Congress gets seriously save USPS

9:00 AM Congress, seriously No Comments

| By Devin Leonard, Bloomberg BusinessWeek

Rep Darrell Issa has already spread a proposal for a law, indicating his willingness to lock a bipartisan solution.

Now, most people on the edge of which is bankruptcy the U.S. know postal service.

But in recent years, Congress has sometimes acted as if it make indifferent to the Agency and the possibility was that it could require a taxpayer bailout.

Republicans and Democrats in the House seem now awakened to the crisis have.

On Wednesday, members of both parties expressed hope that she would shortly adopt hearing to fix the post at a House Committee on oversight and democratic Government.

"The need for a Bill is urgent," said Rep Darrell Issa, R California, the Committee Chairman. "We want to do in the next few weeks."

Issa has already distributed a draft law, which indicated his willingness, a bipartisan solution screw.

One of the primary threats to the postal service survival is a requirement that each year allocates $5.5 billion for future retiree health-care payment option costs.

In the face of the rapid decline of first-class mail use, the USPS can no longer afford to do so.

Issa's proposal would the post for calculating these costs on the basis of estimates of what actually guilty, rather than a fixed annual payment allow.

This could be the Agency's annual expenditures for both current and future retirees reduce health benefits of $8.5 billion, somewhere between $2 billion and $5 billion. That will win us Democrats.

Meanwhile, the Democrats have introduced a postal reform bill their own Republican-friendly elements. On Wednesday, Issa embraced a proposal to limit the rural post office closures.

He announced at the hearing that he is on his efforts to abolish post no layoff policy has been dispensed, the naturally very unpopular with postal workers' unions.

If this surprised some Democrats, Issa followed the ending of the agencies no dismissal; He has just changed his tactics.

The two sides have substantial differences, when it comes, goes to the rescue of the postal service. Issa is set to mail delivery, which supports the public ends Saturday.

On the whole, are Democrats on the preservation of the six day service. But if Democrats and Republicans can keep their newfound zeal for postal reform, prevent she could even a bailout to USPS.

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USPS urges Congress to help it avoid taxpayer bailout

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Reuters – 4 days

U.S. Postmaster General Patrick Donahoe pleaded with lawmakers Wednesday not to block the financially strapped Postal Service from moving ahead with plans to end Saturday first-class mail delivery.

Last week, the Postal Service rattled lawmakers and other stakeholders when it announced plans to end delivery of first-class mail, magazines and direct mail on Saturdays, starting in August. The plan, the Postal Service said, would save the agency $2 billion a year when fully implemented.

No law requires the Postal Service to deliver mail six days a week, but Congress included a provision in legislation to fund the federal government each year that has prevented the USPS from reducing delivery service.

The current funding measure expires in March, and would free the Postal Service to change its delivery schedule unless Congress prohibits it in the next spending resolution.

But some lawmakers and trade groups have argued that the savings from this plan are too small compared to the $20 billion budgetary gap the Postal Service needs to fill.

"The financial problems of the Postal Service are getting bigger every year," Donahoe said. "Congress can avoid a future scenario in which the Postal Service requires a taxpayer bailout - which could be in excess of $45 billion dollars by 2017 if we don't change our business model."

The Postal Service, which lost nearly $16 billion last year, has been grappling with tumbling mail volumes as Americans communicate more online, and has struggled under the weight of massive required payments for future retiree health benefits.

It has repeatedly urged Congress to pass legislation to restructure its operations and allow it to get on better financial footing.

Lawmakers at a Senate committee hearing agreed that urgent postal legislation was necessary, but not over how to save the Postal Service.

U.S. Representative Darrell Issa, California Republican who wants new legislation to help the Postal Service, said in testimony that other countries such as Australia, Canada, Finland and Spain have been successful in shifting to five-day delivery, and the USPS can do the same and save money.

"It's very clear that ultimately, either the rate payer or the taxpayer will have to pay the $20 billion in debt of the Postal Service," Issa said.

Current laws, Donahoe said, limit the flexibility of the struggling mail carrier to implement changes that would help it become more profitable and offer new products and services. He wants lawmakers to allow the agency to control its own employees' healthcare funding.

The Postal Service pays $13.1 billion annually in healthcare costs, including mandatory payments into its future retirees' healthcare fund. The Postal Service has blamed much of its financial troubles on this prefund mandate put in place by a 2006 law.

Over the last six year, the Postal Service has eliminated more than 190,000 jobs, Donahoe said, in attempts to cut costs. But it still needs Congress to free its hands to handle more of its affairs.

