Notes from House Hearing on USPS
From: Clint Burelson
Sent: Friday, May 3, 2019 5:22 PM
To: Clint Burelson
Subject: House Hearing on Financial Condition of the Postal Service
Sisters and Brothers,
I normally listen to postal hearings after the fact while working around the apartment. However, given contract negotiations, I went to the recent House hearing on the financial situation of the Postal Service with the idea that it would be good to see it in person and it would better than normal since there was not a lot of preparation time by the witnesses and Congress. I thought the hearing would therefore be less scripted and/or have some breaking news. It seems I was right.
Here are my notes and opinion of the top things that happened with some more information and details on the top items below. Hopefully all postal workers should be concerned enough about their job to listen to the hearing on the Postal Service. https://oversight.house.gov/legislation/hearings/the-financial-condition-of-the-postal-service
The Clerk Craft cannot give away our responsibility to properly understand and resist big picture changes to the Postal Service like we did with the 2006 PAEA. As it stands, the Clerk Craft could see significant changes in the upcoming USPS 10-year Strategic Plan and congressional postal reform.
Top Things to Know
*Under pressure from Republican Mark Meadows, the PMG indicated the Postal Service isplanning to go to 5-day delivery of mail and 7-day delivery of packages. This change in delivery frequency iscurrently part of the USPS forthcoming 10-year strategic plan. PMG Brennan notes that 96% of volume is mail and 4% is packages. Meadows asked why are you making packages the priority and mail secondary?
*Republican Mark Meadows, who took the lead position for the Republican, was also angry that the PMG did not provide the business plan (USPS Strategic Plan) in January as originally promised. Meadows appears to want to see the plan include some cuts in order for the republicans to agree to fix the prefunding issue (I’m guessing on this). However, Meadows objected to the reduction in delivery noting Issa had tried it before and failed. Meadows made it clear that the business plan should include the assumption that the prefunding issue would be fixed. Given Meadows and others stated strong opposition, it remains to be seen whether a change in delivery frequency will be in the final plan currently due around July 7. There are powerful players who do want a reduction in delivery frequency.
*Chris Edwards from the Cato Institute (Koch Brothers) was so over the top in his arguments for privatization (harming the republicans) that even Meadows had to set the record straight that they were not going to close post offices as suggested by Edwards. Representative Katie Hill from California had the best interaction with Edwards that almost had me cheering out loud. See below.
*Cato/Koch/Edwards acknowledged that if privatized, government (taxpayers) would pay for prefunding and other deficits totaling over 100 billion so private company does not pay for USPS liabilities when taking over. He also acknowledged that if privatized and a universal service obligation put on private company, the government (taxpayers) would pay a subsidy at end of year to private corporation and USPS (if still around) for universal service obligations. So, Cato acknowledges that a privatized USPS would require a bailout, while fixing the USPS prefunding and adjusting the price cap would not.
*The PMG admitted in the hearing that the Postal Service charges rural customers more for delivery of USPS competitive products (mostly packages and unpublished rates). It remains to be seen how much this information will spread and take off. This is one reason why shifting mail from market dominant to competitive products is not a good thing.
A Bit more on the Details and Other Notes
New USPS Business Plan (Strategic Plan)
Mark Meadows said that the PMG had promised him a 10-year business plan (USPS Strategic Plan) in January, but the PMG has not provided it at this time. He also expressed that the PMG was not communicating with him and therefore not respecting him as he would like. He took a very angry tone with the PMG.
The business plan is to assume the prefunding is taken care of. It does not appear to include assumptions that the postage price cap will be modified by the PRC (awaiting decision) or that Medicare integration will be accomplished. Those are two significant factors that postal legislation would address. It appears Meadows want some benefits for business (meaning cuts on labor or service) before passing postal reform.
To appease Meadows and his frustration with the PMG, Connolly said they never had a better partner on the other side of the aisle than Mr. Meadows. Cunningham agreed.
Chairperson Cunningham told the PMG that their business plan is expected to be required by at least July 7 or so. Although the last business plan was vaguehttps://about.usps.com/strategic-planning/five-year-strategic-plan-2017-2021.pdf, plans in the past had been very direct in communicating USPS plans. For example, in the 2012 business plan, which was after the huge APWU concessions in the 2010 CBA, the USPS was rather explicit in planning for 5 day delivery, consolidating facilities, closing post offices, lowering service standards, and cutting employees. Previous USPS Strategic Plans can be accessed here -https://about.usps.com/strategic-planning/archive.htm
The PMG indicated that 5 day delivery for mail and 7 day delivery for packages was currently in her plan, which further infuriated Meadows. He indicated that proposal is not viable. It had been tried by Darrel Issa and failed.
