Trade Groups Argue About How to Fix the USPS

The United States Postal Service is “a train wreck about to happen,” in the words of Harry Quadracci, president/ CEO of printer Quad/Graphics. But the Direct Marketing Association and the Association for Postal Commerce (PostCom) are bickering about the best way to prevent a crash.

PostCom — along with, rumor has it, the Postal Service’s Board of Governors (BOG) — endorses the establishment of a presidential commission to explore a revamp of the USPS. But the DMA argues that “simply calling for a commission at this point is tantamount to accepting a 25% postal rate increase for commercial mail and a 50-cent stamp for U.S. households,” in the words of president/CEO Robert Wientzen. The DMA would rather that Congress push through a revised version of H.R. 22, the Postal Modernization Act of 1999, introduced by Rep. John McHugh (R-NY).

Time for a revamp

Shortly after the Jan. 7 implementation of new postal rates, the USPS said it would launch another rate case this summer, with a rate hike of 15%-20% likely for next spring or summer. The news spurred PostCom president Gene Del Polito, along with Kevin Richardson, vice president of government relations for printer R.R. Donnelley, to start rallying other printers to press the Bush Administration to establish a commission devoted to revamping the USPS.

“The purpose of a commission,” Del Polito says, “is to come up with feasible ways to bring about change to the postal system. That’s what Congress needs: A commission can at least lay out the road map to a new postal future.”

It was an earlier presidential commission that led to the 1970 Postal Reorganization Act, under which the USPS currently operates. But many feel the legislation is outdated.

For one thing, it gives the Postal Service little flexibility in setting rates — a problem in the face of increasing private-sector competition. For another, the law makes it difficult or impossible to fire most of the USPS workforce. Not only does this hinder the agency’s ability to cut labor costs, but it also gives employees no incentive to perform up to private-sector standards.

Such limitations, along with a decline in first class mail volume resulting from the rising popularity of Internet-based alternatives, led the Postal Service in fiscal 2000 to post its first annual loss since 1995. USPS sources add that it’s likely the agency will take another loss this year.

In light of the Postal Service’s financial straits, USPS vice president for public policy Deborah Wilhite conceded in February that the BOG has been “wrestling with the idea of a presidential commission.” Some sources say it has already endorsed the concept.

No time to lose

But the DMA contends that such a commission would be a waste of time. “The USPS simply can not afford to wait two or three years for a commission’s report,” Wientzen says. “Immediate help is imperative.”

The DMA isn’t against the establishment of a commission to study long-term postal issues, Wientzen says. But for the short term, even if a commission were to release its findings within two years, “it would require yet another round of time-consuming hearings, studies, and politicking on Capitol Hill.”

For that reason, the DMA is calling for Congress to revisit H.R. 22. “This bill would modernize the legislative and regulatory environment that surrounds the Postal Service,” Wientzen says, “and give the USPS the flexibility it needs to compete.”

But H.R. 22, a version of which had been introduced back in 1996 as the Postal Reform Act, never made it beyond the House full-committee level. That failure, Del Polito says, is why a commission is the way to go.

When the bill was discussed in the House last year, “there were differences between [Government Reform Committee chairman] Dan Burton and [Government Reform Committee member] Henry Waxman,” Del Polito says. “And those dynamics haven’t changed. Those two guys don’t like each other, and for the next two years it’s highly unlikely that you’re going to get them to sit down and talk of any legislative solution they’ll agree on.”

Some argue that Congress won’t seriously consider legislation without a commission. The main reason McHugh’s bills died, says Quad/Graphics’ Quadracci, is that “Congress doesn’t know there’s a problem. The Postal Service made money for several years until last year. And Congress measures how the USPS is doing based upon letters it gets from constituents. It hasn’t heard boo, so it thinks the Postal Service is doing well.”

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