Could the Deficit-Reduction Deal Limit Postal Pay Raises and Rate Increases?

An apparently unintended consequence of the proposed bipartisan “Gang of Six” deficit-reduction deal is that it could reduce future inflation-based increases in U.S. Postal Service wages and rates. One section of the plan calls for a “shift to the chained-CPI (a more accurate measure of inflation) government-wide starting in 2012” to calculate changes in inflation. The document adds that, “According to CBO [the Congressional Budget Office], the shift to chained-CPI would result in the annual adjustment growing, on average, about 0.25 percentage points per year slower than the current CPI.”

Chained-CPI takes into account people’s tendency to substitute a less expensive