Pitney Bowes CEO Expects Resolution on Postal Reform

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NEW YORK -- The escrow and military pension issues in the postal reform legislation on which Congress and the White House differ are resolvable, according to Pitney Bowes chairman/CEO Michael J. Critelli.

"I think the administration will work with Congress, and the industry will persuade the administration that ... even if the budget scoring shows this not to be completely budget neutral, that there is a net economic benefit to the legislation," Critelli said yesterday at Pitney Bowes' annual conference for institutional investors and financial analysts.

The Senate passed S. 662 on Feb. 9, and a similar bill passed the House of Representatives last summer. A conference committee will try to resolve the differences between the two bills. If a compromise is reached, the committee submits a report to both chambers for final approval. Then the bill would go to President Bush.

The White House has insisted that the bill have no effect on the federal budget. But one provision eliminates an escrow account that would require contributions from the U.S. Postal Service of $78 billion over 60 years. Another provision returns responsibility for funding pension benefits related to the military service of postal retirees to the Treasury Department.

Though the USPS acted in a risky fashion by opposing the bill at the 11th hour, Critelli said, there is legitimate detail involving governance that the conference committee needs to address.

"The regulatory commission cannot be a place where operational decisions by the postal service ... get stymied," he said. "[I believe] that is an issue that can and will be worked out."

Another issue is the price-cap difference between the bills. The Senate seeks a "hard cap" that would keep postal rate increases at or below the rate of inflation, while simplifying the process for the approval of such increases. The House bill also caps rate increases, but this softer version likely could be broken by events such as the recent rise in gasoline prices.

Critelli said he thought the reform bill likely would become law "this year." He said that the bill "has significant language to expand [USPS] work-sharing incentives and optimize its processing networks. That is good news for the postal service and good news for Pitney Bowes."

Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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