Opponents Go Postal Over Push to Raise Mailing Costs

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U.S. Postal Service employee Arturo Lugo delivers an Express Mail package during his morning route on February 6, 2013 in Los Angeles, California.
National Journal
Billy House
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Billy House
Dec. 18, 2013, 3:43 p.m.

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.”

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