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193 IRET Congressional Advisory 1 (2005)

handle is hein.taxfoundation/iretcgadv0190 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote growth and efficient operation of the market economy. August 31, 2005 Advisory No. 193 ADMINISTRATION SEEKS TO UPHOLD FIVE PRINCIPLES OF POSTAL SERVICE REFORM Executive Summary The Administration has called for changes in H.R. 22 and S. 662. These are bills being considered in Congress that would alter some of the laws under which the U.S. Postal Service operates. As the Administration explained in a Policy Statement in July, it is concerned that the bills would increase the federal budget deficit and would not provide enough meaningful reform. The changes the Administration seeks would clearly lower the budget costs. The question examined here is whether the changes would also be helpful in terms of Postal Service reform. The answer is that when the Administration's proposals are evaluated strictly from a reform perspective, they are seen to be sensible, realistic, and helpful. The Administration has consistently said that Postal Service reform should be based on five principles: governance based on best practices, improved public transparency, greater flexibility in operations, a stronger regulator to provide more accountability, and financial self-sufficiency. These are reasonable goals that have met with general approval. The changes sought by the Administration are thoroughly supportive of these goals. The Administration contends that: * Money released from an escrow fund should be used dollar for dollar for paying down the Service's massive unfunded liabilities. * The Postal Service should be required by statute to meet SEC reporting requirements. * New restrictions on worksharing should be examined carefully to be sure they are reasonable and would not cripple an important vehicle for bolstering efficiency and lowering costs. * When postal workers' pay is determined through binding arbitration, the law should require arbitrators to consider the impact of their decisions on the Postal Service's financial health. * Most of the Service's debt limit should be reserved for its core products; a tight limit of $3 billion should be placed on borrowings for competitive-market products. This paper reaches no conclusion on the issue of whether the Postal Service or the U.S. Treasury should pay for certain pension credits retired postal workers receive if they served in the military. However, if the Postal Service's current-law expenses in this area are reduced, any savings should be used dollar for dollar to pay down the Service's unfunded liabilities. While one might wish for stronger reforms, the changes sought by the Administration all move in the correct direction.

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