US Senate committee backs postal reform bill denounced by mailers

A key committee in the US Senate has approved the latest version of postal reform legislation designed to rescue the ailing US Postal Service. The Homeland Security and Governmental Affairs Committee voted nine to one to report the Postal Reform Bill to the full Senate.

The Bill seeks to restructure the Postal Service’s pensions and healthcare financing to help it reduce its massive debt. It would potentially allow USPS to cut operating costs by moving from six-day-a-week mail delivery to a five-day schedule if mail volumes fall below 140bn pieces a year.

Much to the disappointment of major USPS customers, the Committee decided to go ahead with proposals that would strip regulators of more powers on pricing after 2016, and turn an above-inflation surcharge into a permanent postage rate.

Senator Tom Carper, the Committee chairman, said his bill offered a “bipartisan, balanced approach”, but accepted that the measures require “sacrifice in order to help the Postal Service survive and thrive”.

He said it was a bill that both Republicans and Democrats could get behind, though it will be a long road ahead for any proposals to actually become law.

“We took a big step today, but we are not even halfway there yet,” Carper said.

“With today’s vote, both the House and Senate have passed postal reform legislation out of committee. We now need to bring these bills to both the Senate floor and the House floor for votes so we can create a conference committee to hash out the differences. Clearly, this is no easy task and we have a lot of work ahead of us. It’s time that Congress and the Administration work together to save the Postal Service for the long haul.”

Price increase

The key amendment debated yesterday, particularly as far as business mailers were concerned, came from Senator Tammy Baldwin. It would have allowed last month’s temporary above-inflation postage rate increase to remain in affect for only one year, after which the USPS price cap would become inflation plus one percent, instead of the current basis on inflation only.

But the Committee instead voted to make the three-times-inflation “exigent” postage rate increase permanent, then maintain the annual price cap for subsequent price increases at the inflation level, subject to a 2017 review.

The Committee also backed proposals to give USPS governors primary responsibility over postage rates, stripping powers away from the Postal Regulatory Commission.

Carper explained the proposed review: “2017 rolls around, Postal Service proposes what a rate structure should look like, passes it off to the PRC, PRC has the opportunity to say ‘yea’ or ’nay’. If it’s ’nay’, then we stay right at CPI.”

The US Postal Service is currently $15bn in debt to the US Treasury and making multi-billion dollar annual losses each year, while defaulting on multi-billion payments to the Federal government.

Tom Coburn, the leading Republican on the Committee, said he believed financial projections from the Postal Service on how it would grow revenue to close some of its budget gap were “way too optimistic”.

He said assumptions that parcel growth rates would be 6% a year, while Standard Mail volumes would decline by only 4% in a decade, were “highly unlikely”.

He said as a result, there had to be some kind of compromise providing fairness on who pays for the US mail service.

“I have no doubt that everyone on this committee wants the Postal Service to survive. The statements we’ve heard that the American taxpayer isn’t paying any of the bills of the Post Office is just ludicrous. They’ve paid $15bn so far,” he said.

“What we have to do is come to a compromise that is fair as far as possible to those who are paying the postage, and fair to the postal employees, and fair to the American public.”

“Frustrating”

But following yesterday’s bill mark-up, major USPS customers warned that rejecting the Baldwin amendment to the Senate bill would pose a “serious threat” to the long-term viability of the Postal Service.

Art Sackler, co-manager of the business mailers’ lobby group Coalition for a 21st Century Postal Service, said: “The Senate bill is especially frustrating because the Postal Service so badly needs help from Congress, yet this bill isn’t it. It will heap higher payments on an already struggling community, and reduce the ability of the Postal Regulatory Commission to ensure consumers, customers and competitors are treated fairly.”

Rafe Morrissey, the vice president of postal affairs at the Greeting Card Association, said the current Senate bill was not a “commonsense” plan for the universal service.

“As currently drafted, The Postal Reform Act of 2014 poses a serious threat to the long-term viability of the Postal Service by raising rates and eliminating critical oversight by the Postal Regulatory Commission, and the GCA is extremely concerned by its passage through committee,” he said.

Business mail groups are now looking to push for changes to the bill’s proposals as they are debated by the full Senate – but said they will oppose the bill outright in its current shape.

Peggy Hudson, the Direct Marketing Association senior vice president of government affairs, said: “DMA is extremely disappointed in the outcome of today’s markup of the Postal Reform bill. We oppose the Postal Reform Act of 2013 in its current form. DMA will work closely with our Senate allies to improve this legislation for the mailing community. We extend our sincere thanks to Senator Tammy Baldwin for her leadership and support.”