Treasury secretary: Postal Service should pay military retirees

Treasury Secretary Snow said Tuesday the Bush administration does not support any postal overhaul effort that would shift funding responsibilities for military retirement benefits to the Treasury.

In a joint hearing of the House Government Reform and Senate Governmental Affairs committees, Snow said postal overhaul is "overdue -- and critically important."

But he said the Postal Service should pay for the military retirement benefits of its employees.

"The administration opposes any effort to shift the estimated $27 billion of military costs back to the taxpayer," Snow said, calling the retirement payment, which was shifted to the Postal Service last year, "a fair and equitable allocation of costs."

Although Snow did not say the administration would necessarily veto a bill that included the military pension shift, his opposition could create a sticking point between Congress and the White House as lawmakers craft a postal bill over the next several weeks.

Several key lawmakers active on postal change -- including Senate Governmental Affairs Committee Chairwoman Susan Collins, R-Maine, Sen. Thomas Carper, D-Del., House Government Reform Committee Chairman Tom Davis, R-Va., and Rep. John McHugh, R-N.Y., who chairs the House Reform special panel on postal overhaul -- have said transferring the military payment back to the Treasury is an integral part of any legislation.

If the Postal Service is required to fund those payments, they say, it will be forced to raise rates sooner, exactly what overhaul legislation aims to prevent.

Collins said Tuesday returning the military retirement responsibility to the Treasury is one of "two issues that have united every witness that's appeared before the committee" in seven postal hearings.

The other issue is releasing $3 billion currently in escrow back to the Postal Service. Snow said the administration supports that effort "in principle," but only if abolishing the escrow has no effect on the deficit. For accounting purposes, Snow said, if that money were released, it would appear as a deficit, which the administration opposes.

"The administration's a pretty lonely voice on those two issues," Collins said.

Davis said he would work with the administration to reach an agreement on the escrow account. However, he said, "It seems much simpler, cleaner and more honest to just release the money and call it what it is -- the Postal Service's money."

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