Reform Legislation Obstacles

The prospects for passage of postal reform legislation in 2006 have been clouded by three issues. First is the pressure on the federal budget. Although the USPS is funded entirely by postage, it is still part of the unified federal budget. Thus, pension and retiree medical insurance obligations of the postal service are obligations of the federal treasury.

Secondly, the USPS has serious misgivings about key provisions of the legislation. Third, the Senate is caught in a disagreement between large-volume mailers and small-volume (and single-piece) mailers over a proposed amendment.

Failing to pass the legislation may mean that no bill would pass for years. If this happens, the biggest worry for the industry is that rates will rise and volumes will drop, as happened leading up to the last three years, when there have been no rate increases. Mailers worry about the "death spiral" scenario, when price causes mailers to reduce volume or discontinue mailing, forcing further increases and reductions. The bottom line for the printing industry is that postal reform remains a priority.