Postal accountability bill will modernize service

One of the final acts of the 109th Congress was to pass the Postal Accountability and Enhancement Act, designed to modernize the U.S. Postal Service and make it viable in the 21st century.

The legislation is the first major overhaul of USPS since 1970, and it will help stabilize mail volume and stamp prices, according to a statement from Rep. Tom Davis (R-Va.), outgoing chairman of the House Governmental Reform Committee, who helped broker the bill.

“This landmark legislation solves the structural, legal and financial constraints that have brought the Postal Service to the brink of utter breakdown,” Davis said. “This compromise [legislation] will reverse the ‘death spiral’ at the Postal Service and bring it into the 21st century. It's a huge win for everyone who uses stamps.”

Davis said the legislation directs USPS to concentrate on what it does best – processing and delivering mail. It alters the way USPS prices its products by allowing it to change prices whenever it needs to, just as commercial businesses do. But the legislation also ensures that price increases are kept below an inflation-based ceiling.

In addition, the bill would give USPS the freedom to introduce new, innovative products or tailor existing ones to meet customers’ needs.

Initially, the Bush administration had insisted that the bill also include a provision requiring USPS to prepay at least $3 billion a year in retiree health benefits. The service wanted to continue funding the retirees’ health benefits on a yearly basis.

Another major sticking point that prevented earlier passage was resolved when a provision in the current law was repealed that made USPS the only agency in the federal government responsible for paying its employees’ military pension benefits.

Under the new bill, the Treasury Department is obligated to pay those benefits.

Davis, along with Rep. Henry Waxman (D-Calif.) and Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.), brokered the agreement.

Postmaster General John Potter issued a statement praising the passage of the legislation. “We are grateful that the funding for USPS retiree military service obligations will be borne by the Treasury,” he said. “This, combined with release of the escrow funds, will be used for retiree health benefits.”

Another provision of the legislation is intended to correct the service’s pension formula, which was leading to significant overpayments and contributing to higher rates.

These provisions will free up billions of dollars, enabling USPS to begin paying down its debts, Davis said.

The compromise version of the bill maintains language included in both the House and Senate versions giving the newly created Postal Regulatory Commission subpoena power, among other tools, to ensure that USPS complies with the law.

It also contains new language giving the commission power to monitor the new rate system and make whatever changes are necessary to ensure that it continues to meet USPS customers’ needs. At the same time, the bill would add an inspector general to the commission to monitor the regulator in the use of its expanded powers.