Postal Service finds creative ways to lobby Congress

When John E. "Jack" Potter became Postmaster General on June 1, he took the reins of the second-largest civilian employer in the United States. The U.S. Postal Service boasts 800,000 employees at 38,000 facilities that process more than 200 billion pieces of mail a year. In 2000, the USPS racked up revenue of $64.5 billion. But Potter also inherited an expected $2 billion to $3 billion budget shortfall for 2001, angry customers, hardball competitors, and a Congress that's breathing down his agency's neck. Efforts to improve the grim financial outlook have run into a brick wall. Institutional mailers--already fuming over a price increase that took effect in January--became apoplectic following the Postal Service's decision in May to raise rates once again. Postal executives, beset by negative appraisals of the USPS's effectiveness, have been asking Congress to pass reforms that could allow the Postal Service to turn the financial corner. But the ongoing controversies over postal-rate hikes have all but placed such reforms on hold. If the Postal Service were an ordinary private-sector corporation seeking congressional help with the massive economic and regulatory challenges it faces, it would hire an armada of lobbyists and public relations folks, and spread loads of campaign money around to members of Congress. But the U.S. Postal Service is no ordinary company, and it won't be hiring any help from the usual suspects on K Street. The USPS is an unusual hybrid: part private-sector competitor, part government-approved monopoly. And that governmental link is crucial. It means that the Postal Service is barred from lobbying in the same way that other corporations do. So, as Potter--himself a 23-year Postal Service veteran--develops a turnaround strategy, he'll have to rely on a unique set of plans and tactics to try to win over Capitol Hill. Consider what happened on April 4 when the head of the General Accounting Office testified at a hearing of the House Government Reform Committee. Comptroller General David M. Walker told the panel that for two years GAO had been raising a host of concerns about "financial, operational, and human-capital challenges that threaten the Postal Service's ability to continue to provide affordable, high-quality universal postal service on a self-financing basis." Moreover, the USPS's "financial outlook has worsened more quickly than expected," Walker said, "and it is not clear how the service will address its mounting financial difficulties and other challenges." Despite Walker's tough words--and his credibility as the head of Congress's investigative arm--his testimony was overshadowed in the next day's media coverage. Instead, the big headline was an announcement made the previous day by the Postal Service Board of Governors that USPS executives were weighing the possibility of ending Saturday mail delivery. The governors said they would only be studying the issue, not implementing any change. But the mere possibility that six-day service could end shocked Congress, the business community, and the public. Critics assailed the idea, but they also saw something else at work. They called the announcement's timing suspicious and suggested that it was designed to pre-empt Walker's negative testimony. "It was a very effective PR ploy," argued Rick Merritt, the executive director of PostalWatch Inc., an advocacy group for postal consumers that is based in Virginia Beach, Va. Deborah K. Willhite, the Postal Service's senior vice president for government relations and public policy, emphasized in an interview that the USPS didn't make the announcement "to overshout any bad news." Still, many postal observers saw the announcement as yet another case of the Postal Service creatively throwing its weight around. "That was a pretty effective way of getting our attention," said one Capitol Hill aide. "They're certainly able to communicate their needs." No Weakling By statute, the Postal Service cannot ask members of Congress to vote either for or against legislation, or explicitly request that friendly interest groups lobby in its place. It cannot make political action committee donations to key committee chairmen or give so-called "soft money" to political parties. And it cannot pay its governmental-affairs staffers--who, pointedly, are not called lobbyists--more than federal pay scales allow. (The postmaster general himself is paid $164,000 a year, far less than top Gucci Gulch denizens earn.) Add in the USPS's need to fend off negative connotations associated with the term "government agency," as well as the widespread public distaste for bureaucracy and inefficiency, and suddenly it becomes clear that a job advocating for the Postal Service's interests can be far less glamorous than equivalent positions with private competitors, such as Federal Express Corp. and United Parcel Service.

