Postal Service Seeks Rate Increase to Help Close $20 Billion Budget Gap

Letter carrier Nancy Konstance collects last-minute tax returns outside the Main Post Office in Philadelphia, on Monday, April 17, 2006.  Taxpayers were given two extra days this year to file.   (AP Photo/Matt Rourke)
National Journal
Billy House
See more stories about...
Billy House
Sept. 25, 2013, 9:22 a.m.

The U.S. Postal Ser­vice said Wed­nes­day it is seek­ing rate in­creases to raise $2 bil­lion, but it might re­con­sider if Con­gress can take ac­tion to help close its $20 bil­lion budget gap.

The new rates, if ap­proved, would take ef­fect Jan. 26. For in­stance, new pri­cing for single-piece first-class mail would in­clude:

  • Let­ters weigh­ing 1 ounce or less  — 3-cent in­crease to 49 cents
  • Let­ters weigh­ing over 1 ounce — 1-cent in­crease to 21 cents per ex­tra ounce
  • Let­ters to all in­ter­na­tion­al des­tin­a­tions (1 ounce) — 5-cent in­crease to $1.15
  • Post­cards — 1-cent in­crease to 34 cents

New pri­cing for stand­ard mail, peri­od­ic­als, pack­age ser­vices, and ex­tra ser­vices also will be ad­jus­ted as part of an of­fi­cial rate-in­crease fil­ing to the Postal Reg­u­lat­ory Com­mis­sion, sched­uled to oc­cur Thursday, ac­cord­ing to the an­nounce­ment Wed­nes­day. Those oth­er pri­cing de­tails were not yet avail­able.

“Of the op­tions cur­rently avail­able to the Postal Ser­vice to align costs and rev­en­ues, in­creas­ing post­age prices is a last re­sort that re­flects ex­treme fin­an­cial chal­lenges,” ex­plained Postal Ser­vice Board of Gov­ernors Chair­man Mickey Barnett in a let­ter to some cus­tom­ers, re­leased Wed­nes­day.

“However, if these fin­an­cial chal­lenges were al­le­vi­ated by the timely en­act­ment of laws that close a $20 bil­lion budget gap, the Postal Ser­vice would re­con­sider its pri­cing strategy,” he also wrote. “We are en­cour­aged by the re­cent in­tro­duc­tion of com­pre­hens­ive postal-re­form le­gis­la­tion in Con­gress, and des­pite an un­cer­tain le­gis­lat­ive pro­cess, we are hope­ful that le­gis­la­tion can be en­acted this year.”

The pri­cing changes would come as the res­ult of a vote taken by the Postal Ser­vice’s Board of Gov­ernors, meet­ing this week in Kan­sas City, Mo.

The Postal Ser­vice—a quasi-gov­ern­ment­al en­tity—ac­know­ledges that its price in­creases are nor­mally capped at the rate of in­fla­tion as meas­ured by the Con­sumer Price In­dex. That would mean an al­low­able in­crease of only about 2 per­cent.

But a 2006 law also al­lows the Postal Ser­vice to seek a high­er rate in­crease bey­ond the CPI in in­stances of “ex­i­gent” cir­cum­stances — and that is what is be­ing pro­posed now. Such re­quests are to be made to the Postal Reg­u­lat­ory Com­mis­sion, which has 90 days to ap­prove them.

The Postal Ser­vice says it is fil­ing for such an “ex­i­gent” in­crease “due to ex­traordin­ary and ex­cep­tion­al cir­cum­stances which have con­trib­uted to con­tin­ued fin­an­cial losses.”

“The Postal Ser­vice re­cor­ded a $15.9 bil­lion net loss last fisc­al year and ex­pects to re­cord a loss of roughly $6 bil­lion in the cur­rent fisc­al year, and has an in­tol­er­ably low level of avail­able li­quid­ity even after de­fault­ing on its ob­lig­a­tion to make pre­fund­ing pay­ments for re­tir­ee health be­ne­fits,” the an­nounce­ment states.

In 2010, the Postal Ser­vice sub­mit­ted a re­quest for an ex­i­gent rate in­crease of 5.6 per­cent — far above the CPI cap — that would have brought in more than $3 bil­lion an­nu­ally. But the mail­ers fought that in­crease in court and it was de­railed.

