The Rubber Meets The Road
 

With all the press coverage of the ongoing "negotiations" regarding increasing the debt ceiling, an otherwise very important news piece was relegated to about the fifth page of the New York Times business section. The article describes Congressional testimony by the Postmaster General of the U.S. saying that unless Congress grants the U.S.P.S. substantial funding each year going forward, mail delivery will have to be cut to three days a week within the next twenty years.

This news sets up what might be a very real decision which will be required of the members of Congress. Assume you are a member of Congress. I'll set up some conditions which very probably would precede a vote on a question of increased and ongoing funding of the U.S.P.S. At the end, I'll ask how you might vote.

Background:

• The major financial problem of the U.S.P.S. is the generous retirement and healthcare benefits granted to its employees over the years. Their retirement plans were the result of negotiations with the postal workers union. The number of employees who are projected to retire from the postal service in the next decade or so will result in crushing increases in costs to U.S.P.S.

• The U.S.P.S. is a government-owned corporation and as such cannot declare bankruptcy in an attempt to seek bankruptcy court protection in re-negotiating debts, including pension obligations. The debts of the U.S.P.S. are essentially obligations of the U.S. government.

• The U.S.P.S. lost over $8 billion in 2011. Those losses are expected to increase exponentially in future years as an increasing number of employees reach retirement age.

Situation Preceding A Vote For "Special Funding" For The U.S.P.S.

• The U.S.P.S. has asked for annual special funding by the Congress amounting to $100 billion for the 2013-2023 period.

• In 2012 the Congress passed "cut, cap and balance" legislation. Consequently, the only way the U.S.P.S. request can be funded is by immediate and concurrent cuts in the budgets of other government departments or programs.

• In the news coverage preceding the scheduled vote, economists and the media have noted that if mail delivery was reduced to only three days a week, the U.S. would be the only developed country in the world not to have daily mail delivery. There were a variety of analyses on how detrimental three-day per week mail delivery would be on our economy.

• In hearings held with the Postmaster General he has testified that if special funding is not approved, postal rates for first class mail would have to be doubled and the rates for business and advertising mail increased even further. These increases would be necessary to fund the pension and retiree healthcare benefits of U.S.P.S. workers.

On The Day Before The Vote:

• A lobbyist from the Direct Mail Marketing Association visits your office. He presents you with a well-researched report that projects that if the special funding bill is not passed, that over 200,000 workers will be laid off by companies relying on affordable direct mail to advertise and sell their products. His report projects that the loss in tax revenue from these companies and income taxes from the laid-off employees will be more than the $100 billion requested by the U.S.P.S. The lobbyist then offers a substantial campaign contribution in exchange for your favorable vote on the bill.

• On the afternoon preceding the vote, another lobbyist from the National Assocaition of Manufacturers visits your office. He presents you with another analysis of what might happen if the proposed bill is not passed. His report also projects that seversal hundred thousand Americans will lose their jobs if the bill is not passed. He offers an even more generous campaign contribution in exchange for your favorable vote on the bill.

On The Morning Of The Vote:

• Staffers from your party leadership report that finding "funding" from reductions in other government departments or programs will be very difficult. The only ones that seem to be available for cuts involve cuts to education programs, the funding for national infrastructure improvement projects, funds for controlling illegal immigration, and the funding for military retirees.

• Your party Whip e-mails you with instructions on how to vote, including the thinly-veiled threat that your failure to cooperate will be considered in the distribution of party-provided campaign funds and future committee assignments.

The Vote:

OK, given all of the above information, how do you vote on the question of providing $100 billion in additional funding for the U.S.P.S....

Yea or Nay??

The request for additional funding for the U.S.P.S. is absolutely certain to happen. The rest of my scenario is based on how we all know Washington really operates. I doubt that anyone would argue that not to be the case. So the question remains...how would you vote?

We do everything electronically. We go for our mail about every other day. It is all junk mail. Maybe time to deliver mail 3 days a week. Progress.

vk,

Your scenario is thoughtful and thorough. I don't believe it is entirely real and I can think of a number of things I would do before casting my vote. So instead of concentrating on the vote, I'll suggest you've brought up a classic example of the current situation with productivity and employment in America and how it must change.

The first respondent to your post is actually correct. The postal service operates with a woefully outdated and costly model. We all know we are floating a boat which is incredibly wasteful. I believe the US could go to a three or four day per week delivery schedule and balance the USPS budget. Postal workers would be laid off and perhaps workers in other businesses would lose their jobs as well. But we fail to count the additional jobs which would be created in the electronic messaging industry, and for-profit delivery services which will pick up any demand the slimmed-down USPS can't meet.

There are parallels in many other industries. Every example of increased productivity has it's cost, almost always a reduction in jobs. It is the fundamental explanation why unemployment still hovers around 10% when the economy is growing again. A huge number of jobs lost in the last five years will not be reappear, no matter how much the Republicans fight to protect the "job creators".

So what's a Congressman to do?

Support infrastructure rebuilding programs; education K-college; job training programs; accelerated energy research and planning; reduction of medicare benefits and social security colas for wealthy persons; elimination of about $1 trillion tax breaks, (that's only the patently absurd ones); making large cuts in the defense budget, taxing banks and securities companies according to the amount of cash, above the required reserve, which they refuse to lend; controlling illegal immigration; and a return to the basic tax code of the 1960's.

