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Wednesday, May 10, 2006

Postal Service fights overhaul bill's accounting language

"The Postal Service is contesting language in both the House and Senate versions of a postal overhaul bill the agency contends would damage its ability to compete with private companies such as UPS.

At issue is how the agency's general accounting practices will be determined once the overhaul legislation is enacted. Both versions say the Treasury secretary -- 'in consultation with' the Postal Service -- will recommend the accounting method the agency should use in pricing products such as overnight mail and parcel shipping that compete in an open market alongside UPS and FedEx.

Treasury's report, which would also include advice from a private accounting firm, would be submitted to the newly created Postal Regulatory Commission for final consideration. The provision was created to keep the Postal Service from subsidizing the costs of its competitive products with revenue from first-class mail.

According to one postal insider, creating separate funds for competitive products and first-class mail will keep the Postal Service from offering its products at a lower price than its competitors. "

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