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Fighting Postal Rate Increases


Post Date: July 6, 2010
By: dma

On July 6, 2010, the U.S. Postal Service (USPS) filed an exigent rate case with the Postal Regulatory Commission (PRC), requesting permission to raise postal by an average of 5.6% – nearly ten times the current rate of inflation.  DMA is at the center of a broad coalition – the Affordable Mail Alliance – fighting this exigent rate case before the PRC.

Postal Service Seeking to “Bust the Cap”

In 2006, a new postal rate-setting system was established in the Postal Accountability and Enhancement Act (PAEA). For most products, the new system caps rate increases at changes in inflation (CPI). This price cap – and the entire PAEA – was enacted with the full support of the mailing community, including the Postal Service. The intention was to give mailers predictability and manageability with respect to postage costs and the Postal Service an incentive to reduce costs so as to generate and retain profits.

With the Anthrax Crisis and 9/11 terrorist attack still fresh in memory, the law allowed for an above-inflation increase in exigent circumstances – i.e., “extraordinary or exceptional” circumstances that necessitated an increase in rates to handle the exigent circumstance. Assuming such an urgent circumstance would require quick action, the law set a short 90 days for the Commission to act on the Postal Service’s request.

The Postal Service is now seeking to “bust the cap,” increasing postal rates by up to ten times the rate permissible by law.

Affordable Mail Alliance Asks the PRC to Dismiss Rate Hike Request

On July 26, 2010, DMA joined the Affordable Mail Alliance in filing a petition asking the PRC to dismiss the Postal Service’s rate hike proposal.  The motion to dismiss argues that the rate hike violates the cost controls Congress put in law to protect consumers and that the Postal Service needs to cut costs and modernize rather than raise rates an average of ten times the rate of inflation. Read what Jerry Cerasale, DMA’s senior vice president of government affairs, had to say about the motion to dismiss.

Join the Affordable Mail Alliance!

The Affordable Mail Alliance is an unprecedented coalition of postal customers – including more than 700 associations, businesses and nonprofit organizations that employ 7.5 million people –calling on the PRC to reject the Postal Service’s proposal to raise postal rates by up to ten times the rate permissible by law.  Join DMA as a member of the Affordable Mail Alliance, opposing the Postal Service’s push for an exigent increase.  There is no cost to have your organization listed as a member.

Why are we fighting the USPS’ proposed increase?

  • It is unlawful. Despite widespread agreement on PAEA, the Postal Service is now seeking to “bust the cap”. The ostensible “exigent” circumstance? We believe that the Postal Service will cite the recession of 2008-2009 and electronic diversion of First-class mail, its most profitable category. But these are hardly the exigent circumstances the law contemplates – since 1945 there has been 11 recognized recessions – more than one a decade.
  • The Postal Service failed to make the tough business decisions all other businesses have had to make. Online bill payment, digital media, internet advertising – all parts of the “digital revolution” – have impacted mail volume for over a decade. USPS should have been significantly downsizing to match likely long-term volume trends long before now. The Postal Service failed to take the same painful steps other businesses have taken during this economic downturn.
  • Increasing postal rates will cause a decline in volume – exactly the wrong approach. Driving volume and mail users from the system, as an above inflation rate increase will do, will have the exact opposite effect the USPS desires. Volume – at least in Standard mail – is just starting to recover. An exigent increase will put USPS back in its “death spiral”.
  • Increased rates will cause more lost jobs. The mailing industry, which employs over 7.5 million people, has been hit particularly hard during the recent economic downturn.  An above inflation postal rate increase will cause job losses.
  • An exigent increase based on routine, cyclical economic conditions is a dangerous precedent. If the PRC grants the Postal Service’s request, PAEA will effectively have been broken. In the future, nothing would prevent the Postal Service from using the exigency clause to raise rates whenever it was losing money.

 

The Affordable Mail Alliance fighting against this unlawful increase represents all mail classes and all segments of the mail supply chain. The mailing industry has much at stake.

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