SENATE BILL: Atlasian Postal Reform Act (vetoed)

[bgwah]

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Sponsors: Duke, Marokai

[Fmr. Pres. Duke]

This is a brainchild of both Marokai and I. I think it will best serve to reform the Postal Service while not gutting it of its relevancy. Do we like all the provisions in this bill? Well, some are hard to swallow, but they are necessary to get it back on even footing, and if not even, at least on a footing that isn't losing billions a quarter.

[Mopsus]

Could we get an estimate from the GM as to exactly how much money each provision would save?

[🐒Gods of Prosperity🔱🐲💸]

Sure.

Ending Saturday delivery can be expected to reduce expenses by about $2.5 Billion, while reducing revenue by $600 Million, so net reduction in deficit of $1.9 B.

With labor and pension costs currently at $57 Billion out of $75 Billion ($56 B out of $73 B w/o Sat delivery) total operating cost, this law would require reducing pay and benefits by over half, or $32 Billion, to $25 B out of $42 B, assuming overhead remains constant apart from Saturday delivery.
This is in comparison to an $8 Billion current budget deficit.  Since this law requires a loan payback over 2 years, the post office must save at least $12 Billion over the current budget. That could actually be done with labor cost percentages of 70%.  Giving a longer loan payback period would put that even higher while making the budget situation more steady from one year to the next.

However, reducing labor and pensions to any constant percentage will mean any future reductions in overhead such as in section II are likely to necessitate further cuts in pay and benefits also. 

To analyze this further, it would be important to get a sense of a few things.
Would I.3. apply to already accrued benefits? I didn't know that could be done legally, but "null and void" sounds all-encompassing.  The difference here regarding the PO deficit has to do with defined benefit versus defined contribution, both for retirement funds and health care.
That deficit will also depend on whether Atlasian federal government continues to require the Post Office to fund retiree health care a few decades in advance.  That's going to be a more relevant issue to the current financial situation than whether or not there is Saturday delivery.

[bgwah]

Are we ready for a final vote here?

[bgwah]

I'll take that as a yes.

Senators, I am bringing this bill to a final vote. Please vote aye, nay, or abstain.

[Marokai Backbeat]

I feel a bit ashamed of myself for not speaking up about this bill, but I hope people vote to pass it. It's a comprehensive plan to protect the postal service, while trimming labor costs to keep it competitive and absolving them of their current debt. It's the most comprehensive restructuring of them that's ever been offered. Anywho;

Aye.

[Mopsus]

Aye

[🐒Gods of Prosperity🔱🐲💸]

Since this ended up being the final version of the bill, I should clarify: this bill will necessitate major restructuring of how the post office operates, so the static-formula figures I presented aren't the last word.  An attempt to expand service in a manner that increases overhead costs, while still lowering overall costs, is likely, so the full $32 Billion in projected savings may not be seen.  As mentioned before, due to the ceiling on labor costs, apart from a radically different business model, postal employees can expect pay and benefits to be cut in half (which would then be substantially below that of private sector competitors).

[Fmr. Pres. Duke]

aye

[Napoleon]

Abstain

[Okay, maybe Mike Johnson is a competent parliamentarian.]

Nay

[I spent the winter writing songs about getting better]

Nay

[Marokai Backbeat]

I don't understand where the nays are coming from here. Do you want the Postal Service to go under completely?

[Southern Senator North Carolina Yankee]

Aye

[bgwah]

Aye


the current tally is 5-2-1.

I suppose with the abstention that means this has enough votes to pass... So Senators have 24 hours to change their votes.

[bgwah]

I re-read the part about pensions and I'm changing my vote to nay.

[Napoleon]

Changing my vote to Nay.

[Marokai Backbeat]

I re-read the part about pensions and I'm changing my vote to nay.

60% is still significantly above what their private competitors offer, if any pension at all. I don't think you recognize how dire the current situation with the post office is, and frankly, I hope that Shua turns around and lays down some sort of horrible economic crisis on us if you people vote this down, considering the fact that this problem was raised, like, two months ago, and this has been the only time we've offered a comprehensive solution to actually address this.

Changing my vote to Nay.

