The Honorable Dan Burton
Chairman
Committee on Government Reform
U.S. House of Representatives
Washington, DC 20515

Re: The Postal Modernization Act of 1999 - HR 22

Dear Mr. Chairman:

The Main Street Coalition for Postal Fairness is sending this letter to you and your Committee to correct recent misleading statements by some of the proponents of H.R. 22 in the postal mailing community and hopefully assist you in your consideration of the Bill. Although some organizations are hoping to benefit from the Bill through discriminatory rates or other special interest provisions, their public relations efforts ignore the widespread dissatisfaction with the Bill in its present form by both Main Street members and others.

Attempts to buy off various parties should not be confused, however, with the legitimate practice of endeavoring to reach a compromise among parties holding conflicting views, such as the amendment which Congressman LaTourette intends to offer. Substantial Postal Service legislative modifications, whether categorized as reform, modernization or deregulation are just too important to the American public and should not be subject to deal making or carve outs with the objective of "buying" support from special interests.

To set the record straight:

a) It is incorrect to conclude as some have that there was widespread support for the Bill when it was reported out of the subcommittee. Nearly all of the organizations - including Main Street - who submitted testimony to the subcommittee could support the Bill only if it were changed. Almost without exception there was no endorsement of the proposed legislation in its present form. To put it another way, the Bill in its current form is not ripe for Full Committee mark-up. Final legislative language, even after subcommittee mark-up, is unavailable and changes in content are being secretly negotiated as the Bill awaits consideration by your Committee.

b) It is misleading to suggest that the Bill protects the small mailer or for that matter any mailer subject to the Postal Service monopoly. Pricing flexibility which would be granted to the Postal Service at the subclass level where large and small mailers would be in the same subclass, will enable the Service to continue a practice, well documented in the recent reclassification case before the Postal Rate Commission (PRC), of favoring large mailers over small mailers. That practice was rejected by the PRC, but would be permitted under the Bill.

c) It is wrong to conclude that the price cap proposal will protect the First Class mailer. Price caps were designed for private companies, not government entities. No economist that testified before the subcommittee felt that the H.R. 22 price cap system would work.,

d) It is inaccurate to state that under current procedures small mailers with limited financialresources have no opportunity to present their views to the PRC. This is frequently accomplished through representation by their trade or other associations. Under the Bill, the Service would be authorized within approved ranges to increase postage rates behind closed doors with no opportunity for small or large mailers to be represented by anyone.

e) Those proponents of the Bill favoring the creation of a USPS Corporation seem to have lost sight of the fact that the Postal Service was created by Congress to deliver the mail universally and in a non-discriminatory fashion. H.R. 22 would radically alter this public service mission by creating a government owned private profit-making enterprise and allow the Postal Service to pick and choose which mailers to help and which to harm in postal and non-postal markets.

f) It is inaccurate to contend, as the proponents have, that discriminatory pricing would be limited to competitive products. Discriminatory pricing would be condoned for all products in a subclass. Under the Bill, enhanced PRC oversight powers (which are welcomed) would not prevent such discrimination for non-competitive products.

There should be no disagreement about the importance of an ongoing policy of improving service and advancing other reforms for an effective and efficient Postal Service In evaluating this Bill, however, and the need to move forward now with the proposed sweeping Postal Service restructuring, we would urge you and the members of the Committee to consider the following:

• The United States Postal Service is more efficient by far than any other postal system in the world. When compared with the next eight largest postal systems in the world, the Postal Service handled seven times the mail volume with only twice the number of employees. Consequently there appears to be no sound reason to rush into uncharted waters.
• There is no credible evidence that the Postal Service is losing market share. Periodical market share has increased, parcel delivery product lines have shown very strong growth patterns and priority mail product lines dominate the two to three day package delivery market. Nor is there available reliable evidence on the volume trends of personal and business mail, although recently the Postal Service reported that First Class volume is increasing once again.
• There are recent studies which show that e-mail will not cut into postal volume. While the growth of electronic commerce might pose a challenge to the Postal Service some day, in another respect it will increase demand for priority and overnight delivery of products by the Postal Service.
• The Bill assumes that the challenges facing the Postal Service can only be addressed by giving it increased pricing flexibility. The real issue is how the Postal Service should adapt to a changing environment. The pricing flexibility contained in the Bill does nothing to encourage or enable the Postal Service to improve productivity and make other changes necessary for it to survive and thrive in the future. The Bill reduces the protections afforded to small mailers and monopoly class mailers by Postal Rate Commission scrutiny of rate increases as the price for allowing the Postal Service the pricing flexibility it thinks it needs to chase volume in the competitive classes and services. The Bill does not address the basic problems facing the Postal Service, but instead rests heavily on the presumed assumption that pricing will be the main weapon to confront its problems in the future.

Main Street Coalition is made up of a large range of mailers of all sizes who depend entirely on an efficient, low cost, universally available Postal Service; mailers like the 1,000 smaller circulation business and professional periodicals published by American Business Press members and similarly by the members of the Associated Church Press. Our primary difference with those who support the Bill is that Main Street members tend to be mailers without alternatives, including small mailers and mailers of all sizes who are locked into the Postal Service monopoly.

Please find attached a current list of Main Street Coalition members and some others opposed to the Bill.

Respectfully submitted,

John T. Estes

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Copies:

The Honorable Henry A Waxman
The Honorable John M. McHugh
The Honorable Chaka Fattah
Members of the Committee on Government Reform