Momentum builds for Postal Service relief

Congress might be prepared to offer the U.S. Postal Service a partial bailout by giving the mail service a $2 billion infusion from a special health benefits fund set aside for future retirees.

Under a 2006 law, the Postal Service is required to pay at least $5.4 billion annually into a special fund. The service also pays about $2 billion from its operating funds for its share of premiums for current retirees.

The agency, which is supposed to be self-supporting, is on track to lose more than $7 billion in the fiscal year. Mail volume for fiscal 2008 declined by 9.5 billion pieces and had declined by double that amount for this year as of May. The GAO in July added the Postal Service to its list of at-risk areas that require congressional attention.

Both a House bill that cleared the House Oversight and Government Reform Committee and a pending bill before the Senate will allow retirees to be paid out of that special fund, easing the financial burden by about $2 billion. But that relief is only temporary, covering three fiscal years.

Quick relief is a priority for lawmakers, before the Postal Service is due to put $5.4 billion into the special fund for future retirees on Oct. 1.

The measure should find smooth sailing through the House since the legislation sponsored by Rep. John McHugh, R-N.Y., has more than 390 co-sponsors. But it might not be that easy in the Senate.

The Senate Homeland Security and Governmental Affairs Committee approved a similar bill on July 30, but it contains an amendment that could be an obstacle. The rider by Sen. Tom Coburn, R-Okla., requires that the service's financial stability be taken into account in negotiations for union contracts. Unions called the amendment "mean-spirited" and said they could not back the bill with that amendment.

"Although arbitrators routinely consider the financial health of the Postal Service, if the amended bill is passed into law, it would have a profound effect on negotiations. When we begin our next round of contract talks in September 2010, discussion will be overshadowed by this new requirement," said William Burrus, president of the American Postal Workers Union.

The fight over that amendment will be played out on the Senate floor -- as early as next month if Senate Majority Leader Harry Reid, D-Nev., has his way -- or in a House-Senate conference.

In an effort to save money, the Postal Service has also proposed consolidating services and shuttering some of its 3,200 post offices across the country, recommendations that are pending review by the U.S. Postal Rate Commission. Postmaster General John Potter wants to cut mail service to five days a week, a proposal that would require Congress to change the law requiring six-day service.