HOW TO KILL A REFORM BILL WITH ONE REALLY BAD IDEA

The following is a perspective by PostCom President Gene Del Polito and PostCom Vice President Kate Muth.

 As the mailing industry digested last week’s information on the proposals the administration wants included in the House and Senate reform bills, they found themselves choking on one suggestion.

The administration has proposed a price cap tied to the Consumer Price Index applied at the class level, which is not the item that is causing heartburn. Mailer distress is over the administration’s suggestion that the Postal Service be allowed to “bank” any inflation-related increases for five years if they do not raise those rates annually. For example, under a banking system, if the USPS didn't raise rates in 2006 and 2007, and the cumulative rate of inflation in those years was 6%, it could add that 6% on top of the next rate increase.

Mailers have been saying for years that they want predictable, simple and budgetable rate increases. That is to say, they do not want to get hit with a huge rate increase in one year – even if this is the cumulative rate of inflation over the previous few years. An inflation-banking option is contrary to those goals. Further, this banking system makes mailers wonder why an exigency clause is needed in a price-cap regime. (The administration proposal on a cap would allow the USPS to seek additional revenues for “unexpected and extraordinary circumstances.”

In short, the idea of banking inflationary increases is something mailers cannot tolerate. Including it in any bill would mean the death knell for reform.

Most of the administration’s legislative proposals to the House, such as recommended changes to worksharing language, were expected as they closely mirrored the elements the administration put forward in its short “white paper” on reform that circulated late last year. The idea of banking inflationary increases, however, was a new one for the Administration. Too bad, the idea was bad when it first was proposed by the Postal Service in the late 1990s. It remains bad today. It's worthy of an early burial, before it brings the whole postal reform effort to a devastating end.