'Wrong Time to Raise Rates,' Marketing Leaders Say

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Association executives and marketers expressed dismay today with the U.S. Postal Service's Board of Governors and its decision to raise rates across the board 1.6 percent.


"I hope the postal service knows what it's doing," said Neal Denton, executive director of the Alliance of Nonprofit Mailers, Washington. "I'm at a loss to explain how increased rates are going to recapture lost mail volumes."


In a faltering economy, mailers will look for alternatives, said Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association.


"Now is absolutely the wrong time to raise rates," he said. "Congress, the postal service and mailers need to look at legislative reform and cost-saving strategies for the postal service if it is to continue its mission to provide universal mail service at affordable prices."


Several congressional leaders have said in recent weeks that it is inappropriate to raise rates in the current economic climate. They include Rep. Dan Burton (R-IN), who chairs the House committee overseeing the postal service; Rep. John McHugh (R-NY), a leading House proponent of postal reform legislation; Senate Majority Leader Trent Lott (R-MS); House Majority Leader Dick Armey (R-TX) and House Majority Whip Tom DeLay (R-TX).


The board voted unanimously in closed session yesterday to modify the April 10 decision of the Postal Rate Commission. By law, it can overturn the PRC if the vote is unanimous. Though nothing was announced, insiders expect that another rate case will be filed this summer to go into effect next spring. In February, the board asked postal management to prepare for a postage rate increase of as much as 10 percent to 15 percent.


Next week, the Senate subcommittee with postal jurisdiction will have a postal oversight hearing. USPS management, board members and PRC officials are scheduled to testify. A day later, the House Committee on Government Reform will conduct a second hearing on the state of the USPS. A panel of mailers is expected to testify on the effects of continued rate increases.


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