Bush signs law changing postal operations

WASHINGTON -- President Bush on Wednesday signed into law the first major changes in postal operations in decades, offering hope for reducing or delaying future rate increases. For now, people will not notice anything different at the post office.

"This is a historic accomplishment and will help one of the most revered institutions in America survive and prosper in the electronic age," said Rep. Henry Waxman, D-Calif.

Sen. Susan Collins said the changes are the only way to avoid what congressional investigators referred to as a "death spiral" -- excessive and unpredictable rate increases that result in a lower volume of mail.

Collins, R-Maine, noted that the Postal Service is the linchpin of a $900 billion mailing industry, providing 9 million jobs in fields such as direct mailing, printing, catalog companies, paper manufacturing and financial services.

Postmaster General John E. Potter said the law could not have come at a better time. "The Postal Service has never been stronger, and this law enables us to build on our successes," he said.

In an important change, the law shifts responsibility for some retirement benefits to the Treasury.

Many postal workers once served in the military. Unlike other federal agencies, the post office had to pay for retirement benefits earned during both the military and postal careers of those workers.

Benefits earned during military service will be charged to Treasury now, relieving the post office of having to pay billions of dollars in the future.

The measure also abolishes a requirement that the post office set aside about $3 billion annually in an escrow account. The law requires the agency to use that money to fund retiree medical benefits for 10 years. After that, the money may be available for other uses.

The escrow requirement pushed the post office into the red last year, forcing it to raise the price of a first-class stamp by 2 cents in January.

A 3-cent increase is pending and probably will take place next spring. The law will not change the need for that increase, Potter said.

After 18 months, the law limits any new increases to the rate of inflation. That will make rate changes easier to plan for, as large mailers have sought.

William Burrus, president of the American Postal Workers Union, said this cap will have a devastating effect on employee wages and benefits.

"This limit on rate increases -- without regard to the actual costs the Postal Service incurs -- will result in an artificial cap on postal workers' wages," Burrus told his union members.