Postal Reform Bill Passes House, Senate

Consider it a postal and legislative version of “Do you believe in miracles?” Late on the night of Dec. 8 and into the early morning of Dec. 9, the House and then the Senate passed a sweeping postal reform bill that will bring forth significant change in the way that postal rates are set. President Bush is expected to sign the bill into law sometime this week.

The bill’s passage culminates 11 years of prior failures to get a postal reform bill through both chambers of Congress.

Soon after the Senate passed the bill, H.R. 6407, the Direct Marketing Association Senior Vice President of Government Affairs Jerry Cerasale told Catalog Success: “We’re ecstatic. And the White House has already agreed to what’s in the bill, so we don’t expect any problems getting it signed into law,” he said. “We never gave up; everybody wanted this done.”

In brief, what this means to catalogers is as follows:

* Future postal rate hikes will be at or below the inflation rate. A cap for raising rates will be created by linking rate changes to increases in the consumer price index. This will give mailers the chance to know what’s coming and be better prepared for rate increases.

* The cumbersome and costly, nine-month-long rate case process will be eliminated, giving the Postal Service the ability to set new rates much quicker, but with oversight from a new government agency, the Postal Regulatory Commission. The commission would be able to alter the cap or the rate system if it sees fit. The USPS will have greater incentive to keep its costs in line.

“You don’t get passage of a comprehensive reform bill after 11 years without a lot of compromise from mailers and a bipartisan congress,” says Bob McLean, executive director of the Mailers Council, an Arlington, Va.-based lobbying group. “Everybody has had to give up something to this point. And that’s why this bill was declared dead just recently.”

The new bill contains two key elements that will likely lead to its success:

1. For the first time in U.S. history, the USPS will no longer be required to pay for postal employee pension costs for those employees who previously served in the military. The new bill would eliminate this.

2. The bill repeals the law that forces the USPS to make postal pension payments, which are unwarranted, to an escrow fund, effectively freeing up $78 billion over the next 60 years. This money instead will help keep postage in check, as well as cover retiree healthcare liabilities and postal debts to the U.S. Treasury.

Gene Del Polito, president of the Association of Postal Commerce and Catalog Success postal columnist, says there’s no downside with this bill. ’”There’s nothing worse than what we have today in the structure and regulations surrounding the USPS, he says. “The situation today is a surefire guarantee of a postal fiscal crisis in the very near term. There’s no way that under the current scheme the USPS could’ve survived given today’s marketplace.”

Once reformed for the first time since the Postal Reorganization Act of 1970, the Postal Service will “have to operate in a more businesslike manner,” Del Polito says. “It promises relief to the endless, very expensive and very litigious rate case process, and that should benefit catalogers enormously.”