USPS Bites Back at Affordable Mail

Alliance Calls the group’s pricing protest “strained,” “fatally flawed” and ignorant.

By Bill Mickey
Friday, September 10, 2010

The USPS is taking a hard line against a pricing protest issued late July by the Affordable Mail Alliance, a coalition of hundreds of businesses including magazine publishers and trade associations. The Postal Service has asked the Postal Regulatory Commission (PRC) to deny the coalition’s motion to dismiss the USPS’ proposed exigent rate hike.

In early July the USPS filed for a price hike with the PRC, offering its case for the “exceptional and extraordinary circumstances” that allow for the USPS to seek pricing above the .6 percent Consumer Price Index cap. That could force rates for periodicals mailers up by as much as 8 percent.

Publishers and associated groups quickly struck back, forming the Affordable Mail Alliance and issuing a 96-page motion against the price increase.

“Now the Postal Service expects customers to pay the price for its refusing to do what its customers had to do [cut spending],” the coalition says in a statement. “For our organizations, the Postal Service’s unwillingness to do its part will mean the loss of thousands of additional jobs, further cuts to pay and benefits. This is an issue about investing for possible future growth or paying higher taxes in the form of higher postal rates. …Punishing customers with higher prices is not the way to make the Postal Service solvent.”

In its 96-page motion, the Affordable Mail Alliance argues that allowing the USPS to raise prices above the Consumer Price Index “in this case would nullify the single most important safeguard for mailers and the public in the Postal Accountability and Enhancement Act of 2006.”

USPS To AMA: Your Argument Is “Fatally Flawed”
In early August, the USPS issued its own strongly worded statement to the PRC, saying the AMA made “manifestly misleading comparisons” and called the coalition’s interpretation of existing law “fatally flawed.”

The USPS feels it has proven “extraordinary circumstances” that meet the definition of the law, summoning as exhibit A “the worst recession since the Great Depression.” Further, the USPS says it can’t simply suspend employee benefits and payments due to union representation—and that the AMA knows this.

The USPS also feels that the AMA has mistakenly compared it to a private sector company, ignoring its “unique constraints” such as its inability to pursue the types of cost-cutting efforts its competitors are able to do. “These companies raised rates, increased surcharges, adjusted service levels and stopped payments into 401k plans. These are either not options or require regulator approval for the Postal Service,” said the USPS in a statement.

Lastly, the USPS believes it has indeed run the organization in a fiscally responsible way, citing $1 billion per year cost savings since 2001. The USPS goes on to say that the AMA’s motion “quickly collapses into a pastiche of selective memory, misunderstanding, and misrepresentations, leavened with a healthy dose of willful ignorance of the legal and political context in which the Postal Service operates.”

In response to the USPS, AMA released a statement from Senator Susan Collins (R-ME), ranking Republican member of the Homeland Security and Governmental Affairs Committee and co-author of the 2006 Postal Accountability and Enhancement Act (PAEA). It seems there is some argument in the interpretation of the law and what is grounds for “extraordinary circumstances.”

“I have repeatedly expressed my concerns to the Postal Service that reducing service and increasing rates are not the means to raise mail volume and restore fiscal balance,” says Collins in her statement. “As the author of the PAEA, I can unequivocally state that the law does not provide for an exigent rate case based merely on poor economic circumstances or on increased utilization of electronic or other alternatives to traditional mail. Neither of these circumstances is exceptional nor extraordinary as required by law.”