"If legislation is not enacted - and soon - to provide the necessary reforms and flexibilities to achieve savings and generate new revenues, we will all be back here again, discussing the same issues," Donahoe told the Senate Committee on Homeland Security and Governmental Affairs.

Copyright 2013 Thomson Reuters.

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Congress on budget promise what they can't keep

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John W. Schoen, NBC News

Next time, when you hear that someone in Washington come the federal budget balance with a long-term plan, take it with a medium-sized Capitol grain of salt.

As the control and the battle rages on in the capital spending are Democrats and Republicans swear to replace temporary, stop-gap budget measures with a long-term plan, the gap between how much the Government raises in taxes and how much Congress agrees to spend.

Although bitter over like it to pull out divided, both sides agree that a plan step by step, long term, budget balancing would do less harm to the economy than the steep rate cuts short-term issues effectively in a few weeks. Earlier this week, House Republicans set a 10-year schedule for the income and expenditure into line.

"The budget over the next 10 years means that we save the future for our children and our grandchildren balancing", said House Speaker John Boehner, R-Ohio, was announced as the business.

Even if every Member of Congress agreed with this goal, it is a promise that none of them can hold.

Every budget in the long term is subject to a long list of unknown - from disasters and wars, recessions and Finanzkrisen-, which can quickly knock it off course. The list includes a future Congress, which decides to break the plan into pieces and replace with a new one.

"You can talk about a budget as an institution, a sense of direction, but you can not talk on a budget get in the long term as a precise point," said William Galston, senior fellow at the Brookings Institution and political adviser in the Clinton administration. "All sorts of things can change the assumptions underlying long-term planning."

Congress press the "Pause" in the current budget battle this week) due to the delay of a looming deadline, to prevent that the Government of the borrowing to its bills to pay. The business allows the Treasury Department continues to make the distance between the taxes, collects sell bonds and the Congress has the issues.

The measure effectively the debt ceiling crunch until mid-May, moved. The precise date is difficult to predict because the Treasury able to juggle its bills for a few weeks, the borrowing Cap approaching.

The next hard deadline comes with automatic budget cuts - the expenditure side of the so-called "fiscal cliff" - which delayed until March 1 and fell from $24 billion in the last minute, to the end of the year deal, taxes were raised for the richest households.

These cuts, so called "were secrete" in July 2011 after the last debt issued ceiling standoff.

The hope was that the impact of the cuts would be so bad, that the deadline for a compromise in the long-term average of deadlock would compel. Republicans and the White House remain on a collision course over a long-term plan which sequester to replace clever concept for spending cuts of meat.

Both sides agreed a long-term financial plan - invade or to forego their salaries. (This is easier than kept another promise. The 27th amendment envisages that any modification of the selected trust men salaries apply only to the next session of Congress. So the move is largely for map.)

Replace the short-term measures budget with a 10-year plan begins with a set of assumptions about future spending, which are impossible to make. Will the United States fight a war in the next ten years? How many natural disasters such as Superstorm Sandy calls emergency spending? Are health care costs rising faster than the rate of inflation next?

There are more wild guesses embedded in the economic forecasts used to estimate how much money that the Government takes taxes. It will enter a recession in the next 10 years? If so, will it be mild or severe? Short or long?

As all of them have long-term plan a relatively small miss a great influence on the street this estimate. If the current $16 trillion U.S. economy in the historical average speed 50 years by around 3 percent, for example, in 10 years gross is growing gross domestic product - a rough measure of the income of the country is $21, hit 5 trillion. If the growth rate at the current, meets only about 2 percent pace, GDP $19.5 of trillion less tax revenue from businesses and households to generate, even if tax rates remain stable.

"A lot of problems, you can resolve if you simply create in the kind of economic performance we've seen in the last six years by Reagan or the last five of Bill Clinton," said Galston. "It is possible to do everything on paper, if you do not what you do."

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Congress steering economy toward a 'fiscal cliff'

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Jason Reed / Reuters

Watch that fiscal cliff. Fed chairman Ben Bernanke departs a news conference following the monthly two-day meeting at the Federal Reserve in Washington, April 25, 2012.

By John W. Schoen, Senior Producer
Fed Chairman Ben Bernanke calls it the “fiscal cliff.” It might be better thought of as the next economic Armageddon.

Unless Congress acts to soften the blow, economists are warning that a looming year-end collision of massive, “automatic” cuts in federal spending and the expiration of sweeping Bush-era tax cuts could crush an already weak U.S. economic recovery.

