The following is critically important information you need to be aware of. This will a longer than my typical post, but invest the time to read an understand.
Those of you who have been around the mailing industry for awhile are probably aware of the 2006 legislation (PAEA) that accomplished a significant milestone for our industry. It eliminated the previous highly contentious and litigious postal rate making process with a more stable and predictable process that tied postal rate increases to the rate of inflation (CPI). However, it also contained a major flaw in that it required the Postal Service to a overly aggressive pre-funding schedule for its retiree health insurance program. This overly aggressive pre-funding schedule eventually resulted in annual required annual payments of more than $5.5 billion - which the Postal Service has been unable to pay for the past several years. The inability to pay contributed to mounting debt and a current balance sheet that would require most businesses to declare bankruptcy.
The 2006 PAEA law expires the end of this year. Soon the Postal Regulatory Commission (PRC) will begin reviewing the impact of the current rate making process and will be responsible for either recommending a continuation of the current process, or moving to a new rate making process. This is where the importance of H.R. 5714 comes in play. H.R. 5714 would effectively effectively eliminate the current pre-funding payment schedule and essentially clear up the Postal Service's balance sheet. Without this "clean up" the PRC may feel the need to turn the Postal Service's financial fortunes around with a disproportionately high contribution from us - the rate payers. If the PRC takes this position we could potentially see a number of consecutive double digit rate increases. I don't need to explain the devastation this would cause for our industry.
So, for more than a year Idealliance and its C-21 Coalition partners have been working to develop the structure of a bill that could prevent the worst case scenario from happening. We were even able to create a partnership with the postal unions as part of this effort. This effort culminated with the work of the House Committee on Oversight and Government Reform, chaired by Jason Chaffetz from Utah. OGR created H.R. 5714 (with bipartisan support) incorporating a number of our suggestions. Of course, this bill still would have a long way to go in the legislative process and face an uphill battle.
Yesterday afternoon I gathered with a group of industry representatives to meet with Emily Murray who runs the majority staff of the Ways & Means Health Subcommittee to discuss the prospects of H.R. 5714 (the current best chance for meaningful postal legislation in 2016). Our hopes for passage of the bill were elevated by the Congressional Budget Office's attachment of a positive "score" for the bill. More precisely, CBO's assessment indicated that the bill would positively impact the overall budget by $2.2 billion over 10 years. A "negative" score would have essentially killed the bill, but this "positive score" was reason for renewed enthusiasm. However, we had heard that the Ways & Means Committee now had serious concerns about the bill. W&M is responsible for, among other things, the management of Medicare and a principal provision of the bill involved moving USPS retirees to Medicare.
Essentially Ms. Murray informed us that W&M would not be inclined to support our bill for the following reasons -
- It would be a raid on Medicare
- The "score" was $2B short on what it would cost Medicare (of course the bill would contribute over $2B making the overall impact a wash).
- Forcing postal retirees to take Medicare would be a first (event though they have paid into Medicare for years - and, the unions supported this move).
- They had not been consulted about this fix, which was in their jurisdiction.
Without the support of W&M the future for this bill, or any helpful legislation from this Congress, is highly doubtful. While we can pick this effort up next year the timing is not helpful in that the new rate making process will likely be completed before any new legislation could be passed.
This post is not intended to be alarmist. Rather, it's intent is to inform and illustrate the importance of the need to be informed and aware. Idealliance will continue to work hard with our industry partners to work on these challenges and move the process forward. It's difficult and demanding work that largely takes place "behind the scenes". In some cases we are not permitted to report on meetings with Congressional committees and specific members of Congress because the nature of the meetings are "sensitive". Over the past several years our success has sometimes been measured in the defeat of poorly constructed legislative proposals that would have been harmful to our industry.
Understand that part of your dues investment in Idealliance pays for this critically important work. Without this funding we can not continue this work. Of course, non-members would benefit equally from our successes but I know that you are not satisfied to piggyback and ride on the hard work and investment of others.
Thank you for your support. Call me if you have questions (703) 837-1065.
Ken
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Ken Garner
Executive Vice President
Idealliance
Alexandria VA
703-837-1070
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