[Congressional Record (Bound Edition), Volume 148 (2002), Part 3]
[Extensions of Remarks]
[Pages 3886-3887]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        POSTAL RATE PROCEEDINGS

                                 ______
                                 

                           HON. WM. LACY CLAY

                              of missouri

                    in the house of representatives

                       Wednesday, March 20, 2002

  Mr. CLAY. Mr. Speaker, I rise to speak on a matter that is critically 
important to every individual in this country, and critically important 
to the welfare of our economy. I am referring to the condition of our 
United States Postal Service. In a proceeding now before the Postal 
Rate Commission, the Postal Service, which is in considerable financial 
difficulty, is proposing to give large mailers more than $700 million 
per year in unjustified discounts. The cost of these unjustified 
discounts will be imposed on individual citizens and small businesses 
who must use the United States postal system.
  It has been widely reported in the press that the Postal Service has 
suffered financial difficulties as a result of the terrorist attacks on 
September 11, and the problems caused by the discovery of anthrax in 
the mail. What has been less reported, but which is of equal or even 
greater long-run significance, is the fact that important issues of 
public policy affecting the vital interests of the Postal Service are 
being debated and decided in a little-noticed proceeding before the 
Postal Rate Commission.
  I am deeply concerned that the policy decisions about to be made by 
the Postal Rate Commission may cripple the Postal Service. 
Unfortunately, the Postal Service itself appears to be cooperating with 
those who seek to exploit or weaken it.
  I am referring to the fact that, in a misguided effort to speed up 
the postal rate increases, the Postal Service has proposed, and the 
Postal Rate Commission seems poised to accept, rates that will 
subsidize large business mailers at the expense of individuals and 
small businesses. This may occur because the Postal Service has 
proposed setting presort discounts for large business mailers at a rate 
which cannot be justified by the cost-savings to the Postal Service 
when mail is presorted.
  The only party opposing the proposal to establish excessive discounts 
for presorted mail is the American Postal Workers Union. I am well 
aware, of course, that postal workers have a self-interest in opposing 
pre-sorting of mail. To the extent that mail is pre-sorted, work that 
might be done by postal employees is done by private industry. 
Nevertheless, the arguments made by the American Postal Workers Union 
against excessive presort discounts are correct and should be 
recognized and supported. The former Chief Financial Officer of the 
Postal Service, Dr. Michael Riley, has provided testimony in support of 
the APWU position opposing these subsidies for large mailers. Dr. Riley 
is no advocate for union interests, nor can he be discounted as an 
ideologue of any kind. Dr. Riley is a businessman, and he has addressed 
the issue of postal rate making from a sound business perspective.
  As Dr. Riley has very persuasively argued before the Postal Rate 
Commission, it makes no business sense--it is unsound business--to give 
discounts to pre-sort mailers that exceed the costs avoided by the 
Postal Service when mail is pre-sorted. But that is what the Postal 
Service is proposing to do. The Postal Service is proposing to set 
discounts that will, in some cases, be 125 percent of costs avoided. 
This is wrong, it is a wrong business decision, and it is a wrong 
policy. When the Postal Service was created, it was set up to be run 
like a private sector business. Private sector business does not give 
away hundreds of millions of dollars. If this decision were to be based 
on solid business considerations, pre-sort discounts would be set at an 
amount below the cost avoided. Sound business practice would require 
that the discounts be set as low as 80 percent of costs avoided, and 
certainly never 125 percent of costs avoided as the Postal Service is 
proposing.
  I want to emphasize again how critically important this issue is. 
Universal mail service at a uniform cost to mailers is essential to a 
sound economy, and it is particularly important to those non-urban 
areas who must depend on the United States Postal Service. Every year, 
the United States Postal Service adds 1.7 million additional delivery 
points to its universal service. This is enough delivery points to be 
about as big as the City of Chicago. That is an enormous undertaking 
and it is an undertaking that is enormously important to our country. 
Many of the people served by the Postal Service have no other practical 
alternative to the U.S. mail. As this network expands, it must be 
maintained on a sound financial footing. But that financial footing may 
be undermined if the Postal Service continues on its present course.
  The Postal Service already has frozen 800 capital investment programs 
that are important to the future health of the Postal Service. The 
Postal Service's 2001 Annual Report described the impact of this freeze 
as follows:

       The Capital plan is at extreme risk . . . for the second 
     year in a row we will not be able to make the necessary 
     capital investments to meet the growth demands of universal 
     delivery.

  Given the present rate proposal, these programs will continue to be 
frozen, further compromising the future of the Service. Furthermore, 
withholding $800 million in Postal Service automation spending will 
contribute to the unfortunate softness in the economy. For this large 
postal enterprise to be taking a backward stance at this important 
turning point in our hoped-for economic recovery will be 
counterproductive for all concerned.
  Because the compromise proposed by the Postal Service would set rates 
at an artificially low level, we are facing the need for another rate 
increase in the near future, and that rate increase may have to be 
substantially larger. Predictably, there will be opposition to large 
postal rate increases in the future. So, by misallocating postal rates 
now the Postal Service is setting itself up for even greater 
difficulties in the future. I am afraid that difficult future is at 
hand.
  I urge my colleagues to take note of this important issue, and I urge 
the Postal Service and the Postal Rate Commission to reconsider this 
misguided course of action.

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