Budget Background

Apr 24 2012

Action Alert: Decisive Procedural Vote—Postal Bill Violates Debt Deal

Not One Cent Of $34 Billion Is Offset. The Bill Is Subject To A Point Of Order. A Vote To Waive The Point Of Order Is A Vote To Waive The Debt Deal Spending Levels.

Senate Budget Committee Ranking Member Jeff Sessions announced today that he will be raising a PAYGO budget point of order against S. 1789, the postal reform bill. The Congressional Budget Office has scored the bill as adding $34 billion to the debt by 2022, spending more than the levels derived from the Budget Control Act—levels set in law as a condition for the $2.1 trillion debt limit increase. The point of order has a 60-vote threshold to waive.

The postal bill violates the debt limit deal by increasing and not offsetting spending levels in two significant ways: it exceeds the total outlay ceiling in fiscal year 2012 by $11 billion and it increases the deficit above baseline levels in fiscal years 2012–22 by $34 billion.

The bill’s managers assert that the $11 billion debt increase scored by CBO should not be counted. They argue that the Treasury is only repaying the Postal Service $11 billion that the Postal Service has in the past overpaid for the retirement contributions for current employees. Because the government is running a budget deficit, however, this money will still have to be borrowed. It adds to the debt. While the $11 billion may be a valid claim, that sum must be offset.

Additionally, the $11 billion in FY12 is only one-third of the bill’s total debt impact.

Most of the deficit increase from this bill—about two-thirds—would occur because we are reducing the amount that the Postal Service is supposed to pay to the Office of Personnel Management for the future retiree health benefits of current Postal Service employees.

In 2006, Congress enacted the Postal Accountability Act in an attempt to set the Postal Service on a self-sustaining course. According to one of the managers of this bill, that law included “a requirement the Postal Service endorsed at the time” that the Postal Service pre-fund the future retiree health benefits of current postal employees on an accrual basis. And that 2006 law set out a schedule of those required payments.

Now—6 years later—those payments would be restructured but the retirement benefits maintained through borrowed money. We already enacted a bill last fall partially relieving the Postal Service of their required 2011 payment. This bill would further defer those payments at a cost to taxpayers of $23 billion. Since the bill drafters do not want the users of the Postal Service to pay for these health benefits over the next 10 years as required by current law, they propose to transfer those costs to taxpayers.

On an average annual basis, we can reduce spending $3 billion per year and pay for this bill. At a time when our budget deficit for this year alone will be approximately $1,200 billion, and the General Services Administration is flagrantly wasting taxpayer dollars, we must stop over-spending. The Government Accountability Office has identified $400 billion in annual federal expenditures on programs that are wasteful, inefficient, or duplicative; our task should be easy.

The offsets are there to be found—this point of order does not kill the bill, but sends it back to committee and creates an opportunity for the Senate to live up the terms of the August debt deal while controlling wasteful spending elsewhere in the budget.