Pondering a USPS turnaround

By Bill McAllister, Washington Correspondent

Fredric Rolando, president of the National Association of Letter Carriers, is puzzled.

How, he asks, can any organization that is forecasting a $1.1 billion operating profit in the current year be on the edge of bankruptcy?

The answer, he and other postal labor leaders are saying, is this could happen only if you are the United States Postal Service.

Make no mistake, Rolando is saying, the Postal Service has recorded large losses, thanks in part to the decline of first-class mail.

But now the federal agency that is older than the Constitution is making a remarkable recovery, one that Rolando says the mail service should be proclaiming with the all of the enthusiasm of its flat-rate boxes television ads.

This is no time to be making still more cuts to the mail system, Rolando is saying.

Why then is the USPS failing to tout the news of its own remarkable financial turnaround?

Rolando and other postal labor leaders say that Postmaster General Patrick Donahoe has become so engaged in his battle to win major — and very unpopular — changes from Congress that he dares not back down from his cries for help.

For years, Postal Service officials have sought Congressional approval to end Saturday mail deliveries. Donahoe wants to continue slimming down USPS costs, saying it remains straddled with $20 billion a year in excessive costs.

Despite all his cajoling, Don­ahoe has found few supporters in Congress.

For one thing, some lawmakers are refusing to accept the postmaster general’s claim that his restructuring and closing processing plants has not slowed mail deliveries.

Montana Sen. Jon Tester, a Democrat, has told Donahoe he does not accept his claims that mail is moving just as fast as it did before the closings.

USPS officials say that the Postal Service remains in serious financial trouble despite its showing of a $765 million operating profit in the first quarter of the current year.

Its cash reserves are perilously low, and its actual bottom line will show nearly $5 billion in losses after all its bills are tallied.

Its balance sheet is also a sea of red ink, says spokeswoman Patricia Licata.

“Our liabilities exceed our assets by $40 billion,” she told Linn’s.

Postal Service officials say that the USPS still needs to eliminate Saturday deliveries and make permanent the recently approved 4.3 percent emergency increase (with its 49¢ stamp) that is supposed to last only two years.

Sen. Bernie Sanders, the Vermont independent, argued in The Wall Street Journal on March 4 that “the [postal] crisis is manufactured.”

It was, Sanders said, created by the Bush administration’s insistence in 2006 that any postal legislation had to carry a provision that would force the USPS to prefund over a 10-year period the costs of health benefits for future Postal Service retirees for the next 75 years.

Without this burden, the USPS would have made $623 million in fiscal 2013 and would show a $1 billion profit this year, Sanders said.

But when those losses are included, “the antigovernment crowd” will continue to proclaim that the Postal Service “is going bankrupt,” Sanders said.

The Obama administration, which previously endorsed the Donahoe plan to end Saturday deliveries, has agreed in its latest proposed federal budget that the 49¢ first-class stamp should become permanent.

The Obama budget also would allow those $5.5 billion-a-year in retiree health benefit payments to be stretched out over a 40-year period beginning in 2017 instead of sticking to the old Bush timetable.

Rolando says the White House has got it wrong.

“The Office of Management and Budget remains under the spell of a misguided postmaster general, a leader who seems committed to sticking to an obsolete austerity plan devised in very different circumstances,” Rolando said.

Postal unions want Congress to shelve the Donahoe plan for further cuts. Keep Saturday deliveries and stretch out those retiree payments, they say. The USPS is coming back, they argue.