LEGISLATIVE ISSUES — CAN A LAME DUCK FLY?

Failing a reform bill before the stroke of midnight, Lyons feels the PIA/GATF would be willing to pick up the cause in the 110th session. But if that support cannot be rekindled, the focus will shift to effecting change in the rule-making process, addressing rate cases, rules and the regulatory aspects of USPS.

Clearly, a reform bill is the preferred avenue for change. The next rate increase in May of 2007 sees across-the-board increases in the 9 percent to 10 percent range. The USPS would presumably file in 2007 for another increase for the following year. These increases fly in the face of what is viewed as one of the most critical aspects of the reform bill, which is to tie future rate cases to the Consumer Price Index (CPI).

As Cooper points out, future rate increases, when married to the CPI, provide cost certainty for mailers when planning future campaigns. This is critical for a magazine industry struggling to retain advertising dollars, especially since postage costs outweigh printing costs.

Another perk tied into reform is the retooling of the process for filing rate increases, currently a 10-month process that is litigation-intensive.

“The postal service has to create ‘X’ number of dollars, and they do that by deciding winners and losers among some 5,000 different rate subclasses of mail,” Cooper notes. “If you’re a loser in that process, the cost can be significant. Practically every mailer hires an attorney—either individually or through their association—to argue on behalf of their class, subclass or sub-subclass of mail. Fractions of a cent, one way or another, can mean millions and millions of dollars.”

The prevailing theory is that as rates increase, mail volume decreases. As a result, the USPS increases rates further to recoup monies lost to the diminishing volume, creating a vicious cycle. Commonly known as the “death spiral,” a diminishing USPS role is not in the best interest of mailers, the printers they employ or, indeed, for the postal service itself.