House approves postal overhaul bill

The House voted Tuesday night to enact sweeping postal reform legislation for the first time since the creation of the modern Postal Service in 1970.

The measure (H.R. 22) passed on a 410-20 vote.

"The laws that govern the Postal Service are outdated and unsuited for today's competitive environment," said House Government Reform Committee Chairman Tom Davis, R-Va., whose committee pushed the measure. "Tonight's passage not only represents the first big step to bring the Postal Service into the 21st century, but also our best chance at solving the structural, legal and financial constraints that have brought the Postal Service to the brink of utter breakdown."

The measure's chief sponsor, Rep. John McHugh, R-N.Y., has pushed the postal reform issue for several years. "This legislation is a long time in coming, and I couldn't be more thrilled to see the full House put its stamp of approval on H.R. 22," McHugh said. "Americans have an expectation that the Postal Service will abide by its well-known, although unofficial, motto--a commitment to deliver. We have produced a much-needed, well-refined bill to ensure that our nation's Postal Service can continue to deliver on that promise."

Under the bill, the Postal Service would no longer be required to operate on a break-even basis. The agency could retain earnings generated beyond its costs, and distribute them as incentives to managers or share them with employees through the collective bargaining process.

The bill also simplifies the postal rate-setting system, while requiring that annual increases for letters, periodicals and advertising mail do not exceed the annual change in the Consumer Price Index. The legislation renames the Postal Rate Commission the Postal Regulatory Commission and provides it with beefed-up oversight powers.

The bill includes two measures that have attracted White House opposition. One would shift responsibility for pension payments related to the military service of postal retirees from the Postal Service to the Treasury Department. The other would give USPS access to a $73 billion escrow account created because of past overpayments into the Civil Service Retirement System.

White House officials have floated a compromise that would allow the Postal Service to use $27 billion it has paid in military-related pension benefits to help cover the agency's retirement benefits costs. The Postal Service would be required to pay the military retiree benefits in the future. The Bush administration also has proposed to allow the agency to borrow at least $2 billion in each of the next two years in lieu of allowing it access to the escrow account.

The compromise proposals likely will be addressed when the Senate takes up its version of the bill (S. 662), or in conference committee. Senators are not expected to vote on the measure before the August recess.

Postal Service officials have said a 5.4 percent rate increase will be needed early next year if the bill is not approved in this session of Congress.

Alyson Klein of CongressDaily contributed to this report.