of $139 million. From the politician’s point of view, it’s a win-win situation- each month, the gimmickry shifts another half billion dollars of the national debt “off budget”, to the USPS; and it matches the story people like Darrell Issa and Dennis Ross like to tell about bloated bureaucracies and overpaid workers.

We just can’t have a unionized government run operation making a profit, can we?

USPS Preliminary Financial Information (Unaudited).

Update on health benefits bargaining: Some media reports have inadequately described our position on health benefits. NALC has made no agreements with the Postal Service on health care for active members or retirees, either within or outside of FEHBP. We have agreed to seriously explore mutually acceptable ways to deliver high-quality health benefits at a lower cost both to the Postal Service and to its employees. No agreement will be made that does not have the support of the NALC’s membership.

via Latest News | President Rolando speaks at National Press Club.

Here are his remarks:

Thank you for coming here today.

My name is Fred Rolando. For 20 years, I delivered the-mail in South Florida, and for the last two years, I have had the privilege of leading a union that represents nearly 200,000 men and women who deliver letters and packages all over America.

As a long-time employee of the United States Postal Service, I would like to share with you some thoughts about how my union—the National Association of Letter Carriers—intends to deal with the very real challenges that the Postal Service faces.

There is no doubt that the Postal Service faces big problems. In fact, hearing some of what has been said, one could be forgiven for concluding that the Postal Service—while an important part of America’s past—has no real role in the country’s future.

It is seldom dangerous to steal from Mark Twain, so let me say up front that the reports of the Postal Service’s demise have been greatly exaggerated.

We know the Postal Service faces very serious problems. As letter carriers, we know them better than most. But, we also know that the Postal Service, if properly restructured, can be as relevant for the 21st century as it was for the 18th, 19th and 20th. And we are prepared to work with all interested stakeholders to craft a comprehensive plan to take the Post Office from where it is—to where it needs to be.

Today I want to put forward one very large and very specific idea and point the way toward a number of other ideas that, taken together, will do just that.

Now let me be clear: Nothing that we are suggesting today requires Congress to appropriate one dime of taxpayer money to support the Postal Service. The Postal Service has not received taxpayer support since the early 1980s, and we intend to keep it that way.

But what we do ask of Congress is that—in the words of the famous Hippocratic Oath—it does no harm. We need Congress to understand that reducing and degrading our network or the services that the Postal Service provides to the American people—like going to 150 million addresses six days each week—is not the way to save the Postal Service.

Tens of millions of Americans depend on a strong Postal Service. Half the country’s monthly bills are paid through the-mail. The nation’s letter carriers still carry 170 billion pieces of mail a year. They still deliver trillions (with a “T”) of dollars per year in financial transactions. Rural communities, the elderly, and a huge percentage of Americans who do not use their computers still rely on their letter carriers.

Recklessly reducing service will irreparably damage the Postal Service’s most valuable asset—and that’s the Postal Service’s comprehensive delivery network—thus making it harder and less efficient for customers to use the-mail. Ending Saturday service or eliminating door-to-door delivery will put the Postal Service into a death spiral. It would dismantle—NOT save—America’s Postal Service.

And Congress can certainly help the Postal Service survive by undoing the grievous harm that it caused the Postal Service in 2006 when it required it to do something that no other private or public sector enterprise is required to do. In 2006, Congress insisted that each year the Postal Service use $5 billion of its precious cash flow to cover the cost of future retirees’ health care. This money could have been used to re-invest in new technology and other plans to reduce the cost of delivering the-mail, but instead this money was diverted to a fund, that while laudable, is totally unnecessary, especially under today’s conditions.

Here’s a fact: without that one requirement, the Postal Service would have broken even over four of the past five years—despite the recession and despite the decline in First Class Mail and other changes associated with the rise of the Internet.

Letter carriers are in the midst of contract negotiations with the Postal Service. Our current five-year contract was set to expire last night at midnight. For the past week, every day, every night, up to the wee hours of the morning, negotiators for the NALC and the Postal Service were hard at work. And we will be back at the bargaining table very soon – last night we agreed to extend our talks until at least December 7, 2011.

These negotiations, and our bargaining process under federal law, will produce a contract. Everyone will still get their mail, every day, on time, from their friendly letter carrier. And that new contract will recognize and deal with the new realities of postal volume and finances.

