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Postal Reform Act of 2016: Optimistic Outlook or Skeptical Cynicism

Posted by Mark Fallon on Jun 21, 2016 5:00:00 AM

Last week, the House Oversight and Government Reform Committee (“Committee”) released the draft Postal Reform Act of 2016. The draft bill has already received praise and criticism by the postal community. Both fans and critics of the U.S. Postal Service (“USPS”) will find parts of the bill to support and oppose.

Overview

For people without the time to read the complete 188-page bill, the Committee has published a 4-page summary of the major provisions. Several key aspects of the bill:

  • Addresses USPS retiree health benefits funding by automatic enrollment in Medicare Part A and B.
  • Cancels the unpaid obligations for future retiree health benefits as required under the Postal Accountability and Enhancement Act of 2006.
  • Requires recalculation of USPS payments into the retirement funds, and reimburses the USPS for any overpayments into the fund (over 30 years).
  • Reduces the Board of Governors from 9 members to 5 members.
  • Changes the Postmaster General and Deputy Postmaster General to Presidential appointees (with Senate approval) with 4-year terms.
  • Requires business to move to centralized (e.g., cluster box) delivery and the “voluntary” conversion of residential addresses to centralized delivery if 40% of residents consent to the plan.
  • Restores half of the Exigent Rate Case increase (2.15%), making it the new base rate for future increases.
  • Directs the Postal Regulatory Commission (“PRC”) to study the rate making system.
  • Authorizes the USPS to provide services (including facilities) to federal, state, local and tribal government agencies.
  • Reduces the PRC review period on post office closings from 120 days to 60 days.
  • Creates a new USPS leadership position – Chief Innovation Officer.
  • Merges the USPS Inspector General and PRC Inspector General offices into the “Inspector General of the Postal Community”.

Politics and Possibilities

QuestionMark-1.jpgA popular saying is that a good political compromise leaves all parties unhappy. This bill represents compromises on many different positions. It addresses the onerous prefunding retiree health benefits requirements, but includes an unpopular move to mandatory Medicare. It recognizes that the USPS has overpaid into the pension fund, but requires yet another study and prorates the reimbursement over 30 years. It raises postage rates, but by only half the amount USPS leadership had requested. Plenty of ideas for plenty of people to be unhappy about.

It’s now 18 months into the 144th Congress, and less than 5 months before the next election. Unlike the last time postal reform was passed in 2006, there’s a presidential election this year. In the Senate, the Improving Postal Operations, Service and Transparency Act of 2015 (iPOST), introduced by Senator Carper (D-DE) last September, hasn’t even received a committee hearing.

What’s different about this new bill isn’t just that it has bipartisan support, but who the supporters are. The Republican sponsors include Representatives Jason Chaffetz (R-UT) and Mark Meadows (R-NC), along with Democrats Elijah Cummings (D-MD), Gerry Connolly (D-VA), and Stephen Lynch (D-MA). These congressmen are leaders in their respective parties with strong support from varied constituent bases.

Of course, this is only the draft of a bill that won’t officially be filed for 2 weeks. And that’s before amendments begin to be added. The House begins a 7-week recess on July 15. Election Day is Tuesday, November 8. The Senate still hasn’t confirmed any of President Obama’s nominees to the current USPS Board of Governors.

With this bill, Congress has the opportunity to fix the mistakes made a decade ago, and restore the financial stability of the USPS.

But will that happen?


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