1. Mailers Technical Advisory Committee [MTAC] Legislative Reform Update Thomas Day Sr. Vice President Government Relations

2. POSTAL REFORM Topics for Discussion  Status of Legislation and Conference  Alternative proposals regarding financial relief  Proposed Rate Increase and Legislative Reform

3. POSTAL REFORM Status of Legislation and Conference  Differences exist between legislation approved by House and Senate  These differences must be resolved before final vote and approval by both House and Senate  A Conference, made up of both Representatives and Senators, will resolve the differences  Final conference report requires approval by the majority of both Senators and Representatives

4. POSTAL REFORM Projected Conference Schedule  Senate has named Conferees; House has not  Sen. Collins will chair the Conference  House and Senate will “pre-conference” most issues before House Conferees are named  Conference should take place in May/June timeframe  Assuming resolution of differences, Conference Report would be approved by House and Senate before Summer Recess in July; signed into law soon thereafter

5. POSTAL REFORM Senate Republican Conferees:  Sen. Collins (R-ME)  Sen. Bennett (R-UT)  Sen. Coleman (R-MN)  Sen. Stevens (R-AK)  Sen. Voinovich (R-OH)

6. POSTAL REFORM Senate Democratic Conferees:  Sen. Akaka (D-HI)  Sen. Carper (D-DE)  Sen. Lieberman (D-CT)

7. POSTAL REFORM Projected House Conferees:  Rep. T. Davis (R-VA)  Rep. Waxman (D-CA)  Rep. D. Davis (D-IL)  Rep. McHugh (R-NY)

8. POSTAL REFORM Issues for resolution in Conference  The major hurdle is the resolution of differences between Administration and HR 22 / S 662 on financial relief, especially military service obligation  Anticipate issues of Postal Reform to be negotiated  The most contentious issue of reform may be Exigency

9. POSTAL REFORM Alternative Proposals – Financial Relief  Several different proposals being suggested as to why financial relief is not necessary  FASB rule as applies to accounting for single vs. multi employer health plans  Forego financial relief and borrow to cover cost of payments

10. POSTAL REFORM Alternative Proposals – Financial Relief  None of the alternatives being suggested are either financially sound or fiscally responsible  The language in pending legislation appropriately address this issue  Escrow fund payments returned in part to USPS, with majority used to pre-fund retiree health benefits  Military Service Obligation returns to Treasury  Senate version with 40 year amortization of payments is preferred

11. POSTAL REFORM Proposed Rate Increase and Legislative Reform  Board of Governors approval of rate filing  Commentary linking proposed rate increase to Legislative Reform  Comparison of current rate method to a CPI Cap methodology - how different are the results?

12. POSTAL REFORM Proposed Rate Increase and Legislative Reform FYCPIRate Increase June 20032.1%0% June 20043.2%0% June 20052.5%0% March 20063.0%5.4% June 2007*2.5%8.5% June 2008*2.5%0% Total15.8%13.9% * Forecast – Council of Economic Advisors

14. POSTAL REFORM Questions And Answers