Opponents Go Postal Over Push to Raise Mailing Costs

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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