21st Century Postal Service Act -- Motion to Proceed

Floor Speech

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Ms. COLLINS. Mr. President, I am very pleased to join with the chairman of the Homeland Security Committee in urging all of our colleagues to cast a vote for cloture on the motion to proceed to this vitally important bill.

There are many different views on how to save the Postal Service, but there can be no doubt that the Postal Service is in crisis. We are at a critical juncture. Without passing legislation, the Postal Service will simply be unable to meet its payroll, perhaps as soon as this fall. We simply cannot allow that to happen.

The Postal Service is vital to our economy. It is the linchpin of a trillion-dollar mailing industry that employs nearly 8.7 million Americans in fields as diverse as printing, catalog companies, paper manufacturing, and newspaper and magazine publishers. These industries and the jobs they sustain are in jeopardy. If we fail to act, we will deliver a crippling blow to the Postal Service.

As Senator Lieberman has indicated, the Postal Service is in crisis. It has lost more than $13 billion just in the past 2 years. First-class mail volume has dropped by 23 percent over the past 5 years and 12 percent over the past 2 years. The Postal Service has a debt to the U.S. Treasury of $13 billion and will max out its credit limit of $15 billion this year.

We have to address this crisis. It would be irresponsible for Members to simply vote no on the motion to proceed if they have other ideas on how to address this crisis. I have urged a full and open and fair amendment process so that Members can bring forth their alternative plans for saving the Postal Service.

We simply cannot allow the Postal Service to fail. The stakes are too high for our economy and for Americans across this country.

Finally, I would remind my colleagues that the Postal Service's roots go back to our Constitution. This is an organization that is vital to our heritage and to our future. I urge a ``yes'' vote for the motion to proceed.

I yield back the remainder of the time on our side.

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Ms. COLLINS. Today, the Senate begins debate on reform legislation to save an American institution--the U.S. Postal Service. Our Founding Fathers recognized the importance of having a postal service. Article I, section 8 of the Constitution gives Congress the power to establish post offices. The Postal Service is also required by law to provide the entire population of the United States with adequate and efficient postal services at a fair and reasonable rate. This is called the universal mandate, and it ensures that the Postal Service cannot leave behind rural States and small towns.

The Postal Service, which has delivered news to generation after generation of Americans, is at great risk of not being able to make its payroll by this fall, according to the Postmaster General himself. My point is that this crisis is very real. The Postal Service is in debt to the U.S. Treasury by $13 billion. By the end of the year, it is likely to reach its statutory debt limit of $15 billion. Driving this crisis are many factors, not the least of which is that the volume of its first-class mail has fallen by 26 percent since 2006 and continues to decline as this chart shows. Reflecting that sharp drop in volume, revenue has plummeted from $72.8 billion in 2006 to $65.7 billion in 2011.

The Postal Service is part of our culture and economic fabric. Its failure would deliver a crushing blow to our economy at a time when the economy is already fragile, and it would be particularly harmful to people living and working in rural America. That means we must pass a bill. Doing nothing is only an option if we are willing to let the Postal Service fail. That is the choice we face. Failure would imperil a vital component of our economy, for the Postal Service is the linchpin of a $1 trillion mailing and mail-related industry that employs nearly 8.7 million Americans in fields as diverse as direct mail, printing, catalog companies, magazine and newspaper publishers, and paper manufacturing, to name just a few. In my State, nearly 38,000 Mainers work in jobs related to the mailing industry, including thousands at our pulp and paper mills, such as the one in Bucksport, ME, which manufactures the paper for Time magazine.

The rapid transition from traditional mail to electronic communication has come at an enormous cost to the Postal Service. The loss of so much mail, coupled with unsustainably high labor costs and exacerbated by the worst recession in decades, has left the Postal Service on the brink of collapse. Despite these headwinds, the Postmaster General is inexplicably forging ahead with plans to abandon current mail service standards in favor of reduced access, slower delivery times, and higher prices. His plans, I fear, will force many of the Postal Service's best customers to pursue delivery alternatives. I cannot think of another major business in serious financial trouble that would risk alienating its remaining customers by slashing service and raising prices. That is a recipe for disaster.

