[Congressional Record Volume 158, Number 59 (Tuesday, April 24, 2012)]
[Senate]
[Pages S2630-S2634]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




VIOLENCE AGAINST WOMEN REAUTHORIZATION ACT OF 2011--MOTION TO PROCEED--
                               Continued

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of the motion to proceed to S. 1925.
  The Senator from Arizona.


                             Postal Reform

  Mr. McCAIN. Mr. President, I want to discuss one of the amendments 
that I believe we will be voting on later, and basically what it does 
is it establishes a BRAC-like process in order to consolidate 
redundant, underutilized, and costly post offices and mail processing 
facilities.
  We found over the years that Congress was politically unable to close 
a base or a facility that had to do with the military, so we adopted a 
process where a commission was appointed, those recommendations to 
consolidate excess and underutilized military bases were developed, and 
Congress was given an up-or-down vote. This is sort of based on that 
precedent.
  The bill before us clearly doesn't offer any solutions. According to 
the Washington Post editorial:

       The 21st Century Postal Service Act of 2011, proposed by 
     Senators Joseph Lieberman and Susan Collins and passed last 
     week by the Senate Committee on Homeland Security Government 
     Affairs, is not a bill to save the U.S. Postal Service. It is 
     a bill to postpone saving the Postal Service.

  I agree with the Washington Post. I usually do. The Service's 
announcement that they lost $5.1 billion in the most recent fiscal year 
was billed as good news. That is how dire the situation is, the fact 
that they only lost $5.1 billion.

       The Collins-Lieberman bill, which transfers $7 billion from 
     the Federal Employee Retirement System to the USPS--to be 
     used to offer buyouts to its workers and paying down debts--
     can stave off collapse for a short time at best.
       Nor do the other measures in the bill offer much hope. The 
     bill extends the payment schedule for the Postal Service to 
     prefund its employee retirement benefits from 10 to 40 years. 
     Yes, the funding requirement is onerous, but if the USPS 
     cannot afford to pay for these benefits now, what makes it 
     likely that it will be able to pay later, when mail volume 
     has most likely plummeted further?
       The bill also requires two more years of studies to 
     determine whether a switch to five-day delivery would be 
     viable. These studies would be performed by a regulatory body 
     that has already completed a laborious inquiry into the 
     subject, a process that required almost a year.

  The Washington Post goes on to say:

       This seems a pointless delay, especially given a majority 
     of Americans support the switch to five-day delivery.

  And finally they go on and say:

       There is an alternative--a bill proposed by Rep. Darrell 
     Issa that would create a supervisory body to oversee the 
     Postal Service's finances and, if necessary, negotiate new 
     labor contracts. The bill . . . is not perfect, but offers a 
     serious solution that does not leave taxpayers on the hook.

  So we now have legislation before us that makes it harder, if not 
impossible, for the Postal Service to close post offices and mail 
processing plants by placing new regulations and limitations on 
processes for closing or consolidating mail processing facilities, a 
move in the wrong direction. It puts in place significant and 
absolutely unprecedented new process steps and procedural hurdles 
designed to restrict USPS's ability to manage its mail processing 
network.
  Additionally, the requirement to redo completed but not implemented 
mail processing consolidation studies will ultimately prevent any 
consolidations from occurring this calendar year.
  What we have to realize in the context of this legislation is that we 
now have a dramatic shift, technologically speaking, as to how 
Americans communicate with each other. That is what this is all about. 
We now have the ability to communicate with each other without sitting 
down with pen and paper, just as we had the ability to transfer 
information and knowledge by means of the railroad rather than the Pony 
Express.
  We now have facilities that are way oversized and unnecessary, and we 
are facing a fiscal crisis. According to the Postal Service:

       The current mail processing network has a capacity of over 
     250 billion pieces of mail per year when mail volume is now 
     160 billion pieces of mail.

