Congress Knows Best

The dogged pursuit of postal reform by many in the industry and in Congress finally resulted in bills passing both the Senate and House of Representatives. The two chambers’ versions are somewhat, though not substantially, different. However, because of the differences, the bills will be sent to a conference committee for resolution of those differences.

Assuming that the conferees can agree on one bill, the next step would be to send the bill that results from the conference back to both houses for an up or down vote. Washington insiders have told me that the earliest any bill will emerge from conference is late March or early April. It should be noted that the conferees could add items to the bill that were in neither original version.

I often have been reminded that neither version of the 1970 reform bill that passed the Senate and House contained any mention of the Postal Rate Commission. The PRC aspect of that legislation was added by the conference. So stay tuned. Anything can happen.

As of this writing, the House has not selected its representatives to the conference. The Senate has chosen its representatives, and I, for one, am a bit concerned. Of the eight members, five come from states having what some might consider special postal needs. These states are Alaska, Hawaii, Utah, Maine and Minnesota. It is a well-worn statement that “all politics are local.”

Therefore, my concern is that the conferees from these relatively rural or distant states will enter into the legislation various restrictions on the U.S. Postal Service that harm its ability to change its mail processing network as volumes or processing technologies change.

This is particularly important as the USPS contemplates changes to its network because of changes in those aforementioned volumes or processing technologies. These are not just hypothetical changes. It is clear that First-Class mail volume is in decline. Furthermore, the USPS is developing a generation of equipment to sort flats into carrier delivery sequence. This equipment is expected to be quite large and require significant floor space.

Both these changes will require the USPS to make significant changes to its processing network. These changes will involve closing some existing facilities and opening new ones. In both cases, the postal service will need flexibility to be able to change its network. Let’s trust that the legislators will not establish restrictions on that flexibility, nor add riders that will open the door for extraneous issues.

On a very serious note, objections have been raised as to the legislation’s value for the future health of the postal service. Perhaps the most important objection has come from some members of the President’s Commission on the Postal Service.

Let me quote from the letter the group wrote Feb. 7 to the congressional leadership of both parties: “Almost 80 percent of the total cost of the postal service is labor. The fastest growing elements of that cost are health care and retirement benefits, which are mandated or restricted by the federal government.”

It then says: “To implement a rate ceiling tied to the [Consumer Price Index] or a similar economic indicator but not give the postal service any additional ability to reduce costs will, in our judgment, in the not too distant future lead to an inevitable reduction in universal service or simply transfer the excessive and unfunded costs to the taxpayers.”

Furthermore, the letter states in clear English: “This is a governance model that simply won’t work.”

But, Congress knows best.

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