We recently learned the Postal Service's own preliminary analysis--submitted secretly to its regulators--reveals that the destructive service reduction plan to slow mail delivery and shut down postal plants will lead to a more than 9-percent decrease in first-class mail and a 7.7-percent reduction in all mail. The Postal Service itself made a preliminary estimate that the first year losses alone would be $5.2 billion. That would consume a major portion of any supposed savings intended by the Postal Service's plan.

Of course, now that these numbers have become public, the Postal Service is backpedaling rapidly and criticizing its own estimates, claiming the survey questions gave the respondents--postal customers--too much information about the drastic nature of the proposed service reductions before asking if these mailers would likely pull out of the system in response to these changes. If the Postal Service is aware of a legitimate methodological flaw in the study, then I would urge a public release of the study and an explanation for why it was submitted to the regulators if, in fact, it is so flawed.

The findings of the survey do not surprise me. They are consistent with what I am hearing from major postal customers. Mailers are all too aware of the destructive course postal leaders are pursuing. Once customers turn to communication options other than the mail system, they will not be coming back, and the Postal Service will be sucked further and further into a death spiral. Companies large and small that rely on the mail tell me if service continues to deteriorate, they will conduct more business online and encourage their customers to switch to online services for bill paying and other transactions.

Let me give an example from Bangor, ME, which illustrates this economic reality. A small business owner from the hometown in which I am living now sent me an e-mail he received from the company that processes his payroll. In the e-mail, the payroll company reminds the small business owner that the Postal Service intends to close a nearby processing center in Hampden, ME. The payroll firm recommends the best option for the small business would be to move to an electronic option outside the mail system. It also offered another option of using nonmail delivery or pickup services.

My point is this example reflects the realities of commerce. Degrade service or raise prices and we don't get more revenue, we get fewer customers and less revenue.

One bright light for me, with respect to the bill we are considering, is that we first should do no harm in the form of hastening the volume decline through ill-conceived policy changes. That is why the downsizing of the labor force and excess capacity the Postmaster General has stated are critical to saving the Postal Service must be carried out in a way that preserves service and does not inflict avoidable harm on dedicated postal workers.

There are naturally strong opinions on what should be done to save the Postal Service, and the bill and the substitute we are bringing to the floor is the product of careful consideration of those competing positions and priorities. As with any bipartisan compromise, this is not the bill each of us alone would have crafted, but we came together because our goal of saving the Postal Service is so important. Senator Lieberman, Senator Scott Brown, Senator Carper, and I consulted extensively with postal customers, both business and residential, with postal workers, with the Postmaster General, the GAO, the administration, and local communities deeply committed to preserving their postal facilities. We have deliberated together literally day after day, meeting after meeting on these complex issues.

The product of these deliberations--the 21st Century Postal Service Act--provides the right tools to the Postal Service, with the right checks and balances, to set it back on course.

First, let me give our colleagues some background. The first thing we did was analyze the Postal Service's costs. The fact is labor-related expenses are responsible for 80 percent of the Postal Service's costs. It is always painful to recognize that workforce costs are simply too high, especially when the employees are as dedicated as those working at the Postal Service. Avoiding reductions in these expenses is simply not an option as we hope to save as many jobs as possible, both within the Postal Service and within the broader mailing community. But we can do so in a compassionate, fair way.

Our bill would transfer to the Postal Service the nearly $11 billion it has overpaid into the Federal Employees Retirement System. We would direct the Postmaster General to use a portion of this money for retirement and separation incentives in order to reduce the size of the workforce compassionately. Let me emphasize--because there are misunderstandings on this point--the refund from FERS--the Federal Employees Retirement System--is not taxpayer money. It was contributed by the Postal Service using ratepayer dollars. It is an overpayment that was identified and confirmed by the actuaries at OPM and verified by the GAO.

