House Committee Gives Postal Service a Break

A House panel approved legislation today that would provide some relief to the ailing U.S. Postal Service, with a bill that would allow the agency to pay for the health benefits of current retirees out of its Retiree Health Benefit Fund instead of its operating budget.

The Postal Service estimates the measure would save the agency between $2 billion and $2.6 billion a year for each of three years. Originally, the measure was designed to provide eight years of relief, but Rep. Stephen F. Lynch, chairman of the House subcommittee on the federal workforce, postal service, and the District of Columbia, said Congress probably would not approve that because the longer term would be too costly to the Treasury.

The postal service is in dire straights because mail volume has been dropping sharply. The number of pieces delivered in May was down about 30 percent compared with May 2008, according to Lynch.

“The postal service lost $2.2 billion in the first two quarters of fiscal year 2009 and lost another $400 million in April 2009, an almost 15 percent higher loss than in April 2008,” Lynch (D-Mass.) told the panel before a unanimous voice vote on the legislation.

The measure has 335 co-sponsors and approval by the full Committee on Oversight and Government Reform, and the House and the Senate is expected.

Lynch said quick action is a must. Without the relief provided in the bill, the Postal Service would have to choose between meeting payroll and making mandated payments to the retiree fund.

“They could not do both without this bill,” he said in an interview.

Yet, the bill only provides partial relief to a big problem.

“This allows the post office to fight another day,” Lynch said. “But there are some structural problems that are remaining.”

In addition to changing the way the Postal Service funds retiree health benefits, postal officials also want congressional approval to cut delivery from six days to five. That is a much more controversial issue, and it was not the subject of discussion at today’s meeting.

By Marcia Davis  |  June 24, 2009; 1:08 PM ET  | Category:  Postal Service
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