Expect postal politics to hit a fever pitch in the next week as a regulatory panel prepares to rule on the U.S. Postal Service’s request for a rate hike of almost 6 percent — the target of furious lobbying by opponents.
The agency’s request would increase the price of a first-class stamp by 3 cents, bringing it to 49 cents, and the cost of mailing a postcard would go up a penny to 34 cents. The rate hike aims to raise about $2 billion more in annual revenue for the Postal Service, which continues to suffer huge financial losses that are reflected in a $20 billion budget gap.
Representatives of a broad coalition of magazine publishers, mail-order companies, and other businesses and nonprofits that are battling the proposed increase say they expect the decision as early as Friday or Monday. But when, exactly, the Postal Regulatory Commission will announce its ruling is not set.
Postmaster General Patrick Donahoe told National Journal in an interview published last month he hoped for a decision by the end of the year so the new prices can take effect at the end of January. That month in-between, he said, would allow time for customers to make software changes they need for mail production.
Donahoe has said the service would reconsider its hike request if its financial challenges were alleviated by Congress through various Postal Service reforms.
But no deal on such legislation has been reached. This session, a new measure from House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., was approved by his committee along party lines. It includes efforts to soften previous proposals to close rural post offices and would immediately end Saturday mail service.
But a scheduled business meeting set for Wednesday by the Senate Homeland Security and Governmental Affairs Committee to work on a Senate version of a reform bill was postponed, and no further action is anticipated until next year.
Outside challenges to the Postal Service’s request have emphasized that rate increases are normally capped at the rate of inflation, which under the Consumer Price Index would mean an allowable increase of only about 2 percent. But a 2006 law does allow the Postal Service to seek a higher rate increase beyond the CPI in instances of “exigent” circumstances — and that is what is being proposed now. The Postal Service says it is filing for such an “exigent” increase “due to extraordinary and exceptional circumstances which have contributed to continued financial losses.”
Mailers fought such an increase in 2010 in the courts and won.
And this time, these opponents are arguing in a filing with the regulatory panel that the service’s recent losses are due more to competition from the Internet — a problem they say doesn’t entitle it to an above-inflation rate increase. They also say the request is made regardless of positive effects seen on mail volume due to the post-2009 economic recovery.
“The Postal Service must face the facts and right-size its operations, not drive even more volume away by raising prices so drastically on its remaining customers,” Jim Cregan of the Association of Magazine Media argued in a statement.
Allowing the increase will be a “big hit” on nonprofits and charities as well as businesses, says Tony Conway, executive director of the Alliance of Nonprofit Mailers.
For instance, in an interview this week, he said that a penny increase in the postal rate would jump the Easter Seals mailing costs by more than $500,000, and the 3-cent increase would boost them by $1.5 million. This is money, he says, that would otherwise go to those the charity aims to help.
“It will mean all nonprofits will do less. And it is unwarranted,” argues Conway. He said the real problem at the Postal Service is that “it is way overbuilt, a massive infrastructure that is far bigger and more expensive than it should be.”