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National Postal Policy Council

NPPC is the trade association for large business users of letter mail, primarily in First Class.  NPPC is committed to ensuring that a postal system to serve business mailers and the public comprehensively, effectively and efficiently be sustained.  With the Postal Service under severe financial stress, NPPC is working with Congress, USPS and the Postal Regulatory Commission, as well as other postal stakeholders, to achieve a solution that will address the
financial challenges.

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Three Variables; One Inflection Point?

As everyone knows, the Postal Service balance sheet is deeply in the red for at least two important reasons: 1) heavily expensive retiree health obligations; and 2) diversion of mail to electronic alternatives driven by demographic, technological and cultural changes in communications and commerce. Its mail volume has resumed a painful decline, yet the Service seems able to keep its operations near or in the black through judicious cost-cutting and the explosion of its package shipping volume. Delivery service has taken some hits, but appears to be recovering somewhat.

Three major policy variables, quite unusually, are outstanding at once. First, legislation remains pending in the House and Senate to, among other things, relieve USPS of major portions of its retiree health obligations. Second, the President has constituted a Task Force on the Postal System to develop recommendations for structural or other changes that will stabilize the system for the foreseeable future. Third, a major change to the postal rate setting system with dire consequences for rates proposed by the Postal Regulatory Commission remains to be decided.

The permutations of what might happen from these three variables, once decided, are too numerous to attempt to delineate here. But, in broad strokes, should the legislation succeed, it would dramatically reduce the amount of obligations on the balance sheet and therefore should have a major beneficial effect on rate setting changes on which the Commission might settle. The Presidential Task Force is due to report its recommendations in August, but it is too early to make educated guesses on what paths they might be pursuing in developing these recommendations.

But whatever - and whenever - the outcomes of these three policy initiatives come to pass, USPS will be at an inflection point. Changes could substantially alter the Postal Service, its structure, business model and balance sheet. Or not. The USPS status quo is unacceptable, but there is no surety that any of the outstanding variables will come to fruition as is, or at all, or when. So, the Service is near an inflection point one way or another: limp along as it has been and gradually fall into a deeper hole; or change significantly in ways that may improve its stability.

It is entirely unsatisfactory that mailers and other stakeholders are left in a position of "wait and see," but that is precisely where we are. Not that we are just waiting, of course: hard advocacy work has been done or remains ongoing in all three arenas responsible for a variable, Congress, the Administration and the Postal Regulatory Commission. Nonetheless, until there is some finality to each of these variables, we will be left in suspense on whether USPS will be stabilized or ultimately need a bailout. And that prospect of uncertainty is a difficult challenge for NPPC members and, indeed, all mailers.


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