Obama Budget Calls for Postage Rate Hike, Other USPS Reforms

Paul Sakuma/AP file photo

President Obama outlined an overhaul to the U.S. Postal Service as part of his budget proposal Wednesday, calling for more flexibility to adjust to the agency’s “changing marketplace.”

The proposal includes a change to USPS’ retiree health benefits prefunding requirements and allows for a one-time postal rate increase, to be proposed by the agency’s board of governors. The plan would provide $30 billion in cash relief, savings and revenue by 2016, while saving the federal government $23 billion over the next 11 years, according to budget estimates.

Obama’s plan calls for the Postal Service to make payments into its retiree health benefits fund based on actuarial calculations, rather than the fixed amounts paid through 2016 currently required by law. It also would provide temporary relief to the agency by reducing payments into the funds by $10.6 billion over the next two years. These payments, in addition to the $11.1 billion USPS defaulted on in 2012, would be added to payments made over a 40-year amortization schedule, starting in 2017.

The White House would allow the USPS Board of Governors to institute “modest, one-time” rate increases for its market-dominant products, such as standard and first-class mail.

The plan includes a provision to allow the Postal Service to eliminate Saturday mail delivery. USPS announced Wednesday it has cancelled plans to change to a five-day schedule, after facing push back from Congress.

Obama included $11.5 billion in savings from returning a surplus in the Postal Service’s Federal Employees Retirement System fund. His plan also calls for the Office of Personnel Management to develop a USPS-specific calculation for future pension contributions that more accurately reflects the agency’s evolving workforce and pay structure. White House budgeters acknowledged the surplus estimate may be exaggerated; OPM has said the excess funds are closer to $2.6 billion.

Finally, Obama’s proposal would subject the Postal Service to PAYGO, which would require all additions to the federal deficit to be calculated upfront and prohibit borrowing for additional spending.

Obama’s reform plan is similar to one included in last year’s budget. Lawmakers failed to strike a deal to overhaul the agency last legislative session, but Obama vowed to continue to work with them to reach a compromise.

“The administration will work with the Congress and postal stakeholders to secure these necessary reforms,” the White House said.

Homeland Security and Governmental Affairs Committee Chairman Sen. Tom Carper, D-Del., plans to introduce a new reform bill soon.

“It is imperative that Congress and the administration come together around a set of meaningful reforms in the coming weeks to help the Postal Service survive and thrive in the long term and Chairman Carper plans to do what he can do to make that happen,” a committee aide told Government Executive. “He intends to have legislative language ready in the near future and remains hopeful that he will be able to move a bill in committee soon after.”

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.