Volume XXIX, No. 14                              July 15, 1999

APWU Members Urged to Call Congress in Support of HR 2535
Reps. Waxman, Fattah
Introduce HR 2535
To Counter HR 22!

Rep. Henry Waxman (D-CA), the Senior Democrat on the House Government Reform Committee, along with Rep. Chaka Fattah (D-PA), Ranking Member of the Postal Service Subcommittee, have introduced a competing bill to HR 22, Rep. John McHugh's (R-NY) Postal Modernization Act of 1999.  APWU President Moe Biller has endorsed the Waxman-Fattah substitute, HR 2535. He asks all APWU members to immediately call your congressional representative and ask him/her to support HR 2535. The Capitol switchboard number is 202-224-3121.

What Does the Waxman-Fattah Bill Do?

• HR 2535 provides rate-making flexibility to the Postal Service, enabling the Postal Service to compete more fairly with its competitors and to gain increased revenue.
• HR 2535 provides for a non-binding study, entitled "National Commission on Postal Efficiency and Enhancement," to examine postal efficiency or waste, plus methods for improving operations.
• HR 2535 provides for Negotiated Service Agreements between mailers and the Postal Service, providing additional revenue for the USPS.
• HR 2535 gives enhanced authority to the Postal Rate Commission, including a provision granting the PRC subpoena power over the USPS.

President Biller has written a letter in support of HR 2535 to Reps. Waxman and Fattah. He wrote that this "substitute [to HR 22] favorably addresses each of the areas for which APWU has expressed concern, while providing pricing flexibility for the United States Postal Service. We believe the Waxman - Fattah language fairly addresses the concerns of the United States Postal Service, its customers, competitors and employees."

APWU Says 'YES' to HR 2535 (Waxman-Fattah)

Here's how the McHugh and Waxman-Fattah bills compare on the major issues:

APWU Says 'No' to HR 22 (McHugh)

APWU has consistently led the fight against HR 22, the McHugh bill. Our primary objections have been the following:

1. Price Caps -- The price cap formula in HR 22 -- CPI (Consumer Price Index) minus an adjustment factor -- is a wage cap. Wage caps interfere with our collective-bargaining rights.

2. Double Postage -- Under the current rules, postal competitors must charge twice the applicable Priority Mail rate, or $6.40, to provide expedited delivery of "letters" weighing more than 12 ounces. Under HR 22, the amount is reduced to $1.98, which, according to former Postmaster General Marvin Runyon, places over $4 billion of monopoly mail at risk to the private sector. This is postal privatization (allowing cream-skimming of profitable services by USPS competitors).

3. Private Law Corporation -- Under HR 22, a new Private Law Corporation would be formed by the Postal Service to sell postal and non-postal products. This corporation's employees would be under state laws, meaning they would be non-union contract employees. This is contracting out good-paying postal jobs to the private sector.

4. Labor-Management Study -- Under HR 22, USPS labor-management relations would be studied by the National Academy of Public Administration. They would recommend solutions to "the myriad of employee-management difficulties the Postal Service has faced in recent years."

5. Universal Service Study -- Under HR 22, the Postal Service is required to review and define universal service. A narrow definition could reduce services, as well as USPS revenue.

Rep. LaTourette Proposes Amendment to HR 22;
APWU Opposes the LaTourette Amendment!

Rep. Steve LaTourette (R-OH) has circulated an amendment to HR 22, which APWU has reviewed and will oppose if it is proposed at a full committee mark-up session. Rep. LaTourette's proposal has been advanced with the support of United Parcel Service (UPS). It calls for a review of the postal rate-making process, and the review "shall consider price caps."

LaTourette's proposal concerns APWU due to the uncertainty it creates. For instance, in the area of price caps, which APWU also opposes in McHugh's version, LaTourette proposes that this be considered by the Postal Rate Commission in an 18-month review. The PRC could decide to institute a price cap -- or wage cap for postal workers.

The bottom line is that an 18-month study by the Postal Rate Commission (to be re-named the Postal Regulatory Commission) will only further delay the pricing flexibility the Postal Service needs to be competitive. This creates undue uncertainty about rate-making and could well paralyze the USPS' competitive status.

'Death-spiral' for the Postal Service?

The LaTourette proposal would also give the PRC the final determination over both postal rates and classes of mail. This currently can be overruled by the Postal Board of Governors; but this proposal may create endless judicial scenarios, whereby the USPS or its competitors file appeals. This would tip the scales against the USPS in favor our competitors.

The LaTourette amendment also proposes changes in international mail, as current rate-making procedures and classification of mail must be applied to all international mail and services. Again, if the Postal Service is denied the flexibility to adjust its rates accordingly for international mail, it may lose its volume to foreign postal administrations.

The conditions set forth in the LaTourette proposal may set up the right conditions for a classic "death-spiral" for the Postal Service. Under those conditions, the USPS competitors, such as UPS, want to be protected from competition. If the Postal Service were denied flexibility to enter new services, the costs for universal or monopoly services would increase. This would create the opportunity for competitors to cream-skim the profitable services, which subsidize less-profitable ones. This vicious cycle would eat away at all profitable services, spinning the USPS into an ever-descending spiral of decline.

No date has been scheduled for mark-up, as the committee appears divided among supporters of McHugh, LaTourette and Waxman-Fattah. Under the committee rules, a mark-up may be scheduled with only 72 hours notice, or 48 hours in an emergency. Immediate APWU grassroots action is critical.

Surprise! Public Likes USPS
Washington Post July 14, 1999