Nov. 21, 2011 — NALC President Fredric V. Rolando held a well-attended press conference today at the National Press Club in Washington. He announced a new approach to health benefits that would save the U.S. Postal Service $20 billion over a decade, and he also spoke more broadly about the need to develop a positive business plan for the future of the Postal Service.
Here are his remarks:
Thank you for coming here today.
My name is Fred Rolando. For 20 years, I delivered the-mail in South Florida, and for the last two years, I have had the privilege of leading a union that represents nearly 200,000 men and women who deliver letters and packages all over America.
As a long-time employee of the United States Postal Service, I would like to share with you some thoughts about how my union—the National Association of Letter Carriers—intends to deal with the very real challenges that the Postal Service faces.
There is no doubt that the Postal Service faces big problems. In fact, hearing some of what has been said, one could be forgiven for concluding that the Postal Service—while an important part of America’s past—has no real role in the country’s future.
It is seldom dangerous to steal from Mark Twain, so let me say up front that the reports of the Postal Service’s demise have been greatly exaggerated.
We know the Postal Service faces very serious problems. As letter carriers, we know them better than most. But, we also know that the Postal Service, if properly restructured, can be as relevant for the 21st century as it was for the 18th, 19th and 20th. And we are prepared to work with all interested stakeholders to craft a comprehensive plan to take the Post Office from where it is—to where it needs to be.
Today I want to put forward one very large and very specific idea and point the way toward a number of other ideas that, taken together, will do just that.
Now let me be clear: Nothing that we are suggesting today requires Congress to appropriate one dime of taxpayer money to support the Postal Service. The Postal Service has not received taxpayer support since the early 1980s, and we intend to keep it that way.
But what we do ask of Congress is that—in the words of the famous Hippocratic Oath—it does no harm. We need Congress to understand that reducing and degrading our network or the services that the Postal Service provides to the American people—like going to 150 million addresses six days each week—is not the way to save the Postal Service.
Tens of millions of Americans depend on a strong Postal Service. Half the country’s monthly bills are paid through the-mail. The nation’s letter carriers still carry 170 billion pieces of mail a year. They still deliver trillions (with a “T”) of dollars per year in financial transactions. Rural communities, the elderly, and a huge percentage of Americans who do not use their computers still rely on their letter carriers.
Recklessly reducing service will irreparably damage the Postal Service’s most valuable asset—and that’s the Postal Service’s comprehensive delivery network—thus making it harder and less efficient for customers to use the-mail. Ending Saturday service or eliminating door-to-door delivery will put the Postal Service into a death spiral. It would dismantle—NOT save—America’s Postal Service.
And Congress can certainly help the Postal Service survive by undoing the grievous harm that it caused the Postal Service in 2006 when it required it to do something that no other private or public sector enterprise is required to do. In 2006, Congress insisted that each year the Postal Service use $5 billion of its precious cash flow to cover the cost of future retirees’ health care. This money could have been used to re-invest in new technology and other plans to reduce the cost of delivering the-mail, but instead this money was diverted to a fund, that while laudable, is totally unnecessary, especially under today’s conditions.
Here’s a fact: without that one requirement, the Postal Service would have broken even over four of the past five years—despite the recession and despite the decline in First Class Mail and other changes associated with the rise of the Internet.
Letter carriers are in the midst of contract negotiations with the Postal Service. Our current five-year contract was set to expire last night at midnight. For the past week, every day, every night, up to the wee hours of the morning, negotiators for the NALC and the Postal Service were hard at work. And we will be back at the bargaining table very soon – last night we agreed to extend our talks until at least December 7, 2011.
These negotiations, and our bargaining process under federal law, will produce a contract. Everyone will still get their mail, every day, on time, from their friendly letter carrier. And that new contract will recognize and deal with the new realities of postal volume and finances.
We have put forward serious and innovative proposals designed specifically to produce billions of dollars in cost reductions for the Service. We have already started to do the hard work to reinvent this public service to preserve its core function in an efficient and economically responsible way.
For example, we are negotiating a new approach to health benefits that could save the Postal Service up to $20 billion over the next ten years. These savings would derive from the adoption of best practices on disease management and wellness care, improved purchasing power for drugs and other medical services, and the sensible integration of our members’ health insurance plans with Medicare benefits, among other sources.
