This was supposed to be the year that long-suffering supporters of revamping the troubled U.S. Postal Service finally got a bill through Congress. Barring a legislative miracle, however, that's not going to happen.
When the lame-duck Congress convenes next week, lawmakers are expected to turn their attention to such matters as unfinished appropriations bills and reorganizing U.S. intelligence agencies. So postal officials, lawmakers and members of the mailing industry are assessing what went wrong, what went right and how to resurrect postal legislation next year in time to blunt a prospective double-digit increase in mailing rates in 2006.
"In the simplest terms, the clock simply ran out," said Rep. John M. McHugh (R-N.Y.), chairman of a special House panel on postal reform and oversight. He is a leading proponent of broad changes in the Postal Service to make it more efficient and competitive.
A week of the congressional calendar was lost to former president Ronald Reagan's death and state funeral in June. Members' desire to return to their districts to campaign for reelection shaved off time in October. And the intense focus on bills to restructure intelligence agencies soaked up the legislative energy on Capitol Hill in the weeks leading up to the elections.
Still, McHugh, who has led House efforts to overhaul the Postal Service since 1995, said much more went right for postal reorganization advocates in this session than in the other eight years in which their efforts fell short. So much so that he thinks there is a good chance the new Congress will pass a bill next year.
In Sen. Susan Collins (R-Maine), chairwoman of the Senate Governmental Affairs Committee, McHugh found a partner on the Senate side who was as committed to revamping the Postal Service as he was. For the first time, committees in both the House and Senate voted -- unanimously -- to approve major postal legislation, although neither bill has come to the full floor for a vote.
In general, the legislation would grant the Postal Service, a $67 billion-a-year entity, more flexibility in the services it offers and the prices it charges for them, while continuing to guarantee delivery six days a week to every address in the United States.
Although the two bills differ in some provisions, and the White House has significant objections, McHugh said that few lawmakers consider the gaps unbridgeable and that, with more time, a compromise approach could have been worked out. What is more, President Bush greatly added to the legislative momentum this year by naming a presidential commission in late 2002 to study potential remedies for the Postal Service's bleak financial outlook under its current business model.
"That's a lot different than past years, when our coming up short was predicated more on a substantive issue or lack of will to go forward," McHugh said. "So in a very important way, we did make progress. Obviously, all of us would have liked to send a bill to the White House, but we've come a long way and we remain optimistic that with a fast start in January we can get a bill and do it in a timely fashion so that any kind of major rate increase can be forestalled."
Collins said she and Rep. Thomas M. Davis III (R-Va.), chairman of the House Government Reform Committee, recently met with White House Chief of Staff Andrew H. Card Jr. to discuss strategies for getting a bill that Bush would sign, leaving with a list of measures the administration wants incorporated into the legislation.
"It is important that we act to pass postal reform as soon as possible in order to preserve a $900 billion mailing industry that is responsible for 9 million jobs nationwide," Collins said in a statement Friday. "Without substantial reform, it is expected that we will once again see rate increases far in excess of inflation."
Ralph Moden, senior vice president of government relations for the Postal Service, said officials would have to file this spring for a 2006 rate hike large enough to cover inflation and perhaps more. It would be the first increase since 2002, when the price of a first-class stamp rose to 37 cents. Without legislative relief, "it will most likely be a double digit [percentage] increase," Moden said.
George Gould, legislative director of the National Association of Letter Carriers, which supports the legislation, said he thinks the chances for passage next year are good.
"It's good politically at this point to make the system viable," Gould said. "The administration and Congress can take credit for the Postal Service avoiding having huge rate increases and for not being able to deliver the products."
Last reorganized in 1970, the Postal Service has about 635,000 full-time employees and 164,500 part-time workers, and generally relies on revenue from operations rather than taxpayer funding. The organization recently has been plagued by stagnant revenue, rising costs and declining mail volume, leading to several consecutive years in the red before a return to modest profitability last year.
Especially worrying to postal officials is the accelerating decline in letters and other first-class mail, a lucrative line of business that has traditionally covered two-thirds of the Postal Service's costs. Officials predict further erosion as Americans increasingly turn to the Internet, e-mail and cell phones to pay bills and stay connected. As revenue has declined, however, the number of addresses the Postal Service must deliver to has continued to increase.
"We add about 1.8 million new addresses every year," Moden said. "That comes at a cost. The business model had always assumed that those costs could be covered by growing mail volume. . . . The concern -- and we're starting to actually see it now -- is that volume growth may not be as self-generating as we once thought it was."
Congress provided some financial relief last year when it passed a law allowing the Postal Service to scale back by billions of dollars its annual payments into its over-funded pension accounts for longer-serving employees. The measure helped temporarily restore the Postal Service to profitability, but it also gave rise to two thorny issues that now complicate efforts to pass the larger overhaul legislation.
One is a technical but important dispute over whether the Treasury Department or the Postal Service should pay about $27 billion in retirement benefits to some workers related to their military service. Historically, Treasury has paid such costs, but the responsibility was shifted to the Postal Service last year as part of the postal pension legislation.
Postal officials want to switch the burden back. Both the House and Senate bills would do so, but the White House opposes such a move, which would add billions to the budget deficit.
A second issue is the fate of about $3 billion a year in postal pension savings starting in fiscal 2006. Congress allowed the Postal Service to keep that money this year, but required that it be deposited in an escrow account in later years as a check on wasteful spending until the prospective postal reorganization could be put in place.
Postal officials say that unless they gain access to that money, and the larger pension payment issues are resolved, rate increases will be higher than they otherwise would have to be. The administration is wary of releasing the money, however, because that, too, would add to the deficit.
The uncertainty of the situation is bad for large mailers, who are now trying to budget for future mailing expenses without any guarantee that legislative relief is on the way.
"We're worried about this notion that mailers are going to be forced to pay a 'stamp tax,' " said Neal Denton, executive director of the Alliance of Nonprofit Mailers, an association of charitable groups, referring to prospective rate hikes tied to political disputes about the pension contributions rather than to actual costs. Mailers "are all assuming now that we're going to get stuck with double-digit rate increases, because it's been years and Congress still hasn't gotten postal reform passed."
Denton said Congress should consider a two-track approach, releasing the former pension payment money as a short-term fix to hold down mailing rates, while still pursuing the larger legislative package.
Michael J. Critelli, chief executive of Pitney Bowes Inc. and president of the Mailing Industry CEO Council, disagreed, saying such an approach would only delay the larger effort.
"If we at this point in time peel off the pension issue from everything else, we will have a very great deal of difficulty reassembling the coalition that has come together behind comprehensive postal reform legislation," Critelli said. "We need to keep going on the present track."