Senators Collins, Carper Introduce Comprehensive Bill to Ensure Future Viability of U.S. Postal Service

WASHINGTON, DC—Senate Governmental Affairs Committee Chairman Susan Collins (R-ME) and Senator Tom Carper (D-DE) today introduced comprehensive legislation to reform the United States Postal Service (USPS). Their legislation, the first major overhaul of the USPS since 1970, would help ensure that the USPS and the millions of businesses and employees whose livelihoods depend on it remain viable into the 21st century.

“We must save and strengthen this vital institution upon which so many Americans rely for communication and for their jobs,” Senator Collins said. “The Postal Service is the linchpin of a $900 billion mailing industry that employs nine million Americans in fields as diverse as direct mailing, printing, catalog production, and paper manufacturing. Industries that rely on the Postal Service and its affordable rates account for nearly 9% of the Gross Domestic Product,” said Senator Collins.

“We have a once-in-a-generation opportunity this year to pass meaningful, comprehensive postal reform legislation,” Senator Carper said. “The Postal Service, under the leadership of Postmaster General Potter, has done an excellent job in recent years in cutting costs and making themselves more efficient. This will only take them so far, however. In the coming years, Americans will continue to turn to faxes, e-mail and electronic bill pay to communicate with friends and family and conduct business. We need to make fundamental changes in the way the Postal Service operates in order to make them as successful in the 21st century as they have been for more than 30 years. Just as postal workers don’t let anything stand in their way of delivering the mail every day, Congress shouldn’t adjourn this year without passing real postal reform.”

Throughout eight Committee hearings examining the issue, Senators Collins and Carper demonstrated the need for postal reform and highlighted its significant impact on the economy. The Postal Service, however, faces approximately $90 billion in unfunded liabilities and other obligations, according to the General Accounting Office, which described the need for reform as “urgent.” In the last two years, the Postal Service has reported that the volume of first-class mail has decreased by over 3.5 billion pieces, while 1.7 million new addresses have been added annually during the same period—pushing up delivery costs at a time when revenue has declined.

“Our comprehensive, bipartisan legislation addresses the USPS’ financial concerns while strongly endorsing the basic features of universal service — affordable rates, frequent delivery, and convenient community access to retail postal services,” said Senators Collins and Carper.

“Among other provisions, our legislation would reform the rate-setting process and guarantee a higher degree of transparency to ensure fair treatment of customers,” they said.

In addition, the bill would repeal a provision requiring that money owed to the Postal Service due to an overpayment into the Civil Service Retirement System (CSRS) Fund be held in an escrow account. Repealing this provision would essentially “free up” $78 billion over a period of 60 years. The Postal Service would use these savings to pay off debt to the U.S. Treasury, fund health care liabilities, and mitigate rate increases. In fact, failure to release these escrow funds would mean, for mailers, a double-digit rate increase in 2006 — an expense most American businesses and many consumers are ill-equipped to afford, the Senators noted.

The bill also would return to the Department of Treasury the responsibility for funding CSRS pension benefits relating to the military service of postal retirees. No other federal agency is required to make this payment.

The legislation has the support of the 21st Century Coalition on Postal Service, composed of more than 150 businesses and associations, the National Association of Postmasters of the United States, and two major postal unions — the National Association of Rural Letter Carriers and the National Association of Letter Carriers.

A summary of the legislation follows.

— Preserves universal service—the USPS will continue delivering to every address in the country.

— Simplifies the pricing process for Postal Service products and services and replaces the current rate-setting process with a rate-cap based structure to allow the Postal Service to react more quickly to changes in the mailing industry. The rate caps will be linked to an inflation indicator of the new Postal Regulatory Commission’s choosing. The system of rate caps will apply to the market-dominant products only, such as First Class Mail, periodicals, and bound printed matter.

— Gives the USPS Board of Governors the authority to set rates for competitive products, such as Express Mail and Parcel Post, as long as these prices do not result in cross-subsidy from the market-dominant products.

— Gives the Postal Regulatory Commission the power to institute emergency price increases due to “unexpected and extraordinary circumstances.” An example will be the anthrax attacks.

— Guarantees a higher degree of transparency to ensure fair treatment of customers of the Postal Service’s market-dominant products and companies competing with the Postal Service’s competitive products.

— Authorizes the USPS to enter into negotiated service agreements with mailers, whereby mailers perform some of the work.

— Repeals the Civil Service Retirement Service (CSRS) escrow fund provision and transfers the military retiree pension obligation back to the Department of Treasury. The Postal Service is the only agency required to pay the military obligation.

— Gives USPS the authority to transition individuals receiving workers’ compensation to a retirement annuity when the affected individual reaches the age of 65. It also puts into place a 3-day waiting period before an employee is eligible to receive workers’ compensation pay. This is consistent with every state-run plan.

— Requires that all future Governors of the Postal Service be selected based on their demonstrated ability in managing organizations or corporations of substantial size.

— Requires USPS to report to Congress and the General Accounting Office with a strategy for how they intend to restructure its infrastructure to reduce excess processing capacity and space. They will also be required to identify anticipated cost savings associated with infrastructure rationalization.