In the let­ter to some cus­tom­ers Wed­nes­day, Barnett de­scribed the “pre­cari­ous fin­an­cial con­di­tion” of the Postal Ser­vice and the “un­cer­tain path to­ward en­act­ment of postal-re­form le­gis­la­tion” as primary reas­ons for seek­ing price changes above the CPI in­crease.

Barnett also wrote that that the price ad­just­ment above the CPI in­crease is ne­ces­sary to en­sure that the Postal Ser­vice will be able to main­tain and con­tin­ue the de­vel­op­ment of postal ser­vices of the type and qual­ity that Amer­ica needs.

Some of the same groups that lob­bied against the pre­vi­ous hike said Wed­nes­day they were dis­ap­poin­ted by the latest re­quest.

“The Board of Gov­ernors’ re­quest for an ‘ex­i­gent’ rate in­crease is a ter­rible sub­sti­tute for badly needed le­gis­lat­ive re­form of the U.S. Postal Ser­vice,” said Mary G. Bern­er, res­id­ent and CEO of MPA — The As­so­ci­ation of Magazine Me­dia.

The Greet­ing Card As­so­ci­ation also is­sued a state­ment ex­press­ing con­cern.

“The GCA and its nearly 200 mem­ber com­pan­ies are dis­ap­poin­ted in today’s fil­ing by the Postal Ser­vice’s Board of Gov­ernors,” said Rafe Mor­ris­sey, GCA’s Vice Pres­id­ent of Postal Af­fairs. “Ex­i­gency rate in­creases were meant to re­spond to ex­traordin­ary cir­cum­stances and are no sub­sti­tute for com­mon­sense, struc­tur­al re­forms that will put the Postal Ser­vice on sound and sus­tain­able fisc­al foot­ing.”

“It is our hope that the Postal Reg­u­lat­ory Com­mis­sion will, as it has in the past, deny this ex­i­gency rate in­crease,” Mor­ris­sey said.

What We're Following See More »
‘PRESUMPTIVE NOMINEE’
Priebus Asks Party to Unite Behind Trump
5 hours ago
THE LATEST
FEELING THE MIDWESTERN BERN
Sanders Upsets Clinton in Indiana
6 hours ago
THE LATEST

Despite trailing Hillary Clinton by a significant margin, Bernie Sanders wasn't going the way of Ted Cruz tonight. The Vermont senator upset Clinton in Indiana, with MSNBC calling the race at 9pm. Sanders appears poised to win by a five- or six-point spread.

Source:
TRUMP IS PRESUMPTIVE NOMINEE
Ted Cruz Bows Out, Effectively Ceding the Contest to Trump
7 hours ago
THE LATEST

And just like that, it's over. Ted Cruz will suspend his presidential campaign after losing badly to Donald Trump in Indiana tonight. "While Cruz had always hedged when asked whether he would quit if he lost Indiana; his campaign had laid a huge bet on the state." John Kasich's campaign has pledged to carry on. “From the beginning, I’ve said that I would continue on as long as there was a viable path to victory,” said Cruz. “Tonight, I’m sorry to say it appears that path has been foreclosed."

Source:
TAKES AT LEAST 45 DELEGATES
Trump Wins Indiana, All but Seals the Nomination
7 hours ago
THE LATEST

The Republican establishment's last remaining hope—a contested convention this summer—may have just ended in Indiana, as Donald Trump won a decisive victory over Ted Cruz. Nothing Cruz seemed to have in his corner seemed to help—not a presumptive VP pick in Carly Fiorina, not a midwestern state where he's done well in the past, and not the state's legions of conservatives. Though Trump "won't secure the 1,237 delegates he needs to formally claim the nomination until June, his Indiana triumph makes it almost impossible to stop him. Following his decisive wins in New York and other East Coast states, the Indiana victory could put Trump within 200 delegates of the magic number he needs to clinch the nomination." Cruz, meanwhile, "now faces the agonizing choice of whether to remain in the race, with his attempt to force the party into a contested convention in tatters, or to bow out and cede the party nomination to his political nemesis." The Associated Press, which called the race at 7pm, predicts Trump will win at least 45 delegates.

Source:
THE QUESTION
What’s the Average Household Income of a Trump Voter?
12 hours ago
THE ANSWER

Seventy-two thousand dollars, according to FiveThirtyEight. That's higher than the national average, as well as the average Clinton or Sanders voter, but lower than the average Kasich voter.

Source:
×