Bottom line – the USPS Strategic plan that will be coming out in the next few months will have a significant impact (positive or negative) on the Clerk Craft and the APWU. Currently, the PMG is planning to go to 5 day delivery of mail and 7 day delivery of packages.
Alexandria Ocasio-Cortez – We Created the Problem, We can Fix it
AOC came to the defense of the PMG in arguing that there was no way to come up with a plan when there is the heavy unreasonable burden of prefunding retiree health care. She brought out fact that USPS had a good business model prior to 2006 PAEA. She noted the problem was caused by Congress and Congress should fix it. AOC got the large mailer (Quadracci) to say he would be out of business if that burden was on is business. said they would be out of business if had the pre-funding. Finally, she noted that postal workers had access to good health care and talked about preserving the dignity of work for postal workers. I was definitely impressed.
Cato’s Chris Edwards was there as a witness promoting privatization
Wants to cut jobs, pay workers less, deliver less frequently, close post offices.
Cato Institute founded and funded by Koch brothers with funding also by FedEx and others
Acknowledged that if privatized, government (taxpayers) would pay for prefunding and other deficits totaling over 100 billion so private company does not pay for liabilities when taking over.
Acknowledged that if privatized and a universal service obligation put on private company, the government (taxpayers) would pay a subsidy at end of year to private corporation and USPS (if still around) for universal service obligations.
Katie Hill Addressing Chris Edwards of Cato Institute
Congresswoman Katie –
I’m just wondering, to put it simply, your proposal is literally to cut jobs, pay people less, and serve fewer people?
Cato’s Chris Edwards: Ah yes.
And right after that, Katie Hill says,
“You are director at a tax policy study at a think tank founded by the Koch family. It is a non-profit organization and on a page on your website that talks about tax deductible contributions that corporations can be making. The first quote under the section called “Praise for Cato” is from Frederick Smith, the chairman and CEO of the FedEx corporation. So just to clarify, FedEx is a major supporter of your organization and you are here advocating for the privatization of postal services. So essentially, FedEx is receiving a tax deduction to have someone come testify in front of congress to take measures that would directly benefit them. Is that correct?”
(I almost got up and cheered)
Postage Rates for Rural Customers
USPS, UPS, FedEx have published and unpublished rates
Private companies have different rates
USPS unpublished competitive rates can be different for rural areas
(The different rates for rural citizens are a problem with moving mail from market dominate category to competitive products, which has been the trend)
PMG said about 76% of retirees are in Medicare A and B
About 88,000 are not in A and B
I think they said they would have saved 50-55 billion over a 10 year period if they were in Medicare A and B
Department of Defense requires employees to use Medicare first
Rolando noted they would like an exception for certain people who would not be using some of the benefits (former employees living overseas for example)
Asked PMG about vehicles – USPS has 200,000 vehicles where average age is 27 years old
USPS buying next generation vehicle in 2021
Off the shelf vehicles to replace 50,000 vehicles in next two years.
Meadows said had suspicious bomb at his office – thought maybe the postal carrier was at risk – (his story was confusing) – Meadow’s wife was on hold for 1 hour and 43 minutes – made it to post office quicker than phone.
(Shows the need for staffing telephones at the call centers and at post offices because health and safety could be at risk)
Veterans are about 100,000 or 13-14% of workforce, which is a big drop from prior to the 2010 CBA.
(Personality test and low wages/benefits as non-career weeding them out)
Most Visible Mean Person of the Day
Republican Jody Hice, GA – Sitting next to Meadows – Given that the hearing was about the financial situation of the USPS, Hice spoke early on and in a surprisingly hostile and arrogant manner asked Rolando about carriers on leave (Hatch Act incidents). Rolando calmly explained USPS released them and onus was on Postal Service for the violations. Meadows and Edwards (in what he proposed) from Cato were also bad.
Rumors of PMG Brennan Leaving
After watching the hearing, I can see why there are rumors of replacing PMG Brennan from all sides. She follows a certain stiff protocol in her actions and answering that is no longer good enough for 2019. She should have explained the situation clearly and not need reps like Alexandria Ocasio-Cortez have to explain things.With her proposed decision to reduce delivery frequency, Brennan is not an effective advocate for a vibrant public Postal Service that treats employees with dignity and respect.
Feel free to forward,
With much Aloha and Solidarity,
Director, Clerk Division
American Postal Workers Union, AFL-CIO