WE CAN'T GET THERE FROM HERE

The following is a postal legislative report by PostCom Vice President Kate Muth.

The Postal Service would have extreme difficulty meeting consumers’ needs if new legislation were enacted that was revenue neutral and at the same time gave the Board of Governors limited authority to govern the organization as an efficient business enterprise, James C. Miller, chairman of the Board of Governors said in a statement released following the board’s monthly meeting. 

Miller said the board discussed the White House’s recent Statement of Position on H.R. 22 -- the House postal reform bill that was recently passed -- and in particular the administration’s threatened veto if the resulting bill is not revenue-neutral. This revenue-neutral position conflicts with both H.R. 22 and S. 662, the Senate postal bill, Miller noted. 

“Consequently, the Governors reviewed how the Postal Service would operate in the event there were no reform legislation and determined that we would build on our recent progress in controlling costs and generating revenue,” Miller said. “Under this scenario, the Governors would anticipate a further increase for 2007 in mid-single digits and then target future annual increases at CPI or below. 

The chairman’s statement capped a week’s worth of remarkable activity on postal reform that started with the passage of H.R. 22 in the House of Representatives on July 26. Industry attention then turned to the final day of Senate activity before the August recess, when word drifted out that the Senate might pass its bill, S. 662, by unanimous consent. Sources say the White House, Senate Republican leadership and key sponsors of the legislation reached agreement in substance on the budget concerns to a degree that all felt comfortable attempting to move the bill on Friday. In order to move the bill, it would have needed to go by unanimous consent. But, Sen. Chris Bond, R-MO, put a “hold” on the bill at the request of Hallmark, which continues to press for an agreement on what is known as "Fair and Equitable" language. Efforts to develop acceptable language were unsuccessful and that ended the bid for unanimous consent.  

Finally, Miller’s statement on the legislation and the administration’s position came at the board’s August 3 open meeting held in Newport Beach, CA. 

Miller’s statement is notable in that it is the first public assertion from the Postal Service that the organization cannot support legislation that does not include a release of the escrow funds to allow for some type of rate mitigation. Further, it indicates that the Postal Service does not think it could operate under the compromises being discussed, which would allow the USPS to borrow money for near-term rate mitigation but would use the entire amount of the Civil Service Retirement System overpayments to prefund long-term health liabilities. Both the House and Senate bill would use some of the overpayments – the escrow – to begin prefunding long-term liabilities, but allow for a portion of it to be used to stabilize rates. Both bills also return responsibility for military service costs of retirees to the Treasury Department. The compromises being discussed by the White House and the key sponsors of the legislation would require the Postal Service to pay the military service costs of its retirees going forward, but not require it to repay the $17 billion that Treasury has already paid since 1984. 

The Board of Governors’ position echoes Chairman Miller’s comments at the March National Postal Forum, where he said that no legislation would be better than bad legislation. It’s becoming clear that the Postal Service believes that “revenue-neutral” legislation – that is to say, the compromises that have been discussed -- is not better than current law. Congress Daily reported in its Aug. 3 Daily Briefing that Senators Susan Collins and Tom Carper said that the Postal Service opposes the administration’s proposals to allow for greater borrowing authority in lieu of access to the escrow funds. Congress Daily reported that Collins said “borrowing is strongly opposed by the Postal Service” and Carper noted that “we can do better.” Whether the USPS believes “uncompromised” legislation – H.R. 22 as passed for example -- is better than the status quo is not clear.