Don’t go postal: Emergency rate hike would be overreach

The U.S. Postal Service can still deliver a letter or package across town or across the country in speedy fashion at a reasonable price. But it can’t deliver on its massive retirement obligations, a fact that could begin affecting all its customers very soon.

As reported by The Hill, the USPS Board of Governors is expected to address a range of issues at a private meeting today, the biggest of those being pricing. The Postal Service lost a whopping $15.9 billion in fiscal year 2012, and although it has cut those losses heading into the last quarter of this fiscal year, the country’s mail carrier is still a major money pit.

Private-sector groups — including some of the Postal Service’s largest customers, such as magazines, catalog marketers and banks — fear the board will pursue a broad rate increase on the order of 10 percent or more. Worse, the board could do so by declaring a fiscal emergency.

Congress gave the Postal Service the ability to impose exigent increases in response to such events as terrorist attacks and natural disasters. Not being able to meet your pension obligations doesn’t rise to that level. Nor does a recession or a steady, predictable downturn in mail volume, for which the USPS sought and was denied an exigent increase in 2010.

“An exigency increase was meant to respond to extraordinary circumstances — a Katrina-type national disaster,” Rafe Morrissey of the Greeting Card Association told The Hill. Mr. Morrissey’s group and other mailing industry coalitions say such a rate hike could wipe out their businesses.

This kind of rate increase, imposed in this kind of fashion, represents an incredible overreach. Using a disaster provision to push through a money grab would greatly harm the Postal Service’s best and largest customer base: massive mail industries that provide many thousands of jobs.

The Postal Service maintains it must address its obligation to prefund its pension promises to retirees and current employees. If that condition were waived, the Postal Service would appear viable on paper.

However, eliminating the prefunding requirement doesn’t solve the long-term problem. The bills are still going to come due — retirement payouts will bring down the Postal Service, not email nor the Internet — and any hypothetical revenue gains resulting from a rate increase would almost surely be lost by customers taking their mailing business elsewhere.

If the Board of Governors seeks the increase, the Postal Regulatory Commission would have 90 days to consider it. Former Nevada Rep. Jim Bilbray is vice chairman of the board and certainly holds some sway in today’s decision. Mr. Bilbray and his peers should forget about rate increases and focus on restructuring the Postal Service, with an eye toward eventual privatization, no matter how much senior lawmakers squeal in response to such cost-saving measures. If the board doesn’t deliver, it’s just a matter of time before the Postal Service can’t, either.