Postal overhaul sponsors criticize proposed rate hike

The Postal Service's rate increase proposal, announced Wednesday, drew grim reactions from the lawmakers working to overhaul the agency.

"I am disappointed the Board of Governors did not see fit to wait until comprehensive postal reform legislation becomes law before making a decision on whether to seek rate increases," House Government Reform Chairman Tom Davis, R-Va., said in a release.

Davis called on the Postal Service to stall its rate case until after issues surrounding the overhaul legislation are reconciled in conference. Because the rate-setting process would be altered under the legislation, Davis said a rate case might "needlessly expend the resources" of the agency.

Meanwhile, Senate Homeland Security and Governmental Affairs Chairwoman Susan Collins, R-Maine, hinted that the agency's rate increase, which would raise first-class stamp prices from 39 to 42 cents, heightens the urgency to push the overhaul legislation. Collins said the bill awaiting conference "would modernize the rate-setting process to provide more predictability for its users."

Both House and Senate versions require the agency to establish annual increases, which would be restricted by a rate cap tied to the Consumer Price Index. The Postal Service currently increases prices at its own discretion, and without a price ceiling.

The newly proposed increase, averaging 8.5 percent among the varying mail classes, follows last year's increase of 5 percent. Rep. John McHugh, R-N.Y., the House bill's lead sponsor, said "a 13.5 percent hike in just over two years could be perceived as excessive."

While congressional staffers involved with the legislation noted the price hike highlights the need for overhauling the Postal Service's rate increase process, negotiations are still under way to move a bill that will meet White House approval.

The administration opposes language to transfer the agency's $27 billion military pensions obligation from the Postal Service to the Treasury and give the agency access to money slated for an escrow account.

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