Sen. Susan Collins: USPS Proposed Exigent Rate Increases Are Not Justified Under Law
Filed under: postal, postal news, postal reform, press releases, usps
Senator Susan Collins issued the following press release:
SENATOR COLLINS AGREES WITH ARGUMENTS IN MOTION TO BLOCK PROPOSED POSTAL RATE HIKES
Collins Backs Position taken by the Affordable Mail Alliance
WASHINGTON, D.C. – U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee and author of the landmark postal reform law, the Postal Accountability and Enhancement Act of 2006, issued a statement today in support of the Affordable Mail Alliance’s Motion to Dismiss the U.S. Postal Service’s proposed rate increases.
The Alliance filed its motion with the Postal Regulatory Commission, arguing that the Postal Service’s rationale for its proposed rate hikes does not meet the required criteria to use an exigent rate case – which would allow postal rates to exceed the annual price increase cap.
Senator Collins’ statement follows:
“As the author of the 2006 postal reform law, I completely agree with the Affordable Mail Alliance that the Postal Service’s proposed exigent rate increases are not justified under law.
“Let me be clear. The authority to increase rates under an exigent case can only be used in extreme and unforeseen instances – such as terrorist attacks, natural disasters, and other events that would cause significant and substantial disruptions in service. The law was not meant to be used to remedy poor economic performance or to offset an ongoing marketplace trend, such as the increased use of electronic over traditional mail.
“In addition to not meeting the criteria set forth in the law, the exigent rate case is simply a bad business decision. Rather than help restore postal solvency, an exigent rate increase will worsen the Postal Service’s crisis by further driving down mail volumes and thus revenues. Such action will erode further the Postal Service’s already declining customer base. The Postal Service should be looking at initiatives that will increase volume and attract more consumers. These rate increases will do just the opposite.”
Sen. Susan Collins: USPS Rate Hike, Service Cuts May Lead To Fewer Customers
The U.S. Postal Service Tuesday announced plans to seek approval for a wide array of rate increases, filing its request with the Postal Regulatory Commission (PRC).
In response, Senator Susan Collins issued the following statement on the USPS proposal:
“As the principal author of the 2006 postal reform act, I am disappointed that the Postal Service is seeking rate increases that far exceed the rate of inflation, averaging between four and six percent and for one class of mail as high as 23 percent. Only when the Postal Service can demonstrate ‘exceptional or extraordinary circumstance’ does the law allow for rate increases that exceed the rate of inflation. The Postal Service cites as one factor justifying the exigent rate case ‘continued movement toward electronic alternatives’ despite that trend being neither unexpected nor extraordinary.
“The Postal Service’s proposal could actually worsen the erosion in its customer base. Raising the rate for catalogs by more than five percent will cause some businesses to reduce their mailings of catalogs and to direct more of their customers to websites for information about their products. The Postal Service’s plans to hike rates so substantially as well as to cut services may well produce a death spiral of fewer customers and ever declining volume, exactly the wrong direction,” Collins said.
Author of Postal Reform Bill Attempts to Refute That Law Created USPS Financial Plight
Bill’s Author Can’t Change the Facts: Postal ‘Reform’ Created the USPS’ Financial Plight
In a continuing effort to rewrite history, the author of the Postal Accountability and Enhancement Act (PAEA) has attempted to refute the Postal Service’s contention that the 2006 law is responsible for the Postal Service’s current financial difficulties. The law requires the USPS to place in escrow more than $5 billion per year for 10 years to pre-fund future retiree healthcare benefits.
The attempt to dismiss this burden as the cause of the USPS’ misfortune would be laughable, except that the words are those of a United States senator. Because of the power she wields, her assertions must be addressed:
The 2006 law that the senator defends has forced the Postal Service virtually into insolvency. It imposed on the Postal Service a $75 billion liability that is not borne by any other federal agency. This single requirement has created a USPS deficit of alarming size.
I am disappointed that postal management has failed to release financial records showing USPS liabilities minus this obligation. Such documents would clearly demonstrate the disastrous effect the legislation has had. Absent this obligation, the Postal Service would have experienced a cumulative surplus of $3.7 billion over the last three fiscal years, despite declining mail volume, an economy in chaos, and electronic diversion.
Furthermore, I am compelled to ask: If funding future healthcare liabilities meets sound accounting standards, why isn’t this requirement applied to all federal and private enterprises? Why doesn’t every branch of government, including Congress, pre-fund future healthcare liabilities? What is unique about the Postal Service that it should be singled out?
The PAEA was a mistake, a gross miscalculation, which provided no new revenue stream for the Postal Service, while imposing massive, artificial new costs.
It is easy to suggest that the Postal Service should offer new services in order to remain financially sound, while ignoring free-market obstacles. I challenge the law’s defenders to name one new service or product the USPS could offer that would be accepted without challenge by private-sector competitors and that would result in short-term profit for the Postal Service.
And how can the USPS be expected to fund new enterprises that would require significant start-up costs while it is saddled with a $75 billion debt? The reality is that requiring the payment of $5.6 billion annually for 10 years would bankrupt any American corporation.
It is apparent that ostriches are not alone in their ability to bury their heads in the sand.
William Burrus
President
Senator Collins: USPS Slow In Taking Advantage of Tools In Postal Reform Act
SENATOR COLLINS’ STATEMENT ON PLAN TO REDUCE POSTAL DELIVERY SERVICE
March 2, 2010
WASHINGTON, D.C. – The U.S. Postal Service today announced that it will propose cutting Saturday mail delivery as a way to trim its large budget shortfalls. It also proposes to reduce overtime and to cut its workforce by about 30,000. Senator Susan Collins, R-Me., Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, which has oversight of the U.S. Postal Service, issued the following statement:
“The Postal Service is the only financially troubled business I know that would focus on cutting service rather than on trying to serve its customers better. The Postal Service needs to increase its volume and attract more customers. It cannot expect to gain more business if it is reducing service.
“The Postal Service is the lynchpin of a $900 billion mailing industry, providing nine million jobs nationwide. Given its critical role in our economy, the Postal Service should do everything it can to develop new revenue streams, to become more competitive and to improve services for both individual and business customers.
“I am concerned that cutting delivery days could force businesses to seek alternatives for their communication needs. Such a migration of customers will only increase the erosion in the Postal Service’s shrinking mail volume, which will prompt greater postage rate hikes and renew calls for even more truncated delivery services. It is a vicious cycle that will only exacerbate the Postal Service’s dire financial problems. We must break this death spiral.
“Despite the relief Congress provided to the Postal Service in 2003, 2006 and 2009, it is seeking to wish away more of its liabilities. It also has been slow to take advantage of the tools provided in the 2006 reform act to improve its financial situation. It also is clear that the USPS must continue to address its workforce-related costs, which account for about 80 percent of its total