House, Senate Pass Historic Postal Reform Legislation
Both the House and Senate have passed historic postal reform legislation in the final hours of the 109th Congress after key negotiators–Sens. Susan Collins, R-ME, and Tom Carper, D-DE, and Reps. Tom Davis, R-VA, and Henry A. Waxman, D-CA–brokered an agreement that will modernize the United States Postal Service (USPS) and make it viable for the 21st century. The legislation, ten years in the making and the first major overhaul of the USPS since 1970, will help stabilize mail volume and stamp prices.
The USPS is a $900 billion mailing industry, providing nine million jobs nationwide in fields as diverse as direct mailing, printing, catalog companies, paper manufacturing, and financial services. Its current business model, which has not been updated in decades, is not viable, according to the legislators. The enacted reforms, they say, are the only way to avoid a “death spiral” of excessive and unpredictable rate increases which lead to further reductions in mail volume.
The legislation should help the USPS avoid disastrous future postal rate hikes and achieve firm financial footing in the face of increasing communication through faxes, email, and electronic bill-paying.
The Postal Service is in a period of transition. When it was created in 1971, no one had access to fax machines, cell phones, pagers, and email. After nearly three decades of success, these new communications technologies have hit the agency hard. In recent years, the volume of first class mail has steadily decreased. At the same time, more than 1 million new addresses are added to delivery routes each year. The result: Delivery costs have increased at the same time that revenues are being threatened.
The legislation would force the USPS to concentrate on what it does best–processing and delivering mail to all Americans. The bill, titled the Postal Accountability and Enhancement Act, would dramatically rethink the way the USPS prices its products by giving it the same ability other businesses have to change prices when necessary. But to protect businesses and mailers from sudden and dramatic price hikes, the legislation would ensure that price increases be kept below an inflation- based ceiling.
In addition, the bill would give the USPS the freedom to introduce new, innovative products or tailor existing products to meet customers’ needs, which should help attract new business and increase revenues. The bill also would support the USPS’ finances by repealing a provision in current law that makes the USPS the only agency in the federal government responsible for its employees’ military pension benefits, returning this obligation to the U.S. Treasury.
Another provision will permanently correct the Postal Service’s flawed pension formula, a formula that was leading to significant overpayments and contributing to higher rates. These provisions will free up billions of dollars, giving the USPS the ability to begin paying down its debts.
Lawmakers also were able to strike a deal on the level of authority given to the newly-created Postal Regulatory Commission. The bill maintains language included in both the House and Senate versions giving the Commission tools, such as subpoena power, to ensure that the USPS is in compliance with the law and that the interests of the mailing public are protected.
In addition,the bill now contains new language giving the Commission the power, as an expert regulatory body, to monitor the new rate system in future years and make whatever changes are necessary to ensure that it continues to meet postal customers’ needs. At the same time, the bill would add an Inspector General of the Postal Regulatory Commission to monitor the regulator in the use of its expanded powers.