One lobbyist who is sympathetic to the Postal Service suggested that arguing the Postal Service's case is like "playing tennis with your hands behind your back and the racket in your teeth." Willhite called the current anti-lobbying rules "reasonable," given the Postal Service's federally blessed monopoly on delivering first-class mail. Still, she argued, the rules ultimately limit her ability to make the Postal Service's case in Washington. "My goodness gracious, if I could lobby and have a PAC, given our size and ubiquity, I believe we'd be very, very effective," Willhite said with a laugh. Yet veterans of Washington's postal wars emphasize that the Postal Service is no weakling. They say that whenever the Postal Service clashes with deep-pocketed parcel deliverers such as Federal Express and United Parcel Service, or comes up against influential mail customers such as magazine publishers and the direct-mail industry, the opponents are evenly matched. Why? Supporters and critics cite the Postal Service's well-honed ability to maneuver within its restrictions. "They certainly have a great gaggle of animals that are walking and talking like ducks"--that is, lobbyists--said Bruce Heiman, a partner at Preston Gates Ellis & Rouvelas Meeds who has lobbied against postal-rate hikes on behalf of the Magazine Publishers of America. Whether you want to call them ducks, he added, "is another question. Whatever restrictions they're operating under haven't seemed to impede their ability to convey a message." For one thing, the Postal Service has a big government-relations staff--a 50-person team that has grown by roughly 16 employees during Willhite's tenure. It includes 20 "liaison officers" who meet with members of Congress and hold briefings with employees and lawmakers throughout the country. It also includes a smaller number of "research staffers" who prepare congressional testimony and help with GAO audits, as well as a "correspondence unit" that handles the 40,000 congressional inquiries the USPS receives every year. By contrast, UPS has roughly 15 in-house lobbyists and FedEx about 10; both UPS and FedEx also retain more than a dozen outside lobbying firms. Willhite is deeply familiar with both politics and K Street. A Navy enlistee in her youth, she later worked on five Democratic presidential campaigns, most recently for President Clinton in 1996. In between, she served as policy director for the speaker of the Connecticut House and as a lobbyist for the firm formerly known as Black, Manafort, Stone & Kelly. At Black, Manafort, Willhite handled lobbying work for such blue-chip clients as American Airlines Inc., AT&T Corp., and--ironically--UPS, which is considered the Postal Service's most bare-knuckled rival. She moved over to the Postal Service in early 1998 when William J. Henderson-the now-retired postmaster general and longtime Willhite family friend-recruited her to beef up the USPS's government-relations effort. A gathering held immediately before Willhite sat down for an interview with National Journal in late April illustrates the fine line she has to walk every day. Willhite had been addressing representatives of the bulk-mailing industry who periodically meet with Postal Service officials to discuss technical issues, such as mail-sorting specifications. Because potential legislative reforms are of keen interest to these mailers, Willhite said, "I usually do a presentation on what's happening" in Congress. But that presentation, according to the rules, has to be purely informational. So, Willhite explained, she typically tells such audiences about the USPS's activities and updates them on how the Postal Service interprets the latest congressional hearings. She can volunteer to send copies of hearing testimonies, and she can explain those issues that the USPS hopes to emphasize in the future. She can answer questions and provide information on Postal Service goals and strategy. But Willhite is prevented from going one step further. "I cannot say to them, `We need you to do this or that.' If someone in the audience comes back and says, rhetorically, `We think this should happen,' I can't say, `You should call [House Government Reform Committee Chairman Dan] Burton about it.' I try to make sure all the folks in our department are very, very careful about that." Similarly, when officials from the USPS government-relations office meet with members of Congress or their aides, they are allowed to state the Postal Service's views on particular issues, but they may not request any particular actions on votes. The fine line between what's OK and what's impermissible often drives the Postal Service's competitors batty. Tad Segal, the director of public relations for UPS, recalled an incident in 1999 when Sen. Michael Enzi, R-Wyo., and Rep. Jim Greenwood, R-Pa., were working to pass legislation that would have brought the Postal Service under the authority of the Occupational Safety and Health Administration. The USPS government-relations office sent a letter to several members of Congress that argued in favor of keeping the bill off the House's "suspension calendar," so that amendments could be incorporated into it. (The suspension calendar is usually reserved for noncontroversial measures; measures on the calendar require passage by a two-thirds supermajority, without amendment.) Because the request represented a specific call to action on pending legislation, Segal said, the action seemed to contravene the restrictions on USPS lobbying. But Willhite said that neither this allegation nor others have stuck. UPS "has a very, very effective and strong lobbying effort, and in the past they have accused us of lobbying," Willhite said. "Their hope is to tie us up, and that's a legitimate tool. We have never been found to cross that line, much to their chagrin." Playing the Money Game There are other major differences between the Postal Service and its rivals. One is that the USPS cannot make campaign donations-something that FedEx and UPS do in spades. Not being able to make PAC donations "probably hurts us," Willhite said. "Not because I think a vote can be bought--I've been around politics long enough to know that's not the case--but you do get to have different kinds of conversations at different kinds of [fundraising] events. The atmosphere is usually