Cover Your Eyes: This May Be Messy
German Chancellor Otto von Bismarck said, "There are two things you don't want to see being made: sausage and legislation." He was referring to all the unappetizing ingredients that find their way into a tasty wiener that may look great to the eye, but less so if we knew from whence it came.
Bismarck's observation about the legislative process remains alive today. A good example currently in Congress is a measure of strong interest to NAPS members and the postal community. H.R. 22 has earned bipartisan support and gained 321 co-sponsors, more than any other measure in the 111th Congress. It was introduced in January, but, since then, has encountered delays unrelated to its merits.
Despite H.R. 22's simplicity-the bill is fewer than two pages-common sense in the congressional treatment of it has been discarded. Congress has become the United States Sausage Factory.
H.R. 22 would permit the Postal Service to realign how it pays for its retiree health benefits. It would allow the USPS to save $2 to $4 billion a year over the next eight years, while continuing to make down payments for future benefits.
Sounds sensible, right? Well, the problem is use of a well-intended congressional process called "budget scoring"-a method used to figure out how much legislation will cost before it is passed. The scoring problems with H.R. 22 have unfolded not once, but twice.
First, in 2006, as Congress prepared to pass postal reform, it created the makings of the current problem through misguided actions based on scoring. Congress offset the costs of postal reform by saddling the Postal Service with an aggressive schedule of payments into the newly established Retiree Health Benefit Fund (RHBF). To ensure postal reform would score without cost, Congress tasked the USPS with onerous payment obligations far more ambitious than any private-sector employer wisely would take on.
That meant when the economy began to fall into a recession, the Postal Service went into the red, to an extent because of the size of the multi-billion dollar retiree health benefit payments it had to make and continues to make. So, a fiscal charade for Congress in creating an aggressive payment schedule set the stage for today's scoring nightmare.
Scoring again is the culprit. This time, the Congressional Budget Office (CBO) says H.R. 22 would cost $25 billion over the next eight years. Cost who? The Postal Service? No. Ratepayers? No. Then who? The "unified federal budget," CBO says. Because the Postal Service, as a result of its retiree health benefit payment schedule being relaxed, would be less inclined to seek further savings, thereby imposing net costs to the federal budget.
Keep in mind the Postal Service is off-budget. Its operations are not financed by taxpayer dollars. H.R. 22 does not use one penny of taxpayer funds. It is not a bailout. H.R. 22 simply provides a different time schedule for a pre-established, intra-governmental payment to move money from one fund, the RHBF, to another, the Civil Service Health Benefit Fund.
This is exactly the course of events Congress intended to begin happening in 2016 under the postal reform law. It simply would be occurring earlier, due to changed circumstances.
CBO's green-eyeshade logic yields a twisted result. According to CBO, because RHBF assets are calculated in the total assets of the federal government, tapping those retiree funds now would add to the budget deficit.
And CBO further finds-and here's where the thinking really goes off the rails-the Postal Service would not adequately offset that amount of the deficit. Why? Because, the CBO predicts, the USPS will take its foot off the cost-savings pedal once it begins to be relieved of its financial obligations.
The truth is otherwise, given the huge financial challenges the Postal Service faces and the significant cost savings in infrastructure and labor costs the agency will need to continue to extract to make ends meet.
So, what will emerge from the sausage factory in Washington? It is difficult to say. If Congress disregards the illogical arithmetic of CBO, it will pass H.R. 22. But if the bill becomes enmeshed in budget politics this summer, the outcome may become, like so many things postal right now, much more uncertain.