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Shock Doctrine at U.S. Postal Service: Is a Manufactured Crisis Behind Push Toward Privatization?

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Today, postal workers and their supporters are holding events across the country to press their demand for repealing the benefit-funding mandate and push back against calls for their workplace to be privatized. For months, Americans have heard dire warnings about the impending collapse of the United States Postal Service due to fiscal insolvency and a drop in the use of mail service. In early September, the U.S. Postmaster General told Congress that the USPS is close to default and unveiled a series of radical proposals to cut costs by firing up to 120,000 workers, closing several thousand facilities, scaling back deliveries, and reducing benefits for retirees. But many postal workers say the much-touted crisis facing the U.S. Postal Service is not what it seems. They argue the greatest volume of mail handled in the 236-year history of the postal service was 2006. They also point to a 2006 law that forced the USPS to become the only agency required to fund 75 years of retiree health benefits over just a 10-year span, and say the law’s requirements account for 100 percent of the service’s $20 billion in losses over the previous four years, without which the service would have turned a profit. Last week, Republicans introduced legislation to overhaul the USPS in response to a bill proposed by Democrats that would refund a reported $6.9 billion in over-payments to the USPS retirement plan, offer early retirement and voluntary separation incentives, adjust retiree benefits prepayment requirements, and preserve employee protections set out in collective bargaining agreements. We host a debate between Chuck Zlatkin, the legislative and political director of the New York Metro Area Postal Union, and Gene Del Polito, president of the Association for Postal Commerce in Washington, D.C. [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.

NERMEEN SHAIKH: For months, Americans have heard dire warnings about the impending collapse of the United States Postal Service due to fiscal insolvency. Earlier this month, the U.S. Postmaster General, Patrick Donahoe, told Congress the USPS is close to default and unveiled a series of radical proposals to cut costs. Under Donahoe’s plan, the Postal Service would fire up to 120,000 workers, close several thousand facilities, scale back deliveries, and reduce benefits for retirees. Donahoe discussed his demands in an appearance on CNBC.

POSTMASTER GENERAL PATRICK DONAHOE: We need Congress to act immediately. We’ve been asking them—we went over today, had a hearing before the Senate. We need them to do three things: give us the opportunity to resolve this prepayment issue, the $5.5 billion; let us move from six-day to five-day delivery; and give us a refund. We’ve overpaid one of our retirement funds by $6.9 billion. Those three things. We can take care of the rest of the issues we need to take care of ourselves.

NERMEEN SHAIKH: But postal workers say the much-touted crisis facing the U.S. Postal Service isn’t what it seems. Rather, they point to a 2006 law that forced the USPS to find enough money to fund 75 years of retiree health benefits over just a 10-year span. The American Postal Workers Union says the law’s requirements account for 100 percent of the Service’s $20 billion in losses over the previous four years, without which the service would have turned a profit.

AMY GOODMAN: Well, today, postal workers and their supporters are holding events in every congressional district to press their demand for repealing the benefit-funding mandate. The events are part of a national day of action dubbed “Save America’s Postal Service.” In addition to pushing for legislative changes, the postal workers are also pushing back against calls for their workplace to be privatized.

I’m joined now by two guests to debate this issue. Chuck Zlatkin is the legislative and political director of the New York Metro Area Postal Union. He’s joining us here in New York. And joining us from Washington, D.C., is Gene Del Polito. He’s president of the Association for Postal Commerce in Washington, D.C.

Gene Del Polito, what’s the problem with the U.S. Post Office today?

GENE DEL POLITO: Well, actually, it’s a combination of a couple of things. But the fact is, is that the people who are responsible for coming up with the solution to the Postal Service’s problems have very fundamental disagreements in terms of the way they actually see what the cause of the problem is or what the solutions are likely to be. But to put it simply, the Postal Service is operating under a significant burden in terms of what it has to fund for its postal retirees. But at the same time, so much mail has been leaving the postal system for electronic alternatives that it now looks as if the Postal Service’s ability to attain the kind of revenue targets it would have achieved in the past is just no longer possible.

AMY GOODMAN: Is this a real crisis, Chuck Zlatkin?

CHUCK ZLATKIN: Well, it’s become a crisis, but we feel that it’s a manufactured crisis, because the Postal Accountability and Enhancement Act, which my union opposed, which was supposed to prepare the Postal Service for the 21st century, has actually created this crisis.

AMY GOODMAN: Passed five years ago.

