[Congressional Record Volume 143, Number 12 (Tuesday, February 4, 1997)]
[Extensions of Remarks]
[Pages E121-E122]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E121]]
     SUPPORT THE POSTAL SERVICE CORE BUSINESS ACT OF 1997, H.R. 198

                                 ______
                                 

                           HON. DUNCAN HUNTER

                             of california

                    in the house of representatives

                       Tuesday, February 4, 1997

  Mr. HUNTER. Mr. Speaker, today I rise to reintroduce the Postal 
Service Core Business Act of 1997. Last year, I introduced this same 
bill as H.R. 3690. This is an important bill framing a debate on an 
important subject: Where is the line between U.S. Government 
competition with the private sector, particularly small business?
  My bill will establish a clear line of demarcation between the U.S. 
Postal Service, a Federal agency, and small private businesses across 
America. For the past 20 years, a vibrant private sector business has 
been evolving. In fact, the industry was born within a region I 
represent, San Diego, CA.
  This business sector is known as the CMRA, or Commercial Mail 
Receiving Agents, industry. These businesses establish a special 
relationship with the Postal Service and become agents for receiving 
mail for individuals and small businesses. These small businessmen and 
women open a store, usually in a shopping mall, or a downtown business 
district, and rent private mailboxes to customers. Altogether, an 
industry of nearly 10,000 privately owned stores in all 50 States and 
virtually every congressional district has grown.
  These CMRA stores are either franchise stores of nationally 
recognized groups like MailBoxes Etc, Postal Annex, PostalNet, Parcel 
Plus, or independently owned stores affiliated with the associated mail 
and parcel centers. Often, these small business owners use their life 
savings to establish their store. No matter what their origin, all of 
the stores are owner-operated by individual entrepreneurs who work long 
hours and thrive on fair and healthy competition. They do not look for 
government subsidies, nor do they shrink from competing with each other 
or any other private business which seeks to compete with them. What 
these small businesses did not count on was having to compete with the 
U.S. Government, in the form of the U.S. Postal Service, which has been 
known to describe itself as the 12th largest business in the Fortune 
500.
  The problem is that the Postal Service has decided to go into the 
business of packaging parcels, a service born and bred by these 10,000 
small businesses, and there is clearly more on the horizon. In fact, 
the Postal Service announced its intention to spend billions to enter 
into retail competition with private business.
  Stated simply, the Postal Service is not General Motors, AT&T, or 
Phillip Morris. It is an agency of the U.S. Federal Government. Its 
employees are Federal employees, its lawyers are from the Department of 
Justice, its benefits are Federal employee benefits. Further, it enjoys 
unique advantages as a Federal agency which none of its top 10 Fortune 
500 compatriots have. For example:
  1. USPS has a legal monopoly on first class mail--This generates the 
lion's share of its $50+ billion revenue. This gives it great 
opportunity to cross-subsidize from its stamp revenue to money losing 
operations such as their Pack & Send's.
  2. USPS has no profit incentive--Since the Postal Service is a 
Government agency, it is not necessary for it to make a profit. That 
means it can run unprofitable business lines with impugnity.
  3. USPS can cross-subsidize these unprofitable businesses--There is 
no guarantee that the Postal Service will not use its monopoly revenue 
to cross-subsidize unprofitable activities like Pack & Send. In fact, 
it can, and does, even discount coupons on these nonstamp products.
  4. USPS does not charge sales tax--That is a 4- to 8-percent 
advantage in most States.
  5. USPS pays no property tax on its own facilities--It is not fair 
that the USPS can enter into direct competition against private sector 
businesses while being exempt from property tax.
  6. USPS is self-insured--As an agency of the U.S. Government, the 
Postal Service does not need to buy insurance. All these small 
businesses must, or risk losing their business in litigation.
  7. USPS borrows money from the Federal Reserve--Federal law permits 
the Postal Service to borrow money directly from the Federal Reserve at 
preferred rates. CMRA's must borrow from banks at market rates and with 
secured collateral.
  8. USPS is immune from antitrust laws--All private businesses in 
America, big and small, must comply with Federal and State antitrust 
regulations. The Postal Service, however, claims they are not subject 
to the same antitrust laws.
  As a result, the Postal Service, a $50+ billion business, is preying 
on small business owners with impugnity, doing what it wants with 
little regulation from Federal, State, and local authorities. It is 
critical that Congress step in and set up some rules.
  Mr. Speaker, the Postal Reorganization Act of 1970 was enacted before 
the CMRA industry had developed. A review of the act makes that clear. 
The act does not even include a definition of what services the Postal 
Service can and cannot offer. This 1970 law needs to be revised to set 
some groundrules--a line of demarcation setting out what activities the 
Congress intends the Postal Service to offer. Most agree that it should 
continue to deliver the mail, but I don't believe its job description 
should also include T-shirt sales or packaging services.
  My bill sets out some rules as to what the Postal Service can and 
cannot do regarding competition with the private sector. It is simple 
and straightforward:
  Like most of my colleagues, I am a strong supporter of the Postal 
Service and I rely on it everyday to receive and deliver my mail. The 
Postal Service Core Business Act protects and promotes a strong and 
vibrant Postal Service by allowing it to keep offering the same 
services it has been doing all these years. It can continue to 
concentrate on its core business: mail delivery. It can continue to 
offer those special and ancillary services as it has for decades, 
including selling packaging materials for use by its customers.
  What it cannot do is compete with private businesses in areas that 
the Postal Service has not been traditionally engaged. For example, its 
new packaging service, called Pack & Send, would be prohibited under my 
bill. The private sector is already offering this service in over 
10,000 locations throughout the country.
  The Postal Service will also be prohibited from becoming a volume 
photocopy dealer; there are plenty of private businesses which provide 
this service. The same goes for gift wrapping, notary services, and 
other business-related services.
  The aforementioned services are not functions of the Postal Service 
established by our Founding Fathers in the Constitution, and are 
therefore better left to the willing and able private sector.
  This bill will not effect the Postal Service's ability to deliver 
overnight packages.
  This bill will not prevent the Postal Service from accepting packages 
for mailing or shipment.
  This bill will not interfere in any way with normal postal service 
operation.
  Ny bill provides that line of demarcation which must be established 
now that the Postal Service is trying to branch out into other 
nontraditional areas of business.
  The American entrepreneur is out there in all 50 States to provide 
these new services We do not need a Government created and protected 
entity like the Postal Service to provide these services.
  Nearly 10,000 small business owners in virtually every congressional 
district support this bill. During the 104th Congress, many of these 
business owners contacted their Representatives with their support for 
a clear definition of Postal Service activities.
  Mr. Speaker, I believe it is important to point out to my colleagues 
that the Postal Service is now offering this Pack & Send service in 
violation of the Postal Reorganization Act. The Postal Rate Commission 
[PRC] has recently found that this service cannot be offered unless and 
until the Postal Service has submitted it for a rate and classification 
hearing before the Commission.
  There is one problem, however, only the Postal Service can submit the 
case to the Commission; the Commission cannot initiate it themselves. 
The PRC is now waiting for the Postal Service to submit the case or to 
cease the service. Until that time, the largest Federal agency, the 
Postal Service, is offering a service in direct competition with 
private sector businesses, and in violation of its own enabling 
legislation.
  Clearly, we do not want Federal agencies acting independently of the 
mission they were

