Federal Spending Goes Postal

Post Office reform bill backed by Senate Democrats would break terms of the 2011 Budget Control Act, Republican says

Columbia Tristar
April 24, 2012

The Senate is expected to vote Tuesday on postal reform legislation that one leading Republican argues would violate the terms of last year’s Budget Control Act.

Sen. Jeff Sessions (R., Ala.), ranking member on the Senate Budget Committee, raised a point of order on Monday against the 21st Century Postal Service Act. The bill aims to reform the U.S. Postal Service (USPS), which is teetering on the brink of insolvency.

The bill would cost taxpayers an additional $34 billion and exceed the spending limit established in the August 2011 deal to raise the debt ceiling, known as the Budget Control Act (BCA), Sessions argued.

"The spending and debt under the postal bill violates the debt limit agreement reached just last summer," Sessions said on the Senate floor Monday. "The Senate is already planning to spend more than we agreed."

Under Senate rules, any Senator may bring a point of order against a bill that proposes to spend more than the limit established in current law. Once a point of order is raised, 60 votes are required to overturn the order and proceed to passage.

Sessions blasted Democrats for what he said was their disingenuous reverence for the limits set in the BCA.

Earlier, Democratic Senators had criticized House Republicans for approving a budget that called for spending $19 billion less than the BCA cap for fiscal year 2013.

Sen. Patty Murray (D., Wash.) called the Republican plan to spend less money "outrageous and deeply disappointing."

"House Republicans are reneging on a deal their own speaker shook on less than eight months ago," she said in March. "They have shown that a deal with them isn’t worth the paper it’s printed on."

Senate Budget chairman Kent Conrad (D., N.D.), who has not passed a budget out of his committee in nearly three years, concurred.

"Our Republican friends now seem to be walking away from these limits, even though they agreed to them just several months ago," he said.

But Democrats do not hold similar reservations about spending more than the agreed amount, Sessions argued.

"Only in Washington does spending underneath a cap get you accused of breaking a deal, while spending more than an agreement means people just look the other way," he said. "Majority Leader [Harry Reid] and the Budget Committee chairman are proud of the Budget Control Act, but where are they when it comes to making sure even these modest savings are enforced?"

The bill in question would "save" money for the USPS (at taxpayer expense) by changing the agency’s retiree health benefits program. For instance, it would require the U.S. Treasury to return more than $11 billion in retirement contributions that the USPS is estimated to have overpaid to its own employee retirement system.

The bill would also restructure a provision in a 2006 postal reform that required the USPS to pre-fund future benefits for current employees. It would effectively allow the USPS to defer nearly $23 billion in such payments, spacing them out over a 40-year period.

The federal government would have to borrow an additional $34 billion in order to finance the bill because the Senate legislation does not include any spending cuts to offset the cost.

"If this new spending is necessary, then isn’t it worth cutting spending somewhere else to pay for it?" Sessions said. "Do we really have to break our spending agreement before the ink is dry on it? At a time when we’re facing next year our fourth straight deficit in excess of a trillion dollars?"

A competing bill in the Republican-controlled House of Representatives would end taxpayer subsidies to the USPS by consolidating operations and cutting costs. The nonpartisan Congressional Budget Office (CBO) estimated that the House bill would save $18.5 billion over the next decade. The Senate legislation, on the other hand, would cost taxpayers an additional $6.3 billion over the same period, according to the CBO.

Democrats such as Sen. Joe Manchin (D., W.V.) have bemoaned the idea of forcing the USPS to consolidate its operations, which could result in the closing of many rural offices that comprise "the very core of what makes this country great."

A House Republican aide told the Washington Free Beacon this was an invalid argument.

"USPS is in a financial crisis because Americans use less paper mail and they have not consolidated excess capacity," the aide wrote in an email. "The question is not ‘should facilities be closed to resolve the financial crisis?’ but rather, ‘should the taxpayer be forced to subsidize surplus capacity we are not willing to consolidate for political reasons?’"

The House Committee on Oversight and Government Reform calculates that as a result of continued losses at the USPS—the agency has said it will be completely broke by October 2012—federal taxpayers could be on the hook for more than $36.5 billion.