Worth the Fight?
Monica C. Smith, CEO/president of Marketsmith and a board member of the American Catalog Mailer’s Association (ACMA), is urging catalogers to contact their U.S. senators and representatives to tell them to suspend the mandate included in the Postal Accountability and Enhancement Act (PAEA) that requires the U.S. Postal Service to overfund retiree health benefits.
Specifically, Smith is circulating a form letter, drafted by fellow ACMA board member Chris Bradley, president/CEO of Cuddledown, which urges lawmakers to repeal the funding rule, which they say is “the underlying reason for high postage rates and the catalog industry’s downward spiral.”
The letter states that catalogers are still reeling from the 2007 postage increase that raised catalog rates by about 20%. Unfortunately that rate increase preceded an economic downturn which resulted in “the weakest retail environment in several decades” and has “put all catalogers in serious trouble.”
“The USPS is currently paying more than $5 billion each year (as required by PAEA) into a federal fund that now stands at $30 billion,” the form letter states. “These payments are currently scheduled to continue until 2016. In addition, the USPS pays the healthcare cost on a current basis for all the retirees on the books today. This amounts to some $2.2 billion each year, covering 100% of the current expense. Clearly the two payments are overkill and the effect is to put an unnecessary burden on current rate payers.”
The letter urges support for H.R. 7313, a bill introduced by Congressmen Danny Davis and John McHugh which aims to reduce the pension burden on the USPS.
“The first thing Congress could do to help catalogers is to revisit the PAEA requirement and suspend it for a few years so the USPS could roll back rates and get catalog volume growing again,” the letter states. “Requiring the USPS to only fund current retiree health benefits would free-up over $5 billon annually to be used to roll back rates.”
I’m not quite sure what to make of this. I agree that catalogers have been unduly “whacked” with outrageous mailing rates — but at the same time I see the potential for some serious cause-and-effect scenarios if this proposal is approved.
First of all, with all that Congress has on its plate this session, I see little hope of this getting on the legislative radar. I suppose it could make its way into the Obama administration’s “American Recovery and Reinvestment Plan” or some other bill in the form of an amendment.
Second, didn’t the USPS just announce that it has to raise rates by about 5% — and didn’t it move up the date for the increase on certain mail classes to January — all because it’s seeing a massive drop in mail volume? I mean, the USPS is suffering from its own economic woes, too. And I don’t think repealing the retiree pension and health care payments will be such an easy thing to do. Obviously there are other interests at stake here.
Don’t get me wrong – I know all too well the value of getting those glossy pages into the hands of customers and prospects – and I do think this effort is commendable. It’s just that I’m not 100% convinced that this is the right time to be fighting this battle. Especially when I think about the recent efforts of Catalog Choice and the DMA on the “do-not-mail” front … I wonder what effect that might have on a lawmaker’s decision making?
To download a copy of the letter, click here.
What do you make of this effort? Is it worth the fight or is it just a waste of time?
