Consumer Advocates and Other Groups Strongly Oppose Postal Regulator’s Plan for Major Price System Overhaul and Rate Increases

This month, American Consumer Institute (ACI) along with many organizations and analysts have expressed concerns with the Postal Regulatory Commission’s (PRC) plan for drastic US Postal Service rates hikes for each of the next 5 years. As ACI contends, such proposals have been ushered to the public using faulty logic about the challenges facing the USPS.

ACI president, Steve Pociask, maintains that raising prices, rather than cutting costs, is the wrong solution. In his comments submitted to the PRC, Pociask further discusses the limitations of the PRC’s findings:

“The current price cap mechanism should not be altered. Allowing for rates to increase faster than inflation amounts to a negative productivity offset, which eliminates incentives to reduce costs and undermines the first goal of the Act. The price cap mechanism has not failed; the USPS has failed. It has failed because it cannot properly evaluate the profitability for its lines of business. This deficiency invites cost, revenue, profit and risk shifting, effectively subjecting its dominant market services to prop up competitive activities.”

Many others have also favored reforming USPS’ irresponsible accounting practices, rather than the PRC resorting to unwarranted revenue remedies:

Center for Individual Freedom: “For a government agency, any instance of omitting transparency of financial health and potential exposure of federal assets is simply irresponsible. For that reason, the Commission’s proposal for across-the-board rate increases for five consecutive years lacks sound justification.”

Consumer Postal Council: “There is a clear, disturbing and ongoing pattern of the Postal Service failing to meet cost cutting and efficiency goals. And, there does not appear to be any consequence for failing to do so. There must be a fundamental change in the Postal Service’s culture on costs and operating efficiency, and related business changes, before postal consumers are asked to pay significantly more.”

American Mail Alliance: “The Commission proposal does little or nothing to challenge the Postal Service to take lasting steps to streamline costs. Instead, by simply mandating much higher prices, it removes the pivotal incentive to cut costs. The industry believes that it is hardly a coincidence that the Postal Service achieved larger cost savings when constrained by a rate cap.”

Citizens Against Government Waste: “Under the proposal, the USPS is under no obligation to use the additional revenue to begin to pay down its debt, or fund its hundreds of billions of unfunded liabilities. CAGW strongly opposes any proposal which permits the USPS to maximize revenue without addressing the bloated cost side of its operations.”

Netflix: “The cap system is a reasonable approach; it has worked well for ten years, and the burden to justify changing it has not been met. In particular, the cap system has achieved Objective 5 because MD revenues have contributed adequately to the Service’s financial stability as Congress intended.”

Taxpayers Protection Alliance: “Until such transparency is realized and the applicable data is properly analyzed, the Commission cannot adequately determine if the remaining PAEA objectives have been achieved, and further, it does not have sufficient justification to propose any rate system changes.”

Alliance of Nonprofit Mailers, American Catalog Mailers Association, Inc., Association for Postal Commerce, Idealliance and MPA—the Association of Magazine Media: “The Commission’s proposals—in addition to being barred by the statute—misdiagnose the problems and will only exacerbate the Postal Service’s financial difficulties. The Postal Service needs more incentive to reduce costs and increase efficiency, not less.”

To read more on this subject, The American Consumer Institute’s regulatory filing with the United States Postal Service Commission can be accessed here.

 

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