POSTAL REFORM COMPLETE: Bush Signs Sweeping Bill into Law

At long last, President Bush on Dec. 20 signed into law the Postal Accountability and Enhancement Act of 2006 in a ceremony at the Eisenhower Executive Office Building in Washington. It was the first sweeping reform of the U.S. postal system since 1970.

The bill, nearly a dozen years in the making, was passed through both chambers of Congress on the night of Dec. 8 and into the following early morning. Its passage will have no bearing the current postal rate case, however, according to Association of Postal Commerce president and Catalog Success columnist Gene Del Polito.

Here’s a brief summary of how the reformed Postal Service will impact catalogers:

* Future postal rate hikes will be at or below the inflation rate. A cap for raising rates will be created by linking rate changes to increases in the consumer price index. This will give mailers the chance to know what’s coming and be better prepared for rate increases.

* The cumbersome and costly, nine-month-long rate case process will be eliminated, giving the Postal Service the ability to set new rates much quicker, but with oversight from a new government agency, the Postal Regulatory Commission. The commission would be able to alter the cap or the rate system if it sees fit. The USPS will have greater incentive to keep its costs in line.

The new bill contains two key elements that will likely lead to its success:

1. For the first time in U.S. history, the USPS will no longer be required to pay for postal employee pension costs for those employees who previously served in the military. The new bill would eliminate this.

2. The bill repeals the law that forces the USPS to make postal pension payments, which are unwarranted, to an escrow fund, effectively freeing up $78 billion over the next 60 years. This money instead will help keep postage in check, as well as cover retiree healthcare liabilities and postal debts to the U.S. Treasury.