CHUCK ZLATKIN: In 2006, five years—had created this crisis, because it mandated that the Postal Service, every September 30th, has to write a check from its operating funds—that’s the only place it could come from—for $5.5 billion to the U.S. Treasury to partially—it’s involved in fully pre-funding future retirees’ health benefits, for 75 years. You’re talking about funding the retirement benefits for people who haven’t even been born yet, let alone working in the Postal Service.

AMY GOODMAN: Wait, you have to explain this. Do other agencies have to do this?

CHUCK ZLATKIN: No, no other agency, no other corporation, no organization that we know of is mandated by law to do this.

AMY GOODMAN: Gene Del Polito, what is the logic of this?

GENE DEL POLITO: Well, to be honest, I can’t quite figure out what the logic is, either. Actually, the logic stems from the fact that the people who were involved from the Bush administration in the creation of the Postal Accountability Act had little faith that the Postal Service was going to remain a sustaining organization and wanted to be absolutely sure that whatever provisions needed to be put into the law to ensure that the U.S. Treasury would not be left on the hook for any unfunded liabilities, that it would be taken care of.

NERMEEN SHAIKH: Earlier this month, Gwen Ifill of PBS spoke with Fredric Rolando, president of the National Association of Letter Carriers. He insisted the U.S. Postal Service is not broke. Let’s go to that clip.

FREDERIC ROLANDO: During the last four fiscal years, the Postal Service, with the recession that we’ve been through, the worst recession in 80 years and the internet diversion, still showed an operational profit of almost $700 million during that period of time. The $20-plus billion that you read about in losses is nothing more than a congressional mandate that requires the Postal Service—required the Postal Service to take all of their cash and put it into a pre-funding account. The Postal Service actually has somewhere between $50 billion and $125 billion in their other funds that is not taxpayer money. They haven’t used a dime of taxpayer money in over 30 years. And the Congress just needs to act responsibly and quickly to give them access to those funds.

NERMEEN SHAIKH: Gene Del Polito, your response?

GENE DEL POLITO: Well, there was a time when what Mr. Rolando said would have been true, and that is the Postal Service’s losses were generated exclusively by the prepayments that they were required to make. However, if you look at their financial sheets today, you’ll find that by the end of this fiscal year, which should be up in a couple of days, the Postal Service, even if they were forgiven all of their obligations, would still not have enough money to be able to operate within the black. The Postal Service also manages what it does by its cash flow, and according to their own chief financial officer’s best projections, it now looks as if the Postal Service is going to flat run out of cash by July 2012 if nothing is absolutely done. It’s also extending the amount of time that it’s giving the people that it has contracts with, to actually manufacture equipment and do things, to see if they can get a longer period of time for payment for them in order to be able to stretch its cash. But there’s no doubt about it: the Postal Service is in a fiscal fix, and just relieving the obligation alone is not going to be enough. There needs to be much, much more done.

AMY GOODMAN: Chuck Zlatkin?

CHUCK ZLATKIN: Well, yes, there needs to be more done, but it’s not just relieving the future burdens. If the $25 billion is left to be paid into the future retiree health benefits plan, but if you got the money that was overpaid into the other fund, $50 billion is the low figure. So you pay off the future accountability requirements for the healthcare benefits, you pay down your debt, and then you use the excess money there to modernize, to develop things that bring more business, more people into the Postal Service. You have this extraordinary structure of places to do business, plants, trucks. Use it for the benefit of the American people. The Postal Service—it’s in the Constitution. Article I, Section 8, Paragraph 7 of the Constitution talks about creating post offices. It doesn’t say anything about closing.

Look at the people that most depend upon the Postal Service. They’re elderly people, disabled people, poor people and small business owners. They can’t afford the alternatives. What should be happening here is that the large businesses, who use the Postal Service to make tremendous profits, should be subsidizing the people who are dependent upon the Postal Service, as opposed to the other way around. The economy went in the dumper in 2008. That impacted upon business. That impacted upon the business of the Postal Service, as well. But the fact of the matter is, the only way you can say the Postal Service might have problems into the future, if you feel that the economy is never coming back, and I don’t know if that’s your position.

NERMEEN SHAIKH: Republican Representative Darrell Issa of California is co-sponsoring a bill that would allow the Postal Service to end Saturday mail deliveries, sell advertising space at post offices, and phase out most residential to the door deliveries in four years. The bill would also require postal workers to pay more toward retirement and healthcare benefits and establish a financial control board to overhaul postal finances. Representative Issa defended his bill on MSNBC’s Morning Joe.

