New Postal Reform Bill Raises Rates on Consumers; Fails to Correct Problems

This week, leaders of House Oversight and Government Reform Committee released draft Postal Reform legislation that neglects to fix the problematic Senate bill and forces the Postal Service further into a downward spiral.

Most troubling about this bill is that it permits rates to increase faster than inflation on its already profitable monopoly mail products. Earlier this year, ACI president, Steve Pociask wrote about how doing this would be very poor decision.

The justification for this rate hike is based on the myth that the Postal Service is still struggling to cope with the after-effects of the recession, which ended seven years ago. For USPS to continue to make this case now is disingenuous given the rulings by the Postal Regulator and US Courts that the agency no longer faces such extreme circumstances. These thorough reviews reflected an accurate understanding of the very profitable monopoly mail services, and sought to protect to protect consumers from further price gouging.

Now, Congress may let the Postal Service unnecessarily stick it to consumers again. First-class single piece and presorted letters, where the rate increase will apply, earned more than twice the revenue from delivery than it cost the Postal Service to provide. This kind of profitability is hard to fathom considering that USPS reports billion-dollar losses each year and faces $101 billion in unfunded obligations, which doesn’t even include the $15 billion liability owed to the U.S. Treasury.

The bottom line is that the House Oversight Committee bill misses the mark on enforcing better structural and management practices just as the Senate’s version does. Fixing this attempt at reform requires many changes, but the first must be done with consumers in mind, and that means to keep monopoly service rates down.

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