USPS Will Be In Default By Sept 30: Rep Issa offers viable pathway to fiscal sustainability

An update to yesterday's post: Postal Office Nearing Default, CouldStop Operating By Winter

Via PJ Tatler:

On June 23, 2011, Rep. Issa and Rep. Dennis Ross, R-Fla., Chairman of the Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy, introduced H.R. 2309, the Postal Reform Act of 2011, which would implement sweeping, structural reforms to the USPS in order to bring the institution back to fiscal solvency. Click here to get the facts on the Postal Reform Act of 2011.

The Postmaster General has announced that on September 30, 2011, he expects the United States Postal Service to default on payments to the U.S. taxpayer. Last year, USPS lost $8.5 billion and is projected to lose $9 billion in FY 2011. Find out what Postal Service default means to you here.

Visit SavingThePostalService.com for more information, including facts on the Issa-Ross Plan and the latest news on Postal Service reform.

The highlights of the reform effort that Democrats are sure to resist:

• No Taxpayer Bailouts: plan delivers an efficient, effective Postal Service without the thinly-veiled taxpayer bailout proposed by other bills.
• Savings through Flexible Delivery: the Postal Reform Act saves an estimated $3 billion a year by giving the Postal Service the option of eliminating Saturday delivery.
• Pay the Real Delivery Cost: phases out expensive loopholes and special deals that force the Postal Service to actually charge certain customers less than the true cost of delivery.
• Ending Special Treatment for Political Parties: our plan eliminates the cut-rate prices now benefiting national and state political committees of all stripes.
• A Team Approach: a team of postal experts will target and eliminate the expensive excess the Postal Service doesn't need. In just a year, the Commission on Postal Reorganization will focus on redundant post offices - saving at least $1 billion a year. Year two will focus on excess mail processing - saving at least $1 billion per year - and the 30% of management facilities without much to manage.
• Pitching in for Health & Life Insurance: mandates that postal workers pay at least the same health and life insurance premiums federal workers do.
• Constant Accountability: when the Postal Service fails to pay its bills for more than 30 days, an independent watchdog is empowered to cut costs much like a bankruptcy judge when corporation can’t pay its bills – this includes addressing expensive labor agreements. And we don't ask taxpayers to foot the bill: the watchdog can borrow up to $10 billion with postal facilities as collateral.
• New Revenue: even though the Postal Service is supposed to act like a private business, it can't make money from selling advertisements. The Issa-Ross Postal Reform Act allows USPS to sell advertising space on vehicles and facilities, as long as the ads respect the Postal Service's integrity.
• Fair Pay: right now, the law says "compensation" means only a postal worker's paycheck. Our plan eliminates this fuzzy math so that compensation means the same thing it does everywhere else: pay and benefits.
• Rightsize Non-Profit Discounts: today, non-profit organizations enjoy a 40% advertising discount from the Postal Service. The Postal Reform Act gradually reduces this discount by 5% a year until it reaches 10%.

It's too little, too late. Compensation needs to be brought in line. It's 80% of the costs and Issa is focusing too much on either 1) the other 20% of the costs, or 2) making the service more expensive. He should only have two bullet points - one to get healthcare costs in line and the second to get pension costs under control, preferably by eliminating those plans.

Postal Office Nearing Default, CouldStop Operating By Winter

After losing $2 Billion in Q1, the Post Office followed up by losing another $3.1 billion in Q2. What is the US Postal Service exactly? Per a prior post: US Postal Service: a public employee pension and healthcare management organization that delivers mail on the side with a large $33.5 billion deficit. The deficit for just this fiscal year is $8.5 billion (Good News: Post Office $8.5 Billion in deficit AFTER massive layoffs). And all this just so they can deliver daily spam to my house via snail mail. I send no letters (I take care of all that electronically). I get no bills (I take care of all that electronically). All I get - virtually 100% - is junk that I have to either shred or throw directly into the garbage bin. If the Post Office disappeared tomorrow, I wouldn't even notice and it would be a net positive for me as the only junk I would have to deal with is via email. And for delivering spam, the unionized USPS employees are getting a juicy 3 1/2% raise. All the while absolutely hemorrhaging taxpayer money. Which brings me to this recent news from the NYT via memeorandum: Postal Service Is Nearing Default as Losses Mount. The relevant part of the accompanying graphic is to the right:

And you read that right- they won't have money to make it into next month.

“Our situation is extremely serious,” the postmaster general, Patrick R. Donahoe, said in an interview. “If Congress doesn’t act, we will default.”

In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts.

The post office’s problems stem from one hard reality: it is being squeezed on both revenue and costs.

And make no mistake that it is the cost side that is the #1 problem:

...decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

USPS' days are thus numbered, and barely in the double digits at that:

Missing the $5.5 billion payment due on Sept. 30, intended to finance retirees’ future health care, won’t cause immediate disaster. But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.

I say let it tank. They already contract with UPS for delivering packages and bulk mail around the country, so what the heck do they actually do other than play middle man these days? More from The Heritage Foundation, American Thinker, Scared Monkeys, Hot Air, The Strata-Sphere, The Astute Bloggers, Ann Althouse, Wake up America, Outside the Beltway and The Lonely Conservative

UPDATE: Via memeorandum, Instapundit: Postal Service paying fewer workers to do nothing  

The U.S. Postal Service, expecting about $9 billion in losses this year amid slumping mail volume, is still paying thousands of its workers millions of dollars each year to do nothing.

...Long-standing labor agreements with two major postal unions prohibit the Postal Service from laying off or reassigning workers because of broken equipment or periods of low mail volume. Instead, idled employees show up for work, sit in a break room or cafeteria and do nothing.

Standby time totaled 170,666 hours in the first six months of 2011, costing the Postal Service $4.3 million, according to an audit by the Postal Service inspector general’s office. In 2009, 1.2 million hours were billed at a cost of $30.9 million.

 Like I stated above, it's a cost problem, not a revenue one.