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Hallmark Cards cares about future of failing U.S. Postal Service

  • The Kansas City Star
  • Published Sunday, Feb. 16, 2014, at 9:18 p.m.
  • Updated Monday, Feb. 17, 2014, at 7:10 a.m.

America’s troubled relationship with its public mail service is nearing another complicated, and perhaps final, test.

It’s likely to pit politics against conflicting special interests, convenience, technology and the price you pay for stamps.

It involves some of America’s best-known companies, including Kansas City’s Hallmark Cards Inc. The firm recently turned to a longtime friend — U.S. Sen. Claire McCaskill of Missouri — to keep rural post offices open and mail delivery rolling six days a week, both important goals for Hallmark.

Congress is trying to complete work on a fix for the U.S. Postal Service by the end of the year.

Yet salvaging a Postal Service anything like the one you know today will be a formidable task. Finding a model that keeps mail delivery cheap and convenient has stumped lawmakers and policy analysts for years.

At the same time, the status quo seems an increasingly poor option:

• New figures show the service took in less money in 2013 than it did in 2004, when it handled twice as much single-piece, first-class mail.

• It lost $354 million in the last three months of 2013, including the lucrative Christmas mailing season, as first-class mail volume continued to slump and costly retiree obligations came due.

• Postage rates rose to 49 cents for a first-class stamp in late January, potentially crimping remaining public enthusiasm for the mails.

“The Postal Service is going to be in trouble no matter what you do,” said James Gattuso, a policy analyst at the Heritage Foundation in Washington, D.C.

Against that grim backdrop, Senate policymakers are discussing yet another intricate package of reforms designed to shore up the Postal Service while satisfying the contradictory demands of businesses, workers and consumers.

In early February, a Senate committee — one that includes McCaskill — recommended a postal reform package that protects underperforming but locally important rural post offices and mail delivery on Saturdays, for a few more years at least. At the same time, it locks in higher postal rates.

“The strength of our postal service has always been that it’s reliable, affordable, and goes to the very last mile,” McCaskill’s statement said after the vote. “And that’s why I’ll always go the very last mile to protect it.”

But critics say McCaskill’s efforts on the bill demonstrate the political difficulty of reforming the Postal Service enough to save it. Powerful interests, they say, are working to protect an outdated model.

“Members of Congress do not get re-elected by closing post offices,” Gattuso said.

In a telephone news conference last week, McCaskill defended her efforts to preserve six-day mail service and rural post offices. Both, she said, are significant to some consumers.

“They’re incredibly important to small businesses and to people who depend on the mail to get their medicine and to get other things that are vital to life in rural areas,” she said. And “five-day delivery could be a death spiral.”

Six-day delivery and subsidized rural post offices aren’t cheap — they drive up the price customers pay for stamps (general tax dollars aren’t involved). In fact, Saturday delivery alone costs the cash-strapped Postal Service more than $2 billion a year.

And while McCaskill says those added costs are meant to help small businesses, pharmacies and rural customers, the spending is also important to politically influential companies that have had a long relationship with the Democrat.

That includes companies like Hallmark, the largest greeting card maker in America and one of Kansas City’s most important employers.

Americans bought more than 6 billion greeting cards last year. More than half were delivered by mail.

Like many mail-reliant businesses, Hallmark has slumped in recent years as younger consumers turn to cheaper social media and digital greeting services. But losing six-day mail service and rural post offices might further reduce greeting card purchases by older customers, who are more accustomed to using regular mail for social greetings.

In fact, efficient, widely available mail service means so much to Hallmark it spent $530,000 last year on lobbying expenses in Washington, according to filings with the Senate. That figure exceeds Hallmark’s lobbying expenses in any other year, in part because, for the first time, it includes the firm’s in-house lobbying costs.

Some of that lobbying involved protecting six-day mail delivery.

In addition, Hallmark-related interests gave McCaskill’s campaign committee more than $52,000 during her first term as a senator, according to the Center for Responsive Politics. That puts the firm’s donors in the top 10 of McCaskill’s contributors during the period.

In 2012, Hallmark interests gave McCaskill — who faced a tough re-election challenge — more money than any other candidate, CRP figures show.

Hallmark’s federal affairs manager, Sarah Moe, said there was no connection between those campaign donations and McCaskill’s work to preserve Saturday delivery and rural post offices.

“We appreciate her leadership,” she said. “It’s not about saving Hallmark. … We believe it’s important to America.”

McCaskill also denied any connection between her committee votes and Hallmark. In fact, she said, she opposed an amendment that would have phased in postal rate increases, as Hallmark wanted, instead of locking them in.

“Some of the votes I cast in the committee were a disappointment to Hallmark,” she said. But it might also have been a compromise that kept the bill alive.

That disappointment is reflected in the reaction of the Greeting Card Association, a national industry group. It called the Senate bill a “serious threat” because it locks in higher mailing costs, while still allowing five-day delivery in 2017 or later.

The bill’s primary sponsor, Democratic Sen. Tom Carper of Delaware, said the higher rates were part of a broader compromise. The bill proposes a “bipartisan, balanced approach (that) requires shared sacrifice in order to help the Postal Service,” his statement said.

He said parts of the bill might be changed on the Senate floor. At that point, McCaskill may argue for the phased-in postal rate approach Hallmark wants.

That position probably will conflict with the Postal Service itself. It blames Congress for imposing difficult standards while limiting the prices it can charge for the service.

Losses are growing, it said in late January, “due to the persistent decline of higher-margin first-class mail, stifling legal mandates, and … inflexible business and governance models.”

Indeed, other critics say McCaskill’s (and Hallmark’s) goal of maintaining rural post offices, six-day mail delivery and low mailing rates may simply be impossible to meet. That’s particularly true because there are other interests to satisfy as well: nearly 490,000 postal workers want to maintain pay levels and benefits, while consumers want quick, accurate mail delivery.

Rural interests want their post offices to stay open as community meeting places, while private companies continue to siphon lucrative business, further hurting the Postal Service.

Sen. Jon Tester, a Montana Democrat, voted against the committee bill because he said it would lead to private operation of the Postal Service, hurting rural areas.

Lawmakers are trying to reconcile all the conflicting demands. They may not find an answer, short of arranging a general taxpayer bailout or turning the service over to private companies.

Or something else.

“We’re heading,” Gattuso said, “for a brick wall.”

To reach Dave Helling, call 816-234-4656 or send email to dhelling@kcstar.com.

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