Yesterday's nationwide rallies to save the US Postal Service represented a concerted effort on the part of the postal unions to garner support for HR 1351, the USPS Pension Obligation Recalculation and Restoration Act. If you attended any one of the rallies, you might think that the one magical fix needed to ease all of the USPS's woes is just to pass this one bill. In fact, the bill is a needed but tiny step toward fixing the Post Office's situation. It is a temporary fix for one of the worst provisions of the 2006Postal Accountability and Enhancement Act, which in fact dealt two ruinous blows to USPS finances.
The PAEA requires that the USPS transfer to the Treasury $5.5 billion per year for 10 years, ostensibly to fund future retiree health benefits for the next 75 years. This is the part of the PAEA that the postal unions are most concerned about, because it places an undue and even absurd burden on the USPS that is placed on no other government agency. In fact, it forces the USPS to provide for the retirement health benefits of people who aren't even born yet.
Another provision of the PAEA caps all postage rates for "market dominant" service at the rate of increase of the Consumer Price Index . "Market dominant" service is anything that the USPS has little or no competition for, such as first-class mail and bulk mail, including catalogs, periodicals, and advertising circulars. This requirement directly contradicts 39 USC 101(d), which states that "postal rates shall be established to apportion the costs of all postal operations to all users of the mail on a fair and equitable basis." In other words, the prices the Post Office charges should cover its overall expenses. But the provision in the PAEA actually prohibits that it do so. And, of course, the price of fuel has increased considerably faster than has the Consumer Price Index.