White House veto threat looms over postal bill negotiations

Now that sweeping postal legislation has cleared the Senate, the bill's champions are gearing up for what will likely be a contentious conference.

Aides in both chambers say it will be relatively easy to reconcile House and Senate differences, but resolving issues dealing with the White House's looming veto threat is another matter.

The administration opposes language to transfer the agency's $27 billion military pensions obligation from the Postal Service to the Treasury and give the agency access to money slated for an escrow account.

During Senate consideration, Sens. Jim DeMint, R-S.C., and Jeff Sessions, R-Ala., expressed concerns about the bill's budgetary impact and placed holds on the measure.

Although those holds were lifted, Senate Majority Leader Bill Frist, R-Tenn., issued a statement when the bill cleared the chamber by unanimous consent last week, saying the Senate would not consider the conference report unless it met budget targets.

An aide for Rep. John McHugh, R-N.Y., the bill's House sponsor, said that language might not be binding.

Senate Homeland Security and Governmental Affairs Chairwoman Susan Collins, R-Maine, said she would keep DeMint and Sessions apprised of talks on the bill's budget impact in conference. She said she expected to see "vigorous debate."

Although aides expect a smooth conference once budgetary issues are resolved, the bills differ in other key areas.

The Senate bill creates a more prescriptive rate-setting structure than the House measure, McHugh's aide said.

He said McHugh considered similar language, but went with a more flexible structure to win the support of House Government Reform ranking member Henry Waxman, D-Calif.

The American Postal Workers Union prefers the worker's compensation provisions in the House measure. In a statement, the union said the Senate bill "would shift a significant portion of the cost of on-the-job injuries from the USPS to postal workers."

Lobbyists close to the negotiations say the Senate's approach will likely prevail on most differences. "I think by and large the Senate bill is the bill we're going to be focusing on," said one postal lobbyist.

He said many of the issues expected to cause clashes in conference were worked out during negotiations over the Senate legislation, including language allowing mailers to challenge rates set for individual products, such as first-class mail.

Postal lobbyists and aides predicted the White House would ultimately convince lawmakers to use at least part of the escrow account to pre-fund health benefits and expected the Postal Service to pick up the tab for part of its military pensions obligations.

The Postal Service has historically opposed the administration's position on those issues, but lobbyists and aides say the agency relinquished a good portion of its negotiating posture when it came out against the bill last month.

"I'm not sure how much credibility they will have going into the conference," McHugh's aide said.

The Senate has appointed its conferees; the House has not.

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