Trying to Keep the Post Office From Going BustBy
Democratic Senator Tom Carper of Delaware is generally a sunny guy, but lately he’s been having difficulty sustaining his characteristic optimism. For the past year, he has been laboring to fix the troubled U.S. Postal Service, which on Aug. 1 is likely to default on a $5.6 billion payment it owes to the U.S. Treasury to cover future retiree health benefits. Carper helped shepherd a bipartisan USPS reform bill through the Senate that passed on April 25. Since then, he has been prodding the House without much success to take action. He recently talked to Bloomberg Businessweek about his concerns about the USPS, his discussions with the House leadership, and what’s at stake if the agency defaults.
Why is that a big issue?
This is an industry around which 7 million or 8 million jobs revolve. Really, our inability to come to an agreement on this particular issue raises further questions about our ability to navigate our way back to economic prosperity.
How would the bill that you co-sponsored fix the problem?
Well, I think of the auto industry. The auto industry had more employees than they needed, more plants than they needed, more assembly plants, more supply plants than they needed, and they right-sized the enterprise, which they did with some help from the taxpayers. The Postal Service has more employees than they need. They have more post offices. They have more mail processing centers than they need. They’re not looking for a bailout from the taxpayers. What they’re looking for is the reimbursement of the roughly $11 billion they have overpaid to the Federal Employee Retirement System. The Postal Service would use part of that $11 billion reimbursement to incentivize some of those 125,000 employees eligible to retire to retire. They would use the rest to pay down their line of credit with the federal government.
Have you talked to Republican Congressman Darrell Issa, the co-sponsor of a House bill that would create a group much like the Defense Base Closure and Realignment Commission to figure out how to close post offices and distribution centers and get the USPS back in the black?
I haven’t talked to him since last week.
What did he say?
I don’t want to put words in Darrell’s mouth, but I understood from him and some of the Republican leadership in the House and the Democratic leadership in the House that bringing a Postal bill to the House floor divides the Republican caucus. It causes them to make some difficult choices and decisions that they would just [prefer not to] make until after the election.
What do you mean divides them?
You have some representatives who are from rural districts and have real concerns about closing rural post offices. How do you address it? How do you handle that? You’ve got some folks who have different perspectives with respect to laying people off, abrogating labor contracts, some who are O.K. with that, and frankly some who aren’t.
Why have you invested so much of your time and political capital in this?
I heard somebody yesterday—I don’t know if it was a mayor or a governor—talking about all the jobs he created in his state. I thought, you know, governors don’t create jobs. Mayors don’t create jobs. Presidents don’t create jobs. What we do is help create a nurturing environment for job creation and job preservation. That’s what we do. It includes infrastructure, a world-class workforce, common sense regulations, affordable energy, affordable health care. It also includes a mail system that works, a postal system that works.
Why does this appeal to you personally?
Well, for a couple of reasons. I studied economics. I was Navy midshipman at Ohio State and studied economics. I did five years of active duty in the Navy during the Vietnam War, moved from California where my squad was based to Delaware to get an MBA. In business school, we studied—we did a number of case studies of businesses large and small trying to figure out how they got started, how they prospered, how they survived, ups and downs. In a sense, this is [the] most interesting case study that I’ve ever had a chance to work on. It’s challenging, but it’s fun. I think in the end, we’ll be successful.
But if they’re losing $25 million a day, don’t they need to make some pretty draconian cuts quickly?
Eighty percent of the cost of the Postal Service is personnel. And they’ve got about 550,000 employees. We think we’ve provided a road map to 100,000 fewer than that. They have got about 480 mail processing centers. We think we have a road map in our rising service standard that enables them to get, over the next three years, to about 325. We have gone from a prepayment system for their retiree health care that was front-end loaded to one where we amortized these costs over 40 years. That gives the Postal Service a fair amount of breathing room. The other thing, and we haven’t talked about it, but we need to: Do you ever buy stuff—gifts or whatever—for yourself online? Well, as it turns out, there is a huge business there, and the Postal Service participates in it. It’s only going to get bigger.
Are you getting any help from the White House?
Actually, for a couple of years we got almost no attention from the White House. But this year has been a bit different. I think they’ve been involved in—they’ve got plenty of other things to say grace over these days at the White House. But if you had asked me that question a year ago, I would have said they are absent without leave. But they have been much more constructive this year.
Can you be any more specific?
The White House has basically said they’re O.K. with five-day [a week] delivery. I think that’s actually helpful to some of the stakeholders to say, “You know, this is not just some wild and crazy people over in the Republican side that want to go to five-day delivery, but the White House is O.K. with that as well.” I think that helps focus the minds of, among others, our labor friends.