One midnight a decade ago, Washington lawyer Ian Volner sat in a room on Capitol Hill with postal industry stakeholders and legislative assistants “fighting like a madman” for the inclusion of the word “if” in a key piece of legislation. It was two days before Congress would enact the Postal Accountability and Enhancement Act (PAEA), and the concerned parties were haggling over final language. The section on which they were stuck would establish a review process for the new plan of capping annual postal rate increases using the Consumer Price Index. Most of those in the room wanted the Postal Regulatory Commission to do the review when the law had been in force for 10 years. Volner, longtime legislative counsel representing the mailing industry, insisted that “when” be replaced with “if,” just in case the plan actually worked and didn’t need a vetting.
Volner got his way, but it’s 10 years later and the PRC is making plans for a comprehensive rate review anyway. Though PAEA’s pricing system has worked fine for mailers –outside of the 4.3% exigent increase that was removed this month—the U.S. Postal Service wants more pricing power and Volner gave attendees at the American Catalog Mailers Association meeting in Washington yesterday no assurance that the Postal Service wouldn’t get its way. “[The PRC] should never have allowed that surcharge to go in,” he said. “They’re not there to serve as an arm of Congress.”
Volner, a partner in the venerable Venable law firm, got agreement from an unlikely source who joined him on the dais: James Sauber of the National Association of Letter Carriers, who was also present in legislative chambers on that long night it 2006. Like Volner, Sauber’s take was that what the mailers, the workers, and the Postal Service needed most was not a new rate-setting system from the PRC, but postal reform from Congress.
“The predictability and stability of the rate cap works. We all know what to expect,” Sauber said. What would be most likely to divert the Postal Service from its quest for rate-setting powers, held the chief of staff for the biggest and most powerful postal union, would be passage of legislation removing the draconian PAEA stipulation that USPS prefund its retirees’ healthcare benefits in perpetuity. Now pay attention here: This is a union leader looking to gain relief for management from an overly-aggressive benefits pre-fund schedule in order to help it sell more postage and retain more jobs.
“There is no other company or organization in the United States that is required to do anything like this,” said Sauber of the measure that annually sucks nearly $6 billion dollars from the Postal Service’s bottom line.In fact, it hasn’t made the payment for several years after having borrowed its $15 billion limit from the U.S. Treasury. The extent of the prefunding, Sauber said, was arrived at by assuming the cost of providing healthcare through the maximum life spans of a postal worker and his or her marriage partner, an estimated expanse of about 92 years.
“Neither we nor you can count on the PRC to solve this,” Sauber told the catalogers. “Congress isn’t doing anything right now, so they can and must do postal reform.”
In the Senate, Delaware’s Tom Carper has been pushing hard for postal reform for years. The genteel Democrat whose demeanor harks back to more collaborative times in the nation’s capital heralds the Postal Service as a force for both democracy and good-paying jobs that just needs legislative relief in order to bloom as a digitally connected marketing channel for the current century. He couldn’t get his Postal Reform Act to the Senate floor for a vote in the last two years and so came back with the Improving Postal Operations, Service, and Transparency Act (iPOST) and a mission to get it passed in 2016. Carper maintains that a consensus of stakeholders support the bill, but most business mailers refuse to swallow its plan to bake the 4.3% exigency surcharge into the base postal rate. Sauber, an economist by training, suggested a secondary plan.
He put up a graph showing that the CPI for urban consumers rate had gone up by far the least over the past 10 years compared to others indices tracked by the Bureau of Labor Statistics, such as the producer price index for couriers and delivery companies. Perhaps, he posited, such a one as this could be substituted for the CPI in a new cap structure and eliminate the exigent surcharge issue, which Volner decried as simply unconstitutional.
“You’re going to hear over the next year from the Postal Service that, ‘Well we’re not making money, we’ve not even achieved break-even, so the system isn’t working and you’ve got to give us greater pricing flexibility,’” Volner said. “It has never been the rule of this country for the regulator to guarantee a utility a particular rate of return. There are basically two rules for the regulator here. Number one is to prevent a monopolist from gouging its customers, and number two is to see to it that the regulated monopoly has the opportunity to maintain financial stability.”
But as is so often the case with the multi-layered and complex postal system, few people understand its workings, not even those sworn to protect and regulate it, and certainly not casual observers of it.
“It’s a battle to try to convince business reporters to properly report on the Postal Service,” Sauber maintained. “Every time a a quarterly loss is reported due to these prefunding payments, it sends a message to business not to invest in the mail. And in almost every news item, reporters say the Postal Service is losing money because people stopped sending personal letters. Well we all know that that stopped four years ago and we all know that business mailers generate 90% of the mail.”
Not even the letter carriers in his union get the fact, Sauber admitted, that business mailers are the biggest defenders of their livelihoods. “Our members think our customer is the people they deliver the the mail to, and that’s certainly true,” he said. “But we struggle to remind them of this other set, a very small group of customers paying us to deliver it. That informs how we do our legislative and political work.”
Updated May 9, 2016
