Wednesday, July 23, 2014

GCA Position Statement on Proposed Exigency Increase

The Greeting Card Association (GCA) opposes the recent proposal by the United States Postal Service (USPS) to increase postage rates to 49 cents, beyond the rate of inflation under the exigent circumstances provision of the Postal Accountability and Enhancement Act of 2006.

With current economic uncertainties and Postal Service volume challenges, the GCA believes such an increase would be counterproductive. Further, we believe the law’s test for “exceptional or extraordinary circumstances” that allows rate increases above the rate of inflation has not been met. Internet diversion is not an exigent circumstance, it has been going on for 15 years. The impact of recessions on average on postal finances cannot be viewed as exigent as recessions are a normal part of the economic landscape; all that is unique in the 2008-2009 recession is the degree to which it exceeded in certain dimensions the “average” recession. For stamped mail, Internet diversion has dominated volume changes at the same rate before, during and since the recession.

We believe the exigent provision was intended to address the impact of short term events that affect all mail classes such as the anthrax attacks or natural disasters like Hurricane Katrina rather than either temporary disruptions in the economy or long-term substitution of electronic for hard-copy media. While the great recession of 2008-2009 may have been deemed to be a qualifying event, it is inappropriate to try to recover losses long after it ended. Such trends require fundamental changes to the Postal Service’s facility and delivery network and its overall cost structure to provide a sustainable business model for the future. Rate increases in the absence of such changes will increase the likelihood of falling volumes and revenues into the future.

The GCA is committed to maintaining a robust and stable United States Postal Service – one that provides affordable and universal service six days a week. To achieve that goal, we support:

  • fundamental change to all USPS costs including workforce and facility network to match current and projected demand;
  • proposed changes to alter the payment schedule for future retiree healthcare costs;
  • allocation of the overpayment to the FEHB pension fund to prefund retiree healthcare costs; and
  • the development of new products and services.

Rate increases and reductions in service levels are not a path to sustainability.

For further information, contact:

Rafe Morrissey, Vice President, Postal Affairs
202.438.6821 | rafem@morrisseystrategic.com
Greeting Card Association
October 7, 2013

Read additional information about GCA's position on the proposed exigency increase here

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