'Exigent' postal rate hike beyond realm of reason

By Brad Thompson

President and CEO

Detroit Legal News Publishing LLC

Our newspapers have joined the fight to halt the Postal Service's "exigent" price increase filed July 6 with the Postal Regulatory Commission (PRC). The price increases includes a 2-cent hike on the first-class stamp, but a much more serious increase for the mailing of newspapers and magazines.

The increase will also affect churches, community organizations and labor groups that use nonprofit mail. It will affect businesses that use the mail for communications and advertising. It will affect catalog companies that send packages in the mail. It will affect everyone.

The new rates will be effective Jan. 2, 2011, unless the PRC stops them.

Our fight is in the best interest of consumers and anyone that mails.

In 2006, a price cap that held postage rates within inflation levels went into effect as a result of the work of the National Newspaper Association (NNA) and other groups representing users of the mail. That cap allows increases only within the Consumer Price Index as tracked by the PRC, which is less than 1 percent currently. USPS wants an average of 5 percent increase in postage. The proposed rates would weaken the cap and maybe destroy it forever.

To its credit, USPS did not try to increase rates in 2010 following the severe recession starting in 2008. But it blames its problems on the recession, in large part, even though its mail volumes began to fall in 2007, before the recession. The Postal Service also notes competition from the Internet as a reason for its current financial woes. Yet it wants to solve its problems by charging more. It is a solution that could lead, as U.S. Senator Susan Collins (R-Maine) said, to a death spiral by our important national universal mail system. Only in the twilight zone of government economic theory does it make sense to raise prices when you're losing business.

Postal losses have been caused in part by Congressional mandates requiring $5.5 billion a year for 10 years prepaid into a retiree health benefit fund, something no other federal agency is forced to do. They also stem from USPS's unwillingness to address high labor costs, which drive up expenses in spite of other cost-cutting moves.

To be sure, the Postal Service is allowed to increase rates beyond inflation when an "exigency" occurs. It argues to the Regulatory Commission that recession plus Internet competition equal exigency. But when the law was written, USPS had just suffered an attack of anthrax in the mail, which could have shut down the entire system. That is the sort of "exigency" that Congress had in mind, not an inability to control the cost of service.

Newspapers and many other employers in our communities have had to cut wages, benefits and hours of employees during this recession. These are painful and harsh. But the Postal Service has done no layoffs. It has passed along wage increases during the recession. It must get serious about controlling its costs.

These postage rates are a bad idea at a bad time. Our newspaper has joined the Affordable Mail Alliance (see www.affordablemailalliance.org), a broad-based coalition of mailing industries representing more than seven million jobs, in this fight.

While Congress has no immediate role in the rate case, our Congressional delegation should be aware of your opposition, as citizens and voters, to both this price increase and 5-day delivery, where they are the decision makers. If the price cap is broken for this reason, then it will cease to exist as proscribed by the Postal Accountability and Enhancement Act of 2006. If you agree, please contact your Senator and Congressperson. Also, the PRC wants to hear from you. Find it at www.prc.gov.

Published: Thu, Jul 22, 2010