Postal Increase Denied – The Day After

By now you’ve heard the news that the Postal Regulatory Commission (PRC) denied… check that, unanimously denied the USPS requests to raise postage rates in January beyond the rate
of inflation, ruling that the mail agency’s recent financial woes were caused by a flawed business model and not the recent recession.

So a rise in stamp prices and other postage rates will not take effect in January as the Postal Service had hoped – at least not yet.

Here’s what some are saying about the PRC’s decision…

John E. Potter, Postmaster General of the United States, CEO of the U.S. Postal Service in a statement said:

“We are disappointed to learn that the Postal Regulatory Commission (PRC) has denied our price filing. But we are encouraged by their acknowledgment and understanding of the larger financial risk we face through the mandated prefunding of Retiree Health Benefits.

Clearly, the Postal Service is a viable business. Maintaining that status requires elimination of several legislatively-imposed constraints that hamper our ability to operate efficiently and profitably.”

The phrase “Clearly the Postal Service is a viable business…” surely caught my eye. Most viable businesses don’t lose $6 billion in a year, which is what the USPS is projected to lose this year.

Click here to read the full statement from John Potter…

The Direct Marketing Association (DMA) chimed in saying they “praised the decision of the Postal Regulatory Commission (PRC) to reject an excessive postal rate hike proposed by the US Postal Service (USPS).”

“Today’s decision is a great victory for businesses and consumers.  The US Mail will remain a viable and affordable communications channel.  The knowledge that postage rates will not rise faster than inflation is also an important element for the business community already operating in an extremely challenging business environment,” said Lawrence M. Kimmel, DMA’s CEO.  “This, however, is only a first step.  USPS customers must continue to work together, and with Congress, to help the Postal Service maintain competitiveness in the marketplace.”

Full DMA response here…

Meanwhile Sen. Tom Carper (D-Del.), Chairman of the Senate subcommittee with jurisdiction over the U.S. Postal Service, released a statement…

“I’d like to thank the members of the Postal Regulatory Commission and their staff for their work. I know this was a hard-fought and complicated case so I appreciate the thought and the long hours that went into producing this important decision.

The Postal Service is clearly in a financial crisis. It lost $4 billion last year and will likely lose as much as $7 billion this year once it closes its books for the fiscal year later today. Postmaster General Potter announced this past spring that, if nothing were done, the Postal Service could accumulate as much as $230 billion or more in losses by 2020. This is clearly an unsustainable path. In fact – if these trends continue and no major changes occur – I understand that the Postal Service will actually run out of cash by the end of fiscal year 2011, just a year from today.”

Complete statement from Senator Carper here…

Then we have #U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee and author of the 2006 Postal Accountability and Enhancement Act…

Her response to the PRC’s decision was not unexpected…

“American consumers and businesses that rely on the Postal Service won a major victory today,” said Senator Collins. “I am pleased with this decision, which I argued was required by the language of the 2006 postal reform law.”

Earlier in the week the same Senator Collins released the findings of three investigations of the Postal Service (USPS) by the Postal Inspector General (IG), which she had requested to determine whether the agency could realize additional efficiencies and cost savings in three areas: employee benefits, purchasing policies, and the area and district field office structure.

The findings revealed some “incredible perks” for USPS executives.

*the USPS awarded 359 contracts to former Postal Service executives without competition. In three cases that the IG examined most closely, the former employees were hired at nearly twice their former pay to advise new executives, a practice which the IG found raised serious ethical concerns and hurts employee morale;

*the Postal Service pays 100 percent of its senior executives’ health benefits, a perk that is not provided to comparable employees in any federal agency;

*postal employees participate in many of the same health insurance and life insurance programs as federal employees, yet the Postal Services pays a greater share of the premiums

“It is unbelievable to me that the Postal Service – awash in red ink and asking for huge postal rate hikes, service reductions and relief from its financial obligations – is paying the full health care premiums for its top executives,” said Senator Collins.

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So it’s now been over 24 hours since the decision was handed down.

Do you think this is the last we will hear of a new increase for now?

Will the USPS file an appeal?

Can the USPS ever be a “viable business?”

#Source: Postal News Blog

Tags: direct marketing association, DMA, John E. Potter, Lawrence M. Kimmel, Postal Inspector General, postal news blog, postal rate increase denied, Postal Regulatory Commission, Senator Susan Collins, Tom Carper, U.S. Postal Service, United States Postal Service, USPS

Post Office Bailout… Not So Fast

If it’s good enough for banks and car makers, why not the United States Postal Service?

I’m talking about Federal Bailouts of course. Is it time for the federal government to bailout the USPS? One high-ranking member of congress thinks so.

Rep. Darrell Issa (R-Calif.), the ranking member of the Oversight and Government Reform Committee, in a letter to the Washington Times on Monday, wrote “the predicament the USPS finds itself is not uncommon.” But unlike other industries affected by the Internet and digital media the “USPS cannot simply go out of business or declare bankruptcy.”

He goes to say that USPS employees “know that a deeply indebted Postal Service leaves the federal government with no real alternative to a taxpayer bailout as the situation approaches insolvency. Indeed, a sheep’s-clothes argument already is being put forward by the postal lobby and some Democratic lawmakers for a $75 billion taxpayer bailout of USPS.”

Issa’s letter (full version here) also contained this chart to the right which shows the demise & decline of the USPS by the numbers from 2000 – 2008.

So, the USPS wants and needs a bailout, right?

Not so fast…

In a response to Rep. Issa’s letter, Fred V. Rolando
President of the National Association of Letter Carriers drafted and delivered a letter to the editor of the Washington Times refuting Issa’s claims.

The letter begins…

To whom it may concern:

It’s election time in an era of extreme political polarization. But that does not excuse misleading the public with false claims that the Postal Service is seeking a taxpayer bailout. Nor does it excuse Congress interfering with collective bargaining between the financially self-sufficient Postal Service and its unions. Unfortunately, the opinion piece by Rep. Darrell Issa (RCA), the Ranking Member of the House Committee on Oversight and Government Reform, fails on both counts.

Click here to read the entire letter from Mr. Rolando to the Washington Times.

Well it seems we have a good old fashioned feud brewing between Mssrs. Issa and Rolando. Should be interesting to see how this all plays out.

But… something just doesn’t seem right.

Oh that’s right… seems that just over a year ago the same Darrell Issa was in favor of just such a measure.

The title on the Postal News Blog says it all…

Darrell Issa was in favor of postal “bailout” before he was against it

As the blog author aptly queries at the end of this post (full version here)…

“Why the sudden about face for a politician who has happily accepted campaign contributions from postal union PACs, and has even addressed meetings of the NALC?”

Why indeed…

So what do you think?

Should the federal government bailout the USPS?

Let me know what you think.

Tags: darrell issa, federal bailout, fred Rolando, National Association of Letter Carriers, Oversight and Government Reform Committee, postal news blog, United States Postal Service, USPS, Washington Times