more relaxed and casual. That is important." Postal employees can attend fundraisers as private citizens, but Willhite said she refrains from going. She acknowledged, however, that some of her staffers--in their capacity as private citizens--have attended political fundraisers, including events for Rep. John M. McHugh, R-N.Y., who was the main sponsor of postal-reform legislation that was supported by the Postal Service. In addition, former Postmaster General Henderson attended McHugh fundraisers, Willhite added, noting that McHugh and Henderson are "good personal friends." Of greater importance to the Postal Service's political fate are the donations made by Postal Service employee unions. Collectively, six postal organizations--the National Association of Letter Carriers, the American Postal Workers Union, the National Rural Letter Carriers Association, the National Association of Postmasters of the United States, the National League of Postmasters, and the National Association of Postal Supervisors--gave $3.4 million through their PACs during the 2000 campaign cycle. That's actually more than was donated by the PACs run by Federal Express and UPS, which gave a combined total of almost $3 million. To be sure, comparing donations from postal unions with those of the Postal Service's package-delivery competitors is not perfectly symmetrical. FedEx and UPS outpaced the postal organizations' overall giving by forking over an additional $2.4 million in soft money to the political parties. (Postal unions gave almost no soft money during 2000.) It's also clear that the Postal Service has no control over the activities of its unions' PACs. Moreover, the USPS and its unions do not agree on every policy issue. Still, observers agree that there's enough of a shared interest between the Postal Service and its employees to make the tacit alliance a potent one. "Traditionally, what has happened is that the employee organizations--which have had pretty much synonymous desires with the Postal Service--have been an out-front lobbying arm of the Postal Service," said Ken Parmelee, the vice president of governmental affairs for the National Rural Letter Carriers Association. The various employee groups, such as his own, "coordinate with each other, though not with the Postal Service, on what the issues are. We do stay in communication with the Postal Service, and occasionally the Postal Service will alert us to things--they'll say, `Were you aware that this particular issue is of concern?' If we were not aware of it, we say we'll have to explore it on Capitol Hill." Asked for an example of partnership, Robert M. Levi, the director of government relations for the National Association of Postmasters of the United States, cited an episode in the late 1990s. Congress, under pressure from UPS and other commercial competitors, was considering whether to force the Postal Service to bid on access rights to the government's portion of the radio spectrum. Previously, the Postal Service had access rights outright. Postal Service employees use the spectrum for communications between trucks and post offices, and postal inspectors use it for their law enforcement activities. Knowing that the Postal Service would be unable to ask members of Congress to vote against the measure, NAPUS and its allies took up the cause. "From the postmasters' perspective, we knew we needed the access," Levi said. "We and the National Association of Letter Carriers met with Billy Tauzin [the Louisiana Republican who chaired the House Energy and Commerce Committee's Telecommunications Subcommittee], and basically educated him about the necessity of the Postal Service's access to the government spectrum. At the end of the day, it was basically dropped." Reforms and Rate Wars Another arrow in the Postal Service's quiver may be even more effective than its unions' PACs and lobbyists: its sheer size and reach. The Postal Service has more facilities than Wal-Mart Stores Inc., the nation's No. 1 nonmilitary employer. Moreover, every American depends, to a greater or lesser extent, on the Postal Service's ability to run smoothly. So, even though the Postal Service cannot directly ask its employees or customers to agitate on policy issues, the fact that its potential grassroots backers are so numerous and geographically diverse carries significant weight in Congress. "The reason we're so effective is that if you pick a congressional district, I can tell you how many post offices and postmasters it has in it," said Levi of NAPUS. "That has a far greater impact on congressional action than some lobbyist walking in from headquarters." That's why announcements such as the Saturday-service study carry so much weight--a reality that makes critics seethe. Segal of UPS cites the Postal Service's statement on March 8 warning of the expected $2 billion to $3 billion shortfall. That shortfall, the Postal Service took pains to note, could force a freeze on 800 construction projects in 50 states. When the Postal Service made the announcement, it linked its electronic news release to a complete list of all 800 projects, organized alphabetically by state and zip code. That linkage made it easy for citizens--and, more important, Capitol Hill aides--to see the potential local impact. The announcement, Segal charged, was another example of the Postal Service "creating a climate of crisis on the Hill." Naturally, Willhite's assessment was more benign. "There wasn't a calculation that said, `We should cover every congressional district,' " Willhite told National Journal. "But if you have 800 facilities, there's a pretty good shot that you're going to hit most of them." As savvy as such communications efforts are, the Postal Service may soon expand its offensive by hiring an outside public relations firm. In December, USPS executives requested bids from PR firms to devise a campaign to promote postal-reform legislation. Although the pending contract is to be paid through postal revenue, not congressional appropriations, critics are not mollified. "Imagine the Pentagon putting out a request for a PR firm to get House and Senate Appropriations Committees to increase their budget," said Segal of UPS. Another unusual facet of postal-related lobbying on Capitol Hill, observers say, is the fluidity of alliances. Consider the postal