Hallmark fights potential cuts to Postal Service

February 3, 2013

Hallmark really wants you to be able to open that birthday card on a Saturday.

But Saturday mail delivery costs the U.S. Postal Service $2.7 billion a year, and it’s a burden the cash-strapped agency is trying to shed — to the dismay of greeting-card makers everywhere. Cutting Saturday delivery is a key part of the USPS’s five-year plan to save $20 billion by 2015, but it is bumping up against businesses such as Hallmark that benefit from six-day mail delivery.

“Countless public opinion polls show Americans do not mind going to a five-day delivery schedule,” said David Partenheimer, a spokesman for the U.S. Postal Service. “There simply is no longer enough mail to sustain six days of delivery.”

Hallmark Cards has long paid federal lobbyists to try to keep Saturday mail service, combat rising postage rates and shape other aspects of postal reform. But because the last Congress remained divided over how to overhaul the Postal Service — which lost a record $15.9 billion in the fiscal year ending last September — greeting-card makers are now preparing to reach out to new congressional leaders who could influence reform efforts. Hallmark this month hired Washington lobby firm EnGage, and is supporting a House bill introduced this month, HR-30, that would preserve six-day mail delivery service. In 2012, the Kansas City, Mo.-based card and gift retailer spent $240,000 to lobby on postal reform and tax issues.

The lobbying efforts provide a window into how the future of the Post Office can affect a wide swath of businesses that normally fall outside the scope of Washington’s regulatory reach — and how those businesses rely on lobbyists to shape laws that could make their products more or less desirable to consumers.


(Illustration for Capital Business/Linzie Hunter)

A Hallmark representative declined to comment beyond expressing support for the Greeting Card Association’s position on postal issues. In a 2010 testimony before members of Congress, Hallmark chief executive Don Hall Jr. said eliminating Saturday mail delivery would drive down the volume of mail — thus revenue — for the Postal Service.

“Solving budget shortfalls through price increases and reduction of service not only won’t work, it will make matters worse, Hall said. “I am concerned that going down this path does not address the critical issues and we will soon be talking about four-day or three-day delivery.”

In the last Congress, the Greeting Card Association, which represents 200 publishing and design houses including Hallmark and American Greetings, opposed a measure that would have reduced USPS mail delivery service to five days a week, and a proposed amendment to a Senate bill that would have added a five-cent surcharge on single rate pieces, thereby raising the cost of mailing greeting cards from 45 cents to 50 cents.

Those objectives remain, but there is some uncertainty about the approach because of turnover in the House and Senate committees that deal most closely with postal reform, said Rafe Morrissey, senior vice president for government relations at the Greeting Card Association. Morrissey is also a lobbyist at EnGage, the firm lobbying for Hallmark.

Sen. Tom Carper (D-Del.) succeeded Joe Lieberman (D-Conn.) as chairman of the Senate Homeland Security and Governmental Affairs Committee, which has urged Congress to take action on postal reform. And Rep. Blake Farenthold (R-Tex.) replaces Rep. Dennis Ross (R-Fla.) as chairman of the Federal Workforce and U.S. Postal Service Subcommittee.

“It’s a little unclear to us what the game plan will be in the new year,” Morrissey said.

One thing the New York-based Greeting Card Association and the Postal Service do agree on is that Congress should allow the agency to change the way it funds pensions. The USPS is currently required to set aside billions of dollars each year to fund health benefits for future retirees, in addition to benefits for current retirees and employees.

“The pre-funding obligation for retiree health care benefits is a huge challenge for the Postal Service. That’s something that can be addressed,” Morrissey said.

The law requiring those payments was passed in 2006, when the Post Office was in better financial condition, having just hit a peak on first-class mail volume. But mail volume has since plummeted, and the pension payments are one reason the Postal Service is running huge deficits each year, Partenheimer said. The USPS has already defaulted on two of those payments, worth $11.1 billion, since 2011. Last fall the USPS, which borrows from the U.S. Treasury, reached its borrowing limit of $15 billion.

“The long-term solution is for us to be allowed to break away from the federal health care programs and competitively bid for our own plan at a reduced cost,” Partenheimer said.

Catherine Ho covers law and lobbying for Capital Business, which she joined in 2011. She was previously a reporter at the Daily Journal in Los Angeles, covering LA civil courts and labor and employment law. Before that, she reported for the business and metro desks at the LA Times. She has interned at newspapers in Detroit, Wichita, Kan., and San Mateo, Calif. She’s a San Jose native and UC Berkeley graduate.
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