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Postal Service's budgeting may backfire
A U.S. Postal worker moves boxes of letters and cards at the U.S. Post Office sort center in San Francisco, Calif.
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TEXT OF STORY
Bill Radke: If you bought one of those big, fat rolls of Forever Stamps, you're feeling savvy. Today, the post office asked for another rate increase -- bringing a first-class stamp from 44 to 46 cents. The last two-cent increase was only a little over a year ago. Not only are mailing costs rising faster than inflation, the post office wants to eliminate Saturday service. These are all attempts to get control of losses that could reach $240 billion in the next decade.
But Marketplace's John Dimsdale reports these budget-balancing efforts may just dig the hole deeper.
John Dimsdale: In addition to the first class rate hike, USPS is asking for an 8 percent increase for magazine deliveries and a 5 percent boost for catalogs.
That's bad news for the mail-order menswear company Paul Frederick in Fleetwood, Penn. Chief Operating Officer Allen Abbott says the company mails nine million catalogs a year, and the post office is chasing away his business.
Allen Abbott: It will do exactly the opposite of what the Postal Service is hoping it will do. It will reduce the amount of mail we send. It will cause them to lose more money than they're currently losing.
The Magazine Publishers of America will challenge the rate request. They rely on the post office for 90 percent of their deliveries. The MPA's Jim Cregan says a postage increase will drive more magazines onto iPads and other mobile devices.
Jim Cregan: It's not the case as it was 15 years ago, where the Postal Service could raise rates and people would have no place else to go and they would just have to shrug and swallow it.
Despite rate increases of more than 50 percent over the past decade, the post office continues to lose money -- nearly $4 billion last year. You can blame that on the Internet.
Canadian researcher Robert Campbell says post offices in other countries have done better because of fewer regulatory restrictions on the services they can offer.
Robert Campbell: Everything from selling cell phones and phone plans to travel insurance, doing currency exchanges, selling mortgages.
Today's USPS rate hike request will be reviewed by the independent Postal Rate Commission. Any approved increases would go into effect next January.
In Washington, I'm John Dimsdale for Marketplace.
The intro to the story is incorrect and misleading. First, Forever stamps only come in books of 20 - USPS doesn't sell them in rolls. Second, even if the USPS rate increase goes through as proposed, you will still be able to buy Forever stamps at 44c each ($8.80 per book) through the end of 2010.
I wonder what kind of rates the catalog companies of America think they would get from UPS or FedEx? They have been subsidized for years, sending out tons of unsolicited catalogs that I have to dispose of. Maybe if the junk mailers have to pay a realistic price they'll quit flooding our mailboxes and the landfills with their come-ons.
The post office provides an excellent service - reliable, speedy,and very painstaking with incomplete /incorrect addresses. It's an important service to provide taxpayers (even poor ones)- it doesn't have to be a self-supporting business.
You guys should stop complaining cuz one the health care we have now isnt as good as it was supposed to be. also the law has just been signed give it a try u guys are too hard on democrats they went to college and we voted for most of these people.so if u want to say u have the right to choose tell that to ur congress men or state official. as for obama people are just tryin to make it look like america made a mistake he has done things to help us and we had a full 8 years of a terrible president and i will be so as happy as ever when a obama fixes bush's mistakes. You can find full medical coverage at the lowest price from http://bit.ly/9sfoMb obama has to put up with the wo0rld judging his every move and trying to fix the mess we are in we are lucky anyone wants to be our president. STOP COMPLAINING AND GIVE HIM A BREAK. i wanna see one of yall do what he sas done. some people are just so ignorant.
Why is it that whenever there is a news story regarding the US Postal Service and the money it's losing, the reporter always says the money loss is due to the Internet, as if it were THAT simple("... the post office continues to lose money -- nearly $4 billion last year. You can blame that on the Internet.") Also there is emphasis on how much rates have gone up in the past decade - in this report it was said to be as much as 50 percent. What the report failed to mention was that the cost of a stamp today, when adjusted for inflation, costs as much as it did 30 years ago.
I'm a letter carrier with the USPS. And I know that as much as there has been volume loss due to the Internet when it comes to how customers transact their business, I also know that the Internet drives business to the mail; with companies like eBay, Netflix, Amazon... even FedEx and UPS ships with the US Postal Service! It is a tight balancing act between revenue lost and revenue gained combined with operating efficiencies in how the budget gets balanced.
But hardly EVER do any of these reports EVER point out the fact that the US Postal Service has been hit even HARDER in the pocket by something more than the Internet. A requirement was placed on it by the US government to not only pay as it goes with its current retiree health care(as most employers do), but also to put aside an additional $5.5 billion a year for its FUTURE retiree health care. Let me say that again: The USPS pays for its current retirees AND also puts aside an additional $5.5 billion a year into a fund for its future retiree health care. Do you know of ANY other government agency and/or private company that does that?
Let me break down some of the numbers: Since 2007 the US Postal Service has lost $11.7 billion. Over the same period of time, the USPS was required to put aside $12.4 billion in to a fund for its future retiree health care. If you remove the strict prefunding requirement for future retiree health care, the USPS stood to PROFIT $700 million. Not bad for a not for profit agency.
What's more is the Inspector General of the US Postal Service determined that the USPS was overcharged by the US government in the amount of $75 billion for its commitment towards the Civil Service Retirement Fund for employees who were actually a part of the old Post Office Department of the US government before postal reform in 1971. This reform allowed the Service to operate more as a business and generate revenue from products and services sold rather than through tax subsidies from the US government. If the US government were to reimburse the USPS this $75 billion, it would fully pay for the future retiree health care fund and would also put the USPS well into the black. There would be no need for rate increases -OR- any need of eliminating services(i.e. Saturday carrier street delivery.)
So please, don't just report/dwell on the sensational aspects of the US Postal Service("... the post office continues to lose money -- nearly $4 billion last year... losses that could reach $240 billion in the next decade... You can blame that on the Internet..."), but rather report the WHOLE story so the American people can be well informed about THEIR US Postal Service.
For anyone interested in the issues facing the US Postal Service, I invite you to visit the letter carriers' union website at NALC.org