unions. They work alongside the Postal Service on a variety of shared issues, but they sometimes diverge on labor-management topics. One ongoing battle, for instance, is being waged between postmasters' groups and Postal Service executives over whether postmasters should be able to exercise collective bargaining rights. As for the competition, Federal Express has sometimes clashed with the Postal Service on postal-related matters, yet ever since the initiation of a "strategic partnership" between the two carriers earlier this year, the two have largely been cooperative. The partnership involves shared delivery capabilities, such as FedEx planes carrying Postal Service shipments, and cross-marketing, including the installation of FedEx drop boxes in post offices. (This arrangement added fuel to the already smoldering relations between the Postal Service and UPS.) Perhaps the strangest love-hate relationship is between the Postal Service and mail-customer groups. In recent years, most mailer groups have signed on to--and actively worked to pass--Rep. McHugh's postal-reform legislation. Most recently, however, those groups have mounted an aggressive campaign to shame the Postal Service into abandoning its plan to hike postage rates. The result, said rural-letter-carrier lobbyist Parmelee, "is a natural constructive tension." (With a wry smile, Willhite agreed that the constantly shifting nature of alliances means that her job is "never boring.") The postal-reform legislation offered last year would allow the Postal Service greater flexibility to set its rates. Currently, an independent Postal Rate Commission generally has to approve rate hikes, but the approval comes only after elaborate proceedings that can take months to complete. Last year's bill would have granted postal officials the ability to offer discounts for good customers and the freedom to market certain new products and services. In exchange, the Postal Service would have accepted additional restrictions, including additional limits on how it finances new commercial ventures. Observers expect the measure, which died during the last Congress, to come up once again. If it is to pass, these people agree that mailer groups will need to support it solidly. Yet while mailers have applauded the reform plan in the past, the current acrimony over rate hikes has thrown a wrench into the relationship. "We're trying to find commonalities," said Neal Denton, executive director of the Alliance of Nonprofit Mailers. "We're trying to find a way to move into the next century in a way that protects universal service, that protects the notion of one price for all mail whether it's sent to Alaska or Manhattan, that protects the livelihood of postal employees, and at same time gives the Postal Service the flexibility to operate more like a business." Such constructive efforts have taken a backseat in recent months because of the rate-hike war. The ringleader of the mailers' attacks has been the Magazine Publishers of America, a group that in 1999 spent $10 million to fight postal-rate increases. Initially, the MPA's onslaught appeared to work, as the independent Postal Rate Commission allowed only a modest rate hike to take effect in January. But within months, the Postal Service Board of Governors struck back, wielding rarely exercised authority to raise prices on its own. The new increases will take effect in July. The urgency of the Postal Service's two-front war-raising rates, while also achieving postal reform-explains the USPS's decision to play hardball, observers say. The most recent Postal Service structural overhaul required six years and a debilitating postal strike before it was approved in 1971. Analysts say this history suggests that postal reform can happen only after a crisis--such as the one that could emerge if five-day delivery and massive construction freezes were to be implemented. Even critics concede that the USPS offensive has been effective in a Machiavellian way. "At the hearing on the House side a few weeks ago, it did seem like the strategy found traction" in scaring members of Congress. Denton said. "Some folks seem to be willing to open up a blank checkbook as long as the Postal Service withholds its fire" on issues such as Saturday delivery. But many lobbyists for mailer groups suggest that the Postal Service's all-out campaign to secure rate hikes is driving a wedge between it and its allies on postal reform--something that could hurt the Postal Service in the long run. Specifically, lobbyists for mailer groups say that the battle over rates has worn down their willingness to fight for postal reform. Denton expressed special pique that the Postal Service, at a recent Orlando, Fla., trade show for big mailers, never hinted that a proposed rate increase was in the works. "The mailers desperately want the Postal Service to succeed," Denton said. "The only reason not to be [on their side] is when we think they're picking our pocket. And that's how we perceive it now." Another lobbyist with prior service on Capitol Hill said the Postal Service has taken on a "circle-the-wagons, us-vs.-them mentality. They've set all this in motion, stirred it up, and God help all of us-including them--if they don't have an endgame in mind." Critics say the Postal Service should be careful what it wishes for. If it follows through on its no-Saturday-delivery proposal, they say, its staunch allies in employee unions will likely be infuriated. Though most observers consider it unlikely that Saturday delivery will be ended, Parmelee said that immediately after the announcement, his union sent out an e-mail urging its members to write letters to Congress that emphasize the potential damage from such a change. Still, Willhite rejects the notion that the Postal Service has been busy making enemies of close friends. "If we had other tools to manage the business with, we would certainly do things differently," she said. "But this has not driven a stake through the heart of the alliance with mailers. Is every meeting tea and crumpets? Absolutely not. But we've all got a job to do, and the service we provide is important for lots of reasons. Not doing these things would only get us deeper into a financial hole, and doing these things without making public announcements of them would not serve the public interest."