White House Backs Major Postal Overhaul

President Obama renewed his longstanding call to overhaul the U.S. Postal Service in his fiscal 2015 budget, saying the agency must be reformed to ensure its future viability.

Obama recommended restructuring the Postal Service’s requirement to prefund the health care of retirees. His plan would defer the fixed payments due in 2014, and part of the payments due in the two years after that. Those payments would then be restructured into a 40-year amortization schedule starting in 2017. The proposal would provide more than $9 billion in relief to USPS through 2016.

The most bipartisan postal legislation in Congress, sponsored by Sens. Tom Carper, D-Del., and Tom Coburn, R-Okla., takes a much more aggressive approach to addressing the retiree health care issue. Their plan would require eligible retirees to use Medicare as their primary health care provider. Like Obama’s plan, it too would amortize the scheduled fixed payments, as well as those the agency already has defaulted on. That bill has cleared committee and is awaiting a vote on the Senate floor. 

Obama also would allow the Postal Service to eliminate Saturday mail delivery immediately, whereas the Senate bill would delay the switch to five-day delivery until 2017. USPS officials have said the schedule change would save almost $2 billion annually.

The budget blueprint, similar to the Senate bill, would allow the Postal Service to shift from to-the-door delivery in favor of a more centralized system “where appropriate.” It also would ban small and rural post office closures and make permanent the controversial “exigent” rate increase currently set to expire in two years. The pricing issue proved a major sticking point in the Senate and several Democrats declined to support the bill in committee due to the sustained rate increase.  

The proposed budget would return to the USPS any surplus payments it has made to the Office of Personnel Management for its share of the Federal Employees Retirement System. The Postal Service has complained that a lack of a USPS-specific calculation for those costs has led to significant overpayment, which the White House estimated at $5 billion. The White House called on OPM to create a new postal formula for the payments moving forward.

All told, Obama’s proposals would provide USPS with $20 billion in cash relief and savings by 2016. The White House included similar postal reform measures in previous budgets, though the president tweaked his 2015 plan to mirror some of the developments in Congress.