And unlike the central bank’s response to the Panic of 2008, the Fed would be powerless to offset the catastrophic impact on the economy and financial markets.

"There is absolutely no chance that the Federal Reserve would be able to have the ability whatsoever to offset that effect on the economy," Bernanke told reporters Wednesday, following a two-day meeting of the Fed's policy-making committee.

The risk of a potential economic train wreck stems from a series of contentious political decisions that Congress has been ducking for years, postponing a long list of tough choices until the end of the year, until after the national elections.

Now, unless a compromise is reached, sharp cuts in federal spending will remove hundreds of billions of dollars from the U.S. economy, virtually overnight. At the same time, American consumers will see a massive increase in taxes that will sharply curb their spending power, taking another big bite out of the economy.

While it was ducking those big decisions, Congress has also punted on a series of smaller budget measures that will have to be decided by next year. Taken together, they add up to some big numbers.

The lists includes two long-running budget items that have become a popular perennial target of political horse trading. One is the now-annual "fix" to scheduled cuts in Medicare payments that would reduce spending on doctors' fees by as much as 30 percent. The other is a so-called "patch" required to prevent the Alternative Minimum Tax from hitting an ever-wider swath of middle class households.

Wage earners are also set to lose the payroll tax cut that expires at the end of this year. An extension of long-term unemployment benefits is also set to expire, which would further slash the amount of money flowing through the economy.

Economists and budget analysts have offered up various estimates on just how badly the economy would be damaged if Congress fails to act in time. The combination of the tax increases and spending cuts would amount to more than $6.8 trillion over 10 years, according to the Committee for a Responsible Federal Budget, a non-partisan think-tank whose board includes former members of Congress and budget directors.

The Congressional Budget Office predicted earlier this year that the full impact of those tax hikes and spending cuts would remove about 3.5 percent of gross domestic product, more than wiping out the current recovery. That would send the unemployment rate, which stood at 8.2 percent in March, to 8.9 percent by year-end and 9.2 percent at the end of 2013.

Some economists argue the hit to GDP could be even greater. Morgan Stanley economist David Greenlaw figures the hit from the fiscal cliff would amount to more like 5 percent of GDP in 2013.

Others, like Deutsche Bank economist Joseph LaVorgna, think those estimates are overblown, though his assessment assumes Congress gets its act together and steers away from the cliff at the last minute.

But there's widespread agreement that if lawmakers ultimately pull a "Thelma and Louise," the economic impact of these tax and spending changes would be devastating if they hit all at once.

As Congress quibbles bitterly over how to cut the federal deficit, lawmakers generally agree that failing to do so would have dire long-term consequences. But, as Bernanke told the House Oversight Committee in March, balancing the budget abruptly would be even worse.

"It is important to achieve sustainability over a longer period," he told the panel. "One day is a pretty short time frame."

Perhaps even more worrisome than the scheduled "cliff" in federal taxing and spending is the timetable lawmakers face to prevent the worst-case scenarios from playing out. Given the potential changes in party leadership for both Congress and the White House, chances appear slim to none that any decisions will be made until after the November elections. That leaves Congress and the White House roughly eight weeks - punctuated by the Thanksgiving, Christmas and New Year's Eve holidays - to prevent the economy from falling off the cliff both sides have created.

The deadline could be even tougher to meet if, as some are warning, the government runs out of borrowing authority in the middle of that eight-week window.

Though the exact timing is difficult to predict, the next expiration of the current debt ceiling will likely spark another round of brinksmanship reminiscent of last August, when Congress and the White House narrowly quelled a rebellion by House Republicans bent on forcing the U.S. Treasury to default on its debt. That compromise produced the "automatic" $1.2 trillion spending cuts set for early next year.

"Finding a clever way to kick the can down the road again is becoming a bigger and bigger challenge," Princeton University economist Alan Blinder wrote in a recent Wall Street Journal OpEd. "And Congress has barely coped with previous such challenges."

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CNBC's Steve Liesman discusses the statements made by the Federal Reserve on Wednesday and whether QE3 is ahead.

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Congress OKs Korea, Panama, Colombia trade deals

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WASHINGTON — The Congress on Wednesday approved long-delayed trade pacts with South Korea, Colombia and Panama that are expected to lift exports by about $13 billion a year and give U.S. employment a boost.

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Republicans and Democrats joined together in the House of Representatives and the Senate to pass the pacts, which now go to President Barack Obama to sign into law.

Obama -- who sent the three agreements to Capitol Hill nine days ago, four to five years after they were negotiated -- welcomed Congress' passage of the deals as "a major win for American workers and businesses."

