Postal Updates

By Bill McAllister, Washington Correspondent

Alaska bypass mail program: creating division in the House

March 07, 2014 10:58 AM

Rep. Blake Farenthold, R-Texas, just wanted to make sure he understood the dispute over “bypass mail.”

That is the Alaska-only postal service that for 42 years has allowed sodas, chips and other goods to be shipped at greatly discounted rates to the remote areas of the vast state.

Does this mean, Farenthold asked, that when I buy a forever stamp to send a Valentine’s card to my wife, a portion of that money will go to subsidize the shipments of Diet Coke?

The answer, of course, was yes.

The Alaska mail program last year needed a $76.8 million subsidy to operate, a subsidy that postal rate payers must bear.

The United States Postal Service paid $108 million to airlines in Alaska for a program that produced only $32 million in postal revenues.

That is so costly that Rep. Darrell Issa, R-Calif., said it amounts to “every six years building a bridge to nowhere.”

That was a reference to a proposed Alaskan bridge that would have connected Ketchikan with its airport on a nearby island. Congress killed that project in 2005 after it was exposed as an example of wasteful spending.

With the Postal Service deeply in debt, it’s probably not surprising that House conservatives, like Farenthold and Issa, have attacked the Alaska mail service this year.

As chairman of the House Oversight Committee, which handles postal issues, Issa is complaining that the Alaska mail system is broken and needs more competition to lower the Postal Service’s operating costs.

To the dismay of many Alaskans, Issa is pushing changes to the bypass mail program as a key part of any House legislation to help the USPS out of its current fiscal crisis.

The Postal Service has not endorsed Issa’s efforts, having pledged to keep the bypass mail system intact.

As chairman of the committee, however, Issa is in a position to have a say on such issues.

Issa complained at a March 4 hearing that the program is costly enough to make it “cheaper to ship by air in Alaska than by ground in the rest of the U.S.”

He also charged that the supposed savings are not being passed along to the very Alaskans bypass mail is supposed to serve.

Alaska’s three-member congressional delegation roared back at Issa, claiming that the bypass mail system is not broken and doesn’t need fixing.

“Are we just looking for a problem?” asked Rep. Don Young, R-Alaska.

Sen. Mark Begich, D-Alaska, complained that the Senate Homeland Security Committee has passed a postal bill that keeps bypass mail as is. He asked why the House can’t just do the same.

But as Farenthold’s question and Issa’s persistent questions made clear, the House conservatives want some changes in the program now.

For years, Sen. Ted Stevens, R-Alaska, protected it. The senior GOP senator, who died in 2010, was a champion of the Postal Service, perhaps its greatest friend in the Senate.

At one hearing before his defeat in 2008, he told Postal Service officials not to be worried. As a member of the Appropriations Committee, Stevens assured them he could come up with millions of dollars to overcome any shortfall.

The Postal Service’s problems seems larger today than they did then.

Without Stevens to protect the program he created, conservatives puzzled why Alaska should get such a “legislative earmark,” in the words of Issa.

Bypass mail has suddenly surfaced as a major issue facing the Postal Service’s efforts for financial relief.

Issa repeatedly said at the hearing that he understands the need for such a program; he just wants to see more competition from more air carriers.

That would cut the costs of the program, he said.

Five carriers now are locked into the program, and new carriers “must overcome significant hurdles to participate,” the Postal Service’s inspector general told the March 5 hearing.

Issa expressed surprise that the Postal Service had never challenged the Department of Transportation’s formula for setting prices the carriers must be paid.

Tammy Whitcomb, a deputy inspector general for the USPS, suggested a number of ways the burden on rate payers could be slashed.

One idea is to tap Alaska’s $50 billion Permanent Fund, an idea that state officials have previously rejected.

Issa said he believed that another federal agency, such as the Transportation Department, might shoulder some of the costs as it does for small rural airports.

After all, a number of witnesses agreed the program seems more like the work of an air carrier than the Postal Service.

The shipments, after all, do bypass post offices.