Postal Accountability And Enhancement Act

POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT -- (Senate - December 08, 2006)

Ms. COLLINS. Mr. President, shortly, the Senate will consider H.R. 6407, the Postal Accountability and Enhancement Act. As the Presiding Officer is very well aware, since he has been a key player in molding this important legislation, this postal reform legislation has been a long time coming. And it is great news for the U.S. economy.

This legislation represents the culmination of a process that began back in 2002 when a group of constituents came to me, sat down with me in Maine, and taught me the importance of the Postal Service to the viability of their businesses and to the employees they had.

This coalition of groups included a Maine catalog company, a paper manufacturer, a printer, a local financial services company, and a publisher. They all came together and it was from them that I learned just how vital the Postal Service is to our economy.

So shortly after that meeting in the summer of 2002, I introduced a bill to establish a Presidential commission charged with examining the problems of the Postal Service and charged with developing specific recommendations and legislative proposals that the Congress and the Postal Service could implement.

The President appointed the members of the commission. They worked very hard. They came up with an excellent report which provided, in many ways, the basis for the landmark legislation that I believe we will finally clear tonight.

During the next 4 years, the Homeland Security and Governmental Affairs Committee, which I had been privileged to chair, worked very hard to craft the most sweeping changes in the U.S. Postal Service in more than 30 years.

Senate passage of this legislation will help the 225-year-old Postal Service meet the challenges of the 21st century.

As a Senator representing a large rural State, I want to ensure that my constituents, whether they live in the northern woods or on our islands or in our many small rural communities, have the same access to Postal Services as the people of our cities. If the Postal Service were no longer to provide universal service and deliver mail to every customer, the affordable communications link upon which many Americans rely would be jeopardized. Most commercial enterprises would find it uneconomical, if not impossible, to deliver mail and packages to rural Americans at the affordable rates charged by the Postal Service.

But for several years now, the Postal Service has clung to the edge of an abyss. Under the business model in which it has been forced to operate, the Postal Service has been at great financial risk. In fact, the Government Accountability Office aptly describes it as a potential death spiral in which escalating rates lead to lower volume, which in turn leads to even higher rates, which in turn causes the Postal Service to lose more business.

The Postal Service faces the challenge of the electronic age. It also has been saddled with more than $90 billion in unfunded liabilities and obligations, which has included debt to the Treasury, nearly $7 billion to workers' comp claims, $5 billion for retirement costs, and as much as $45 billion to cover retiree health care costs. The Comptroller General of the United States, David Walker, has cited these figures to point to the urgent need for ``fundamental reforms to minimize the risk of a significant taxpayer bailout for a dramatic postal rate increase.'' And it is telling, indeed, that the Postal Service has been on GAO's high-risk list since April of 2001.

With this landmark reform legislation, we will put the Postal Service on a firm financial footing. We endorse the principle of universal service, of affordable, predictable postal rates. This legislation will modernize the Postal Service's rate-setting process and provide much-needed rate predictability for postal customers. Without this reform, postal ratepayers would have faced billions of dollars in higher--much higher--rates over the next several years.

The 750,000 career employees of the Postal Service often labor without anyone really knowing who they are, but their efforts play an absolutely essential role in the American economy. The Postal Service is the linchpin of a $900 billion mailing industry that employs 9 million people in fields as diverse as direct mailing, printing, catalog companies, paper manufacturing, publishing, and financial services. The health of the Postal Service, therefore, is essential to the vitality of thousands of companies and the millions of employees they serve.

This bill represents years of hard work. As chairman of the committee with jurisdiction, I held a series of eight hearings, including a joint hearing with our House colleagues, during which we reviewed the recommendations of the President's commission and we heard from a wide range of experts and stakeholders, including representatives of the postal employees unions, the Postal Service itself, administration officials, mailers, the postmasters, postal supervisors, publishers--a wide variety of groups. In fact, there is a broad coalition supporting this bill, including many nonprofit mailers, which rely on affordable postal rates.

There are many people who have worked very hard to craft the very delicate compromise that is before us tonight. I particularly thank Senators CARPER, COLEMAN, and LIEBERMAN for their assistance but also our House colleagues. I will have more to say about them later.

The compromise legislation before the Senate replaces the current lengthy and litigious rate-setting process with a rate cap-based structure for products such as first class mail, periodicals, and library mail. For 10 years, the price changes for market-dominant products like these will be subject to a 45-day prior review period by the Postal Regulatory Commission. The Postal Service will have much more flexibility, but the rates will be capped at the CPI. That is an important element of providing 10 years of predictable, affordable rates, which will help every customer of the Postal Service plan.