In fact, GAO recently confirmed OPM's assessment that this figure now has risen to nearly $11 billion. We would encourage early separation and retirement incentives, capped at the current Federal limit of $25,000, combined with retirement incentives, such as giving an extra year of service credit if the postal worker is in the CSRS system--the old Civil Service Retirement System--or 2 years if the worker is in the FERS system. That would allow the Postmaster General, by his estimate, to compassionately reduce the workforce by about 100,000 people, a goal he has said in the past was necessary to achieve solvency.

Let me give our colleagues another important fact. More than one-third of all postal workers are already eligible for retirement, so these incentives should be effective and, as the chairman indicated, would save an estimated $8 billion a year.

The bipartisan legislation also includes a new requirement that arbitrators rendering binding decisions in labor disputes consider the financial condition of the Postal Service. I know it may defy belief that an arbitrator would not automatically consider the looming bankruptcy of the Postal Service when ruling on contract disputes, but some previous arbitrators have disregarded this factor in their decisions because the requirement to consider it was not explicitly listed in law. We would remedy this problem.

For the first time in 35 years, the bill also brings sorely needed commonsense reforms to the Federal workers' compensation program--not only at the Postal Service but across the Federal Government. But why is this particularly important to the Postal Service? Forty percent of workers who are on the long-term rolls for Federal workers' comp are postal workers. The Postal Service contributes about $1 billion a year in Federal comp costs.

This program, intended as assistance for injured workers to help them recover and return to work, currently has more than 10,000 postal and Federal employees age 70 or older, 2,000 of whom are postal employees. They receive a higher payment on workers' comp than they would under the standard retirement program, even though it is obvious at that age they would not be returning to work. In fact, 430 of these workers, Federal and postal, are over 90 years of age and 6 workers are 100 years old or older. These employees clearly are never going to return to work, and they should be switched to the normal retirement system.

It is unfair to employees who are working to the normal retirement age. It does not serve injured workers well. It also imposes an enormous financial burden on the Postal Service.

Our bill, I would note, in its workers' comp reforms, is very similar to the reforms proposed by the Obama administration. It would make benefit levels more comparable to what the majority of States are offering their workers. Let me describe just a few more of these issues.

First, for people past retirement age the median annual workers' compensation benefit is 26 percent higher than the median benefit received by Federal and postal workers who retire under the regular retirement system. Thirty-nine of the 50 States pay their workers' comp recipients two-thirds or less of their salary. Yet most Federal beneficiaries receive 75 percent of their salary, and that is tax free.

The program has also been shown to be highly vulnerable to fraud and abuse. That is not good for workers who are truly injured and need the help of this program. Let me mention two flaws. The program relies heavily on self-reported data, and it does not now require the use of independent physicians to assess the initial or continued eligibility of claimants. These vulnerabilities are not hypothetical, but they surely are costly.

The IG of the Department of Labor reports that the removal of a single fraudulent claim saves on average $300,000 to $500,000. When the IG reviewed over 10,000 claimant files a decade ago, there were irregularities in almost 75 percent of the cases. That resulted in benefits being reduced or ended for more than 500 claimants, saving almost $5 million a year in benefits that otherwise would be paid.

I note that the Obama administration has proposed many similar changes and also has recommended that they apply across the board so we do not have two different systems. We agree.

I want to move to another issue about which there has been a lot of discussion. The Postal Service blames some of its financial woes on a 2006 requirement to prefund its retiree health plan--a requirement the Postal Service endorsed at the time, I might add. The Postal Service currently owes $46.2 billion to cover the costs of the promises it has made to provide health care to future retirees. That unfunded liability is not going away. Nevertheless, the payments for retirement health benefits could be eased by coming up with a new amortization schedule that stretches out the payments. That is what we have done.

We have established a 40-year amortization schedule for the unfunded liability, and we would also reduce the requirement that the fund reach 100 percent of the liability. We have changed that to 80 percent, which is more consistent with what is done by the private sector.

