Committee
on Government Reform
NEWS RELEASE
For
Immediate Release
Contact:
Dana Johnson (McHugh)
(202) 225-4611
Karen Lightfoot (Waxman)
Richard Boykin (D. Davis)
McHugh, Waxman, T. Davis, D. Davis Introduce
Bipartisan
Postal Pension Reform Legislation
Bill
Would Make Short-term Rate Increases Unnecessary
Washington, D.C. – Members of the House Government Reform
Committee today introduced critical legislation to correct a retirement benefit
formula in current law that would force the U.S. Postal Service to unnecessarily
increase postage rates. By
modernizing the way the agency’s retirement benefits are calculated, the
lawmakers will prevent a $71 billion overpayment by the U.S. Postal Service to
the Civil Service Retirement System (CSRS).
And by reducing the Postal Service’s annual obligation to CSRS, the
next postal rate hike could be postponed by at least three years.
The legislation was introduced by Rep. John McHugh (R-NY); Ranking Member
Henry Waxman (D-CA); Committee Chairman Tom Davis (R-VA); and Rep. Danny Davis
(D-IL).
“The Postal Service and the mailing industry have been hit hard by the
9/11 and Anthrax attacks. If we are
to sustain this $900 billion, nine million-job industry, Congress needs to do
everything in its power to ensure a modicum of rate stability,” Rep. McHugh
said. “Without this change, postage rates will unnecessarily climb this
year. We owe it to every single
postal customer to fix this retirement benefit formula so they’re not forced
to overpay.”
“This
bill will strengthen the Postal Service, lower the federal debt, and protect
postal consumers,” Rep. Waxman said. “This is a very positive
bipartisan start for our Committee.”
“Tackling this issue early in the 108th Congress, in a
bipartisan fashion, demonstrates our commitment to getting the Postal Service
back on solid financial footing and protecting American postal consumers from
unnecessary rate increases that would have significant impacts on household
budgets and the nation’s economy,” Committee Chairman Tom Davis said.
“As the Ranking Member of the Civil Service and Agency Reorganization
Subcommittee, I am pleased we have joined together in a bipartisan manner to
change the way Postal Service retirement payments are paid,” Rep. Danny
Davis said. “I look forward to working with my colleagues to further
refine the bill we have introduced today.”
Background: The
Problem
·
The
Office of Personnel Management (OPM) has determined that the Postal Service,
based on payments required by existing law, will overfund its obligations
to the Civil Service Retirement System (CSRS, the pre-1984 retirement system) by
well over $70 billion dollars.
·
In order
to correct this problem, OPM proposed legislation modeling the Postal
Service’s payments to CSRS after its payments to the current Federal Employee
Retirement System (FERS). This
would result in a reduction in the Postal Service’s annual obligation to CSRS
by $2.9 billion, allowing the Postal Service to delay its next rate
increase beyond 2004 to at least 2006.
·
Without legislative change, the American postal consumer will experience
unnecessary rate increases, unfairly subsidizing the CSRS obligations of
other federal agencies.
The
Solution
·
The
McHugh/Waxman/Davis/Davis bill differs from the original OPM language in that
the Postal Service would be required to work with the Department of the
Treasury to apply the funds saved to pay down its debt to the Treasury.
· After 2005, the bill requires the Postal Service and OPM to calculate the difference between the cost to fund CSRS under the bill and the cost under the old law. These funds would be held in escrow until Congress acts on a Postal Service proposal outlining what should be done with the funds.
·
Additional
mandates, in the form of a sense of Congress, would direct that some portion of
saved funds be used:
·
to hold
postage rates unchanged until at least 2006;
·
to fund
retiree health benefits; and
·
to not
pay for executive bonuses.