Critics take on Postal Service over rate increase

Incensed by proposed postal-rate increases of 15 percent or higher, several associations representing industries that heavily utilize the U.S. Postal Service are fighting back with litigators, lobbying muscle and money.

The Postal Service's mid-January proposal, which levies different increases on different types of mail, must first be approved by the Postal Rate Commission, an independent oversight board. "By law we're mandated to break even over time, and each class of mail must cover its own cost," said USPS spokesman Greg Frey. "To accommodate the costs that are projected, what we asked for is what it will take to break even in the given time frame. I don't know what kind of adding machines [the critics] are using."

The USPS "barely" broke even last year, showing a $363 million surplus on $63 billion of operating revenue-a margin of less than one percent, Frey said. Despite the end of federal mail subsidies in 1982 and rises of less than inflation in first-class postage since 1971, the USPS has managed to achieve net revenues for the past five years, Frey added.

None of this washes with critics of the USPS. First, they contend that the USPS's current rate-hike proposal overstates its financial needs by using figures from fiscal year 1998 rather than 1999. The more recent numbers-which would have been available not long after the proposal was submitted, the critics say-might have shown that USPS' expenses had decreased, due to ongoing improvements in efficiency.

Moreover, the critics contend the amount of the USPS's requested increase is roughly twice what it needs to prepare a unexpected shortfalls and to continue with its ongoing effort to pay down its debt, which has accumulated for the past three decades.

"What the Postal Service wants is a pad of cash to insure it against its own incompetence," said Gene A. Del Polito, president of the Association for Postal Commerce, a group that was known as the Advertising Mail Marketing Association until January. "That's why mailers are going bananas. This is probably one of the most ill-designed and ill-conceived rate cases ever."

Leading the charge is the Magazine Publishers of America, which has vowed to spend $10 million to fight the proposal. Rita Cohen, the MPA's senior vice president for legislative and regulatory policy, said that the money will probably be spent on litigating the regulatory case, conducting a PR campaign, running advertisements in member magazines and working Capitol Hill to urge broader reforms of the Postal Service. Cohen said the association is preparing to hire outside PR or lobby firms, or both, to push its message.

In the meantime, other groups-including the Direct Marketing Association, the Alliance of Nonprofit Mailers, and the Association of American Publishers-are joining the protest. "We will be challenging the supposed justifications for the Postal Service's proposals [and] bring them to the attention of Congress," said Association of American Publishers president Pat Schroeder, who as a member of the House of Representatives once belonged to the House Post Office and Civil Service Committee.

Publishers who belong to Schroeder's group could face rate hikes of 18-28 percent, said Allan Robert Adler, the AAP's vice president for legal and governmental affairs. "We work closely with the magazine publishers," Adler said. "That's an incredible commitment they've made. We don't have the resouces to match it, but we will work with them because there is mutual concern in the area of periodicals."

The flap over the rate hike has helped accelerate efforts by Postal Service critics to push for even more-sweeping reforms, particularly now that longstanding congressional efforts to pass postal service reform have been stalemated, observers said.

"It's going to turn into a very, very ugly lobbying battle that will be aimed not only at the senior postal staff responsible for putting the case together but also at the postal service board of governors itself," Del Polito said.

In late January, the Direct Marketing Association wrote a letter expressing "no confidence" in the Postal Service's management and requesting that the Postal Service's board of governors withdraw the rate hike.

There's even an effort to push for a blue-ribbon presidential commission that would suggest fundamental reforms. Murray Comarow, a semi-retired Washington lawyer who was executive director of a 1967-68 commission that helped create the USPS's current structure, has submitted the idea for a new commission to "a large number of people on the Hill, unions, and mailers," he said in an interview. "The world has changed enormously since the last commission. We need another."

A source said that efforts to get the USPS and the MPA to come out publicly in favor of such a commission fell through in early Feburary.