Lawmakers are asking the USPS regulator to block DeJoy’s latest price hikes – Government Executive

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Reps. Jamie Raskin, D-Md., Gerry Connolly, D-Va., Kweisi Mfume, D-Md., and Raja Krishnamoorthi, D-Ill., are asking for the the Postal Regulatory Commission to block a planned July rate hike of the First Class stamp to 73 cents from 68 cents. Kent Nishimura / Getty Images

Management

Lawmakers are asking the USPS regulator to block DeJoy’s latest price hikes

USPS is pursuing its largest rate increases since Louis DeJoy became postmaster general.

Eric Katz

Senior Correspondent

May 23, 2024

House Democrats are asking the U.S. Postal Service’s regulator to block its latest proposed price hike, saying another increase would threaten the future of the mailing agency.

USPS last month announced it was planning in July to raise the cost of a First Class stamp to 73 cents from 68 cents as part of a proposal to raise overall prices by 7.8%. The increases, if approved by the Postal Regulatory Commission, would mark the sixth hike under Postmaster General Louis DeJoy’s tenure and a 31% spike in the cost of a stamp since he took office. USPS has begun raising its rates on a biannual basis and DeJoy has tapped into the authority he won in 2020 to increase prices more than the rate of inflation on nearly every allowable occasion.

Reps. Jamie Raskin, D-Md., Gerry Connolly, D-Va., and Kweisi Mfume, D-Md., who serve as ranking member on the House Oversight and Accountability Committee and two of its panels, respectively, as well as Rep. Raja Krishnamoorthi, D-Ill., asked PRC to reject that latest request on the grounds that the Postal Service is failing to meet its statutory requirement to “maintain high quality service standards.” They noted the commission’s review of USPS performance in fiscal 2023 found the agency missed its targets for more than half of its market-dominant products.

The lawmakers said postal management has not given appropriate weight to the impact the rate changes would have on the general public and large-scale mail users, arguing it is is instead pursuing a strategy that will drive more mail out of the system. First-Class mail volume has declined 10% since 2020, though that marks the continuation of a trend dating back nearly two decades.

“We are concerned with the extent to which the pace of these postage price changes may contribute to volume declines in excess of earlier projections on total mail volume,” the lawmakers said in their letter.

DeJoy has countered that critique by suggesting he “cannot compete with digital” and therefore it was immaterial if he expedited the inevitable loss of volume.

The Democrats’ letter adds to the mounting congressional pressure on DeJoy and his 10-year Delivering for America plan. Already, the postmaster general agreed to pause until at least 2025 reviews that could have led to the consolidation of dozens of mail processing plants. Still, DeJoy has defended his approach as the only viable option to bring USPS to financial solvency and noted to Congress this week many of his major changes that were already underway will continue.

Whether PRC can heed the lawmakers’ request is unclear, as their approval of price hikes have typically amounted to a simple checking of the math to ensure postal management adhered to the price cap formulas. A bipartisan effort to get PRC to block DeJoy’s previous price hike was unsuccessful.

In recent months, however, PRC has publicly derided parts of DeJoy’s reform efforts and suggested he may be harming the mailing agency. The postmaster general has feuded with his regulator since taking office and at a recent hearing PRC Chairman Michael Kubayanda said USPS is trending in the wrong direction. The commission last month asked the Postal Service to formally justify its network changes before the regulator, but USPS has rejected that request.

The new rate system PRC established in 2020 created a complicated formula for setting prices derived from factors including inflation, declining mail use and retiree costs. The Postal Service historically only raised its rates in line with inflation, but since 2021 DeJoy has repeatedly used the new authority to increase prices at a far faster clip.

Postal management has defended the rate increases by noting USPS still charges less than most of its counterparts around the world. The Postal Service has grown its revenue slightly in recent years, despite the volume declines, due to the higher prices.

“As changes in the mailing and shipping marketplace continue, these price adjustments are needed to achieve the financial stability sought by the organization’s Delivering for America 10-year plan,” postal management said in April. “USPS prices remain among the most affordable in the world.”

Groups representing large-scale mailers are also pushing back on the latest price hike, saying USPS is causing significant harm to its biggest customers.

“With this sixth notice of market-dominant price changes in three years, the Postal Service continues, Titanic-esque, to sail inexorably toward the iceberg—clinging to its belief that the Delivering for America plan is the panacea to its ills notwithstanding all evidence to the contrary,” said the Alliance of Nonprofit Mailers in a filing before PRC.

The Association for Postal Commerce said while USPS is technically in compliance with the statutory price caps, it is missing the mark on its other legal obligations to provide predictability and stability to mail users. It added that PRC must use its authority to block the price increases.

“If the commission declines to exercise that legal authority, it will be as complicit as the [USPS board of governors] in the acceleration of the unnecessarily rapid decline of a postal system that has served the American public for almost 250 years,” the group said.

The groups, like the lawmakers, stressed that mail delays have spiked as USPS has implemented some of its network reforms. USPS delivered just 84% of First-Class mail on time in the first half of fiscal 2024, compared to 91% in the same period of fiscal 2023. DeJoy has admitted his agency has struggled to smoothly put his network changes into place, but vowed to quickly correct those issues.

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