The decade-long odyssey known as postal reform has
cleared its most significant hurdle to date. The House of Representatives late
on Tuesday passed H.R. 22, the Postal Accountability and Enhancement Act, by a
vote of 410-20. All proposed amendments to the bill were defeated.
For the first time in more than 35 years, the House has
passed a bill to overhaul the U.S. Postal Service. The House Government Reform
Committee unanimously reported H.R. 22 to the full House back in April. The
Senate is not going to vote on its companion piece of legislation, S. 662,
this week. It will have to wait until Congress returns to work after Labor
Day.
Rep. John M.
McHugh, R-NY, and sponsor of H.R. 22, said in a statement in advance of the
vote, “This reform is critical, not only for the continued operation of our
nation's Postal Service, but truly for the millions of individuals and
businesses who rely on the availability of universal mail service. Americans
have an expectation that the Postal Service will abide by its well-known,
although unofficial, motto - a commitment to deliver. USPS would not be
able to continue meeting those expectations, at least without significant cost
increases, without this update to its business model.”
The Postal
Service, a $900 billion industry that represents nine million jobs and nearly
nine percent of the Gross Domestic Product (GDP), is facing a decline in mail
volume and increase in costs. McHugh noted. Without reform, this
"death spiral" could put at least 1.5 million industry jobs at risk.
McHugh said H.R.
22 mandates transparency in the Postal Service’s finances, costs, and
operations, thus providing a sound structure to help the Postal Service adapt,
operate and survive. The legislation also substantially reduces the need
for the across-the-board increase in postal rates, which the Postal Service
had anticipated taking effect in January 2006.
“After working
on this bill for more than 10 years, I feel fairly certain that occasionally I
do run the risk of sounding like a broken record,” McHugh added. “But
there is no doubt in my mind that passage of this bill is critical, and not
just for the solvency of the Postal Service. The American taxpayer -
individual, small business, non-profit, or corporate - can ill afford the tax
increase that would come in the form of increased postal rates without HR. 22. What
these taxpayers do need is the $6 billion tax cut that this bill essentially
provides, which will, in turn, support investments in the economy and in job
creation.”
Currently, $43
billion would be collected from American taxpayers over the next 10 years and
locked away in escrow, the McHugh release noted. H.R. 22 reduces this
figure by $6 billion, and uses the remaining funds to address outstanding
liabilities associated with retiree health care.
Overall, the key
provisions of the Postal Accountability and Enhancement Act are:
Modern Rate
Regulation -
shifting the basis of the Postal Rate
Commission from a costly, complex scheme of rate cases to a modern system
designed to ensure that rate increases generally do not exceed the annual
change in the Consumer Price Index. This applies only to market-dominant
products (letters, periodicals, advertising mail) because the Postal Service
is provided with different pricing freedom for its competitive products
(Express Mail, Priority Mail, etc.).
Combining
Market Disciplines with Regulation - combining
market mechanisms with Commission regulation to govern the rates of
competitive products. The Postal Service would be given additional
pricing freedom but would lose favored legal treatment for such products.
Limitations on
Postal Monopoly and Nonpostal Products - requiring
the Postal Service to only offer postal services and for the first time
defining exactly what constitutes "postal services." The bill
also revises the authority of the Postal Service to regulate competitors.
Reform of
International Mail Regulation - clarifying
the authority of the State Department to set international policy, applying
customs laws equally to postal and private shipments, and giving the Postal
Service the authority to contract with airlines for transport of international
mail.
Strengthening
of the Commission -
giving the PRC “teeth” by granting
it subpoena power and a broader scope for regulation and oversight. The
PRC would be renamed the "Postal Regulatory Commission.”
Establish a
Basis for Future Reforms - mandating
several studies, including a comprehensive assessment of the scope and
standards for universal services.
Miscellaneous
Reforms -
including returning the responsibility
for the military service cost of Postal retirees to the Treasury Department,
while also requiring the Postal Service to significantly fund its enormous
liability for retiree health benefits.
The House bill differs from the Senate companion
legislation in a few ways. One is in the area of ratesetting. H.R. 22 directs
and empowers the Postal Regulatory Commission to determine the methods of
ratemaking to be applied to market-dominant service. It leaves the issue of
rate caps to the Postal Regulatory Commission’s discretion.
Perhaps most importantly to mailers is that both HR 22
and S. 662 returns to the Treasury the responsibility to pay for the military
portion of postal retiree benefits and eliminates the Civil Service Retirement
System escrow created by Public Law 108-18. The President’s Commission on
the U.S. Postal Service recommended both of these moves.
The White House, however, remains adamant that any postal
reform bill brought to President Bush for signature must be “deficit
neutral.” This has led to discussions between the co-sponsors and
administration officials on potential compromises that would limit the amount
of money available for rate relief.
Back in April, House Government Reform Committee Chairman Tom Davis, R-VA,
said he recognized that some budgeteers might be concerned about the cost of
this bill. Although the bill generates on-budget savings and does not violate
the Budget Act, the bill does not have an off-budget cost. This cost comes
from allowing the Postal Service to cut rates, which would stimulate economic
growth.