[[Page E122]]

assigned by Congress, which is the ultimate authority. The Constitution 
specifically directed the Congress to determine what kind of post 
office the Nation should have. That is what my bill is all about.
  Interestingly, Mr. Speaker, the United States is not the only country 
experiencing this quandary of what business line its post office should 
and should not be permitted to enter. In Canada, the Canada Post 
Corporation is currently in the business of competing with the private 
sector. There is no constraint on Canada Post in this regard under 
Canadian law, and the Canada Post has jumped in with enthusiasm.
  In 1993, Canada Post purchased the largest private, Canadian owned 
courier service, Purolator Courier, in order to compete with local and 
American delivery services. Further, it is in the mailing center 
business as well. Much as its American counterpart, it is competing 
head to head with local and franchised private centers such as 
MailBoxes, Etc.
  Canada Post is aggressively promoting unaddressed admail in direct 
competition with private mailers and even going so far as to deny 
access to private apartment boxes to its private sector competition.
  This is the future for the U.S. Postal Service if my bill is not 
passed and Congress does not act to set ground rules in this area of 
what the U.S. Postal Service can and cannot do.
  The Situation in Canada has so deteriorated that the government 
appointed a one man commission to review these and other issues and to 
make recommendations to the Canadian Government.
  That Commission held hearings and took testimony throughout Canada 
and thoroughly examined the issue of competition by Canada Post with 
private mailing centers. Its conclusion was straightforward:
  ``The Government should direct Canada Post Corporation to withdraw 
from all competition with the private sector in areas of activity 
outside its core public policy responsibilities for providing postal 
services.'' [Report of the Canada Post Mandate Review, p. 86]
  ``Specifically, that means exiting from the courier business, from 
unaddressed admail, from the operation of business support or mailing 
centers, from electronic products and services, and from retailing of 
non-postal merchandise,'' [Report of the Canada Post Mandate Review, p. 
84]
  Mr. Speaker, my bill does not take on all the issues that this 
comprehensive review did, but that review hit the issue on the head. 
The basic conclusion of the Commission was that no government agency, 
like Canada Post or the USPS, can serve and compete with its customers 
at the same time.
  The Postal Service Core Business Act is sound and fair in identifying 
a workable solution for all parties. I urge my colleagues to join me in 
support, because it establishes the rules necessary for both the Postal 
Service and the private sector as to this area of postal related 
business. These small business owners are looking to us to ensure that 
they are afforded a fair chance to succeed, and as their 
Representatives we need to work to meet their needs.

                          ____________________