I note this would reduce the annual payment by approximately $2 to $3 billion while still keeping promises to workers and avoiding a taxpayer bailout. Our bill gives authority to the Postal Service to save money through greater efficiency in its operations. We do so in a way that ensures that rural America will not be left behind. As the Presiding Officer is well aware, across America communities are up in arms over the Postal Service's plans to close about 3,200 post offices. It has become clear to me, in looking at the specifics, that common sense often is not applied in these decisions.

We do not mandate that every single post office remains open nor do we dictate that an arbitrary number should close. Instead, our bill requires the Postal Service to work with the Postal Regulatory Commission to establish for the first time clear standards for what constitutes reasonable access to postal services for communities and for customers. These would be developed by considering important factors, including distance, travel time, access to transportation, weather, and geography.

That means if the Postal Service tries to close a post office and that closure would result in this new service standard being violated, the community, under our bill, could appeal the closure to the Commission. If the Commission agrees, its binding decision would require the service to be preserved.

The Presiding Officer, Senator Tester, and Senator Moran from Kansas have worked very hard on the language in this provision. I thank them for that. What is more, the bill requires the Postmaster General to work with communities to offer cost-saving alternatives to full-time, full-service post offices in lieu of totally shuttering a beloved post office in the heart of town.

There are so many options the Postal Service could use. For example, moving the post office into a retail store, providing hours part time--say at 7 to 9 in the morning, when people are going to work, or 5 to 7 in the evening when they are coming home. We need to be creative. In recent months we have seen the Postal Service announce a number of Draconian measures, including the closing of hundreds of processing plants and implementing disastrous service standards changes, including a proposal to do away with overnight delivery, one of the real advantages the Postal Service has.

Our bill takes a better approach that helps the Postal Service rightsize its excess capacity while still maintaining what is one of its most valuable assets: its ability to deliver mail overnight to many areas.

Let me give another example. The Postal Service has proposed closing one of two processing plants in the State of Maine, the one that is located in Hampden, ME, in the central eastern part of our State. That means for northern Maine communities that are sending mail between those communities, the letter would have to take a roundtrip of more than 600 miles to be processed and returned. That makes no sense at all. It clearly will lead to a marked slowness in delivery, a deterioration in service, and, I would argue, probably to more costs. That plant could be downsized, but it should never be closed.

There are so many options that need to be pursued by the Postal Service in order to prevent service from deteriorating and delivery times from lengthening because, once again, that will drive more mail out of the system, and that is the last thing the Postal Service needs.

I would say that many postal employees have pointed out to me, as has the inspector general, that there are excessive bureaucratic costs at the Postal Service. For example, the Postal Service--even though it is insisting on closing all these facilities--already has over 67 million square feet of excess property that it has yet to dispose of. The bill requires the Postal Service to devise a plan to close and consolidate these administrative offices around the country and to start implementing that plan within the year.

We have also encouraged collocation of postal facilities with other Federal agencies, an idea that Senator Carper had to minimize excess capacity. We also authorized the Postal Service to convert delivery from front door to the curb where it is practical and cost effective. The Postal Service inspector general has estimated this could save as much as $4.5 billion a year.

Another controversial issue that we tackle in this bill is the Postmaster General's proposal to eliminate Saturday delivery. I have said repeatedly that I believe abandoning Saturday delivery will once again drive mail out of the system and do more harm than good. Our compromise prohibits eliminating Saturday delivery for at least 2 years so that cost-cutting reforms can be implemented. If at that point to achieve solvency the Postal Service needs to go to 5-day delivery, it can do so if it proves it has done everything else to cut its excessive costs. Again, reducing service should be the last resort, not the first option. Our hope is that the cost-cutting tools we provide the Postal Service in this bill will allow this service reduction to be avoided.

There is much more in this bill which we will discuss as the debate goes on. Today is just the first step in what I know is going to be a long journey. But the point is we must pass a postal reform bill. The House also has a bill that awaits floor consideration, and more compromises will have to be made along the way. But we cannot forget the urgency of this task.

I ask my colleagues to work with us during the upcoming floor debate, and I urge their support for final passage. The fact is it is up to us to preserve this vital American institution, the U.S. Postal Service.

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