• Address volume declines by maintaining the postage rate cap to the Consumer Price Index (CPI). An increase in postage has a direct and profoundly negative impact on postal volumes, resulting in a "death spiral" where additional price increases are necessary to cover costs, Quadracci testified. "Ultimately, this will drive additional volume out of the mailstream. Congress, in its wisdom, capped postage rate increases to the CPI as part of the 2006 Postal Accountability and Enhancement Act. Doing so has provided an enormous incentive for the USPS to move quickly and prudently to improve the cost-efficiency of its services without substantially reducing the quality of its mail services. Without such an incentive, the fiscal position of the USPS would be much worse than it currently is."
• Lengthen the amount of time the USPS has to pre-fund healthcare benefits for retirees. The current 10-year amortization schedule has resulted in unaffordable $5.5 billion annual payments on which the USPS has already defaulted twice. Extending payments over a longer period of time would relieve some short-term financial pressure while still enabling the USPS to meet its retiree benefit obligations long-term.
• Return to the USPS overpayments to the Federal Employees Retirement System for its use in reducing its debt, making necessary capital investments, and moving forward with its efforts to restructure and right-size its operations.
• Provide the USPS the flexibility to manage escalating healthcare costs without disadvantaging employees or retirees. Quadracci shared that it is possible to improve the quality of healthcare while reducing costs, and cited Quad/Graphics' own success through its 23-year-old QuadMed subsidiary. "Our costs are 20-30% lower than all industry," Quadracci said. "There are many healthcare options but too often the costs are simply shifted from one group to another. By focusing on wellness, our model actually reduces costs rather than shifting who pays."
During his oral testimony, Quadracci stressed that while print remains an extremely effective medium for marketing and communications - and one that connects and integrates well with other media channels - clients are apprehensive about the future of the USPS. "We are at a stage where our customers are concerned," he said. "We have to make sure we have the ability to deliver [mail] in an efficient manner."
In closing, Quadracci acknowledged that postal reform requires bold, difficult decisions, but that those decisions are necessary and can no longer be delayed. "I applaud you for making the Postal Service a priority," he told the Committee.