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USPS and PAEA

Sketch Of Capital DomeThe House Committee on Oversight and Government Reform has demanded that the Postal Service make a detailed accounting of cost allocations for its Competitive Products, alleging the Postal Service violate PAEA by using revenues from Market Dominate Products to grow its shipping business.

It may have surprised the committee that oversees that oversees the agency to imagine the USPS could succeed in the absence of financial resources, an up-to-date fleet of vehicles, or a modern business plan. “Opportunities for unlawful cross-subsidization,” a letter addressed to Postmaster General Megan Brennan on May 13 and signed by Committee Chairman Jason Chaffetz (R-Utah) and Mark Meadows (R-N.C.), chairman of the subcommittee on Government Operations said.

Perhaps the congressmen in question responded to pressure from private shippers who use the Postal Service to carry their least profitable packages the last mile to a customer’s home and who have felt it necessary to raise their prices through use of more expensive DIM weight pricing formulae and fuel surcharges during a time when many of their fuel costs were declining. The letter focused on packages as the source of the oversight committee’s concerns. “Given that Postal Service ‘package delivery’ products are almost solely competitive in nature, it is important to ensure [that] a bright line separation between marketing dominant products and competitive products is maintained.”

Of course, comprehensive postal reform could address these concerns, but the committees with oversight responsibility will continue studying what they helped break.