Nothing new here..

[Marokai Backbeat]

Since this ended up being the final version of the bill, I should clarify: this bill will necessitate major restructuring of how the post office operates, so the static-formula figures I presented aren't the last word.  An attempt to expand service in a manner that increases overhead costs, while still lowering overall costs, is likely, so the full $32 Billion in projected savings may not be seen. As mentioned before, due to the ceiling on labor costs, apart from a radically different business model, postal employees can expect pay and benefits to be cut in half (which would then be substantially below that of private sector competitors).

With all due respect, I don't see how this is even remotely the case. Labor and pension costs currently consume 75% of the Atlasian Postal Service's expenses, compared to 46% of their private competitors. How insanely drastic could these cuts possibly be that would get anywhere near cutting everything in half?


Further, what would be the effect on future pension payouts if we staggered the reductions, and froze the pension payouts of those currently receiving them? (Also, if we made the loan a one-time payout, absolving them of financial obligations on that front?)

[bgwah]

How is it even legal to declare their pensions and contracts null and void?

[🐒Gods of Prosperity🔱🐲💸]

Since this ended up being the final version of the bill, I should clarify: this bill will necessitate major restructuring of how the post office operates, so the static-formula figures I presented aren't the last word.  An attempt to expand service in a manner that increases overhead costs, while still lowering overall costs, is likely, so the full $32 Billion in projected savings may not be seen. As mentioned before, due to the ceiling on labor costs, apart from a radically different business model, postal employees can expect pay and benefits to be cut in half (which would then be substantially below that of private sector competitors).

With all due respect, I don't see how this is even remotely the case. Labor and pension costs currently consume 75% of the Atlasian Postal Service's expenses, compared to 46% of their private competitors. How insanely drastic could these cuts possibly be that would get anywhere near cutting everything in half?

Proportion of labor costs of total expenses depends not just on labor costs, but also on non-labor costs. The private competitors emphasize long-distance air and truck delivery, information technology, automation, etc. so expenses are more capital intense vs. labor intense. (See http://courierexpressandpostal.blogspot.com/2011/05/comparing-labor-costs-at-usps-ups-and.html)   This is why trying to put labor costs at the same proportion as the competitors (who aren't competitors in all senses as they are focused on particular types of deliveries) would require a drastic change that goes beyond putting compensation at the same level as competitors. 

To consider it mathematically, even though 60% is (.80)(75%), this bill will not mean that labor costs will be reduced to 80% of their current level.  They will need to be reduced much more because when you subtract any number from labor costs, you are subtracting that number from total costs simultaneously (assuming non-labor costs do not increase).  Let's say we've gotten rid of Saturday delivery, and so labor costs are 56 Billion out of 74 Billion total cost. If we cut, say, 16 Billion from the labor side, we need to cut it from our total cost figure also. That means we're at 40 Billion out of 58 Billion, which is still 69%. Cut 20 Billion, 67%. We won't reach 60% until we've cut 32 Billion, down to $24 Billion labor costs.
Increases in non-labor costs could keep the total cost a bit higher as labor costs go down, in order to shield compensation somewhat, but it's not clear what those would be.

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I'll put pension payouts in four categories:
1. Those given to current pensioners. 
2. Those already earned by current employees.
3. Those earned in the future by current employees.
4. Those not yet under contract.

For categories 1 and 2, the pension is already paid for except for unexpected shortfalls in the investment returns, which are hard to estimate. I can't say what would be gained by going after those, apart from a legal challenge . For category 3, total pension contributions run about $18 Billion/yr. You could allow the post office to stagger reductions for current employees in some way (as long as it's legal under the contract law). I'd suggest a basic structure for how much you're looking to save over the short and long term, and then leaving the details for APS to hash out.
For the loan being a one-time payout, that would help them ease the transition for whatever restructuring they need to do, so that paying it back isn't an additional burden.

[bgwah]

How is it even legal to declare their pensions and contracts null and void?

I might reconsider. This bill just seems iffy to me.

[Fmr. Pres. Duke]

Hey, just let it go broke then.

[bgwah]

That doesn't answer my question concerning the legality of it.