Senate Postal Service Overhaul Shifts Attention to House

Senate passage of an overhaul of the U.S. Postal Service shifts pressure to the House to beat a May 15 deadline, when the organization said it may start closing thousands of post offices and hundreds of mail processing sites.

“I hope it puts a little pressure on the House to act,” Connecticut independent Joe Lieberman, the Senate bill’s sponsor, said after passage yesterday. He said House consideration of the bill as late as July would be “too late.”

The cash-strapped Postal Service agreed in December to a five-month moratorium on its plan to close as many as 3,700 post offices and more than 220 mail processing plants. The Senate bill would further delay the closures and set additional requirements for justifying them.

The Postal Service’s board of governors, in an e-mailed statement, called it “totally inappropriate in these economic times to keep unneeded facilities open.”

“If this bill were to become law, the Postal Service would be back before the Congress within a few years requesting additional reform” as “losses would continue in both the short and long term,” Postmaster General Patrick Donahoe said in the statement. He cited daily losses of $25 million and a debt of more than $13 billion.

‘Spending Binge’

The sponsor of the House’s Postal Service legislation, California Republican Darrell Issa, issued a statement calling the Senate measure “a special interest spending binge that would actually make things worse.” The “wholly unacceptable” bill would keep more than 100 “excess” facilities open, he said.

Issa’s proposal would create a board modeled after the Defense Department’s base-closing commissions to oversee postal closures.

Under the Senate bill, states that conduct vote-by-mail procedures would be exempt from closures through the November election. Rural post office closures would be delayed for at least one year, with some exceptions. The bill also contains an expanded appeal process for customers to protest potential closures.

Maine Republican Susan Collins, a co-sponsor of the Senate legislation, said yesterday that she encouraged Issa to get his version to the House floor “as quickly as possible” so the chambers can negotiate in a conference committee.

Areas of Compromise

Lieberman declined to predict what a compromise with the House might contain.

“When the House passes a bill, we’ll find out where the areas of compromise are,” Lieberman said.

The Senate bill, passed 62-37, would authorize the Postal Service to provide non-postal products and services, revise payments to two federal funds that provide worker retirement benefits, offer retirement incentives and install an innovation officer to create new business practices.

The bill would delay, for at least two years, a move to mail delivery five days a week instead of six. The Postal Service said the “vast majority of the American people” favor switching to five-day service.

The vote on the bill, S. 1789, followed more than five months of negotiations among senators, led by Vermont independent Bernie Sanders, who were concerned about how post- office closings would affect their constituents.

Debt Ceiling

The Postal Service has estimated it may reach its $15 billion debt ceiling as soon as this year if scheduled payments to its retiree health benefits fund aren’t deferred or if there was a major interruption in service, such as an anthrax scare.

The Senate bill would adjust health benefit costs, canceling a 10-year payment schedule enacted in 2006 that required the Postal Service to set aside about $5.5 billion a year for future retirees. Instead, the bill would require the organization to pre-fund 80 percent, rather than 100 percent, of its projected liabilities on a 40-year payment schedule.

The Postal Service, which reported losses of $3.3 billion in the quarter that ended Dec. 31, attributed $3.1 billion of that to required payments into the retiree health-care fund.

The Postal Service has estimated the Senate bill could save it $19 billion a year starting in 2016, Lieberman said.

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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