CCAGW Urges Opposition to H.R. 2382 | Council For Citizens Against Government Waste

CCAGW Urges Opposition to H.R. 2382

Letters to Officials

February 4, 2020

U.S. House of Representatives
Washington, D.C. 20515

Dear Representative,

You will soon consider H.R. 2382, the USPS Fairness Act, introduced by Rep. Peter DeFazio (D-Ore.). On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I urge you to oppose this legislation.

From fiscal year (FY) 2007 through FY 2019, the United States Postal Service’s (USPS) net losses totaled $77 billion. In FY 2019 alone, the USPS ran an $8.8 billion deficit, a 125 percent increase compared to the $3.9 billion in FY 2018. According to the Government Accountability Office (GAO), total unfunded liabilities and debt for the USPS in FY 2018 stood at $143 billion, which is double its annual revenue. The USPS was included in GAO’s 2019 High Risk List report, which stated that the agency’s financial condition is “deteriorating and unsustainable.” Marking 13 years of consecutive losses, there is no doubt that the USPS faces a serious financial crisis.

H.R. 2382 would eliminate the mandate that the USPS fully pre-fund its retiree health and pension liabilities. When the Postal Accountability and Enhancement Act of 2006 established the pre-funding requirement, USPS Chief Financial Officer and Executive Vice President H. Glen Walker looked favorably on the pre-funding plan, stating that it “is a farsighted and responsible action that places the Postal Service in the vanguard of both the public and private sectors.” Now, the USPS sings a different tune and believes that the pre-funding requirement is its biggest challenge and an impediment to financial success. However, according to the Congressional Budget Office, the required payment was $4.6 billion in FY 2019. That would still leave the USPS with a deficit of $4.2 billion.

Removing the pre-funding requirement would set the USPS on track for a massive taxpayer bailout down the road. The USPS Retiree Health Benefits Funds (RHBF) is $70 billion in the hole and only 41 percent is funded. By removing the pre-funding safeguard, taxpayers would be on the hook for all of the RHBF’s unfunded liabilities.

The USPS’s woes are structural and long-term, its liabilities are massive, and the bills will have to be paid eventually. Eliminating the pre-funding requirement will not eliminate the liability itself, nor is it the holistic panacea that it is touted to be. Instead of eliminating the pre-funding provision, Congress should look at the USPS’s structural problems, highlighted by the Treasury Department’s Postal Task Force’s Report, United States Postal Service: A Sustainable Path Forward. The report recommends restructuring the benefit payments to be “reamortized with a new actuarial calculation based on the population of employees at or near retirement age;” refocusing on the agency’s core mission; prioritizing private-sector partnerships; realigning labor costs; reviewing the Universal Service Obligation; and consolidating underperforming facilities.

Distilling down the USPS’s dire situation to a single issue to solve the agency’s financial burdens to taxpayers and postal ratepayers is irresponsible and only addresses one side of the postal reform paradigm. H.R. 2382 will not salvage an agency whose business model is structurally dysfunctional and will likely put it in an even more untenable position for taxpayers. Again, I urge you to oppose this legislation. All votes on H.R. 2382 may be among those considered for CCAGW’s 2020 Congressional Ratings.


Tom Schatz
President, CCAGW

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