After 10 years, the Postal Regulatory Commission will review the rate cap and, if necessary, and following a notice and comment period, the Commission will be authorized to modify or adopt an alternative system.

While this bill provides for a decade of rate stability, I continue to believe that the preferable approach was the permanent flexible rate cap that was included in the Senate-passed version of this legislation. But, on balance, this bill is simply too important, and that is why we have reached this compromise to allow it to pass. We at least will see a decade of rate stability, and I believe the Postal Rate Commission, at the end of that decade, may well decide that it is best to continue with a CPI rate cap in place. It is also, obviously, possible for Congress to act to reimpose the rate cap after it expires. But this legislation is simply too vital to our economy to pass on a decade of stability. The consequences of no legislation would be disastrous for the Postal Service, its employees, and its customers.

Among other highlights of the compromise, the bill will reform the Postal Service workers' compensation system to require a 3-day waiting period. This is consistent with every State workers' compensation program. The bill introduces new safeguards against unfair competition by the Postal Service in competitive markets, prohibits subsidization of competitive products by market-dominant products, and requires an allocation of institutional costs

to competitive products.

I note that we looked at competitive issues with UPS and FedEx, and I think we have come up with the right balance here. The bill transforms the existing Postal Rate Commission into the Postal Regulatory Commission with enhanced authority to ensure that there is greater oversight of the Postal Service as its management assumes greater responsibility.

The bill reaffirms postal employees' rights to collectively bargain. It changes the bargaining process only in small ways and only in ways that have been agreed to by both the Postal Service and the four major unions.

Another significant provision amends the current law to essentially free up $78 billion over 6 years. This is a complicated issue. It has to do with the responsibility for paying for the military retirement credits of postal employees and also money that was put into an escrow account to compensate for an overpayment into the civil service retirement system. These savings will be used to pay off debt to the U.S. Treasury, to fund health care liabilities, and to mitigate future rate increases.

This compromise is not perfect and, indeed, earlier tonight, there were issues raised by the appropriators--legitimate issues--that threatened at one point to derail the bill again. It has been a delicate compromise to satisfy all of the competing concerns. Everyone has had to compromise, but I think we have come up with a good bill. This compromise will help ensure a strong financial future for the U.S. Postal Service and the many sectors of our economy that rely on its services, and it reaffirms our commitment to the principle of universal service that I believe is absolutely vital to this institution.

Finally, there are so many people both within Congress, within the administration, and among the stakeholders who have worked very hard to bring this legislation to a successful conclusion. I cannot name them all, but I want to name some of them.

Senator Carper and his staffer, John Kilvington, have been here every step of the way. Senator Carper was the original cosponsor of the bill and has worked very hard to bring the compromise about.

Senators LIEBERMAN, COLEMAN, AKAKA, and VOINOVICH also have played very important roles.

Our leaders, Senator Frist and Senator Reid, have been vitally interested and have helped us get this job done.

In the House, Chairman Tom Davis and the ranking Democrat HENRY WAXMAN of the Government Reform Committee, also worked hard to produce a bill and to work with us to bring about the compromise.

A true hero of this effort, a person who worked on postal issues for a decade, is Congressman JOHN MCHUGH.

The administration has played an absolutely critical role in bringing us to where we are today. The administration often doesn't get credit for that, and they deserve credit. They have worked with us to come up with solutions on the financial issues in this bill, and without the strong support of the administration, we would not be here tonight.

I want to particularly salute OMB Director Rob Portman; Michael Bopp, my former staff director, who is now working at OMB and brought his expertise to bear on this issue; Jess Sharp and Candi Wolff of the White House staff; and of course the staff of the Postal Service itself, which was always there with expertise, particularly Kim Weaver.

But most of all, I thank Ann Fisher of my staff, who has worked for years on this bill. This has been an issue which has meant a great deal to her, and she has been working on postal issues for a long time. She is a recognized expert, and without her expertise, we would not be here tonight.

I finally also want to thank the committee's new staff director, Brandon Milhorn, for bringing his judgment to bear on this issue.

There are so many people who have worked so hard, but the collective effort of everyone has produced a bill of which we can be proud.

It is not a perfect bill, but I am convinced it will put the U.S. Postal Service on a sound financial footing for years to come.

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