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Summary

Recently, financial challenges have compelled a number of publishers of periodicals (e.g., magazines and newspapers) to downsize their operations and to cease printing certain publications. To cite just two examplesTime Inc. has said it will cut 600 jobs, and the century-old Christian Science Monitor newspaper, which is delivered via U.S. mail five days per week, is to cease publishing in paper format in April 2009. In light of these high profile incidents, and because of a possible U.S. Postal Service postage increase in 2009, the 111th Congress may be asked to help periodical publishers by providing them with increased postage subsidies. Some publishers sought postage relief during the 110th Congress. Such assistance would not be unprecedented. In fact, Congress has subsidized periodicals postage since the founding of the United States. This report describes and assesses the major federal policies that have subsidized postage for periodicals. These policies have been contentious because they involve disputed principles and vexing implementation issues. Some persons believe that periodicals provide important information about politics and government to U.S. citizens, which helps members of the public to discharge their civic duties. Others dispute this contention. Additionally, considerable implementation issues also arise, such as which periodicals should receive these subsidies? Since 1792, Congress has provided periodical mailers with reduced rates that are lower than their delivery costs. Initially, Congress funded these postage subsidies through annual appropriations. Senders of other types of mail, such as first-class letters, have paid rates that covered the revenue shortfall of periodicals. In 2007, the Postal Regulatory Commission (PRC) restructured the postage rate schedule to more accurately peg periodical rates to their delivery costs. The postage paid by some periodical mailers jumped dramatically and their postage subsidies fell. Later that same year, the PRC established the new rate-setting system mandated by the Postal Accountability and Enhancement Act (PAEA; P.L. 109-435; 120 Stat. 3198-3263). The system requires each class of mail to bear its direct and indirect costs, but it also includes a rate cap that forbids the USPS from raising postage rates by more than the rate of inflation, except in extraordinary or exceptional circumstances. The long-term effects of the new rate schedule and rate-setting system on periodicals subsidies are unclear. Thus far, the USPSs periodicals delivery costs continue to exceed greatly its periodicals postage revenues. This report will be updated as events warrant.

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