GOP lawmaker proposes overhaul of USPS

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This story has been updated.

A Republican lawmaker is proposing to reform the U.S. Postal Service just one day after the agency announced plans to suspend its pension contributions to cut costs.

Rep. Darrell Issa, R-Calif., on Thursday introduced legislation that would allow USPS to drop a delivery day and to adjust its labor costs in an effort to bring the agency back into the black. The Postal Service faces financial insolvency after losing $2.6 billion in the first half of fiscal 2011. Officials expect to be down $8 billion by the end of the year.

"Congress can't keep kicking the can down the road on out-of-control labor costs and excess infrastructure of USPS, and needs to implement reforms that aren't a multibillion-dollar taxpayer-funded bailout," Issa said in a statement. "This legislation encourages USPS to modernize its retail network and enables USPS to act more like a business."

In addition to delivery flexibility, Issa's legislation would mandate parity between health and life insurance premium percentages paid by postal employees and other federal workers, would ensure that total compensation at USPS is comparable to the private sector, and would require arbitrators to consider the agency's finances during labor negotiations.

The bill also would modify contracting policies and create two oversight bodies to manage changes at USPS. The Postal Service Financial Responsibility and Management Assistance Authority would be charged with cutting costs and bringing the agency back to fiscal health. The group would have an additional $10 billion in borrowing authority and the ability to renegotiate or modify union contracts. The Commission on Postal Reorganization would review the agency's infrastructure and recommend facility closures and consolidations to Congress.

The Postal Service said it looked forward to working with Issa on the legislation but strongly opposed the $10 billion borrowing provision and the creation of more bureaucracy.

"The bill appears to be based on the assumption that the Postal Service's challenges result from too little regulation," USPS said in a draft statement. "The opposite is true. Our financial instability is the result of dramatic loss in volumes, coupled with restrictions imposed by Congress that have prevented the Postal Service from adequately responding to those losses in a business-like fashion."

Postal officials have continued to request legislative changes to bring the agency back to financial health, such as the flexibility to cut Saturday delivery, adjust the size of the workforce and end an obligation to prefund retiree health benefits at $5.5 billion annually.

According to Issa, the bill's provisions, once fully in place, will save $6 billion annually.

There are several other postal reform bills currently under consideration. Rep. Stephen Lynch, D-Mass., in April introduced legislation that would reduce the agency's burden to fund its Civil Service Retirement System account and reverse years of overpayment; require the Office of Personnel Management to recalculate the Postal Service's CSRS obligations; and transfer any surplus funds from both CSRS and FERS back to the agency to pay for retiree health benefits and workers' compensation liabilities.

Issa's office disputes the Postal Service's claim it has overpaid its CSRS and FERS accounts.

Sen. Tom Carper, D-Del., is pushing a similar bill that also would grant USPS the authority to change its delivery schedule -- to drop a mail day, for instance -- increase the number of nonpostal products and services offered at its locations, and require arbitrators consider the agency's finances during labor negotiations. Proposed legislation from Sen. Susan Collins, R-Maine, also would fix USPS' pension overfunding and shift employees receiving workers' compensation to the appropriate retirement system.

USPS is self-funded and does not receive taxpayer dollars for operating expenses.

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