Bill might solve Postal Service’s woes

One of its stamps lasts forever, but the future of the U.S. Postal Service? Less clear.

The “Forever” stamp turns 10 years old in March. That’s about how long the post office has faced declining mail volume and a growing mountain of debt. Mail volume is now at a 29-year low, and for the past 10 years, the USPS recorded annual losses as high as $15.9 billion. Last year, it tallied a $5.6 billion loss.

The beleaguered service, its regulatory agency and members of Congress hope 2017 will mark a turning point.

The postal service operates under a 2006 law that governs what it can charge for stamps, how much it must pay into retiree health funds and how it operates its business. Some provisions of the law expired last year, including the provision that forced the postal service to pay a staggering $5.4 billion to $5.8 billion annually to the health fund.

Now the House is considering a bipartisan bill that would revamp that costly health plan and could lead to an increase in stamp prices — moves lawmakers say could help the USPS thrive.

Congress imposed the health fund requirement over concerns the postal service wouldn’t be able to pay its retirement obligations and that cost would fall to taxpayers, said Cornell professor R. Richard Geddes, an expert on the postal service.

The 2006 law also capped prices at the rate of inflation for services that make up 74 percent of revenue, like First Class mail, giving the USPS little flexibility to respond to changes in the marketplace.

The post office started missing all annual payments to its retiree health benefit fund in 2011 and maxed out its credit, hitting a $15 billion borrowing limit.

Rep. Jason Chaffetz, R-Utah, one of the new bill’s co-sponsors, said rising debt and missed payments were “a flashing red light” for legislators to step in. “We have to change that equation, or you’re going to see a need for a massive bailout,” he said.

Without reform, “This iconic American institution would continue its downward spiral to insolvency,” said Rep. Gerry Connolly, D-Va., another cosponsor.

With the easing of the 2006 law, the postal service now has less stringent requirements to pay into its retiree health program, but it still owes an additional $52 billion to the fund. The proposed legislation would further lessen the amount the USPS has to pay for these benefits by creating plans for postal employees within existing federal employee programs and integrating Medicare into its retiree programs.