  So now we have overcapacity that is nearly double what is actually 
going to be the work the Postal Service does, and all trends indicate 
down. More and more Americans now acquire the ability to communicate by 
text message, Twitter, and many other means of communications. So to 
somehow get mired into while we cannot close this post office, we have 
to keep this one open, we have to do this--we have to realize it in the 
context that a large portion of the U.S. Postal Service's business is 
conducted by sending what we call ``junk mail'' rather than the vital 
ways of communicating that it was able to carry out for so many years.
  In addition, the Postal Service has a massive retail network of more 
than 32,000 post offices, branches, and stations that has remained 
largely unchanged despite declining mail volume and population shifts. 
The Postal Service has more full-time retail facilities in the United 
States of America than Starbucks, McDonald's, UPS, and FedEx combined. 
And according to the Government Accountability Office, approximately 80 
percent of these retail facilities do not generate sufficient

[[Page S2631]]

revenue to cover their costs. That is what this debate is all about. I 
hope my colleagues understand that we are looking at basically a dying 
part of America's economy because of technological advances, and in 
this legislation we are basically not recognizing that problem.

  When 80 percent of their facilities don't generate sufficient revenue 
to cover their costs, then any business in the world--in the United 
States of America--would right-size that business to accommodate for 
changed situations. This bill does not do that. It continues to put up 
political roadblocks that prevent tough but essential closings and 
consolidations.
  I grieve for the individuals who took care of the horses when the 
Pony Express went out of business. I grieve for the bridle and saddle 
and buggymakers when the automobile came in. But this is a 
technological change which is good for America in the long run because 
we can communicate with each other instantaneously. So we have a Postal 
Service--and thank God for all they did all those years, in fact, to 
the point where they were even mentioned in our Constitution. But it is 
now time to accommodate to the realities of the 21st century, and the 
taxpayers cannot continue to pick up the tab of billions and billions 
of dollars. Again, last year it lost only $5.1 billion, which they 
suggested was good news.
  All this bill does is place significant and absolutely unprecedented 
and new process steps and procedural hurdles designed to restrict 
USPS's ability manage its mail processing network. Additionally, the 
requirement to redo completed but not implemented mail consolidation 
studies will ultimately prevent any consolidations from occurring this 
year.
  So what do we need to do? We obviously need a BRAC. We need a group 
to come together to look at this whole situation, find out where 
efficiencies need to be made--as any business in America does--and come 
up with proposals, because Congress does have a special obligation, and 
have the Congress vote up or down. This bill will continue the failing 
business model of the Postal Service by locking in mail service 
standards for 3 years which are nearly identical to those that have 
been in place for a number of years.
  The clear intent of this provision is to prevent many of the mail 
processing plant closures that the Postal Service itself has proposed 
as part of its restructuring plan. It also prohibits the Postal Service 
from moving to 5-day mail delivery for at least 2 years with 
significant hurdles that must be cleared before approval, even though 
the Postmaster General has been coming to Congress since 2009 and 
asking for this flexibility.
  One of the largest single steps available to restore USPS's financial 
solvency would save the Postal Service at least $2 billion annually. If 
you told Americans that we would save the taxpayers' money--because 
they are on the hook for $2 billion a year--if you went from 6-day to 
5-day mail delivery, I guarantee you that the overwhelming majority of 
Americans do support a 5-day delivery schedule rather than 6-day 
delivery schedule.
  This, of course, kicks the can down the road. The bill also has at 
least five budget points of order against it about which the ranking 
member of the Budget Committee came to the floor yesterday and spoke.
  So the BRAC-like amendment is essential, in my view, to moving this 
process forward. I don't know how many more billions of dollars of 
taxpayers' money is going to have to be spent to adjust to the 21st 
century. There is no business, no company, no private business in 
America that when faced with these kinds of losses wouldn't 
restructure. And they would restructure quickly because they would have 
an obligation to the owners and the stockholders. We are the 
stockholders. We are the ones who should be acting as quickly as 
possible to bring this fiscal calamity under control.
  The GAO, the Government Accountability Office, states:

       The proposed Commission on Postal Reorganization could 
     broaden the current focus on individual facility closures--
     which are often contentious, time consuming, and 
     inefficient--to a broader network-wide restructuring, similar 
     to the BRAC approach. In other restructuring efforts where 
     this approach has been used, expert panels successfully 
     informed and permitted difficult restructuring decisions, 
     helping to provide consensus on intractable decisions. As 
     previously noted, the 2003 Report of the President's 
     Commission on the USPS also recommended such an approach 
     relating to the consolidation and rationalization of 
     USPS's mail processing and distribution infrastructure.

