Health Costs and Other Postal Fairy Tales

It’s nearly impossible to open a newspaper’s business section these days without reading about the financial troubles at General Motors. There are many reasons for the automaker’s problems, including product design and quality. However, at every opportunity GM talks about the need to do something about its healthcare costs. It’s estimated that more than $2,000 in healthcare costs for current and retired employees are built into every GM car. GM has made clear that restraining healthcare costs will be at the top of its next United Auto Workers contract negotiations.

Meanwhile, the U.S. Postal Service spends more than $6 billion annually, more than GM, for healthcare. A simple calculation shows that 3 cents of the price of every First-Class stamp goes to pay healthcare costs. And, like most companies, postal healthcare costs are rising around 10 percent annually. But, unlike the automobile industry, legislation currently in place does not permit the USPS to negotiate any of the terms of the healthcare coverage it provides. Yet, despite its obvious importance, none of the reform bills in Congress give the postal service the ability to negotiate, with its unions, changes to healthcare coverage. Congress apparently believes the USPS has some magical means to address healthcare costs.

Have you ever wondered why Social Security, Medicare and Medicaid cost issues are put off to the future? Congress often seems unable or unwilling to address difficult issues, and clearly it is ducking this issue of letting the USPS negotiate its own healthcare costs. Someone’s living in a fairy tale.

Dan Blair, the administration’s acting director of the Office of Personnel Management, recently told a second fairy tale. Blair heretofore had seemed a straightforward and common sense guy. I wonder how hard it was for him to explain to Congress, with a straight face, why it was perfectly logical for the USPS to be required to pay pension obligations earned when employees previously served in the military. I wonder what a private sector company would do if it were required to pay the pension obligations of its employees that were earned at a previous employer? This doesn’t pass the smell test.

This issue is critical, amounting to tens of billions of dollars in cost. Congress must decide whether to approve a bill that transfers responsibility for the military pension obligations of postal employees back to the Treasury Department, where it clearly belongs, against the wishes of the administration.

It’s an interesting situation. Should Congress do what is right, and risk a presidential veto of wide-ranging postal reform legislation? Given that President Bush has never vetoed a bill of any kind, it would seem to be a long shot to suggest that he might veto this one. If there were a veto, the administration might have a tough time explaining why the postal service should pay these military pensions. Both sides have a stake in devising a solution that is fair to the USPS. Or does the Bush administration believe that a fairy tale explanation might work?

Let’s shift to an issue that was raised by the Presidential Commission on the Postal Service and has gathered dust since. That is, what should be the responsibilities of the Postal Inspection Service? This issue came to mind recently as I read an article in The Wall Street Journal last month.

The story concerned allegations of multimillion-dollar mail and wire fraud involving trucking contracts that were rigged. The scheme allegedly involved an executive of S.C. Johnson & Sons, a consumer products company. What caught my attention was that the investigators were the U.S. attorney’s office in Milwaukee and postal inspectors.

I have never understood why the USPS should be spending postal funds on investigations that have very little to do with “the mails.” The victim in this case was S.C. Johnson, not the postal service.

On the other hand, a problem that the Inspection Service should be, and is, working on is counterfeit postal money orders. The USPS sold 188 million money orders in 2004. Though the number has been declining, they still brought $230 million in fees. Money orders have become a popular way for paying for items bought over the Internet. They increasingly have become subject to forgery. This is the kind of problem, one with a direct USPS impact, that the Inspection Service needs to focus on. The postal service needs to find a way, probably by working with the Justice Department and Congress, to get the Inspection Service to stop spending money on investigations that do not affect the USPS.

We’ve had enough of the fairy tales. Piling expenses on the postal service that belong to the government at large must stop. The USPS has enough to do without being asked to help balance the federal budget.

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