Big Mailers Bracing for Steep Rate-Hike Request From Postal Service

U. S. Postal Service letter carrier Terry Caldwell, of Topsham, Maine, background, delivers mail in Bath, Maine, Monday, Dec. 5, 2011. The Postal Service, which has been losing money for five years, announced Monday that it would close 252 out of 461 mail processing centers across the country starting next April. (AP Photo/Pat Wellenbach)
National Journal
Billy House
Add to Briefcase
Billy House
Aug. 27, 2013, 3:30 p.m.

A co­ali­tion of magazine, news­pa­per, print­ing, and dir­ect-mar­ket­ing groups warns that the U.S. Postal Ser­vice may de­cide next week to re­quest that postal rates be raised sig­ni­fic­antly — per­haps by as much as 10 per­cent — un­der the claim of “ex­i­gent” cir­cum­stances.

The Board of Gov­ernors for the Postal Ser­vice, which is bleed­ing money, con­tin­ues to ex­plore “the pos­sib­il­ity of fil­ing for price ad­just­ment later this year,” spokes­man Dave Parten­heimer said Tues­day.

But he said no fi­nal de­cision has been made.

However, the board is sched­uled to meet in a private tele­con­fer­ence Sept. 5 with the top­ic of “pri­cing” in­cluded on its agenda. Fear­ing the board plans to vote to re­quest an across-the-board rate in­crease that far ex­ceeds in­fla­tion, the Af­ford­able Mail Al­li­ance of more than 50 com­mer­cial or­gan­iz­a­tions that rep­res­ent news­pa­pers, magazines, and dir­ect mail­ers has launched a pree­mpt­ive lob­by­ing ef­fort.

“The Af­ford­able Mail Al­li­ance un­der­stands that the Board of Gov­ernors will be con­sid­er­ing a po­ten­tial ex­i­gency rate in­crease on your con­fer­ence call on Sept. 5,” de­clared let­ters by the group to the board’s chair­man, Mickey Barnett, and oth­er board mem­bers.

Not­with­stand­ing the Postal Ser­vice’s on­go­ing fin­an­cial pre­dic­a­ment, warns those let­ters, a sig­ni­fic­ant rate in­crease could be self-de­feat­ing to re­cov­er­ing postal fin­an­cial sta­bil­ity, caus­ing “severely ad­verse and likely ir­re­voc­able con­sequences for mail volume and rev­en­ue.”

Postal rate in­creases are capped at in­fla­tion, as meas­ured by the Con­sumer Price In­dex. That would mean an al­low­able in­crease of about 2 per­cent for late Janu­ary 2014 im­ple­ment­a­tion.

But a 2006 law also al­lows the Postal Ser­vice to seek a high­er rate in­crease bey­ond the CPI in in­stances of “ex­i­gent” cir­cum­stances. In craft­ing that lan­guage, Sen. Susan Collins, R-Maine, has said she en­vi­sioned ex­treme cir­cum­stances, like ter­ror­ist at­tacks or nat­ur­al dis­asters.

Such re­quests are to be made to the Postal Reg­u­lat­ory Com­mis­sion, which has 90 days to act on them. In 2010, the Postal Ser­vice sub­mit­ted such a re­quest for an ex­i­gent rate in­crease of 5.6 per­cent — far more than the CPI cap — that would have brought in more than $3 bil­lion more an­nu­ally.

But the mail­ers fought that in­crease in court, and it was de­railed.

The Postal Ser­vice con­tin­ues to hem­or­rhage money — as much as $19 bil­lion since early 2012. And there are ex­pect­a­tions that ef­forts to use “ex­i­gent” cir­cum­stances as a basis for a sig­ni­fic­ant rate in­crease are be­ing re­kindled.

The high­er costs would hit every­one, in­clud­ing in­di­vidu­als who put a stamp on a piece of mail. However, the AMA’s let­ters spell out that the mail­ing in­dustry and its sup­pli­ers are re­spons­ible for $1.3 tril­lion in sales an­nu­ally, and nearly 8 mil­lion private-sec­tor jobs.

“This is not a solu­tion,” said Mary Bern­er, pres­id­ent and CEO of the As­so­ci­ation of Magazine Me­dia, in an in­ter­view.

Rather, she said it will in­stead pro­duce a “lose-lose situ­ation” for Postal Ser­vice con­sumers and the ser­vice it­self. Some magazines, she said, could end up abandon­ing mail use al­to­geth­er and con­cen­trate even more on di­git­al ef­forts, or even go out of busi­ness. A 10 per­cent in­crease would add about $300 bil­lion in costs to the in­dustry, she said.

