Since 1971, the U.S. Postal Service (USPS) has been a self-supporting wholly governmental entity that was designed to cover its operating expenses with revenues generated through the sales of postage and related products. However, the sharp decline in first class mail since 2006 and the loss of the associated revenues coupled with high operating expenses has left the USPS in a difficult financial position. In the first three quarters of this year, the USPS has run a deficit of $5.7 billion and is not expected to be able to make the mandatory $5.5 billion Retiree Health Benefits Fund payment by November 18, 2011. With declining revenues and increased expenses, it is imperative that Congress take action to address and reform the structural issues threatening to bankrupt this important agency.

At this point in the 112^th Congress, a variety of Committee hearings, have resulted in a number of bills designed to address the financial problems facing the USPS.  Representative Darrell Issa, Chairman of the Oversight and Government Reform Committee, which is charged with oversight of the USPS, introduced H.R. 2309, Postal Reform Act of 2011, on June 23, 2011. The bill would create the Postal Service Financial Responsibility and Management Assistance Authority, which would have a broad mandate to restructure the Postal Service and reduce costs in order to bring the institution back to fiscal solvency when the Postal Service goes into default to the Federal government. The Authority will be disbanded once the United States Postal Service (USPS) meets several benchmarks that ensure financial health.

The Postal Reform Act of 2011 also empanels a separate body, the Commission on Postal Reorganization (CPR), to review postal infrastructure and recommend closures and consolidations to Congress that will ultimately save the Postal at least $2 billion a year. If Congress does not reject the CPR’s recommendations, they become law. The legislation will also remove several legal hurdles that the USPS currently faces when it comes to reducing costs, including allowing financially unsustainable retail postal facilities to be closed.  

H.R. 1351, the United States Postal Service Pension Obligation Recalculation and Restoration Act of 2011, was introduced by Representative Stephen Lynch on April 4, 2011. This bill would amend the method of calculating the amount of any Postal surplus or supplemental liability under the Civil Service Retirement System. Many supporters of this bill argue that the USPS has overpaid into the Civil Service Retirement Fund; however, this claim is based on a hypothetical formula for determining the share of retiree benefits that was never actually agreed to. The USPS claims that, if this formula had been used instead of the current formula which they agreed to in 1974, the US Treasury would owe $50-75 billion to the USPS due to overpayments made toward retiree benefits. Since this formula was never agreed to and the USPS has operated under a different formula since 1974, there was no overpayment made by the USPS.  

The USPS is a proud institution that provides vital services and employs thousands of hard-working Americans. Any efforts to reform the USPS must ensure solvency for the agency and the benefits of its retirees, and must modernize its structure in order to adapt to 21^st century communications practices.