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Passage Of USPS Retirement Overpayment Corrective Legislation Forestalls New Rate Increases
NEW YORK, April 8, 2003 – The Direct Marketing Association (The DMA) expressed its appreciation for the passage, in both houses of Congress, of legislation that will correct the United States Postal Service (USPS) Civil Service Retirement System (CSRS) overpayment problem. A faulty funding formula in current law, if unchanged, would cause every American citizen and business using the Postal Service to be overcharged by about $78 billion for postal retiree obligations.
The bill (S.380/H.R.735) appears to be headed to the President for his signature in short order. This would correct the payment formula and reduce the USPS's payment obligation, starting this year.
"This legislation will save the Postal Service $3 billion this year and, according to the Postmaster General, postpone any postage rate increases until 2006 – three years from now," said H. Robert Wientzen, president & CEO, The DMA. "This delay will do much to encourage growth in the nine-million-job mailing industry."
The DMA and its members, which send between an estimated 80 to 90 percent of all of the USPS's Standard Mail volume and generate, directly and indirectly, $634 billion in direct mail sales, worked steadfastly on ensuring passage of this much-needed corrective legislation. In fact, The DMA helped coordinate an ad hoc coalition of postal employee and mailer groups to help push for the CSRS retirement funding fix.
In addition, The DMA noted that support for this measure had come from both Republicans and Democrats, and it hoped that this collaborative spirit bodes well for meeting future postal challenges.
In particular, The DMA expressed its gratitude to Chairman Tom Davis (R-VA) and Senator Susan Collins (R-ME) for their leadership, and to Senators Joseph Lieberman (D-CT), Ted Stevens (R-AK), Daniel Akaka (D-HI) and Thomas Carper (D-DE) and Representatives John McHugh (R-NY), Henry Waxman (D-CA), and Danny Davis (D-IL) for their strong support.
Wientzen pointed out that there are some major challenges ahead in the area of postage rates and postal reform. For example, beyond 2005, the bill passed by Congress may interfere with the Postal Service's discretion in allocating future savings. "We believe that the Postal Service should have greater discretion about how to allocate savings to attract more business and keep costs low," said Wientzen.
"Today is a good day for the entire mailing community: commercial mailers, employee groups and every American citizen who uses the mail," said Wientzen. "But, steady rates until 2006 are not enough to cure the problems of the Postal Service. There is still much work to be done."
In addition, Wientzen pointed out that the President's Commission on the United States Postal Service currently is reviewing fundamental changes to the USPS's basic business model. "We look forward to working with the Commission, the Administration, Congress and all of the Postal Service's stakeholders in a collaborative way, similar to what we have seen today, in addressing the need to modernize the Service's 32-year-old business plan," said Wientzen.
The USPS retirement overpayment problem was discovered late last year. A review by the Office of Personnel Management of USPS payments found that the statutory formula for retiree payments, if left unchanged, would produce an overpayment of $78 billion. This fiscal year alone, the USPS would have to make a payment of $3 billion above and beyond what is needed to fully fund the pension system.
Congress needed to change the legal formula that the USPS must use to contribute to the CSRS in order to correct the problem. The actions taken by both congressional chambers over the past few days does just that.
The DMA is the leading trade association for businesses interested in interactive and database marketing, with nearly 4,700 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. Included are catalogers, Internet retailers and service providers, financial services providers, book and magazine publishers, book and music clubs, retail stores, industrial manufacturers and a host of other vertical segments, including the service industries that support them. According to a DMA-commissioned study, direct and interactive marketing sales in the United States are projected to have surpassed $2 trillion in 2002, including $126 billion in catalog sales and $34 billion in sales generated by the Internet. The DMA's Web site iswww.the-dma.org, and its consumer Web site is www.shopthenet.org.