  We pay a lot of attention to the Government Accountability Office 
around here and this is something the Government Accountability Office 
recommends as well.
  In addition:

       [GAO] reviewed numerous comments from members of Congress, 
     affected communities, and employee organizations that have 
     expressed opposition to closing facilities. Such concerns are 
     particularly heightened for postal facilities identified for 
     closure that may consolidate functions to another state 
     causing political leaders to oppose and potentially prevent 
     such consolidations.

  We should listen to the Government Accountability Office, take 
politics out of this delicate process, and move forward with their 
recommendations.
  Our proposal would be composed of five members appointed by the 
President, with input from the House and Senate and the Comptroller 
General, with no more than three members being of the same political 
party.
  The Postal Service, in consultation with the Postal Regulatory 
Commission, will be required to submit a plan to the BRAC-like 
Commission on closures and consolidations, which will include a list of 
closures and consolidations, a proposed schedule, estimated annual cost 
savings, criteria and process used to develop the plan, methodology and 
assumptions used to derive the estimates and any changes to processing, 
transportation, delivery or other postal operations anticipated as a 
result of the proposed closures and consolidations.
  The Commission will be required to publish in the Federal Register 
the definition of ``excess mail processing capacity'' with a period of 
public comment.
  After receiving the plans, the BRAC-like Commission will be required 
to hold at least five public hearings.
  Finally, the Commission will be required to vote on the 
recommendations, with the concurrence of at least four of the members, 
and submit the recommendations to Congress. Any recommendation will be 
the subject of a congressional vote of approval or disapproval.
  The amendment recognizes the fact that the current business model for 
the Postal Service is no longer viable. If we continue to act in an 
irresponsible way by putting up political roadblocks, the American 
taxpayer will be the one who ultimately suffers in the form of higher 
postage prices and bailouts. We should make hard choices now so future 
generations of Americans will have a viable Postal Service.
  I ask unanimous consent the Washington Post editorial, ``A Failure to 
Deliver Solutions to Postal Service's problems,'' be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Nov. 18, 2011]

      A Failure To Deliver Solutions to Postal Service's Problems

       The 21st Century Postal Service Act of 2011, proposed by 
     Sens. Joseph I. Lieberman (I Conn.) and Susan Collins (R 
     Maine) and passed last week by the Senate Committee on 
     Homeland Security and Governmental Affairs, is not a bill to 
     save the U.S. Postal Service (USPS).
       It is a bill to postpone saving the Postal Service.
       The service's announcement that it lost $5.1 billion in the 
     most recent fiscal year was billed as good news, which 
     suggests how dire its situation is. The only reason the loss 
     was not greater is that Congress postponed USPS's payment of 
     $5.5 billion to prefund retiree health benefits. According to 
     the Government Accountability Office, even $50 billion would 
     not be enough to repay all of the Postal Service's debt and 
     address current and future operating deficits that are caused 
     by its inability to cut costs quickly enough to match 
     declining mail volume and revenue.
       The Collins-Lieberman bill, which transfers $7 billion from 
     the Federal Employee Retirement System to the USPS--to be 
     used for offering buyouts to its workers and paying down 
     debts--can stave off collapse for a short time at best.
       Nor do the other measures in the bill offer much hope. The 
     bill extends the payment schedule for the Postal Service to 
     prefund its employee retirement benefits from 10 to 40 years. 
     Yes, the funding requirement is onerous, but if the USPS 
     cannot afford to pay for these benefits now, what makes it 
     likely that it will be able to pay later, when mail volumes 
     most likely will have plummeted further?

[[Page S2632]]

       The bill also requires two more years of studies to 
     determine whether a switch to five-day delivery would be 
     viable. These studies would be performed by a regulatory body 
     that has already completed a laborious inquiry into the 
     subject, a process that required almost a year. This seems a 
     pointless delay, especially given that a majority of 
     Americans support the switch to five-day delivery.
       We are sympathetic to Congress's wish to avoid killing 
     jobs. And the bill does include provisions we have 
     supported--such as requiring arbitrators to take the Postal 
     Service's financial situation into account during collective 
     bargaining and demanding a plan for providing mail services 
     at retail outlets.
       But this plan hits the snooze button on many of the postal 
     service's underlying problems. Eighty percent of the USPS's 
     budget goes toward its workforce; many of its workers are 
     protected by no-layoff clauses. Seven billion dollars' worth 
     of buyouts may help to shrink the workforce, but this so-
     called overpayment will come from taxpayers' pockets, and it 
     is a hefty price to pay for further delay.
       There is an alternative--a bill proposed by Rep. Darrell 
     Issa (R Calif.) that would create a supervisory body to 
     oversee the Postal Service's finances and, if necessary, 
     negotiate new labor contracts. The bill, which just emerged 
     from committee, is not perfect, but it offers a serious 
     solution that does not leave taxpayers on the hook.

