Legislation related to USPS rates
In 2006 Congress passed legislation that replaced the previous combative postal rate making process with a more uniform and forecastable process that tied postal rate increases to the Consumer Price Index. However, the legislation was overly burdensome with regard to the Postal Service pre-funding its retiree health insurance program. The Postal Service’s inability to make the $5.5 billion annual payment for the past several years has resulted in a balance sheet that would require most businesses to declare bankruptcy.
The 2006 law has now expired. Soon the Postal Regulatory Commission (PRC) will begin reviewing the current rate making process. They are responsible to either recommend a continuation of the current process or recommend moving to a new process.
H.R. 5714 is a bill in the House that proposes to move USPS retirees to Medicare and it would effectively eliminate the current pre-funding payment schedule. Such a change would ‘clean up’ the Postal Service’s balance sheet. Without a balance sheet clean up, the PRC may feel the need to address the Postal Service’s mounting debt problem through double digit postage rate increases; therefore, for more than a year Idealliance and its C-21 Coalition partners have worked to shape and support a bill that could prevent that scenario from happening. The Congressional Budget Office assessed H.R. 5714 with a ‘positive score;’ indicating that it would contribute $2.2 billion to the budget over 10 years. However, the Ways & Means Committee, W&M, is not inclined to support the bill because their ‘score’ was $2 billion short on what it would cost Medicare. (Note: Because the bill would contribute more than $2 billion to the overall budget, the total financial impact would be slightly positive.) W&M also did not like the idea of forcing postal retirees to take Medicare. (Note: the retirees have paid into Medicare for years and, the unions supported this move.) Without the support of W&M, the hope of helpful legislation from Congress seems doubtful. C-21 and Idealliance will continue this effort on behalf of the industry.