Postal Service Goes on Offensive in Fight With Senators Over System to Set Mail Rates

By Stephen Barr
Thursday, January 26, 2006

The U.S. Postal Service headquarters launched a blitz yesterday to block a Senate bill, contending that the legislation, in combination with White House demands, could trigger a 20 percent increase in stamp prices in the near future.

The bill's sponsors, Sens. Susan Collins (R-Maine) and Thomas R. Carper (D-Del.), said they were "outraged that the Postal Service would mislead senators." In a statement, they said, "Nothing in the bill would lead to rate increases."

Government agencies rarely risk incurring the wrath of committee chairmen who oversee their operations, as is the case with Collins. As head of the Homeland Security and Governmental Affairs Committee, she has made the overhaul of postal operations one of her priorities.

Her bill would create a system of setting mail rates that she believes would give the post office greater pricing flexibility and would prevent it from raising rates each year in excess of inflation as measured by the consumer price index.

The Postal Service faces a bleak future if e-mail and Internet services continue to expand and erode first-class mail volume. Although the post office has stabilized its finances in recent years, efforts continue to reduce labor costs and consolidate operations.

As the word spread this week that Collins planned to bring her bill to the Senate floor, postal officials distributed a letter from the postal Board of Governors reaffirming the board's objections to the proposed overhaul, the first in more than 30 years.

Yesterday, postal officials stepped up their effort to block the bill, contacting Senate staff members and providing each Senate office with a copy of the board's objections.

"We need meaningful reform, and this is not it," Tom Day , senior vice president for government relations, said in a telephone interview.

Senate leaders plan to bring the Collins bill to the floor for speedy approval, called unanimous consent, that does not require a roll-call vote. Postal lobbyists were on the hunt for a senator who would object to the maneuver and put a hold on the bill.

The House has approved a postal overhaul, and once the Senate clears the Collins bill, it will go to a House-Senate committee that will reconcile differences between the two versions. The White House has announced opposition to any compromise that would increase the federal deficit.

Postal officials fear that a compromise bill could leave it on the hook for two major financial obligations and would allow postal regulators to intrude on internal operations and override business decisions.

Day said mail rates could soar by as much as 20 percent if Congress and the White House agreed to extend a 2003 law that requires the post office to pay for military retirement benefits earned by employees before their postal careers, and if the post office also is ordered to prepay health benefits for employees in the Civil Service Retirement System. Such costs are usually covered by the Treasury Department, using taxpayer dollars.

In the worst scenario, he said, the post office would have no choice but to keep raising postal rates, which would set off a "death spiral."

Although the Postal Service has worked with Congress and the White House on proposals to overhaul operations, Day said postal concerns over accountability and management control have been in contention since 1996.

Collins and Carper, however, said, "We are extremely troubled and disappointed that at the very last minute, the Postal Service is attempting to block action on our bill."

They added, "It is ironic that the Postal Service -- which has been forced to raise rates four times in five years because of its inability to control its costs and respond to the new economic landscape -- is accusing us of putting the health of the postal system at risk."

Helping Enrollees

Two House members wrote the Office of Personnel Management yesterday to "strongly urge . . . seamless health care coverage" for enrollees in the discontinued Postmasters Benefit Plan.

OPM dropped the plan Monday from the federal health insurance program because of concerns about its financial solvency and management.

Reps. Thomas M. Davis III (R-Va.) and Jon Porter (R-Nev.), who oversee civil service matters, asked OPM to provide information on whether benefit counselors will be made available to affected employees and what steps will be taken to ensure that the enrollees do not experience a break in coverage.

OPM has said it will move enrollees into the Blue Cross and Blue Shield standard option unless individuals opt for a different plan.

E-mail:barrs@washpost.com

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