The Senate puts the PRC in the backseat — or maybe not even in the car

February 9, 2014


On Thursday of this past week, the Senate held the second of two markup sessions on the postal reform bill, a.k.a. the manager’s or substitute amendment, submitted by Senators Carper and Coburn.  At the first session held the previous week, on January 29, a controversy arose over Section 301 of the proposed bill, which deals with postal rates and the role of the Postal Regulatory Commission.  The controversy resumed on Thursday.  

As originally proposed in the manager’s amendment, Section 301 does several things.  First, it takes the exigent rate increase that the PRC approved on a temporary basis and makes it the new base line.  The bill thus essentially overturns the PRC’s ruling in December and makes the 4.3 percent increase permanent, rather than limiting it to the time frame required to bring in $2.8 billion in profit (about 18 months to two years).

Section 301 also raises the current limit on annual rate increases from the CPI to the CPI plus one percent.  That would all but guarantee higher annual rate increases over the next few years.

In addition to dealing with these two specific rate matters, Section 301 transfers much of the responsibility for setting postal rates in the future from the PRC to the Postal Board of Governors.  The PRC’s role would be reduced to reviewing the BOG’s decision after the fact, rather than approving increases before they’re implemented. 

Finally, Section 301 gives the BOG the primary role in a 2017 rewrite of the ratemaking system.  The PRC can have some input and it will be able to veto the revision, but that's about all.

As Senator Carper explained at Thursday's markup, he and Senator Coburn decided to give the PRC "a very minimal role in terms of actually deciding what that new rate structure would look like" in the 2017 rewrite.  "We really put the Postal Service in the driver’s seat.  I don’t even know if the PRC was in the car, but certainly the Postal Service was in the driver’s seat.”  (video at 2:03:40)

Can it get much worse? The Senate tries postal reform, again

February 3, 2014


The Senate Committee on Homeland Security and Government Affairs finally took up its postal reform bill at a markup session on Wednesday, January 29.  The new S.1486 the committee took up is significantly different from the Carper-Coburn bill released last August.  The current version, aka the substitute bill or the managers’ amendment, has introduced changes to the rate system, regulatory oversight, and facility closings that are worth close scrutiny.

The leadership of the Postal Service has expressed satisfaction with the new substitute bill.  No wonder.  It reads like the fulfillment of PMG Donahoe’s and the Board of Governor’s wish list.  It grants them new powers over ratemaking, adds language regarding contract negotiations favorable to management, and creates a separate postal employee health plan within the current Federal Employee Health Benefit Plan (FEHBP).  The bill also addresses the retiree health benefit prefunding, while adding a new prefunding requirement for workman’s compensation.

Whatever its final form, the postal reform bill that comes out of the Senate will represent the next step in a process that has been going on since the Postal Service was created in 1971.  For the last forty years the leadership of the Postal Service has pursued a course that treats the postal network in terms of a corporate business model that simply provides a delivery service.  Postal leaders do not seem much interested in the view of the postal system as basic national infrastructure that connects American homes and businesses with each other and with their government.  They do not seem very committed to a broad vision of the universal service obligation.  They do not seem to understand what our Founders grasped so clearly — the important role of the postal network as a fundamental element of democracy, furthering access to information and creating connections in a way that bound the nation together.  

The Senate does postal reform: Highlights and low points of the Carper-Coburn bill

August 3, 2013

Senators Tom Carper (D-Del.) and Tom Coburn (R-Okla.) have introduced their version of postal reform legislation, the Postal Reform Act of 2013, a.k.a. PRA and S.1486.  A summary is here, and the whole bill is here.

The new bill contains several changes from the earlier Senate bill, S.1789, that should bring the House and Senate closer together and make the passage of legislation more likely.  In that sense, there’s been some progress, but unfortunately, it’s mostly in the wrong direction.


Comparing S.1789 and the PRA

A look at the earlier S.1789 and the new S.1486 suggests that several changes have been made to align the Senate bill with Issa's bill in the House.  Here are a few of them:

S.1789 had a section (201) that would have maintained overnight delivery standards for three years, which would have prevented the closure of many processing plants.  The PRA has deleted that section.

S.1789 had a section (203) that would have established retail service standards to help guarantee access to a post office.  One such standard, for example, would have put a limit on how far and how long you should need to travel to your post office.  That provision has been removed from the PRA.

The earlier bill had a section that would have helped protect historic post office buildings by giving federal, state, and local governments the opportunity to lease excess space rather than seeing the Postal Service close the post office and sell the building.  That section has also been deleted from S.1486.

Section 207 of S.1789, on “delivery point modernization,” would have authorized the Postal Service to convert how you get your mail — at the door, curbside, or centralized cluster box — even without your permission (which is now required).  The new PRA has a similar section.  But S.1789 said only that the Postal Service “may” change your mode of delivery.  The new bill requires the Postal Service to change your mode of delivery to the one “that is most cost-effective and is in the best long-term interest of the Postal Service.”  That’s much closer to Issa’s bill, which mandates 30 million conversions to save $4 billion.

The earlier Senate bill would have maintained Saturday delivery for two years.  S.1486 maintains it for just one year, and then in the second year permits the Postal Service to switch over to delivering just packages on Saturday.  In the third year, Saturday delivery could be ended completely.


The Greeting Card Association greets us with its proposals for saving the Postal Service

July 21 2013

The Greeting Card Association (GCA) has produced a long report describing what it calls "commonsense solutions" to put the Postal Service on "a path to solvency."  It includes more than 100 deficit reduction proposals.

The main one is simple: "The Postal Service should immediately implement cluster boxes on a widespread national scale using its existing management authority to do so, and drop politically divisive plans for Congress to end Saturday mail delivery."  

The report suggests that ending Saturday delivery is highly unpopular, while replacing delivery to the door or curb with cluster boxes would be fine with most customers.  

That's a highly dubious proposition.  The Postal Service has generally resisted mass conversions to cluster boxes, especially for existing customers, because it knows they will anger customers, and it's been pushing five-day delivery in the belief that customers prefer it to other ways for saving money or to raising rates.  When the OIG did a report on the cost savings of switching modes of delivery, the Postal Service responded, "when surveyed, our customers indicated that they would rather lose a day of delivery service than have their mailbox moved from a door or curbside locations to a centralized delivery.”

The GCA's proposals are often contradictory, and there are many numbers mentioned without a citation to check them.  For example, the report says, "The cost of modifying the Postal Service’s original proposal [to end Saturday delivery] was to add back $500 million to Saturday delivery costs for packages and medicines."  There's no source cited for this figure.  The Postal Service, to our knowledge, has never provided such an estimate, nor has the Postal Regulatory Commission, the agency which has done the most work on analyzing cost savings for ending Saturday delivery.

The GCA suggests that selling the Postal Service's real estate portfolio — valued at $85 billion by the OIG — would be a viable way to cover the remaining obligation ($46 billion) in the Retiree Health Benefit Fund.  There's no discussion, however, of how much it would cost to replace these facilities with leased spaces.  Over the long run, leasing usually costs more than owning, so what good would it do to sell off all this real estate?  

The report makes some good proposals for putting the excess space in post offices to better use, such as leasing out the extra space to other government agencies and using post offices as "centers of continuous democracy" and to help people interface with other federal agencies.  But such ideas are not exactly consistent with the proposal to sell off the Postal Service's real estate holdings.

Despite its problems, the GCA's report is worth reading.  If nothing else, it shows how self-serving each stakeholder's solution for rescuing the Postal Service can be.  Read the report.

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