US Post Office Debate Triggers Lobbying

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3/26/12 - WASHINGTON - Wine wholesalers and amateur beer makers want Congress to repeal a law that makes it illegal to ship alcohol by mail.

Giant insurers like Aegon of the Netherlands want to make sure that the Postal Service stays out of the insurance business. And medical supply companies like Medco oppose plans to cut Saturday delivery, saying that would delay medicines and could add to the cost of mail-order drugs.

As Congress begins work this week on legislation to shore up the finances of the debt-ridden post office, companies representing a cross-section of US business are spending millions of dollars lobbying lawmakers to oppose or support various proposals.

Lobbying disclosure records show that companies and unions with a stake in a postal overhaul have spent nearly $300 million in the past three years as the financial condition of the post office has worsened, though it is not known how much was spent specifically on postal issues.

The service is the backbone of a mailing and shipping industry that employs more than 8.5 million people and supports almost $1 trillion in economic activity every year. The service itself employs 574,000 people.

But the service is losing a staggering $36 million a day as customers are increasingly turning to the Internet in place of letters, print publications, and monthly bills that arrive by mail. Because of a congressional mandate, the service has to pay $5.5 billion annually into a fund for its future retirees, adding $20 billion in debt since 2007.

To trim its operating costs, the service has proposed closing 3,700 post offices, mostly in rural areas; shutting more than 250 mail-processing centers; cutting Saturday delivery; expanding into new lines of business; and increasing postal rates.

But many companies are deeply concerned about the sweeping proposals and say cuts in service and rate increases could have a devastating effect on their businesses.

Greeting card companies say they are especially concerned about proposals to raise the postage rates.

"We think increasing rates would be counterproductive for the Postal Service and for customers like us,'' said Rafe Morrissey, vice president for postal affairs at the Greeting Card Association, which includes Hallmark. "The price increases would cause people to turn more to electronic mail and away from physical cards.''

Morrissey said the greeting card industry is less dependent on electronic commerce than other industries are, and about 60 percent of cards are still sent through the mail.

While rate increases and delivery are the most pressing concerns for greeting card companies, as well as magazine and newspaper publishers, some businesses are worried about the post office branching out into their lines of business.

As the service looks for new ways to raise revenue, various proposals in Congress would allow it to get into financial services or insurance, as do postal offices in European countries. And that has some insurance companies worried.

Jack Dolan, a spokesman for American Council of Life Insurers, a trade group that represents companies like Aegon, said the industry wants the post office to stay out of the insurance business.

"But if perchance they were able to sell insurance products, we'd want to make certain that the playing field is level and they comply by the same licensing and selling standards our companies are subject to. No unfair advantage,'' Dolan said in an e-mail.

Patrick R. Donahoe, the postmaster general, said the service had no interest in getting into the insurance business.

"We've heard people tossing around the idea of letting us get into banking or selling insurance, but we don't think that's a good fit for us,'' Donahoe said. "We want to do things that utilize our strengths, and that's mailing and shipping.''

However, the post office would like to expand into the shipping of beer and wine. Under current postal regulations, it is prohibited from shipping alcohol through the mail.

Shipping alcoholic beverages would allow the service to compete with FedEx and UPS and handle packages sent by licensed wine and beer manufacturers in accordance with state laws.

Pete Johnson, a program manager for the Brewers Association, said being able to ship through the mail would lower the cost of shipping for wine and beer wholesalers who now have to depend on private shippers to send their products.

While beer and wine sellers see postal reform legislation as way to loosen regulations that could increase revenue for them, others businesses see proposals that could restrict their sales.

Medco, a drug delivery company in Franklin Lakes, N.J., said eliminating Saturday mail delivery would delay orders for prescription drugs, creating difficulties for patients