We have put forward serious and innovative proposals designed specifically to produce billions of dollars in cost reductions for the Service. We have already started to do the hard work to reinvent this public service to preserve its core function in an efficient and economically responsible way.

For example, we are negotiating a new approach to health benefits that could save the Postal Service up to $20 billion over the next ten years. These savings would derive from the adoption of best practices on disease management and wellness care, improved purchasing power for drugs and other medical services, and the sensible integration of our members’ health insurance plans with Medicare benefits, among other sources.

NALC’s decades of experience in running one of the best rated health plans in the Federal Employees Health Benefits Program have been brought to bear in our negotiations with postal management, and the two sides have engaged broadly on reducing health care costs. We will continue to advance that engagement in the weeks ahead and look forward to successfully negotiating an historic agreement.

We are also looking to deepen the role of letter carriers in the promotion of competitive products with an enhanced commitment to our Customer Connect program that uses letter carriers to find new customers for Priority Mail, Parcel Post and Express Mail. We have also discussed the creation of an innovation task force to directly engage American businesses of all sizes to find new ideas and uses for our networks.

Let me emphasize that we are by no means opposed to creating efficiencies where they make sense for the interests of the Postal Service and its customers. But a responsible strategy under which the Postal Service would adapt to better meet society’s evolving needs is critical—not panic-driven slashing and burning that are akin to killing a patient to save it.

Beyond the bargaining table, the NALC has hired a world-renowned financial advisory firm, Lazard, and Ron Bloom, who has more than 30 years of experience restructuring major industries, and who most recently served as the Obama administration’s lead in restructuring the automobile industry. These experts will help us develop an alternative business model for the Postal Service—one that will build on the Postal Service’s last-mile strengths and grow the organization, instead of following a self-defeating path of endless downsizing.

Meanwhile, there is also now serious congressional attention on cutting the huge burden imposed by Congress in 2006. The numbers are enormous and the actuarial concepts and principles involved are complex and well beyond what we can get into here. But the basic facts are undeniable and easy to grasp.

As I mentioned earlier, the Postal Service is the only company or agency—public or private—that is required to pre-fund its future retiree health benefits. We have to fund retiree health care the way companies fund ordinary pension benefits. The 2006 law, passed at a time when the economy and the Postal Service were strong, mandated $5.5 billion annual prefunding payments for 10 years! This crushing burden, which hit the USPS just as the economy dropped off a cliff, siphoned $21 billion from postal resources, accounting for 100 percent of the Postal Service’s reported losses between 2007 and 2010. Now, as this is literally bankrupting us, we have been trying to convince Congress to reform this burden ever since.

The most practical answer to this pre-funding burden is to let the USPS use the undisputed $11-plus billion surplus in its main pension plan and the $50+ billion surplus in its other pension plan that private sector expert auditors have identified, using methods that even the General Accountability Office have acknowledged are “reasonable.” But if Congress won’t do this, it should at least repeal the pre-funding burden because the Postal Service has already set aside enough money to fund retiree health benefits for decades to come.

As I stand here before you today, this very minute, the nation’s 200,000 letter carriers are doing their daily job of delivering 560 million pieces of mail to 150 million addresses. That’s 170 billion pieces of mail a year. They are driving the Postal Service’s fleet of 200,000 vehicles. They are operating out of 17,000 postal facilities in every village, town and city in America. They are doing it for half the price of the next cheapest postal service in the world.

In other words, we are a crucial part of the nation’s economic infrastructure. The Postal Service and my members lie at the heart of a set of industries — publishing, printing, advertising, commercial distribution and related sectors — that employ 7.5 million workers, generating $1.3 trillion dollars annually. That’s 8 percent of the entire national economy.

Yes, the Internet has changed the world. And yes, e-mail has eaten into postal volume.

But huge areas of American commerce—and American citizens, especially the elderly and rural residents—depend on the last-mile delivery network of letter carriers.

The National Association of Letter Carriers is committed to saving America’s Postal Service. And we will embrace and lead the changes required for the Postal Service to remain a vital institution that will serve our nation for decades to come.

