July 26, 2016

On July 12, the House Oversight and Government Reform Committee passed “bipartisan postal reform legislation.” It is similar to the discussion draft that the committee had circulated and many stakeholders, including nonprofit mailers, had commented on.

The main bill, H.R. 5714, continues to legislate a postage rate increase equal to half of the 4.3 percent exigent surcharge that expired on April 10. And it still has the Medicare integration that it hopes will save the Postal Service over $50 billion in retiree health benefit costs. The most important change is the removal of a “requirement” and other priority factors that would have shifted the focus away from the CPI price cap and placed it more on the cost coverage of individual postal products.  We had urged this change.

A secondary, but important bill, H.R. 5707, would allow the Secretary of the Treasury to invest part of the USPS retiree health benefits fund in market-based securities, rather than just Treasury Securities with very little return. This would help reduce the projected cost of retiree health benefits, and therefore the pre-funding requirements.

What happens next? The House adjourned on July 15, and does not return to Washington until September 6. It plans to be in session for 17 days in September prior to the November 8 elections. The House has 16 days scheduled in D.C. between the elections and the end of the year. With many other priority items to get done, whether the House will get to voting on the postal bill this year remains a key question.

While members of the House are adjourned until September 6, the staff presumably is working behind the scenes to try to get buy-in from the House Ways and Means Committee that oversees Medicare, and to get a positive scoring from the Congressional Budget Office. CBO scores every proposed bill for its impact on the federal balance budget for the following ten years. A neutral to positive impact is critical to the success of this bill.

The biggest risk for mailers is that the postal cost saving element of the bill, Medicare integration, gets jettisoned because of negative CBO scoring or Ways and Means opposition, while the rate increase stays in. We will keep you posted.