Bern­er said her group is among those sup­port­ive of ef­forts in Con­gress to come up with “real re­forms” rather than what she says are such short-term ef­forts to ad­dress the Postal Ser­vice’s worsen­ing fin­an­cial situ­ation. However, she said that at­ten­tion and ef­fort will be di­ver­ted from those cur­rent le­gis­lat­ive ef­forts by the re­newed leg­al chal­lenges sure to be moun­ted if the Postal Ser­vice pur­sues an­oth­er “ex­i­gent’ in­crease.

In the House, the Over­sight and Gov­ern­ment Re­form Com­mit­tee already has passed along party lines its new ver­sion of a postal-re­form bill sponsored by Chair­man Dar­rell Issa, R-Cal­if. A bill also has been in­tro­duced by Sens. Tom Carp­er, D-Del., and Tom Coburn, R-Okla., the chair­man and rank­ing mem­ber, re­spect­ively, of the Sen­ate Home­land Se­cur­ity and Gov­ern­ment­al Af­fairs Com­mit­tee.

What We're Following See More »
VENEZUELA, NORTH KOREA ADDED
White House Announces Enhanced Vetting for Eight Countries
29 minutes ago
WHY WE CARE
"President Trump is replacing his controversial travel ban with a targeted list of restrictions that will enhance vetting for nationals from eight countries, senior administration officials announced Sunday. The eight countries on the modified list of countries are Chad, Iran, Libya, North Korea, Somalia, Syria, Venezuela and Yemen."

The officials say these states failed to comply with the U.S. information-sharing requirements that aim to make vetting processes stronger.

Source:
TRUMP SPEECH “AN ASSAULT ON OUR MOST CHERISHED RIGHT”
Every NFL Team Protests Trump in Some Way
29 minutes ago
THE LATEST

"Every team that played on Sunday participated in some form of demonstration" of President Trump's comments about players who kneel during the National Anthem. Some "players, coaches and executives ... stood together arm-in-arm along the sidelines" while "others sat, knelt or raised a fist" and some entire teams "stayed in the locker room or tunnel for the duration of the anthem." The Broncos' Von Miller, who knelt with 31 of his teammates, said, "We felt like President Trump's speech was an assault on our most cherished right—freedom of speech. So, collectively we felt like we had to do something before this game."

Source:
TUESDAY ADDRESS AT GEORGETOWN
Sessions to Address Campus Free Speech
29 minutes ago
THE DETAILS

"Trump isn't the only member of his administration fighting a culture war this week; his Attorney General Jeff Sessions will make a "free speech on campus address" on Tuesday at Georgetown University law school in D.C. It's going to get testy." Sessions will tell the students: "Whereas the American university was once the center of academic freedom — a place of robust debate, a forum for the competition of ideas — it is transforming into an echo chamber of political correctness and homogenous thought, a shelter for fragile egos."

Source:
FAR-RIGHT MAKES BIG GAINS
Merkel Wins Reelection but Party Loses Seats
29 minutes ago
THE DETAILS

"Angela Merkel will once again lead Germany, but her governing coalition is going to have to deal with the far-right Alternative for Germany (AfD), which rode a wave of anti-immigrant anger to claim a sizable chunk of seats in the Parliament for the first time. ... AfD, a hard-right, anti-Islam group not even represented in parliament in 2013, has become the third largest party. That might mean big changes to the character of a parliament that, thanks to the long shadow cast by Germany’s Nazi past, was largely free of hardline nationalism. Elsewhere, the environmentalist Greens and classical liberal, centrist Free Democrats (FDP) both grew their share of the vote," at the expense of socialists and Merkel's Christian Democrats.

Source:
VOTE TO GO FORWARD
Collins, Cruz Appear to Oppose Health Bill
10 hours ago
THE LATEST

Republican opposition to the GOP health care bill swelled to near-fatal numbers Sunday as Sen. Susan Collins all but closed the door on supporting the last-ditch effort to scrap the Obama health care law and Sen. Ted Cruz said that "right now" he doesn't back it. White House legislative liaison Marc Short and Sen. Lindsey Graham, R-S.C., one of the measure's sponsors, said Republicans would press ahead with a vote this week." Collins said she doesn't support the bill's cuts to Medicaid, while Cruz said it wouldn't do enough to lower premiums.

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login