A bill before the House of Representatives if passed would cut 120,000 jobs, close thousands of post offices mostly in rural or inner city areas, and will ultimately lead to the privatization of the Post Office. The Republican bill cleared a House subcommittee with only Republican votes.
The U.S, Postal Service has a severe budget crisis and needs Congressional action to stay open. It will lose about $10 billion this year and will run out of cash Nov. 18 or sooner if the House does not pass the funding extension bill next week.
The GOP bill is designed to be both a short and long term “fix” for the Postal Service. It would provide temporary relief by cutting 120,000 jobs, closing 3,000 post offices and over half the mail processing centers, end next day first class mail delivery, end Saturday mail delivery, and phase out door to door mal deliver over 4 years.
The bill sets up a financial control board that could enable the Postal Service to be phased out and its functions turned over to private companies like Fed Ex and UPS. Both companies are huge contributors mostly to Republicans in Congress.
Congress created the problem; Democrats have alternate bill
House Democrats have alternate bills that would solve the Postal’s Service problem without the lay offs. One bill offered by Rep. Stephen Lynch (D-MA) would solve the problem by forcing the federal government to refund billions of dollars the Postal Service has been forced to over-pay the government for retirement funds. Lynch said the Postal Service could use he money to offer early retirement to thousands of workers. This would cut labor costs by attrition not lay offs.
The government owes the Postal Service approximately $72 billion in over charges according to the Inspector General of the Postal Service. A bill rammed through a lame duck session by the Republican Congress in December 2006 forces the Postal Service to pre-pay 75 years worth of retirement in a five year period.
One reason for this is that using billions of postal service retirement money allowed the government to hide how large the deficits actually were during the Bush years. Without this, the Postal Service would have a $1.5 billion dollar surplus not a $10 billion deficit.
Bill will severely hurt the economy particularly rural areas
The problem with the GOP bill is that on both a short term and a long term basis, it will hurt the national economy especially rural economies. First of all, at a time when un-employment is high, laying off 120,000 postal workers will make things worse. These 120,000 workers support at least 300,000 to 400,000 other jobs, so this layoff could cause a serious spike in unemployment.
Secondly, these lay offs will come disproportionately in rural and inner city areas. They will hit veterans, women, and minorities the hardest. These are three groups that have a higher unemployment rate than the population as a whole. The jobs that they support (restaurants, retail, and medical services) are also disproportionately jobs that are held by women and minorities.
Thirdly, the post offices targeted to close are mostly in rural areas which are struggling as it is. The mail sorting facilities are in urban areas that have high unemployment. Affluent suburban areas are not on the hit list for closings.
Eliminating next day delivery service and door to door delivery will hurt seniors and the disadvantaged hardest since they might not be able to walk or drive to alternate locations to pick up their mail. Many seniors rely on the mail for delivery of prescriptions.
If the Postal Service is privatized, it will be a much more serious hit to the economy. The Postal Service employs over 500,000. If it is carved up and sold off to UPS and Fed Ex, most of those jobs would be eliminated. That is what happens in nearly all mergers—they result in elimination of most of the jobs of the acquired business.
Presently, the Postal Service delivers 25% of the letters and packages for UPS and Feed Ex because it is not profitable for those for-profit companies to deliver to far reaching rural addresses. The Postal Service is required by law to deliver to every address in America, so it loses money to help the bottom line of these corporate giants. If the Postal Service is eliminated, rural service will most likely be eliminated because it is simply not profitable.
The bill will come up before the House Post Office Committee next week.
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