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

None

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 »
‘PULLING A TRUMP’
GOP Budget Chiefs Won’t Invite Administration to Testify
1 days ago
THE DETAILS

The administration will release its 2017 budget blueprint tomorrow, but the House and Senate budget committees won’t be inviting anyone from the White House to come talk about it. “The chairmen of the House and Senate Budget committees released a joint statement saying it simply wasn’t worth their time” to hear from OMB Director Shaun Donovan. Accusing the members of pulling a “Donald Trump,” White House spokesman Josh Earnest said the move “raises some questions about how confident they are about the kinds of arguments that they could make.”

Source:
A DARK CLOUD OVER TRUMP?
Snowstorm Could Impact Primary Turnout
1 days ago
THE LATEST

A snowstorm is supposed to hit New Hampshire today and “linger into Primary Tuesday.” GOP consultant Ron Kaufman said lower turnout should help candidates who have spent a lot of time in the state tending to retail politicking. Donald Trump “has acknowledged that he needs to step up his ground-game, and a heavy snowfall could depress his figures relative to more organized candidates.”

Source:
IN CASE OF EMERGENCY
A Shake-Up in the Offing in the Clinton Camp?
22 hours ago
THE DETAILS

Anticipating a primary loss in New Hampshire on Tuesday, Hillary and Bill Clinton “are considering staffing and strategy changes” to their campaign. Sources tell Politico that the Clintons are likely to layer over top officials with experienced talent, rather than fire their staff en masse.

Source:
THE LAST ROUND OF NEW HAMPSHIRE POLLS
Trump Is Still Ahead, but Who’s in Second?
10 hours ago
THE LATEST

We may not be talking about New Hampshire primary polls for another three-and-a-half years, so here goes:

  • American Research Group’s tracking poll has Donald Trump in the lead with 30% support, followed by Marco Rubio and John Kasich tying for second place at 16%. On the Democratic side, Bernie Sanders leads Hillary Clinton 53%-41%.
  • The 7 News/UMass Lowell tracking poll has Trump way out front with 34%, followed by Rubio and Ted Cruz with 13% apiece. Among the Democrats, Sanders is in front 56%-40%.
  • A Gravis poll puts Trump ahead with 28%, followed by Kasich with 17% and Rubio with 15%.
×