Mailers: House Bears Some Blame for USPS Problems

The House Appropriations Committee criticized the U.S. Postal Service yesterday for failing to get its expenses under control, but mailers fired back that Congress is part of the problem.

The USPS “is being asked to take on extraordinary expenses that are part of a public service obligation, like the security of the mail, carrying post offices that are not profitable and delivering mail to far-reaching areas,” said Neal Denton, executive director of the Alliance of Nonprofit Mailers. “But Congress does not seem interested in helping the postal service meet these obligations and at the same time can't seem to bring itself to pass legislative reform that would help the service pay for these expenses themselves.”

Louis Mastria, spokesman at the Direct Marketing Association, said, “From our perspective, we are not concerned about pointing fingers at postal service finances. The fact that they are bad is not new news.

“What is news is that the committee pointed out that unless there is some sort of postal reform, the postal service is in dire straits. It's a bit of a coincidence that less than a month ago the Committee on Government Reform met to consider passing postal reform legislation, and that legislation was defeated by the UPS, a postal service competitor.”

Mastria was referring to charges that heavy lobbying by UPS contributed to the bill's defeat.

The Appropriations Committee's criticism was part of its report on proposed postal service appropriations for 2003 of $76.6 million, the same as last year. The bill was scheduled to be taken up by the full House late yesterday.

The committee said it remains concerned by the financial status of the USPS, with estimates projecting a deficit of $1.5 billion for the 2002 fiscal year. The committee “continues to believe that deficits of this magnitude are unacceptable,” the report said. “The USPS continues to suffer cash flow problems that have, in turn, prevented the funding of needed capital commitments. USPS is also approaching its statutory debt limit of $15 billion and faces growing pension liabilities.”

The committee acknowledged that some of the decline in mail volume is due to the struggling economy, the Sept. 11 terrorist attacks and last fall's anthrax attacks. But it said “that USPS financial difficulties cannot be attributed solely to recent events, nor can the problem be resolved solely by increasing postal rates or by federal appropriations. Instead, the committee believes that USPS organization and practices must undergo fundamental changes to adapt to the current business climate.”

The committee “supports ongoing efforts by the Committee on Government Reform and encourages USPS to work with Congress in the passage of legislation that will return USPS to financial sustainability.”

The postal service's controversial pay-for-performance program, which last year paid out more than $161 million in bonuses to postal executives, also was criticized. According to the report, the program “does not provide the necessary incentives to improve postal performance.”

The committee instructed postal officials to re-examine that program and report its decision to the panel by Dec. 31.

Of the funds provided for fiscal year 2003, the committee included $29 million as reimbursement for prior year shortfalls due to insufficient appropriations in previous years. The Appropriations Committee, for the second year in a row, also rejected the postal service's request to have the government pay off its debt of more than $900 million, the remaining balance due to the USPS under the Revenue Forgone Reform Act of 1993. The act granted the postal service 42 annual payments of $29 million to compensate for insufficient funds appropriated in previous years.

In March, postmaster general John E. Potter requested the entire remaining amount rather than the yearly payments, saying the money was needed now. The remaining balance represents past and future payments and adjustments to cover the postage for free mail for the blind and overseas voting material.

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