As the U.S. Postal Service (USPS) financial crisis and the debate over removing the inflationary price cap on postal rates intensifies, the subject of postal revenue and costs is headed to Congress.
Congress is working to improve the financial condition of the Postal Service, which mailers hope will ease pressure on USPS and reduce the need to squeeze revenues from monopoly mailers, who may seek other alternatives if their postage costs go up.
Chairwoman of the House Committee on Oversight and Reform, Rep. Carolyn Maloney (D-NY), and Ranking Member, Rep. James Comer (R-KY), recently introduced the Postal Service Reform Act of 2021 in the House (H.R. 3076), which would bolster the USPS financial position by integrating postal retiree health benefits into Medicare and repealing a congressional mandate for USPS to pre-fund its retiree healthcare costs. These provisions would save the Postal Service an estimated $57 billion in liabilities over the next decade.
The legislation also requires USPS to maintain an integrated delivery system for packages and monopoly mail of at least six days a week and would help rural newspapers by allowing within-county newspapers to increase their distribution of sample copies—from 10 percent under current law to 50 percent. This will allow rural newspapers to provide samples at lower rates to readers for the purpose of attracting new or returning subscribers.
The bipartisan bill was adopted by the Committee on Oversight and Reform earlier this month with no amendments. A bipartisan group of 20 Senators, led by the Chairman and Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, Senator Gary Peters (D-MI), and Senator Rob Portman (R-OH), respectively, have now introduced a nearly identical bill in the Senate (S. 1720).
However, the legislation in the House and Senate will not prevent the crushing price increases that may soon slam mailers. As we have mentioned in earlier posts, the Postal Service’s ability to raise postal rates – outside of the annual increases usually implemented in January – became available on November 30 when the Postal Regulatory Commission (PRC) overturned a Congressionally-mandated inflationary price cap for monopoly mail (First Class, Periodicals and Marketing Mail). The change could lead to increased rates as early as September and higher costs for publishers, in the range of six to nine percent. This would be on top of rate increases that were implemented at the beginning of the year.
The Alliance and other mailers are encouraging members of Congress to add an amendment to legislation that would require the Postal Regulatory Commission (PRC) to conduct another review of the rate-setting system with more recent data (including the effects of the pandemic) that would provide a more accurate picture of the Postal Service’s finances. This review would demonstrate that USPS is in a stronger financial and operational position given increased postal revenue in packages and a $10 billion appropriation granted by the agency. This could lead the PRC to revise the parameters used for the new rate-setting system, and result in a lower rate structure.