  Mr. McCAIN. I don't know what the ultimate result of the votes in the 
Senate will be. I do know that if it passes, it will be strongly 
opposed in the other body, the House of Representatives. If it is 
passed and signed into law, we will be back on the floor within 2 years 
addressing this issue again because this is not a solution. This isn't 
even a mandate. It is a proposal that will do business as usual and an 
abject failure to recognize there are technological changes that make 
certain practices obsolete, and that is what this is all about. Is it 
painful? Yes. Is it difficult? Yes. But the overall taxpayer obviously 
wants us to act in a fiscally responsible manner.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. LIEBERMAN. Mr. President, knowing we are scheduled to go out at 
12:50, I ask unanimous consent to stay in session for no longer than 10 
minutes more, so we will break at 1 p.m., for Senator Collins and I to 
respond to Senator McCain--hopefully, sooner than that.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LIEBERMAN. I thank the Chair, particularly since the Chair will 
be occupied by the distinguished Senator from Montana between now and 
then.
  I wish to respond very briefly to the statement of my friend from 
Arizona, with a couple big points. The first is that Senator McCain has 
declared the Postal Service of the United States dead much too 
prematurely. He compares it to the Pony Express. Of course, electronic 
mail and other changes have occurred but, today, every day, the Postal 
Service delivers 563 million pieces of mail--every day. There are 
businesses and individuals all over our country who depend on the mail. 
The estimate is there are approximately 8 million jobs in our country, 
most of them, of course--almost all of them--in the private sector, 
that depend in one way or another on the functioning of the U.S. Postal 
Service.
  It is not fair and it is not realistic to speak as if the Postal 
Service is dead and gone and it is time to essentially bury it with the 
McCain substitute. I cannot resist saying that Senator Collins and I 
come not to bury the U.S. Postal Service; we come to change it but to 
keep it alive and well forever because it is that important to our 
country.
  Secondly, Senator McCain speaks as if the substitute legislation, S. 
1789, that we are proposing--bipartisan legislation--does nothing; that 
it is a status quo piece of legislation; it is not even a bandaid on 
the problem. We all know, because we have talked about it incessantly 
since we went on this bill, that the Postal Service is in financial 
difficulty. Incidentally, I wish to say there is not a dime of taxpayer 
money in the Postal Service. Ever since the Postal Service reforms 
occurred, it has been totally supported by ratepayers, basically by 
people who buy the services of the Postal Service, with two small 
exceptions which are small--one to pay for overseas ballots for members 
of the military so they can vote and another special program to 
facilitate the use of the mail by blind Americans. But it has a 
problem: $13 billion lost over the last 2 years.
  This proposal of ours--Senator Collins and I, Senator Carper and 
Senator Scott Brown--is not a status quo proposal. It makes significant 
changes. There are going to be about 100,000 fewer people working for 
the Postal Service as a result of this bill being passed. There will be 
mail processing facilities that close. There will be post offices that 
will be closed and/or consolidated. There will be new sources of 
revenue for the Postal Service. The bottom line: The U.S. Postal 
Service itself estimates that our legislation, if enacted as it is now, 
as it is phased in over the next 3 to 4 years, by 2016, will save the 
Postal Service $19 billion a year. This isn't a bandaid. This is a real 
reform, a real transformation of the Postal Service to keep it alive--
$19 billion.
  Let me put it another way. This is a bipartisan proposal. We have 
worked on it very hard to keep it bipartisan. We think it can pass the 
Senate and it can ultimately be enacted. If Senator McCain's substitute 
were to pass the Senate, nobody thinks it is going to get enacted into 
law. It would not. Certainly, the President of the United States would 
not sign it, and that will mean nothing will be done. What will be the 
effect of that? The effect will be that the post office will go further 
and further into debt and deficit. Also, the Postmaster General will be 
faced with a choice of either enormous debts and deficits or taking 
steps that will make the situation worse--which our bill, through a 
reasonable process, is trying to avoid--which is a kind of shock 
therapy whose effect will be, as the McCain substitute would be, to 
actually drop the revenues of the post office and accelerate its 
downward spiral.
  I think the two numbers to think about--the ones that come from the 
Postal Service itself--are these: By 2016, if we do nothing, the Postal 
Service will run somewhere between a $20 billion and $21 billion annual 
deficit. If we pass this bill and it is enacted into law, that deficit 
will be down to around $1 billion--a little more--and heading toward 
balance in the years that follow.
  So I urge my colleagues to vote against the McCain substitute and the 
BRAC amendment. The BRAC-like Commission amendment I think is not 
necessary. It is not necessary for us in Congress to give up and give 
in. We have a good resolution to the problem. Incidentally, if we get 
this enacted, I think we will send a message to the American people 
that we can face a tough problem that exists in a public service, deal 
with it in a reasonable way, and ask people to sacrifice but keep a 
venerable and critically important American institution alive and well.
  I thank the Chair and I yield the floor for my distinguished ranking 
member.
  The PRESIDING OFFICER. The Senator from Maine.
  Ms. COLLINS. Mr. President, I am only going to speak very briefly. I 
wish to shine a spotlight on a provision of Senator McCain's substitute 
that has not yet been discussed that actually raises constitutional 
issues.
  All of us believe the labor force of the Postal Service is too large 
and unfortunately will have to be reduced, and we do that through a 
system of buyouts and retirement incentives through a compassionate 
means very similar to the way a large corporation would handle the 
downsizing of its employees. But Senator McCain's alternative takes a 
very different approach. It would have this new control board that 
would be created to impose on the Postal Service an obligation to 
renegotiate existing contracts to get rid of the no-layoff provision.
  I will say I was very surprised when the Postmaster General signed 
the kinds of contracts he did this spring. The fact is Senator McCain's 
amendment--section 304 of which amends section 1206 of existing law--
requires existing contracts to be renegotiated. That creates 
constitutional questions. The potential constitutional issue derives 
from the contracts clause of article I, which prohibits States from 
passing laws impairing the obligation of contracts. Of course, this 
provision does not apply to the Federal Government. The Congressional 
Research Service has explained in a memorandum to me on this topic in 
July of 2011 that the due process clause of the