NALC’s decades of experience in running one of the best rated health plans in the Federal Employees Health Benefits Program have been brought to bear in our negotiations with postal management, and the two sides have engaged broadly on reducing health care costs. We will continue to advance that engagement in the weeks ahead and look forward to successfully negotiating an historic agreement.
We are also looking to deepen the role of letter carriers in the promotion of competitive products with an enhanced commitment to our Customer Connect program that uses letter carriers to find new customers for Priority Mail, Parcel Post and Express Mail. We have also discussed the creation of an innovation task force to directly engage American businesses of all sizes to find new ideas and uses for our networks.
Let me emphasize that we are by no means opposed to creating efficiencies where they make sense for the interests of the Postal Service and its customers. But a responsible strategy under which the Postal Service would adapt to better meet society’s evolving needs is critical—not panic-driven slashing and burning that are akin to killing a patient to save it.
Beyond the bargaining table, the NALC has hired a world-renowned financial advisory firm, Lazard, and Ron Bloom, who has more than 30 years of experience restructuring major industries, and who most recently served as the Obama administration’s lead in restructuring the automobile industry. These experts will help us develop an alternative business model for the Postal Service—one that will build on the Postal Service’s last-mile strengths and grow the organization, instead of following a self-defeating path of endless downsizing.
Meanwhile, there is also now serious congressional attention on cutting the huge burden imposed by Congress in 2006. The numbers are enormous and the actuarial concepts and principles involved are complex and well beyond what we can get into here. But the basic facts are undeniable and easy to grasp.
As I mentioned earlier, the Postal Service is the only company or agency—public or private—that is required to pre-fund its future retiree health benefits. We have to fund retiree health care the way companies fund ordinary pension benefits. The 2006 law, passed at a time when the economy and the Postal Service were strong, mandated $5.5 billion annual prefunding payments for 10 years! This crushing burden, which hit the USPS just as the economy dropped off a cliff, siphoned $21 billion from postal resources, accounting for 100 percent of the Postal Service’s reported losses between 2007 and 2010. Now, as this is literally bankrupting us, we have been trying to convince Congress to reform this burden ever since.
The most practical answer to this pre-funding burden is to let the USPS use the undisputed $11-plus billion surplus in its main pension plan and the $50+ billion surplus in its other pension plan that private sector expert auditors have identified, using methods that even the General Accountability Office have acknowledged are “reasonable.” But if Congress won’t do this, it should at least repeal the pre-funding burden because the Postal Service has already set aside enough money to fund retiree health benefits for decades to come.
As I stand here before you today, this very minute, the nation’s 200,000 letter carriers are doing their daily job of delivering 560 million pieces of mail to 150 million addresses. That’s 170 billion pieces of mail a year. They are driving the Postal Service’s fleet of 200,000 vehicles. They are operating out of 17,000 postal facilities in every village, town and city in America. They are doing it for half the price of the next cheapest postal service in the world.
In other words, we are a crucial part of the nation’s economic infrastructure. The Postal Service and my members lie at the heart of a set of industries — publishing, printing, advertising, commercial distribution and related sectors — that employ 7.5 million workers, generating $1.3 trillion dollars annually. That’s 8 percent of the entire national economy.
Yes, the Internet has changed the world. And yes, e-mail has eaten into postal volume.
But huge areas of American commerce—and American citizens, especially the elderly and rural residents—depend on the last-mile delivery network of letter carriers.
The National Association of Letter Carriers is committed to saving America’s Postal Service. And we will embrace and lead the changes required for the Postal Service to remain a vital institution that will serve our nation for decades to come.
But we need to be given a chance to succeed—Congress must resist poorly thought-out and radical downsizing plans and reform the pre-funding burden.
Let me conclude with three simple messages:
To postal management, we say that the NALC is ready to work with you jointly to develop a plan that both saves on cost and taps the Postal Service’s huge potential for growth. Our proposals our ready and our doors are open.
To our leaders on Capitol Hill: Don’t recklessly eliminate crucial postal services like door-to-door and Saturday mail delivery. It will hurt the American people—especially our elderly and rural citizens, and it will do permanent harm to the Postal Service. Let us use our own funds to cover the cost of retiree health pre-funding, or let us handle these costs as it done in the private sector.
And to the American people, don’t give up on the Postal Service. Give us a chance to reinvent this valuable national treasure. Let us work together with management and the postal industry to restructure the Postal Service for the 21st Century.