Will Congress Say Yes to USPS Pension Change?

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The U.S. Postal Service, mailers and the Bush administration are confident Congress will approve legislation that could keep postal rates steady until 2006, but passage may be a tougher fight than first thought.


The legislation is needed for the postal service to lower its pension contributions after a review revealed it has almost fully funded future obligations for postal employees and retirees in the Civil Service Retirement System. As a result, it could lower its retirement contributions by $2.9 billion in fiscal year 2003 and $2.6 billion in FY '04.


The federal Office of Personnel Management prepared the bill, called the Postal Civil Service Retirement System Funding Reform Act of 2002. The USPS and the Office of Management and Budget have signed off on the bill, and it was brought to Capitol Hill last week.


"This bill has the support of the [Office of Management and Budget], of mailers, mailing associations and of the postal service," said Robert E. McLean, executive director of the Mailers Council, the nation's largest coalition of mailers. "What member of Congress is going to say, 'No, let's go ahead and raise rates'? ... I think we have a really good shot because it is really a win-win for everybody."


One problem, however, is that a decrease in postal contributions would be viewed on paper as less income to the federal budget and, therefore, technically would add to the budget deficit.


Essentially, "this savings generates a $3 billion shift in the unified budget," said Neal Denton, executive director of the Alliance of Nonprofit Mailers. "[Congress] is going to have to find $3 billion in costs somewhere -- and the folks up on the Hill aren't interested in doing that, especially with a brand new Congress coming in. Anyone who is dancing naked in the streets thinking that their rates will be frozen until 2006 hasn't spent any time on Capitol Hill. There is still a significant hurdle to be cleared here."


Robert Taub, chief of staff for Rep. John McHugh, R-NY, attended a briefing by the OPM, the Treasury Department and the USPS, and McHugh met with postmaster general John E. Potter.


"I think the bottom line is the one entity that has not been heard from or included in this process -- although they were the ones that started this process and suggested that OPM should begin this analysis -- is the General Accounting Office," Taub said. "McHugh has requested that GAO evaluate this analysis and the legislation and let Congress know what they think."


Sen. Susan M. Collins, R-ME, also met with Potter last week.


"It sounds like excellent news for both the postal service and its workers. As with any legislation, she is still going to examine it," said a spokeswoman for Collins. "But, assuming that everything she has heard is accurate, she plans to take it up quickly."


USPS officials as well as executives from the Mailers Council, Direct Marketing Association and Alliance of Nonprofit Mailers began meeting last week with the Senate Committee of Governmental Affairs and the House Committee on Government Reform.


Time is critical since the postal service has said that it will begin preparing for a rate filing in January and file a rate case with the Postal Rate Commission if the law is not changed by April. Without a change in the law, Potter has said the next rate increase would come at some point in 2004.


"If we file a rate case, the Board of Governors must approve the filing and the board can always withdraw it, but I don't think anybody wants to get that far," said Ralph Moden, newly named senior vice president of government affairs at the USPS.


McLean agreed, saying that negotiating a rate case while also trying to get the pension change passed in Congress would drain his association's resources.


Meanwhile, mailers don't think the issue will be taken up until after the new congressional session begins in January.


"If it did get passed during a lame-duck session, it will be because the White House also applied some pressure to the folks up on Capitol Hill to get this done now," Denton said.


Despite backing from the White House, McLean said, the mailing community will have to push for the bill since it requires some explanation.


"It is an issue that is a bit confusing, unusual and many people feel that it is too good to be true," he said. "Educating members and staffers is our primary task now and throughout the first of the year."


Insiders also worry that lawmakers are uninterested in the legislation, especially since they have heard that USPS rates will be steady until 2004 and competitors such as United Parcel Service raise rates every year.


Also, if the issue spills into the 108th Congress, mailers will start at square one since many committee members are leaving the committees that oversee the postal service.


Though assignments for the next session are not yet made, Rep. Dan Burton, R-IN, chairman of the House Committee on Government Reform, most likely will step down from his post because of term limit rules. Sen. Joseph Lieberman, D-CT, of the Senate Committee on Governmental Affairs, and Sen. Daniel Akaka, D-HI, of the subcommittee that oversees postal issues, will relinquish their chairs.


Sen. Thad Cochran, R-MS, is the ranking member of the postal subcommittee on the Senate Committee on Governmental Affairs. Collins also sits on the postal subcommittee and probably will become chairwoman of the Government Affairs Committee.


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