Will mailers be asked to pay more to help the U.S. Postal Service?

September 5, 2013
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The Postal Board of Governors is scheduled to meet behind closed doors Thursday to consider a path to solvency for the money-losing U.S. Postal Service that includes a potential price increase that’s alarming mailers of newspapers and magazines, advertising and other bulk correspondence.

The occasion for a possible “exigent rate increase” above the annual rate adjustment for mail that’s capped by the Consumer Price Index comes in the aftermath of the Postal Service’s failed effort earlier this year to eliminate Saturday delivery of letters without congressional approval.

(Matt Rourke/AP)
(Matt Rourke/AP)

After Congress balked at the move — and with passage of legislation to shore up the agency’s finances looking like a long-shot in the near term — the board of governors directed postal officials to look into other measures to cut costs and raise revenue. One of those options is a rate increase that could put direct mailers on the hook for hundreds of millions of new dollars a year if it is approved.

David Partenheimer, a postal service spokesman, said in a statement Wednesday that the governors “Continue to explore the possibility of filing for price adjustments later this year. No final decisions have been made.”

But the mailing industry has mounted a public relations offensive against what it predicts could be a steep rate increase request, arguing to the board and in the media that raising prices is premature and would hurt their business and ultimately, the Postal Service.

“Increasing rates cannot be part of a sustainable solution because this will add to the Postal Service’s structural deficit problem by driving more postal volume to e-commerce competitors,” Rafe Morrissey, vice president for postal affairs for the Greeting Card Association, said in a statement. The association represents 200 greeting card publishers and says the Postal Service delivers 60 percent of the close to 7 billion cards sold annually.

The Affordable Mail Alliance, which represents direct marketers and catalog mailers, wrote last week to Postal Board Chairman Mickey Burnett warning of similar consequences — that mail volume and postal revenue would plummet.

The Postal Service can ask for an “exigent” rate increase only in “extraordinary or exceptional circumstances,” according to a 2006 law governing many postal operations. The request must then be approved by the Postal Regulatory Commission. 

The commission turned down the agency’s request for a 5.6 percent exigent increase in 2010, agreeing that the recession, the exceptional circumstance claimed by postal officials, had hurt postal revenues, but disagreeing that the hike was needed to keep the agency in business. The Postal Service filed suit against the regulatory commission but the court upheld the commission’s determination.

From the Postal Service’s point of view, turning to business mailers is the kind of reform that could help recoup multibillion-dollar losses in recent years as first-class mail volume plummets and the agency must prepay billions of dollars in health costs for future retirees. Congress has so far failed to enact legislation to help stem the losses.

Lisa Rein covers the federal workforce and issues that concern the management of government.
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