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Postal Reform takes a step backwards!

The Homeland Security and Governmental Affairs Committee of the U.S. Senate approved an version of the Postal Reform Act of 2013 (S. 1486) and recommended it to the full Senate. It contains a number of features that are problematic for nonprofit mailers. Foremost amongst concerns are that the proposed legislation:

  • makes the recent 4.3% “temporary” exigent rate increases permanent
  • allows the USPS Board of Governors to implement increased rates in the future and force aggrieved classes of mail (e.g. nonprofit standard mailers) to seek to reverse those increases retroactively rather than continuing the oversight role of the Postal Regulatory Commission which currently must approve rate changes before they are effective
  • allows individual classes of mail (like nonprofit standard), to increase as much as 2 percent above the consumer price index even though overall the rates are limited to CPI

Arguing in favor of the need for reform, the USPS testified that its liabilities exceed its assets (which in privately held companies typically results in bankruptcy). A recent Government Accountability Office report indicates that the USPS has $84.8 Billion in unfunded liabilities as well as another $15 Billion in borrowing from the U.S. Treasury.

Where will this $100 Billion in liability come from? Given that the U.S. government is running large deficits annually and already has massive debt, it seems likely that the USPS liabilities will have to be covered by future USPS profits. Given that the USPS is currently (after the rate hike) still running a substantial annual deficit, where and when will USPS profits come from to repay these obligations? It would certainly appear that future mailers will not only pay the costs of their mail, they will “pay for the sins of the past.” That can only mean rate increases significantly above cost of living.

For charities, direct mail agencies, and printers and other vendors providing mailing services to organizations relying upon nonprofit standard mail – there is good reason to be alarmed. It is critical that your voice be heard in Washington and that dramatic and radical solutions be considered before it is too late.