But we need to be given a chance to succeed—Congress must resist poorly thought-out and radical downsizing plans and reform the pre-funding burden.

Let me conclude with three simple messages:

To postal management, we say that the NALC is ready to work with you jointly to develop a plan that both saves on cost and taps the Postal Service’s huge potential for growth. Our proposals our ready and our doors are open.

To our leaders on Capitol Hill: Don’t recklessly eliminate crucial postal services like door-to-door and Saturday mail delivery. It will hurt the American people—especially our elderly and rural citizens, and it will do permanent harm to the Postal Service. Let us use our own funds to cover the cost of retiree health pre-funding, or let us handle these costs as it done in the private sector.

And to the American people, don’t give up on the Postal Service. Give us a chance to reinvent this valuable national treasure. Let us work together with management and the postal industry to restructure the Postal Service for the 21st Century.

In the first place, the USPS is not nearing insolvency due to operational or market conditions. The reason it might not have enough cash to pay any of its creditors next year is the PAEA trust fund obligation- plain and simple. The Treasury is sitting on $42.5 billion in USPS profits- that’s an undeniable fact. Congress created that problem, and only Congress can fix it.

The other issue I have with viewing the situation as a bankruptcy is the fact that creditor and debtor are one and the same- the US Government. The USPS has plenty of money to pay its suppliers and employees. The debt it can’t cover is owed to the US Government. The US Postal Service, contrary to what a lot of folks seem to think, is not a “quasi-governmental” entity, nor is it a company “owned” by the US Government. It is an integral part of the US Government. The trust fund “debt”, then, is owed by one agency of the US Government to another agency of the US Government. Both agencies are, in the end, owned by the American people. The concept that one agency can force another agency to “liquidate” assets that belong to the American people to satisfy a debt owed to the American people is bizarre.

The bottom line is that the US Postal Service financial “crisis” is a political construct, not a financial one. Politicians got us where we are today, and they need to come up with a way out.

Don’t Worry About Forever Stamps in Bankruptcy | Courier Express and Postal Observer.

Dead Tree Edition: Could Forever Stamps Become Worthless? What Bankruptcy Might Mean for USPS.

Sen. Lieberman: “This is yet more confirmation of what we already know: the Postal Service is in such deep financial trouble that mail delivery would be disrupted sometime next year unless bold action is taken. Senators Collins, Carper, Brown, and I have proposed bold reforms in our 21st Century Postal Service Act, which was approved by the Homeland Security and Governmental Affairs Committee last week. I urge my colleagues to support our bill as a last ditch effort to save this valuable national asset upon which millions of people and businesses rely every day.”

Sen. Collins: “It’s no surprise the red ink continues to flood the U.S. Postal Service. Absent action, it won’t be able to meet its payroll a year from now. The Postal Service is the linchpin of a $1.1 trillion mailing and mail-related industry that employs approximately 8.7 million Americans in fields as diverse as direct mail, printing, catalog companies, and paper manufacturing. It literally won’t survive without legislative and administrative reforms. That’s why the bipartisan bill passed by the Homeland Security and Governmental Affairs committee represents a huge step forward toward giving the Postal Service the authority it needs to restructure, modernize, survive, and thrive. I’m hopeful that this bipartisan compromise legislation will move swiftly through the Senate.”

Sen. Carper: “I have been saying for some time now that Congress needs to come together on a plan that can save the Postal Service and protect the more than eight million jobs that rely on it. Last week, we took an important step in our effort to reform the Postal Service by passing the bipartisan 21st Century Postal Service Act (S.1789) out of the Homeland Security and Governmental Affairs Committee. Today’s report again underscores the urgency of this situation. But while the situation is dire, it is not hopeless. That is why we need to pass this bipartisan and comprehensive bill – the only bipartisan proposal from Members in either Chamber – as soon as possible. It is my hope that Congress and the Administration can come together on this plan in order to save the Postal Service before it’s too late.”

Sen. Brown: “Combined with losses from previous years, it is clear that the Postal Service faces a significant risk of being insolvent by next year. Congress will need to act soon to address some of the major financial challenges the Postal Service is facing. The 21st Century Postal Service Act is ready to head to the floor and it’s my hope that it will be called up as soon as possible, so that we can begin to put the Postal Service on a path towards financial solvency.”