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April 25, 2012

Johanns: Postal Service Bill Short on Meaningful Reform

WASHINGTON – Sen. Mike Johanns (R-Neb.) today voted against final passage of legislation restricting the U.S. Postal Service’s ability to improve its long-term cost structure.

“I hoped this bill would be improved through amendments, but at the end of the day it is still a government-centered solution that, like most government fixes, won’t work,” Johanns said. “We have to be honest about the dire financial situation the U.S. Postal Service is facing and this bill doesn’t do that. It continues the troubling trend of kicking the can down the road, leaves taxpayers shouldering the burden, and ties the hands of the USPS – all while trying to convince everyone it's a solution.

“The Postal Service needs meaningful reform to continue its mission, and this legislation simply doesn’t do that."

The legislation passed by a vote of 62-37.

The bill requires the transfer of $11 billion from the federal retirement system to keep the USPS from going bankrupt. This is not a long-term solution considering the Postal Service has already lost about $3.5 billion during the first three months of this year. Without changes, the Postal Service estimates their losses will exceed $20 billion a year starting in 2016. This amounts to almost $55 million in daily losses.

The legislation also increases costs to taxpayers and encourages postal employees to shift their insurance to Medicare, further straining an already unsustainable program.

To put the USPS’s financial problems into context, a recent Government Accountability Office report finds that first-class mail has declined by almost 30 percent over the last decade. The USPS has lost about $25 billion in the last five fiscal years. During this time, the Postal Service has been kept afloat by a $15 billion credit line from taxpayers.

Prior to 1971, postal services were provided through a federal agency called the U.S. Post Office Department, which received annual funding through Congress. Since 1971, the USPS has functioned as a self-supporting government agency. That means for more than four decades, the Postal Service has operated like an independent business using revenues generated through sales of postage and other services – not Congressional appropriations – to fund its operations. For the USPS to continue operating as an independent agency, it needs the freedom to improve its long-term cost structure and make necessary operational changes. Yet the bill passed by the Senate does very little to allow that, instead adding red tape and bureaucracy.

Johanns voted for several amendments giving the Postal Service more flexibility to meet its financial obligations and ensuring taxpayers will not have to bailout the USPS in the future, while providing transparency for communities with proposed service changes. Unfortunately, those amendments failed.

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