DARRELL ISSA: What we’re looking at doing is giving the authority with a mandate to get to break even or a profit to the Postmaster and his governing board. That’s what our bill does. It’s why we want ours rather than a bailout. It’s why most of the major newspapers that have yet spoken, have spoken in favor of this bill, because it actually gets the Post Office back on the right track without any real loss of service, the service you expect whether you’re in New York City or on an island far in the north of Alaska.

NERMEEN SHAIKH: That was Republican Representative Darrell Issa of California. On Friday, Senator John McCain announced that he was introducing the Senate version of that same legislation. Chuck Zlatkin, your response?

CHUCK ZLATKIN: Well, there is a solution, and it’s in the House now. It’s HR 1351, which was introduced by Stephen Lynch of Massachusetts, which basically balances it out. You say we take it from the overpayment fund into the obligation fund, no cost to the taxpayer. It frees up this money. Right now, it has 215 co-sponsors, including a couple of dozen Republicans. Darrell Issa’s bill that he put in has one co-sponsor: his colleague from Florida, Dennis Ross.

I mean, we’re talking about a service to the American people. Let’s solve it and get on to the real problems that are impacting upon people right now. This is about breaking the union, privatizing the Postal Service, and taking away the service to the people, the universal service that everybody has a right to. That’s what this is about. It really isn’t about dealing with the future business of the Postal Service, because the Postal Service, all it needs is a chance to survive and thrive, and it will take care of business.

AMY GOODMAN: Gene Del Polito?

GENE DEL POLITO: Well, the nature of the debate that’s going on, and what people are seeking for resolutions, means that you have to go to Congress in order to be able to get the solution that you want done. Now, the moment you go to Congress and you start asking them for help, you have to start playing the game by their rules, and their rules will are pretty much dictated by the budgets that they create year after year. When you take a look at the Postal Service’s situation, sure, there has been an overpayment, but the problem that you run into is, as as soon as ask for the Treasury to begin to take money out and give it back to the Postal Service, the first question you’re asked up on the Hill is, “And from whom shall I take this additional money in order to be able to make up for what I just gave back to the Postal Service?” So it’s kind of like a no-win situation in which you have—again, there’s this fundamental disagreement over how to go about dealing with the issue.

Now, there is an easier way to be able to resolve this. And that is, if you’re worried about the Postal Service having to make payments for its obligations, why not also take into account that the Postal Service has a tremendous amount of real estate assets that could be pledged against those payments in the future? Most of the real estate assets that the Postal Service has on its books are carried at the prices in which they purchased them. If you actually did a real-market evaluation of what those properties are worth today, you would find they’re worth substantially more than they were at the time that they were purchased. And those assets can be pledged against any payments or liabilities the Postal Service has to make. The trouble is, no one wants to go to the more expedient solution, such as that, because what really is at play here is the contest over what’s going to be happening for the election of 2012.

AMY GOODMAN: Chuck Zlatkin?

CHUCK ZLATKIN: Well, what I’m saying—you go into a store or a restaurant, and they overcharge you, they don’t give you your change, you say to them, “Wait a minute, you got to give me back my change.” And they’ll say, “Well, we don’t know where to take it from. Where do we get that money?” You overcharge, you return the money. It’s a simple thing that anybody can understand. And it isn’t even real money, in this sense, because it’s just crediting against this future obligation, which was manufactured to destroy the Postal Service. Did you support the Postal Accountability and Enhancement Act of 2006?

AMY GOODMAN: Gene Del Polito?

GENE DEL POLITO: No, I didn’t.

CHUCK ZLATKIN: Well, who did?

GENE DEL POLITO: No, I didn’t.

CHUCK ZLATKIN: Who did? Why did you oppose it? Did you oppose it, or you took no position?

GENE DEL POLITO: Are we talking off this issue?

AMY GOODMAN: We’re on the air here, yeah. We’re talking about the act of 2006. Gene Del Polito?

