I am deeply disappointed and shocked that the U.S. Postal Service is proceeding to close its Hampden mail processing center. This decision will create significant job losses, hurt service in much of Maine, and is contrary to the Postal Service's own interests. Given the geography of our State, both plants – in Hampden and Scarborough -- are clearly essential. If mail to and from the northern half of Maine has to travel all the way to the Scarborough plant to be processed – a round trip of more than 600 miles from some Northern Maine communities, longer delivery times are inevitable. That has consequences -- for small businesses advertising their products or billing their customers, for families who use the mail for their daily newspaper delivery, for seniors who rely on the mail for their prescription drugs, and for so many others.
No business facing a financial crisis would risk alienating the loyal customers it still has by eliminating the one service that sets it apart from competitors – in the case of the Postal Service -- overnight delivery of mail for the price of a stamp. The Postal Service is rushing down the path of reduced service and the associated plant closures which will further erode the significant advantages it has to offer.
Closure of this plant would force businesses ranging from home-delivery of medicines to newspapers to turn to other, non-postal delivery options. Once these private firms leave the mail system, they won’t be coming back, and the Postal Service’s revenues will suffer yet another blow from which it might not recover. Such a collapse would jeopardize a mailing industry that employs nearly eight million people and generates almost $1 trillion in economic activity every year. Nearly 38,000 Mainers work in jobs related to the mailing industry, ranging from paper manufacturers to printers to catalog companies and newspapers.
Along with my Senate colleagues, Joe Lieberman (I/D-CT), Tom Carper (D-DE), and Scott Brown (R-MA), I am working to update the Postal Service’s business model and give it the tools it needs to survive and succeed. We are pushing bipartisan legislation that we hope will be considered by the Senate in the coming weeks to reflect the changing reality and help the Postal Service reduce operating costs and innovate to generate new revenue.
While everyone agrees that the Postal Service is in a financial crisis, there is plenty of misunderstanding about its finances. You may have heard the term “prefunding.” This means that the Postal Service is required to set aside money now for future retirees’ health benefits. These payments will pay the bills that come due tomorrow when today’s employees retire. This requirement helps keep important promises made to postal workers.
The current liability for future postal retirees’ health benefits is $90.3 billion. Despite these very real obligations, Congress has recognized the financial crunch facing the Postal Service and provided relief, so that the Postal Service has only paid $6.9 billion of the $16.4 billion originally required over the last few years toward reducing the enormous unfunded liability. Even with that relief, the Postal Service has still been in the red by billions of dollars each of the last three years and is getting by on credit provided by taxpayers. The Postal Service owes more than $13 billion to the U.S. Treasury and will max out its $15 billion borrowing authority sometime this summer.
Ignoring the bill for retirees’ health benefits would be a grave betrayal of postal workers, and could one day leave taxpayers with a significant financial obligation in the event that the Postal Service defaults. Rather than breaking those promises, our legislation provides real and immediate relief by stretching out the payment schedule, similar to refinancing a 15-year mortgage into a 30-year mortgage. In addition, the Postmaster General has proposed a new health care plan for employees and retirees that he maintains would eliminate the unfunded liability and thus the need for prefunding.
In contrast to the health benefits liability, the Postal Service has actually overpaid its pension obligations to the Federal Employee Retirement System by approximately $11 billion. Our bipartisan bill provides an immediate refund of the full $11 billion overpayment. The White House has proposed to return only half of this money now, keeping half for later.
Our bill would direct the Postmaster General to use some of the refunded overpayment to provide compassionate incentives to reduce the size of the postal workforce. Nearly 150,000 of the 525,000 postal workers are at or near retirement age. The goal is to encourage roughly 100,000 of them to retire by providing buyouts and other incentives. The Postal Service estimates this workforce reduction would save about $8 billion a year, without having to lay off a single worker.
In addition, our bill helps save the Postal Service, and the federal government, money by reforming the federal workers’ compensation program -- where 40 percent of all claimants are postal workers. It would bring federal benefits more in line with compensation levels offered under most states’ laws, and encourage more employees who are able to work to return to the workforce.
We also should give the Postal Service the ability to offer certain new products and services -- such as shipping beer and wine -- as its competitors FedEx and UPS do. This would let the Postal Service use its nationwide retail, transportation, and delivery network to bring in new revenue.
We are not crying “wolf.” If nothing is done, the Postal Service will not be able to make payroll as soon as next fall -- stopping mail delivery in its tracks and wreaking havoc on our already fragile economy. To prevent this outcome, we must pass a comprehensive reform bill.
If we don’t, the Postal Service will fail – destroying an American institution, enshrined in the Constitution. We cannot allow that to occur.