Tag: Domestic

President Bush is expected to sign the postal reform bill tomorrow.
Marketers can now look forward to smaller postage rate increases from the U.S. Postal Service in the coming years.
Unlike past years when some mail categories saw 25%-30% rate hikes, the new law links postage rate increases to the Consumer Price Index.
Because of this, marketers might want to plan for smaller postage increases in the 4%-5% range every year, similar to FedEx and UPS.
It’s expected that the higher rates will take effect May 6, 2007.
Postal officials will be able to set new postage rates much faster once the law is in place. The law transfers responsibility of pension benefits earned by postal employees when they were in the military to the U.S. Treasury Department. This will free up USD27 billion that the Postal Service would have had to fund. After 10 years, the Postal Regulatory Commission will be allowed to modify the price cap or adopt an alternative rate system if deemed necessary.
The PRC gains the power to subpoena Postal Service records to ensure that the agency is in compliance with the law and that the interests of the mailing public are being protected.

The House and then the Senate passed a sweeping postal reform bill that will bring forth significant change in the way that postal rates are set. President Bush is expected to sign the bill into law sometime this coming week.

The bill’s passage culminates 11 years of prior failures to get a postal reform bill through both chambers of Congress.

In brief, what this means to catalogers is as follows:

* Future postal rate hikes will be at or below the inflation rate. A cap for raising rates will be created by linking rate changes to increases in the consumer price index. This will give mailers the chance to know what’d5s coming and be better prepared for rate increases.

* The cumbersome and costly, nine-month-long rate case process will be eliminated, giving the Postal Service the ability to set new rates much quicker, but with oversight from a new government agency, the Postal Regulatory Commission. The commission would be able to alter the cap or the rate system if it sees fit. The USPS will have greater incentive to keep its costs in line.

The new bill contains two key elements that will likely lead to its success:

1. For the first time in U.S. history, the USPS will no longer be required to pay for postal employee pension costs for those employees who previously served in the military. The new bill would eliminate this.

2. The bill repeals the law that forces the USPS to make postal pension payments, which are unwarranted, to an escrow fund, effectively freeing up $78 billion over the next 60 years. This money instead will help keep postage in check, as well as cover retiree healthcare liabilities and postal debts to the U.S. Treasury.