"Tonight's vote, with bipartisan support, will significantly boost exports that bear the proud label 'Made in America,' support tens of thousands of good-paying American jobs and protect labor rights, the environment and intellectual property," Obama said in a statement.

U.S. farm and manufactured goods exports are expected to rise under the three agreements as tariffs are phased out. The pacts also open new markets for U.S. companies in service sectors such as banking, insurance and express delivery.

"These free trade agreements will give our economy a much-needed shot in the arm and create tens of thousands of American jobs," said Senate Finance Committee Chairman Max Baucus, a Montana Democrat.

Senate Republican leader Mitch McConnell said the bipartisan votes showed there were some areas where his party and Obama could find common ground despite a battle over jobs legislation and many other clashes in the past.

"For our part, Senate Republicans are ready to work with him on an even more robust trade agenda," McConnell said.

Critics like Senator Sherrod Brown said the deals would harm U.S. employment, though the Obama administration and other proponents believe they will support tens of thousands jobs.

Brown urged Obama to turn away from "NAFTA-style" agreements like the three deals and change trade policy to "put American manufacturers and workers first."

The biggest gains are expected from the pact with South Korea, a longtime U.S. ally and a $1 trillion economy in a region dominated by China. The agreement will help anchor the United States in the fast-growing Asia Pacific region so it can share in its growth, analysts say.

The U.S.-South Korea deal is the biggest U.S. trade pact since the North American Free Trade Agreement that took effect in January 1994.

The action came a day before South Korean President Lee Myung-bak speaks to a joint session of the U.S. Congress.

In a speech to a U.S. business group, Lee called the pact a "very significant achievement" that will create jobs in both countries.

The Senate voted 83-15 to approve the South Korea deal and the House 278-151. The Panama agreement cleared the Senate by a vote of 77-22 and the House 300-129.

The Colombia agreement, reflecting Democrats' concerns about labor conditions, garnered the least support but still was approved by margins of 66-33 in the Senate and 262-167 in the House.

"The free trade agreement ends the uncertainty that has been discouraging long-term investment and it now guarantees to all investors stability in the rules of the game," Colombian President Juan Manuel Santos said on television.

"The moment has come to think big and work for a successful implementation and to take advantage of this treaty, which in commercial terms is the most important one we have signed in our history."

Obama sent the three agreements to Capitol Hill nine days ago, four to five years after they were negotiated.

The deals had foundered mainly on Democratic Party concerns over labor practices abroad and fear that increased competition would cost U.S. jobs.

OPPORTUNITIES LOST

U.S. farmers and big agricultural exporters are excited about new sales opportunities for beef, pork, poultry, corn, wheat, soybeans and other food products in the three markets, but they lament the long delay as a lost opportunity.

"We can't underestimate how much U.S. agriculture has lost out," while the trade pacts were stalled, said Devry Boughner, director of international business relations for the food, agriculture and risk management giant Cargill.

"Corn, soybeans and wheat exports from the U.S. have gone from a 78 percent market share in the Colombian market to 28 percent, owing in part to the fact that Canada got to Colombia first," Boughner said.

David Dreier, chairman of the powerful House Rules Committee, called approval of the pacts a small step toward restoring U.S. leadership on trade.

Although Obama was slow to move the agreements, he negotiated side deals with each country to address concerns raised by Democrats and reduce opposition to the pacts.

He also insisted Congress renew a worker retraining program known as Trade Adjustment Assistance, which the House did on Wednesday along with the pacts.

In a study in 2007, the U.S. International Trade Commission estimated the U.S.-South Korea deal would lift U.S. imports from Korea to $6.9 billion a year by $6.4 billion, with gains in areas like clothing, footwear, electronics and cars.

A study by the labor-backed Economic Policy Institute estimated the agreement will cost about 159,000 jobs over seven years. The White House says it will help create or maintain more than 70,000, while congressional Republicans see as many as 250,000 new jobs.

All three pacts were negotiated and signed during the administration of former President George W. Bush, who was unable to win their approval from the Democratic-controlled Congress before leaving office in 2009.

The oldest and most controversial pact, the one with Colombia, was signed in November 2006 and the other two accords in mid-2007. Since then, other countries have negotiated scores of new trade agreements around the world.

Ted Austell, a vice president at Boeing, said the aircraft maker expected to benefit both directly and indirectly. "When commerce increases, downstream that turns into aircraft orders. More movement of people and certainly of goods opens up more opportunity to sell aircraft," he said.

Copyright 2011 Thomson Reuters.

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