Postal Reform Fears Set-In As USPS Pushes For Rate Setting Freedom
In a recently posted editorial entitled “PMG: Trust Us”, the Alliance of Nonprofit Mailers blasted Postmaster General Megan Brennan for advocating the PRC abolish the CPI rate cap and give the USPS more freedom to set postage rates.
The sharp editorial is striking, with its picture of a frowning Postmaster General and lecturing tone and exposes the fault line between mailers and the Postal Service when it comes to postage rates.
“Postmaster General Brennan’s testimony should send chills down the backs of every mailer who is watching and anticipating the results of the PRC regulatory review. The Postal Service is going for the brass ring—unfettered monopoly pricing power …” (click to read more)
The PMG’s position on the rate cap has been well established over the last six months (click here for the OMG’s report in October). She didn’t say anything new last week at the hearing.
But the fact she is pushing to end inflation-based rate hikes echoes efforts by her predecessor to abolish PRC ratesetting oversight that irked many in the industry.
When former Postmaster General Patrick Donahoe attacked mailers in his farewell address, the issue was over USPS freedom to set rates.
“The mailing industry views the future of the Postal Service mostly through the lens of pricing,” Donahoe said in 2015, “so they don’t want the Postal Service to have greater product and pricing flexibility.”
His efforts at postal reform, he said “didn’t get much support from our unions or the mailing industry — because it threatened the status quo.”
The reaction to PMG Donahoe’s comments from Joe Schick at Quad Graphics echoed what many felt.
“It should be noted,” Schick wrote, “that mailers allowing the USPS (an unregulated monopoly) to set their own prices without oversight, given the track record of the Postal Service, would call into question the sanity of all of us.”
Donahoe’s postal reform efforts failed. And the new Postal Service Reform Act does not change the PRC’s rate-setting authority, though it does make financial stability a priority factor in setting rates. And as if to underline the point, the new act automatically increases postage rates 2.15% upon its enactment into law.
The PRC itself is now reviewing how rates are set as part of its ten-year review of the 2006 postal reform law. It has the authority alone to change or abolish the current process, which includes a CPI rate cap on annual USPS postage rate hikes.
“The current price cap limits price increases simply on the basis of household inflation (as measured by the Consumer Price Index), without regard to our specific circumstances, including mail volume trends that have declined precipitously in the last decade and that will continue to decline, and our unaffordable but legally mandated cost structure,” PMG Brennan said in testimony before the House Oversight Committee earlier this month.
“We will therefore urge the PRC to replace the current system,” she said.
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