Some may holler that a few of the above actions will actually increase unemployment, (eg. defense). But I think these actions are some of the necessary changes 21st century America must make to really move toward economic stability. If we are able to do that, we will be much better prepared for all the other rapid changes which will occur, like it or not.

Thanks
 

I try to give my posts some thought. It's really a pleasure when someone responds in the same way. In fact, I could probably be convinced that the business model of the U.S.P.S. is irretrievably broken. But unfortunately the U.S. is on the hook for all the retirement pay and benefits that we "negotiated" over the years, even if not one more letter or card is delivered.

I like every one of your suggestions, particularly the one regarding investment in education (our future). I might tweak just one--as a retired banker I'd point out that you might consider how safely banks can lend. In an economy as fragile as ours, there are lots more business borrowers than there are business borrowers who can actually pay back their loans.

VK..

How do I vote? I vote "nay". And then I hit the airwaves explaining why.

Let me tell a story that I might have told here before.

There is more categorically wrong with the USPS than we know. And we don't have to go after the retirement accounts first, IMO. We have to correct the situation that I am about to relay first. THEN, if they can't afford the retirement funding we can look at that.

My ex-wife works for the USPS. She sorts mail in what was called a PMPC - Priority Mail Processing Center (has a new name now). She took the job one fall when she decided that making $15/hr for more physical work beat the $10+ she was making as a swing manager at McD's.

Years ago, when she first took the job, it was with Emery Worldwide Air Freight. They were operating under a contract with the USPS to handle Priority Mail. Her first holiday season there, they celebrated when, one night, they handled ONE MILLION pieces of mail.

Forward to the following spring. The USPS decides to take over the operation at the end of the contract. So now everyone becomes a USPS employee. (There's another story concerning the idiocy of the Postal Exam but I'll save that for a later time) Around April, the facility is celebrated at the most efficient PMPC in the entire USPS.

Prolems started. The Postal Unions got in there and working conditions deteriorated immediately. My ex refused to join the union. In NH, you're allowed to do that! The union did a lot of things, some of which would be felonies, over the next few months. Like posting her name (and others) on a "scab" board in 8-inch high letters, telling union members to tell these 'scabs' what they thought of them. This was basically a code word for vandalizing their cars overnight (she worked a graveyard shift). Also, one union steward threw mail at her (assault). This is one of the only things you can do at that job to get you immediately escorted out of the building. However, he said he had his unions buddies to back him up and swear that he was in the union break room at the time.

People were leaving this facility, even in a recession at good wages.

Come the holiday season, they had more people working there than the year before (especially with the seasons 'casuals' they added every year).

The union complained that it was too much to expect of the workers to process THREE HUNDRED THOUSAND pieces of mail in one night.

That's right. More people couldn't do ONE THIRD the work level of the previous year.

This is an area where, CLEARLY, privatization/contracting worked out.

(A big difference than in my area where defense contractors pad budgets like crazy and it's actually more efficient to hire the employees directly - I can't tell you how much the government saved when they hired me away from my defense contractor)

Icouldn't agree more
 

Saturday for sure, complete waste of time going to the box!

The Vote
 

A group of area businessmen and politicians approached me in 2009 and told me that if I run they would make it worth my while. I am now a 45 year old freshman congressman. I've given up my job where I was a partnership track attorney. The longer I last in Congress the more people I will meet, and the prospects of becoming a lobbyist after I am done increases with the number of reelections that I win. Women pursue me who wouldn't have looked at me back in college. No wonder the divorce rate among freshmen congressmen is 30 percent. I have the best medical care in the world

I don't like this job, I love it.
I will vote the way the whip tells me to.

Reality, what a concept.

Nice hypothetical situation VK.

vk,

You knew you'd get some "back atcha" responses and tonyafd's was pretty good!

But back to the stuff. Don't fret the pension costs. The folks who get them will spend them like good middle class folks doing their job putting every dollar back into the local and national economy. They don't have a Camans bank account or spend summer on the coast of France.

If we redesign the unproductive system, or completely privatize it, the government pension responsibilities will be drastically reduced or eliminated in a relatively short time. Lets worry less about what's been committed in the past and proved to be a less than great idea, and concentrate on designing replacement systems which work now and into the future. The USPS is one of scores, maybe hundreds of government agencies which should be redesigned and formatted for the future. A visionary Chief Executive would see this as the path to further budget savings. Perhaps we should form "America's Future Party" to demand it.

If you were a banker, you know of the incredible pecking order bonus system and the billions currently held out of investment as financial institutions seek their one goal, to get bigger. The bonus system insures blind loyalty to include amoral and illegal behavior, requiring that the government aggressively regulate unbridled greed. Yes, the reserve requirement is critical, but institutions are sitting on trillions needed to stimulate real economic growth. Instead of collecting reasonable interest on investment, they are making their money by dunning individuals and small businesses with every fee they can contrive to beat new banking regulations. It was devastating to give bankers bonuses for writing bad mortgages then, but even more so for mismanaging foreclosures and roadblocking millions of potentially good mortgages now.

Hey, how about that "America's Future Party". It isn't practical to think it could be a real third party, or that any third party will ever successfully become a majority force in national decision making. But it could be a lot more exciting than the one-dimensional Tea Party. And there could even be an endorsement for President in 2012. My suggestion would be Barrack Obama. I'm pretty sure he'll be the first incumbent President I've ever voted for.

Your vote is for the "man" who is leading this country to ruins? Surely you jest?