The Association of Magazine Media

Budget Supercommittee Fails to Reach Agreement; President’s Postal Proposal Not Implemented

Established in August as part of the debt ceiling negotiations, the budget “Supercommittee” was tasked with reducing the deficit by $1.2-$1.5 trillion through budget cuts or new revenue sources by November 23rd. To guide the supercommittee’s deliberations, President Obama submitted a $3 trillion deficit reduction proposal, which contained a number of postal-related elements, including a controversial proposal to unilaterally enact the USPS-requested exigency increase. With the Super Committee failing to reach agreement by the deadline, the President’s postal proposals were set aside as well. The supercommittee’s failure “triggers” automatic cuts of $1.2 trillion in spending – split evenly between domestic and defense spending – effective January 2013. The extended timeframe for implementation of the cuts makes it very likely there will be legislative efforts to undo the automatic cuts this year in Congress.

In addition to enacting the exigent increase, the President’s proposal would have made adjustments to the Postal Service’s retiree health benefit prefunding, provided USPS with a refund of its surplus contribution to the FERS retirement program, allowed the Service to reduce delivery to 5 days a week, permitted USPS to offer non-postal products, and changed the current class by class CPI-based price cap to a system wide average. This latter change would have allowed the Postal Service to raise rates for Periodicals as much as it wanted while still living within the price cap. MPA fought very hard against supercommittee inclusion of either the exigent increase or a change to the current price cap methodology.