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U.S. Postal Service
After 12 years of hard work on an issue that impacts every household and business in America, landmark reform of the U.S. Postal Service was passed during the waning hours of the 109th Congress. The comprehensive legislation, while having virtually no impact on the way the American mailing consumer interacts with the Postal Service, will modernize operations and ensure the agency’s future solvency.
Overall, the legislation retains the key principles of reform I have been championing over the last dozen years. It also provides compromise between the House, Senate, and Administration on a number of issues. Specifically, it includes:
• Modern Rate Regulation – shifting the basis of the Postal Rate Commission from a costly, complex scheme of rate cases to a modern system designed to ensure that rate increases generally do not exceed the annual change in the Consumer Price Index. This applies only to market-dominant products (letters, periodicals, advertising mail) because the Postal Service is provided with different pricing freedom for its competitive products (Express Mail, Priority Mail, etc.). The compromise includes a tighter cap on the cost of postage, prohibiting the Postal Service from raising its prices above inflation for the next 10 years.
• Combining Market Disciplines with Regulation – combining market mechanisms with Commission regulation to govern the rates of competitive products. The Postal Service would be given additional pricing freedom but would lose favored legal treatment for such products.
• Limitations on Postal Monopoly and Nonpostal Products – requiring the Postal Service to only offer postal services and for the first time defining exactly what constitutes “postal services.” The bill also revises the authority of the Postal Service to regulate competitors.
• Reform of International Mail Regulation – clarifying the authority of the State Department to set international policy, applying customs laws equally to postal and private shipments, and giving the Postal Service the authority to contract with airlines for transport of international mail.
• Strengthening of the Commission – giving the PRC “teeth” by granting it subpoena power and a broader scope for regulation and oversight. The PRC would be renamed the “Postal Regulatory Commission.”
• Maintaining Budget Neutrality – including Administration-proposed language that eliminates the escrow account and puts the Postal Service in a better position with regard to retiree health liabilities. OMB scores the bill’s language as budget neutral.
• Providing Greater Oversight – requiring a greater role for the regulator in overseeing the performance of the Postal Service. For the first time ever, the Postal Service will be held accountable for delivering all classes of mail on time.
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