CHUCK ZLATKIN: He said that he took no position—


CHUCK ZLATKIN: —on that act. Well, my union and the people we represented, we opposed it from the beginning, because we saw what was going to happen in our future, because it wasn’t just creating this arbitrary payment that had to be made. It limited the amount of debt that the Postal Service could use, and it also pegged any price increase to the Consumer Price Index. You put those things together, it was dooming the Postal Service. This is a manufactured crisis that was brought about by the same Congress that you’re saying that we shouldn’t go to to correct it. They caused the problem. We have to go to the cause of the problem and then come together and deal with this on behalf of the people who depend upon the Postal Service. As far as the union is concerned, if there’s service to the public, we’ll have jobs. We don’t have to manufacture jobs. The people who want to destroy the Postal Service had to manufacture a crisis.

AMY GOODMAN: Who wants to destroy the Post Office?

CHUCK ZLATKIN: Well, because they know it’s an essential business that’s a function that will have to take place anyway. The Postal Service in 2004 did $70 billion in business. In 2010, it did $67 billion in business. So what’s the tremendous drop in business? It’s only because there was a spike in '05, ’06, ’07, because of the economy going up. The economy goes down, the Postal Service is impacted upon that. What we have to do is realize that it's a service that people depend upon. And also, in the middle of the recession, are you going to lay off 120,000 people?

And to accomplish this, you have to go to Congress to pass laws that will negate a contract that the Postmaster General, Patrick R. Donahoe, negotiated with the union in April. In July, he was going to Congress and saying we have to pass laws to break this contract. What happened between April and July? Absolutely nothing. If Donahoe did this contract, which was attacked by Issa, was so bad, why is Donahoe in his job now? He should have been fired. And/or at least if he was a decent guy, he should look at the situation and resign.

And we should also look into the sweetheart retirement package, filled with bonuses and pensions, that his predecessor, John E. Potter, got. If Potter left the Post Office in such a dire straits, why did he get these millions of dollars that was voted to him by the Postal Board of Governors? We need Donahoe out of his job and an investigation into what took place with the financial payoffs to his predecessor, and then we’ll be dealing with some of the real problems that the Postal Service is facing.

AMY GOODMAN: What about the effect of email on the Post Office?

CHUCK ZLATKIN: Well, obviously, there’s some kind of effect from email, that’s true.

AMY GOODMAN: Massive effect.

CHUCK ZLATKIN: But in 2006, it was the biggest volume that the Post Office ever handled in its 236-year history. And the years behind that were 2005 and 2007, well into the internet era. Yes, the nature of the business has changed. People aren’t writing letters to Grandma, but how are they getting their Netflix that they’re getting from their computer? It’s still being delivered by the Postal Service.

AMY GOODMAN: What about the role of unions? And do you think there is a role being played here, and the push for privatization?

CHUCK ZLATKIN: Well, the unions are an important factor, because part of the reason that it looks so good to privatize is, as they see this business and they’re saying, “Look at this, we’re paying close to 600,000 workers a living wage, benefits and retirement package. Well, if we could break the union and eliminate that, we could bring in people, at-will workers for an hourly wage with no benefits, and that money could go to, not the American people or costs in government, that would go to profits. This is another situation where working-class people and poor people are being asked to suffer and sacrifice to benefit the rich.

AMY GOODMAN: Gene Del Polito, a final comment?

GENE DEL POLITO: My final comment would be, I can’t really argue with the man’s suppositions. His suppositions are his own. The fact of the matter is, is the nature of communicating and doing business in America has undergone substantial change. The Postal Service has lost its most profitable category of mail: first-class mail. It continues to decline. The Postal Service has too many facilities, too many workers, and an infrastructure which it finds impossible to support with the revenues that it takes in today. Clearly, what has to happen is its costs need to be realigned to be more realistic to be able to attend to what the needs are that the nation has and how to go about providing them.

AMY GOODMAN: Very quickly, if the Post Office goes the route of privatization, will the—private companies will be asking for subsidies to deal with, for example, rural areas in this country. And in the end, the U.S. taxpayers will continue to foot the bill, but this will be for private gain.

CHUCK ZLATKIN: Well, yeah, they’ll either ask for subsidies, or they’ll refuse to do it. Universal service will be doomed. They’ll pick and choose the profitable areas to service, and the rest of the people will have to fend for themselves. And I would just ask the people who are concerned about this to come out today to rally in every congressional district in the country. You can go to “Save America’s Postal Service,” and find out the location near you. This is about saving an institution for the people who depend upon it.

AMY GOODMAN: Well, I want to thank you both for being with us. Gene Del Polito, thank you for joining us from Washington, president of the Association for Postal Commerce in D.C., and Chuck Zlatkin, here in New York, legislative and political director of the New York Metro Area Postal Union.

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