The Association of Magazine Media

Senate Committee Set To Give Postal Service A Blank Check To Set Prices

This letter was issued today by a broad coalition of companies and mailer groups,  including MPA, representing every major class of mail, and the majority of mail volume in the U.S.

AFFORDABLE MAIL ALLIANCE

Congress needs to pass a common sense solution that reforms the postal system while not turning it into an unregulated monopoly. Call 202-224-3121 and tell your Senator to stamp this bill “Return to Sender.”

January 28, 2014

The Honorable Thomas Carper
Chairman                            
Committee on Homeland Security and Governmental Affairs                                            
U.S. Senate                                                               
Washington, DC 20510                                             

The Honorable Tom Coburn
Ranking Member
Committee on Homeland Security and Governmental Affairs
U.S. Senate
Washington, DC 20510

 

Dear Mr. Chairman and Ranking Member Coburn:

The members of the Affordable Mail Alliance, a broad coalition of postal customers and suppliers established to represent the mailing community in exigency litigation before the Postal Regulatory Commission, write to express our deep concerns and opposition to the rates and governance provisions contained in Section 301 of the Substitute Amendment to S. 1486. 

Section 301 as written would undermine the checks and balance system that has helped both the mailing industry and the Postal Service weather difficult economic times and under which the Postal Service has gained efficiencies, and recently, grown revenues.  All attempts to modify Section 301 to a workable solution have failed.  Members of the AMA therefore stand united in supporting Senator Tammy Baldwin's amendment to strike Section 301 of the Substitute.  Should that amendment fail, the AMA urges members of HSGAC to oppose a Motion to favorably report the bill to the Senate.

Among the provisions that cause us grave concern:

  • The Substitute would build the 4.3% exigency rate increase recently approved by the Postal Regulatory Commission on a temporary basis into the Postal Service’s “rate base” forever.  The total revenue approved by the PRC is $2.8 billion as recession-related exigency losses.  The total revenue the Substitute amendment would build into postage rates is $60 billion (present value of a permanent 4.3% rate increase).  The problems with the Substitute are twofold: (1) By vacating the Commission’s decision, it undermines the regulatory system established to protect the mailing public from the Postal Service’s monopoly status; and (2) It undermines the judicial review process that was established to place checks on the PRC as well.  Members of the AMA have recently appealed the Commission’s exigency decision (as has the Postal Service).  The Substitute would cut off our right to judicial review – a cornerstone of the regulatory system in virtually every segment of the American economy.
  • The Substitute would unilaterally modify the price cap that has been utilized successfully since 2006 from CPI to CPI+1.  Notwithstanding that the entire mailing and supply industry continues to live within a CPI or less world of price increases, the Substitute would undermine the regulatory system of notice, review and public comment that is available to the mailing community under current law when the PRC reviews the CPI cap in 2017.  The Substitute forestalls the mailing public’s right to comment on changes that will have material impacts on the fortunes of mailers, the Postal Service, and the US economy.
  • Finally, the Substitute would completely eliminate any regulatory oversight of the Postal Service in 2017, by placing in the hands of the Postal Service – an entity with two statutory monopolies (on carriage of letters and the mailbox) – unfettered pricing freedom.  The Postal Service would be given the authority to propose whatever pricing system it wants to put into place, and if not approved by the Commission, by a simple two thirds vote, implement that system over the objections of the Commission and the mailing community.  It is inconceivable that Congress would create an unregulated monopolist.  Even in the private sector, antitrust regulators carefully monitor the pricing power of large companies.  How could Congress set a lower standard for an essential public enterprise?

The rates and governance changes in the Substitute would have immediate devastating consequences on both the mailing industry and the Postal Service’s fortunes.  The organizations listed below strongly support Senator Baldwin’s amendment to eliminate this unprecedented dismantling of a necessary checks and balance system.  In the alternative, we must oppose a Motion to favorably report the bill to the Senate.  We regret that we must take this position despite a number of forward-looking provisions contained in the remainder of the Substitute.

 

Sincerely,

 

Members of the Affordable Mail Alliance

 

Alliance of Nonprofit Mailers

American Catalog Mailers Association

American Forest & Paper Association

Association for Postal Commerce

Direct Marketing Association, Inc.

Envelope Manufacturers Association

Greeting Card Association

Major Mailers Association

MPA – The Association of Magazine Media

National Association of Presort Mailers

National Newspaper Association

Quad/Graphics, Inc.

RR Donnelley

Saturation Mailers Coalition

Software & Information Industry Association/American Business Media

 

Cc: Members of the Homeland Security and Governmental Affairs Committee

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