Postal Service deal clears Senate panel

@CNNMoney November 9, 2011: 4:52 PM ET

WASHINGTON (CNNMoney) -- A Senate panel passed a bipartisan deal to save the U.S. Postal Service.

The Homeland Security and Governmental Affairs Committee voted 9-to-1 to pass the deal, which buys out some employees, cuts worker compensation benefits for some retirees and maintains Saturday mail service for two more years.

"I think we've offered a solution to the problem, and we've done so in a bipartisan way," said Sen. Joseph Lieberman, the Connecticut Independent who runs the panel.

The committee made a couple of big changes to the deal, including stripping a controversial measure that forced postal retirees to drop out of the federal health care system and enroll in Medicare if they are eligible.

That change is significant, because the U.S. Postal Service had predicted it could save some $15 billion over the years. Although the U.S. Office of Personnel Management disputed the savings, according to lawmakers.

Now, the deal to save the Postal Service could end up costing more, which could dampen support for it in the full Senate and House. An official cost estimate for the bill was not available on Wednesday.

The committee voted down other attempts to strip controversial provisions from the bill, including cuts to workers compensation benefits among retirees.

Postal service hires big guns to save the service

The Senate panel also agreed to keep the most controversial measure, which prevents the agency from cutting Saturday service for two years while it studies the move. The agency could cut Saturday service in two years if financially necessary.

Sen. Lieberman said he saw the study and delay as a way of "easing into something we're going to have to do in the end," referring to the move to five-day-a-week service.

The bill helps the cash-strapped Postal Service by allowing the agency to tap a $6.9 billion overpayment to the Federal Employment Retirement System to relieve its pressing financial crunch.

Union groups oppose parts of the legislation that cut benefits and would downsize the Postal Service to save it, including the proposal to allow a cut to Saturday service after two years.

The Postal Service is in a bind. Mail volume is down more than 20% over the past four years and losses have topped $20 billion.

The most pressing problem: The Postal Service has until Nov. 18 to make a $5.5 billion payment that's due to its retiree health care fund. It's poised to default.

Some lawmakers on the panel said the bill didn't go far enough. Sen. Tom Coburn, an Oklahoma Republican, pushed for five-day service and tougher measures to close facilities.

"We're not giving them the tools to make the critical decisions to save their own lives," Coburn said.

Postage prices go up....again

But lawmakers who worked on the deal said the deal was a series of well-thought out compromises. For example, Lieberman said lawmakers specifically didn't include a price hike for stamps and services.

"Our judgment was the last thing you want to do, when it's in trouble was to raise prices," said Lieberman who worked with Sen. Tom Carper, a Delaware Democrat, as well as Sen. Scott Brown, a Massachusetts Republican and Sen. Susan Collins, a Maine Republican.

The bill would offer up to $25,000 cash buyouts or up to two years of service credits toward retirement for experienced employees near retirement. If 100,000 workers take the buyout, the move could save $8 billion, according to the Postal Service.

Lawmakers also made it more difficult for the Postal Service to close rural post offices without first considering alternative measures like cutting hours or partnering with other retail services. To top of page

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