Bush Not Budging on CSRS

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The stalemate over funding pension benefits involving the military service of postal retirees showed no sign of abating yesterday as a Bush administration official reiterated its stance that the U.S. Postal Service must continue to pay.


Requiring the USPS to pay the military service portion of benefits to retirees under the Civil Service Retirement System is not unfair, said Dan Blair, acting director of the U.S. Office of Personnel Management. The postal service and its supporters have claimed that the USPS is being singled out to fund military service benefits on its own while other federal agencies use tax money.


Blair spoke at a news conference in Washington that was held, he said, at the request of journalists to explain the administration's position fully. His comments echoed those made April 14 at a postal reform hearing before the Senate Homeland Security and Government Affairs Committee.


"The postal service is different from the other agencies and departments," he said at the news conference. "It's required by law to fully fund its operations. Retirement funding is part of its operations."


However, Blair said he and the administration don't expect this disagreement to prevent a postal reform bill from passing this year. Asked about the possibility of compromise, Blair said only that the administration had been "consistent" and that the two sides had "a further way to go."


"I'll stick to my line -- the administration has been very consistent on this issue," he said.


In 2003, Congress passed the Postal CSRS Reform Act, which reduced the postal service's pension obligations by $78 billion, after it was discovered that the USPS had been overpaying. However, the act also requires the USPS to pay $27 billion for military service-related CSRS benefits.


Congressional supporters of postal reform -- including Sens. Susan Collins, R-ME, and Tom Carper, D-DE -- want the U.S. Treasury to pay the $27 billion out of tax dollars. In a joint statement, Collins, chairwoman of the Homeland Security and Government Affairs Committee, and Carper, a committee member, said the administration's proposal would lead to higher rates and essentially force mail users to subsidize the military.


"The postal service has reached a critical juncture," the senators said in the statement. "If we are to save and strengthen this vital service upon which so many Americans rely for communication and their livelihoods, the time to act is now."


Carper, Collins and other congressional postal reform supporters also are pushing the Bush administration on the requirement forcing the USPS to place $43 billion in savings from the correction to the CSRS overpayment into an escrow account. The administration wants all the money to go toward pre-funding future retiree benefits.


The USPS, mailers and postal reformers in Congress want some of the money to go toward mitigating rate increases. The issue could be another sticking point that delays reform.


Bob McLean, executive director of the Mailers Council, thinks reform is possible this year despite the disagreements. The administration should be mindful that its proposals would hurt the multibillion-dollar mailing industry, which supports thousands of jobs, he said.


Most of the military service benefits the administration wants the postal service to pay are related to military service that occurred prior to the USPS reorganization in the 1970s, McLean said. That was before the USPS became a self-sufficient organization.


Though disagreement exists with the administration over the escrow requirement, the two sides agree in principle, McLean said. Both want to have pre-funding of future retirement benefits, but the administration's proposed level of pre-funding exceeds that suggested for any other organization in the public or private sectors, he said.


"Where we agree is that pre-funding retirement benefits is a serious issue," McLean said.


Scott Hovanyetz covers telemarketing, postal news, production and printing and direct response TV marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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