Copyright 1999 The National Journal, Inc.
The National Journal
January 30, 1999
SECTION: LOBBYING & LAW; Pg. 277; Vol. 31, No. 5
LENGTH: 1197 words
HEADLINE:
No Stamp of Approval for Postal Reform
BYLINE: Mark Murray
BODY:
For years, Rep. John M. McHugh, R-N.Y., has
pushed to
modernize the U.S. Postal Service--certainly not the most
captivating issue in Washington. But McHugh hasn't given up, and
his
latest proposal has set off a brawl involving newspapers,
mailers, giant
private delivery companies such as the Federal
Express Corp., postal unions,
and the Postal Service.
''My bill will help the
Postal Service adjust to the
future, while stabilizing rate changes and
promoting fair
competition,'' McHugh, chairman of the Government
Reform
Committee's Postal Service
Subcommittee, said as he reintroduced
the bill earlier this month. His panel
has scheduled hearings on
the bill for February and March.
The Postal Service has recently been losing first-class
and
international mail business to companies such as Federal
Express and United
Parcel Service of America Inc., and to new
technologies, including
electronic mail. In fact, the Postal
Service's profits have declined from $
1.8 billion in 1995 to $ 550
million last year. McHugh's measure is designed
to allow the
Postal Service to compete more effectively by giving the quasi-
governmental agency increased flexibility to set prices. As it
stands
now, the Postal Service's rate-setting bureaucracy takes
at least 10 months
to arrive at a decision, and the agency is
prohibited from offering volume
discounts on products such as
express mail and parcel post.
But McHugh's bill--which was voted out of subcommittee
late
last year and reintroduced earlier this month as the Postal
Modernization
Act of 1999--would also eliminate some of the
competitive advantages that
the Postal Service enjoys as a
sometime monopoly.
McHugh's legislation would chip away at the Postal
Service's monopoly
of first-class mail. Under current law, a
loophole allows the Postal
Service's competitors to deliver
first-class mail as long as it's ''urgent''
and costs at least $6. The new legislation would trim that cap to $ 2.
Numerous groups, including the newspaper industry,
remain
unhappy with McHugh's proposals. John F. Sturm, president and CEO
of the Newspaper Association of America, says the legislation
would
permit the Postal Service to negotiate different prices for
the same
services. As a result, the agency could cut special
deals with large
advertising mailers--who just happen to be local
newspapers' chief
competition for advertising dollars. ''That
means lost business (for us),''
Sturm said.
To help its lobbying effort, the
newspaper group has
enlisted two top Washington law firms, Tennessee-based
Baker,
Donelson, Bearman & Caldwell and Wiley, Rein & Fielding.
Sturm's
group also belongs to the Main Street Coalition for Postal
Fairness. The coalition includes the religious press, greeting-
card
companies, and newspaper companies. They fear that any
''sweetheart deals''
with the mailers would be subsidized by
higher postal rates for everyone
else.
Of course, the mail-advertising firms disagree
with the
newspaper group. ''There is no rational reason why the Postal
Service should not be able to provide (discounts) to its
customers,''
said Richard A. Barton, the Direct Marketing
Association's senior vice
president for congressional relations.
The Magazine Publishers of America
also supports discounts.
But many Postal Service
competitors, such as Federal
Express and UPS, have embraced McHugh's
approach. These companies
have complained for years that the Postal Service
uses its
billion-dollar monopoly of first-class mail to subsidize express
mail, parcel post, and other services that compete with the
services
that private firms offer. Of course, the Postal Service
has several
advantages: As a government agency, it doesn't have
to pay taxes or parking
tickets. McHugh's bill would prohibit the
Postal Service from using its
monopoly to prop up its other
products, and it would force the agency to
establish a private
corporation for selling nonmail services, such as
long-distance
telephone cards, and knickknacks, such as Looney Tunes
neckties.
''The bill has done a tremendous service
in the sense
that it clearly identified that there is a problem in the way
the
Postal Service now operates,'' said UPS spokesman Tad Segal.
Nevertheless, UPS grumbles that McHugh would still
allow
the Postal Service to offer nonpostal products and services that
distract the agency from performing its core mission: delivering
and
picking up the mail. Mail advertisers and parcel-shipping and
packaging
companies are also concerned that allowing the agency
to sell nonpostal
products could endanger their own businesses.
The legislation, said David A.
Weaver, president of the Mail
Advertising Service Association International,
''will give the
Postal Service carte- blanche authority to get into any
business
it wants to. That concerns us.''
Weaver's organization, which generally supports McHugh's
bill, has
beefed up its lobbying muscle by hiring Bonner &
Associates, a firm
specializing in grass-roots lobbying. Weaver
declined to say how much
compensation Bonner & Associates is
receiving, but ''it is more than
we've ever paid for a government
relations effort.''
Meanwhile, firms such as Parcel Plus and Mail Boxes Etc.
have formed
the Coalition Against Unfair USPS Competition to
spotlight their concerns
about the Postal Service's ability to
compete with their industries. Steve
Silver, the coalition's
executive director, acknowledges that the McHugh
bill would take
away many of the Postal Service's competitive advantages,
but he
stresses that it's unfair for smaller businesses to have to
compete with a $ 60 billion behemoth. The coalition was also
highly
critical of the Postal Services' recent price increases
for first-class
postage, which, it said, will increase consumer
and business costs by $ 1.6
billion a year.
Postal unions have also jumped into
the debate, but
they're by no means unified. The largest group, the American
Postal Workers Union, is up in arms over the McHugh bill,
precisely
because it would reduce the government monopoly of
mail. But three other
postal unions--the National Association of
Letter Carriers, the National
Postal Mail Handlers Union, and the
National Rural Letter Carriers'
Association--support McHugh's
bill because of its pricing provisions.
The player with the biggest stake in the legislation
is,
of course, the U.S. Postal Service. Earlier, it had opposed
allowing
competition for some types of first-class mail, such as
urgent mailings that
cost at least $ 2. But after determining that
changes would not
significantly damage the agency's business, it
dropped that objection.
Still, the Postal Service has suggested
several amendments to McHugh's bill,
some of which would give the
agency more leeway to set mail rates. These
amendments will
probably be discussed at the McHugh subcommittee hearing
scheduled for Feb. 11.
LOAD-DATE: February 01, 1999