[[Page S2633]]

fifth amendment has been held to provide some measure of protection 
against the Federal Government impairing its own contracts. I ask 
unanimous consent that the CRS memorandum I just referred to be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                               Congressional Research Service,

                                     Washington, DC, July 7, 2011.


                               MEMORANDUM

     To: Senate Committee on Homeland Security and Governmental 
         Affairs Attention: Lisa Nieman.
     From: Thomas J. Nicola, Legislative Attorney, 7 5004.
     Subject: Congressional Authority to Alter Postal Service 
         Employee-Management Relations, Including Collective 
         Bargaining Agreements.

       This memorandum responds to your inquiry regarding the 
     authority of Congress to alter Postal Service employee-
     management relations, including collective bargaining 
     agreements. The employee-management authority that Congress 
     has granted to the United States Postal Service in the Postal 
     Service Reorganization Act of 1970, P.L. 91 375, is broader 
     than authority that it has granted to most federal entities. 
     Congress enacted the 1970 Act, codified in title 39 of the 
     United States Code, to enable the U.S. Postal Service to 
     operate more like a business than a government agency. Before 
     this statute became law, postal services were operated by the 
     Post Office Department, a cabinet level government agency.
       The Act established the Postal Service as an independent 
     establishment in the executive branch of the United States 
     Government. While Congress applied to the Postal Service some 
     statutes including those relating to veterans' preference and 
     retirement that apply to federal agencies, it provided in 39 
     U.S.C. section 1209(a) that, ``Employee-management relations 
     shall, to the extent not inconsistent with the provisions of 
     this title [title 39 of the U.S. Code], be subject to the 
     provisions of subchapter II of chapter 7 of title 29[,]'' 
     i.e., the National Labor Relations Act, which governs private 
     sector employee-management relations. By contrast, provisions 
     relating to those relations for federal agencies are codified 
     in chapter 71 of title 5 of the United States Code.
       In section 1005 of title 39, Congress identified subjects 
     of Postal Service collective bargaining--compensation, 
     benefits, and other terms and conditions of employment. This 
     scope of subjects differs from the scope for federal agencies 
     identified in chapter 71 of title 5, which is limited to 
     ``conditions of employment.''
       Addressing the transition from the Post Office Department 
     to the businesslike U.S. Postal Service, Congress in 39 
     U.S.C. section 1005(f), as amended, stated, in relevant part, 
     that:
       No variation, addition, or substitution with respect to 
     fringe benefits shall result in a program of fringe benefits 
     which on the whole is less favorable to the officers and 
     employees in effect on the effective date of this section 
     [enacted on August 12, 1970], and as to officers and 
     employees/or whom there is a collective-bargaining 
     representative, no such variation, addition, or substitution 
     shall be made except by agreement between the collective 
     bargaining representative and the Postal Service.'' (Emphasis 
     supplied.)
       In section 1207 of title 39, Congress provided procedures 
     for terminating or modifying collective bargaining 
     agreements. It stated that a party wishing to terminate or 
     modify an agreement must serve timely written notice on the 
     other party. If parties cannot agree on a resolution or adopt 
     a procedure for a binding resolution of a dispute, the 
     Director of the Federal Mediation and Conciliation Service 
     must appoint a mediator. This section also provided authority 
     to establish an arbitration board under certain circumstances 
     and said that board decisions are conclusive and binding on 
     the parties.
       A collective bargaining agreement is a contract between the 
     Postal Service and a recognized bargaining unit. Can Congress 
     affect a collective bargaining agreement through legislative 
     action? The power of Congress over employee-management 
     relations at the Postal Service, including these agreements, 
     may be divided into prospective authority versus authority 
     over existing agreements. Congress has authority to modify 
     the scope of bargaining prospectively. In the Postal 
