USPS changes uncertain with this Congress

June 12, 2017

By Tonda F Rush

General Counsel and Public Policy Director | NNA

WASHINGTON—Newspapers that are dependent upon the mail, will enter into the summer session of Congress with many unanswered questions about the near future of Periodicals Class Mail.

“We are right on the cusp of pretty serious changes within the U.S. Postal Service,” said Max Heath, chair of the National Newspaper Association Postal Committee. “The Postal Service is getting closer to a major financial shortfall, and any catastrophic event—like a recession—could push it over the edge. And the political world seems ill equipped to address the problems.”

First, the rapid progress of the Postal Reform Act of 2017, sponsored by Reps. Jason Chaffetz, R-UT, and Elijah Cummings, D-MD, came to an abrupt halt in May. The bill was passed on March 16 by the Oversight and Government Reform Committee, as many NNA members looked on and lobbied their congressional delegations for a yes vote. But the bill has not yet officially been reported out of that committee.

The cause of the delay is twofold: 1) the bill, HR 756, has not yet received a score from the Congressional Budget Office, which evaluates every active proposal to determine its effect upon the federal deficit. The score is taking an unusually long time to arrive, probably because the CBO has also been taxed with scoring multiple proposals that constituted the American Health Care Act passed by the House last month, as well as the stopgap federal budget and the beginnings of the 2018 budget proposed by the Trump White House. 2) Chaffetz surprised his party by announcing his resignation from Congress. He is expected to leave in June. Losing the lead sponsor, who is also the oversight committee chair, deprived the reform bill of the momentum it needed to reach the House floor.

The reform bill has to receive the approval, by vote or tacitly, of the House Ways and Means Committee, which it needs before it goes to the full House for a vote because HR 756 would cause some 77,000 postal retirees to enroll in Medicare. Those enrollments would save the Postal Service the expense of funding a separate retiree health program for them and stabilize the system. Although Medicare taxes have been paid for these postal employees, they have not previously taken benefits, so enrolling them into the program would create a new, albeit a minor cost, for Medicare. However, Rep. Kevin Brady, R-TX, chair of Ways and Means, has so far been reluctant to allow these new enrollees. It was up to Chaffetz to change his mind. With Chaffetz leaving, it is not clear who the new chair might be and whether he or she will have the enthusiasm for combat with Brady.

Second, the 2018 postage rates have not yet been announced, but a number of changes are expected. And even more changes are expected in 2019. Some good news for community newspapers is that USPS is considering some sort of pricing incentive to get publishers to use flats tubs instead of mail sacks. NNA has been seeking a discount since 2007. USPS also is seriously testing acceptance of the white tubs without requiring lids, which would make them easier for publishers to prepare and truck and post offices to handle.

But approval of major rate changes is supposed to require approval of the Postal Board of Governors.

However, currently there are no governors.

A dispute led by Sen. Bernie Sanders, I-VT, over some conservative nominees created a stalemate in the 114th Congress. Majority Leader Mitch McConnell, R-KY, refused to allow confirmation of Democratic postal governors while Sanders held up confirmation of the Republican appointees. Thus, the final term of the last man standing came to an end in December without a replacement in the wings. All nine postal governor seats are now vacant. There is no indication that the Trump White House has any appointees to suggest yet.

Third, the Postal Regulatory Commission is midway through its review of the annual inflation cap on postal rates. By October, a report is due to Congress on whether putting a cap on rising rates has been successful during the past decade. The Postal Service has already said price caps cannot work in a network environment because its costs continually rise above inflation and its ability to control them—while mandated to perform universal service—is limited. USPS would like authority to set its own rates with only after-the-fact review by the regulators. If the PRC agrees that the price cap can no longer be used, a new rate system is expected next spring, which will affect 2019 postal rates.

If Congress fails to pass a postal reform bill, pressure will be on the PRC to fund service through increases in rates. Without legislative action, USPS may be inclined to cut service and raise rates to meet the obligations of ongoing labor contracts, replacement of vehicles to develop better package services in the e-tailing economy and retooling of its own processing and delivery system to be more digitally driven with live data on the progress of mail through the network.

The odds of major change for Periodicals are nearly 100 percent. The only question is: which changes will occur? One thing is certain. For the coming months, they won’t be decided by the governing body of the Postal Service, and if summer wanes without postal reform, chances that Congress will speak in its 115th session grow dim. Typically, election years deliver the kiss of death to postal bills.

Postal analysts have said that without postal reform legislation, double-digit postage increases of the 90s and early aughts could yet again become a reality.


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