POSTAL RATE HIKE SHOWS NEED FOR REFORM

Arlington, VA (May 6, 2006) -- The U.S. Postal Service (USPS) has filed with the Postal Rate Commission (PRC) a request for an increases in postal rates to cover the rising costs of operating the nation's postal system. While the Postal Service said it was asking for a system-wide average rate increase of 8.5%. This increase would come on top of the 5.4% increase that went into effect earlier this year, which the USPS said was needed to fulfill the requirement of a federal law passed in 2003, which required it to establish a $3.1 billion escrow account.

The Association for Postal Commerce (PostCom), a national organization that represents enterprises that use (or support others in the use) of mail for business communication and commerce warned that the increases the USPS has requested could wreak harm on the thousands of businesses, nonprofit organizations, and charities that rely on mail as their primary communications vehicle.

This requested rate increase comes on the heels of a 5.4% rate increase that took effect on January 8, 2005. The USPS had claimed that the January rate hike was needed to fulfill the requirement of a federal law passed in 2003, which required it to establish a $3.1 billion escrow account resulting from an earlier federal law. Lawmakers have insisted that this escrow remain in effect until a new postal reform statute has been signed into law by the President.

"Unfortunately," said PostCom President Gene Del Polito, "Congress has not yet completed the job of getting a bill before the President. Time for reform is rapidly running out, and thousands of businesses across this country will have to pay the penalty for Congress' and the White House's inaction." "These are the kinds of postal rate increases," he said, "postal reform was intended to eliminate. Unless Congress and the President act quickly, double-digit rate increases will dampen hopes for continued economic growth."

Those who will be most adversely affected, Del Polito said, represent a segment of society that is responsible for generating some $900 billion economic activity (or about nine percent of the nation's Gross Domestic Product) and for the existence of some nine million American jobs nationwide.

While mailers understand that postage rates eventually must go up to pay for increases in operating expenses, the current system provides for no predictability and no opportunity for mailers to budget for the higher rates. Under current law, the Postal Service files its request for higher rates with the independent Postal Rate Commission, which has 10 months to issue a recommended decision. Then, the Postal Board of Governors votes on the recommendations and determines when the new rates will take effect.

"It's essential, " the PostCom President said, "that Congress complete its postal reform work with dispatch. Without reform, he emphasized, our nation will continue to suffer a fiscal burden that has nothing to do with improving the quality of the mail services we receive."