Two Money Battles You Need To Follow

Legislative
Update
Bruce Moyer NAPS Legislative Counsel his summer, two battles are brewing in Washington, DC, over debt ceilings. The first involves how much the federal government can borrow; the other deals directly with the Postal Services own
Two Money Battles You Need to Follow

borrowing limit. Both battles have the potential to turn into deep crises. And both directly affect the interests of postal employees. First, a three-way confrontation among House Republicans, Senate Democrats and President Obama over the federal governments debt ceiling clearly has begun. On May 13, Treasury Secretary Tim Geithner officially notified Congress the federal government had hit its $14.3 trillion debt ceiling. His announcement means the U.S. Treasury cannot issue any more T-bills or debt instruments without additional borrowing authority granted by Congress. To get by in the short run, Geithner announced he would exercise extraordinary measures to use billions of dollars in the federal civil service pension fund and the FERS G-Fund to help pay the nations bills, a cash management approach permitted under federal law. The billions of dollars in these funds will be enough to keep the government running until Aug. 2, he predicted. After that date, without congressional lifting of the debt ceiling, the government will default on its trillions of dollars in obligations owed to lenders around the world, an unthinkable outcome that could throttle the
world economy. Is your pension money as a postal employee at risk? Not if the debt crisis is resolved without the governments default. The law requires the Treasury to repay any and all funds borrowed from the civil service pension fund and the G-Fund and to make both funds whole once the debt limit is increased. This happened before in 1996, 2002, 2003, 2004 and 2006 during debt ceiling episodes. Each time, Treasury repaid the borrowed funds, along with interest, after Congress reset the debt ceiling. What is less clear, however, is what it will take to resolve the debt ceiling standoff this time. Congressional Republicans insist on government spending cuts as large as any increase in the debt ceiling, but without any new taxes. House Democrats and the President say spending cuts alone are not enough. New revenues must be part of the equation. Is compromise between the parties possible? Compromise is the lubricant of politics, yet its in less supply these days in Washington than partisan brinksmanship. It should come as no surprise by now that spending cuts in a final debt ceiling deal could well include cuts in federal civil service retirement and health insurance benefits, along with changes in Medicare, Medicaid and Social Security. The Presidents debt commission late last year called for billions of dollars in savings through greater contributions by federal and postal employees toward their retirement and health insurance benefits. NAPS and other groups insist that private-sector workers in comparable jobs earn the same or even higher benefits than federal workers. Any cuts in federal civil service and postal benefits
need to be part of a broad debt-reduction package that involves fair and shared sacrifice by all able Americans, NAPS believes. The second brewing battle involves the Postal Service itself. The Postal Service is nearing its statutory limit of $15 billion in borrowing authority. The agency increasingly has warned that, without congressional action, it will default on its financial obligations by Sept. 30. The Postal Service is predicting a current fiscal year loss of at least $8 billion, compounded by two substantial payments due at the end of the year: a $5.5 billion payment to prefund retiree health benefits and a $1.2 billion payment for workers compensation claims. Unless Congress acts, the Postal Service likely will default on these payments to the federal government to conserve cash and continue operations as long as possible, the Postmaster General repeatedly has warned. If Congress fails to actand mail volume and revenues continue to decline and, as the USPS reaches its $15 billion debt ceilingthe Postal Service easily could reach a point in 2012 where it no longer can pay its employees or suppliers, requiring cutbacks in service. Without relief, the mail delivery system could grind to a halt, causing the fragile economy to take a dramatic hit. The solution? Congressional passage of H.R. 1351, legislation that could return to the Postal Service billions of dollars in CSRS pension overpayments and deploy those monies to satisfy USPS retiree health benefits prefunding obligations. Go to the NAPS website, www.naps. org, to send a message today to your member of Congress, asking him or her to co-sponsor H.R. 1351. Your job and the nations mail system depend on it. brumoyer@verizon.net
10 July 2011 / The Postal Supervisor

Two Money Battles You Need To Follow

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Two Money Battles You Need to Follow

10 July 2011 / The Postal Supervisor

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