The Homeland Security and Governmental Affairs Committee has invested a great deal of time and effort on the issue of postal reform. This process, which began in 2002, included numerous hearings and close consultation with the entire range of experts and stakeholders, from the managers of the United States Postal Service and employee unions to non-profit organizations and other members of the mailing community.
I was proud to stand alongside Senator Carper last December as the President signed the postal reform legislation that bears our names into law. Through the long and complex process of crafting this comprehensive modernization of the Postal Service, it became clear to us why postal reform is enacted only every 30 years.
But enacting legislation is only part of the equation. The other is implementation, and that is why we are here today. Although the issues that we confronted were many and complex, our purpose was straightforward: to position the Postal Service for the 21st Century, to ensure the affordable universal service that is essential to the American people, and to strengthen a service that is the linchpin of a $900- billion mailing industry that employs 9 million Americans in fields as diverse as direct mailing, printing, catalog production, paper manufacturing, and financial services. The health of the Postal Service is essential to the vitality of thousands of companies and the millions that they employ, as well as to the more than 750,000 postal employees.
Given the important contributions of the mailing industry to the Postal Service and our economy, I am particularly concerned by the sudden and sharp rate increases proposed by the Postal Regulatory Commission for Standard Mail flats. These proposed rates could drive smaller catalog companies out of business or at least undermine their profitability. This is exactly the kind of double-digit, unpredictable jump in rates that our reform bill was designed to prevent.
Let me illustrate the damage this proposal will cause to the catalog mailing industry with some examples from my home state of Maine. Geiger Brothers, a family business in Lewiston, is a manufacturer, supplier, and distributor of catalogs, calendars, and a wide variety of other printed materials, including the world-famous Farmer’s Almanac. This company estimates this decision would cause an increase in mailing costs of 29 percent. This proposed increase would cost Geiger Brothers an additional $600,000 this year.
Another fine Maine company, Cuddledown is a nationally renown manufacturer of luxury down comforters and other high-quality bedding products with a heavy reliance on mail orders. This family-owned business, located in Portland, estimates that this proposal would increase its mailing costs by 18 percent.
I have also heard from L.L. Bean, Maine’s legendary outdoor outfitter and a world leader in catalog sales, which would be negatively affected by the rate increase and may need to reduce its mailings in order to maintain postage costs at a sustainable level.
These unexpected and steep increases will cause similar harm to catalog mailing businesses throughout the nation. Not surprisingly, the comments filed in response to the proposed rates indicate that this increase will cost jobs and stifle economic growth of companies vital to communities throughout our country.
In addition to the concerns I have with the current proposed rate increase, I would strongly discourage the Postal Service from filing a “final” rate case under the old rate setting rules before postal reform is fully implemented. Filing a new rate case would divert resources and effort from developing a modern system of rate regulations as required under the new postal reform law.
I look forward to the testimony we will hear today concerning how the PRC and the Postal Service are working to ensure predictability and stability in the rate setting process and implementing other core principles of the postal reform act.