     Reorganization Act of 1970, Congress granted the Postal 
     Service authority to bargain over compensation, benefits 
     (such as health insurance and life insurance, for example), 
     and other conditions of employment, but it could amend that 
     statute to limit the scope of bargaining subjects in the 
     future. It could, for example, provide that health insurance 
     no longer will be the subject of collective bargaining after 
     collective bargaining agreements that address that subject 
     expire.
       A more difficult question is whether Congress could modify 
     agreement terms that the Postal Service and recognized 
     bargaining representatives have bargained collectively and 
     included in collective bargaining agreements before they 
     expire. Article I, section 10, clause 1 of the United States 
     Constitution, the Contract Clause, provides that laws 
     impairing the obligation of contracts shall not be passed, 
     but this prohibition applies to the states, not to the 
     federal government. Nevertheless, the jurisprudence under 
     this clause may help inform an inquiry regarding the power of 
     Congress to modify terms of collective bargaining agreements 
     while they are in effect.
       In United States Trust Co. v. New Jersey, the Supreme Court 
     said that, ``Although the Contract Clause appears literally 
     to proscribe `any' impairment, this Court has observed that 
     `the prohibition is not an absolute one and is not to be read 
     with literal exactness like a mathematical formula.' '' It 
     added that:
       The Contract Clause is not an absolute bar to subsequent 
     modification of a state's own financial obligations. As with 
     laws impairing the obligation of private contracts, an 
     impairment [of those obligations] may be reasonable and 
     necessary to serve an important public purpose. In applying 
     this standard, however, complete [judicial] deference to a 
     legislative assessment of reasonableness and necessity is not 
     appropriate because the state's self interest is at stake. A 
     governmental entity can always find a use for extra money, 
     especially when taxes do not have to be raised. If a state 
     could reduce its financial obligations whenever it wanted to 
     spend the money for what it regarded as an important public 
     purpose, the Contract Clause would provide no protection at 
     all.
       Based on the United States Trust Co. case, courts 
     subsequently developed a three-part test when assessing the 
     constitutionality of state action challenged as an impairment 
     of contracts--(1) whether the state action in fact impairs a 
     contractual obligation; (2) whether the impairment is 
     substantial; and (3) whether the impairment nevertheless is 
     reasonable and necessary to serve a public purpose.
       Although the Contract Clause does not apply to the federal 
     government, the Due Process Clause of the Fifth Amendment has 
     been held to provide some measure of protection against the 
     federal government impairing its own contracts, but the 
     limitations imposed on federal economic legislation by the 
     latter clause have been held to be ``less searching'' than 
     those involving the state legislation under the Contract 
     Clause. In two Depression-era cases, however, the Supreme 
     Court held that some statutes which impaired obligations to 
     pay purchasers of federally issued war risk insurance and 
     bondholders that Congress had enacted as economy measures 
     exceeded constitutional limits.
       If a court should be influenced by the reasoning expressed 
     in these cases, it may strike down as a Due Process Clause 
     violation a statute it finds to impair a term of a Postal 
     Service collective bargaining agreement before that agreement 
     expires. If a court should wish to avoid deciding a case 
     involving whether such a statute violates the Due Process 
     Clause, a constitutional ground, it may uphold the statute, 
     but require the United States to pay damages for breaching a 
     term of the agreement. Alternatively, because the limitations 
     on federal impairment of contracts have been held to be 
     ``less searching'' than those that apply to state impairments 
     under the Contract Clause of the Constitution, which are 
     permitted if found to be ``reasonable and necessary,'' a 
     court may uphold a statute that impairs a term of a current 
     Postal Service collective bargaining agreement and not assess 
     damages against the United States.

