The true cost for restoring service standards and why the Postal Service can afford it

(Photo credit: Dayton Ohio Processing and Distribution Facility, partially consolidated)

A couple of weeks ago, the Congressional Budget Office (CBO) announced that it would cost the Postal Service $1 billion to comply with an amendment requiring the Postal Service to revert to the service standards for First Class mail and periodicals that were in effect on July 1, 2012. The amendment was proposed by Representative Chaka Fattah and approved by the House Committee on Appropriations as part of the financial services appropriations bill.

The CBO’s report generated headlines like “CBO: USPS can’t afford House committee provision to reopen mail facilities” (Fierce Government) and “USPS Can’t Afford to Reopen Facilities and Add Employees Like Congress Wants” (Government Executive).

The Coalition for a 21st Century Postal Service (C21), which represents many of the stakeholders in the mailing industry, quickly weighed in to oppose the amendment. In a letter to Senators Cochran and Mikulski, the chair and vice chair of the Senate’s Committee on Appropriations, C21 wrote this:

“In order to restore July 1, 2012 service, the Postal Service would have no choice but to reopen a large number of facilities it has closed and/or sold in the past three years, reverse reconfigured transportation routes, and rehire, or extend the hours of existing, employees. The Congressional Budget Office concluded in a letter to Senator Tom Carper dated July 13 that the amendment would cost the Postal Service in excess of one billion dollars in the first year. (Postal Service estimates are closer to $2 billion in the first year, and $1.5 billion in each of the succeeding four.)”

Unfortunately, the CBO, C21, and the media reports all seem to have misunderstood the amendment, and they are obfuscating the main issue — how much would it actually cost the Postal Service to comply with the Fattah amendment?

As discussed in this previous post, the amendment would restore the interim service standards that went into effect on July 1, 2012 and that remained in effect until January 5, 2015, when the final service standards began. Going back to the interim standards would not necessitate reopening any of the 150 facilities closed in 2012 and 2013 or rehiring any of the thousands of employees who left the Postal Service during this time (mostly as a result of the 2012 buyout offers). That would only be necessary if the amendment were about restoring the original service standards in effect before July 1, 2012.

The amendment would simply require undoing what has happened since the beginning of the year, when the interim standards ended, and the cost would not be anything like $1 or $2 billion. As the following discussion explains, the amendment would probably cost something like $50 million, and the Postal Service could easily afford it.

More/Source: The true cost for restoring service standards and why the Postal Service can afford it | Save the Post Office

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