  Ms. COLLINS. There is also a Supreme Court case, Lynch v. The United 
States, which makes clear that the due process clause prohibits the 
Federal Government from annulling its contracts and the United States 
is as much bound by its contracts as are private individuals.
  In the landmark case of U.S. v. Winstar decided in 1996, the Supreme 
Court cited Lynch for the proposition that the Federal Government ``has 
some capacity to make agreements binding future Congresses by creating 
vested rights,'' even though the Contract Clause does not directly 
apply.
  Obviously, one Congress cannot bind another, and no Federal agency 
can bargain away the right of Congress to legislate in the name of the 
people. But no one would ever sign a contract with an instrumentality 
of the Federal Government if that contract could be rewritten by 
Congress at will.
  Recognizing this, the courts have distinguished between acts which 
affect contracts in general, where the Federal Government is exercising 
its sovereign powers, and acts directly altering the obligations of 
contracts to which the Federal Government is itself a party.
  The Winstar case I mentioned before illustrates this distinction. 
Winstar was brought by a financially healthy Savings & Loan institution 
that was asked by Federal regulators to take over failing thrifts 
during the S&L crisis of the 1980s. After Winstar entered into a 
contract with the Federal Savings & Loan Insurance Corporation 
stipulating that it could count the ``goodwill'' of the thrifts it took 
over to offset the liabilities it was assuming, Congress changed the 
underlying

[[Page S2634]]

law. Based on that change, the regulators reneged, declared Winstar 
``inadequately capitalized,'' and seized its assets.
  In that case, the Supreme Court held that even though Congress had 
the right to change the law in general, the Federal Government could 
still be liable for breach of contract it had entered into with 
Winstar, and for damages.
  I am concerned that if the Postal Service reopens and renegotiates 
its collective bargaining agreements to comply with the McCain 
amendment, courts could find the Postal Service in breach of those 
agreements, and force it to pay damages.
  At a minimum, it strikes me that Senator McCain's language could tie 
up the Postal Service in litigation for years, which would defeat our 
efforts to reduce the workforce costs faced by the Postal Service.
  Bottom line: I am very concerned that if the Postal Service is forced 
by the McCain substitute to reopen and renegotiate current collective 
bargaining agreements, the courts would find the Postal Service in 
breach of those agreements and force it to pay damages and also that it 
would be found to be unconstitutional. The approach we have taken does 
not raise those constitutional concerns. It does not have Congress 
stepping in to abrogate contracts, which is a very serious and 
potentially unconstitutional step for us to take.
  Finally, I would say I agree with everything my chairman has said. 
Senator McCain's amendment does not address the true problems of the 
Postal Service. Instead, it assumes that the Postal Service is 
obsolete, that they cannot be saved, and that we should just preside 
over its demise. I reject that approach.
  Thank you, Mr. President.

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