The U.S Postal Service, plagued by losses that may force it to curtail service, and could make it miss some payments to retirement health plans, may want to increase the price of a first-class stamp to $1. The price rose one penny to 46 cents recently, which will put almost no dent in the USPS deficit.
The Post Office currently loses about $5 billion a quarter. Mail volume continues to drop, beset by e-mail, the electronic delivery of large files and competition from FedEx Corp. (NYSE: FDX) and United Parcel Service Inc. (NYSE: UPS). There is no agreement among those in Congress who oversee the service about how to improve its financial trouble. Among those things discussed are the layoffs of tens of thousands of workers, the shuttering of hundreds of Post Office locations, the elimination of Saturday delivery and a drop in the numbers of deliveries a week in rural areas.
Each of the proposed solutions to the Post Office's problems assumes the cuts are absolutely necessary, which may be true. But Americans do not have an inalienable right to low postage rates. There is nothing sacrosanct about a 46-cent stamp price level. By some estimates, more than 20 billion first-class stamps are printed each year. An increase in the price of a first-class stamp to $1 would certainly close the service's deficit.
The argument, at least the primary one, against raising the prices of all forms of mail service is that businesses that mail large numbers of pieces would have margins crushed. But companies that send out catalogues, magazines and other bulk mail do not send those items first-class. Their rates do not have to be affected.
The notion that the Post Office must cut its way to success has a great deal of support, simply based on the number of Post Offices in tiny towns and hamlets. Members of Congress who have many of those offices in their districts do not want them closed, so the debate about which locations should be maintained could go on indefinitely.
Or, the Post Office could get the necessary approval to double the price of a first-class stamp, or raise it even more. Consumers would face the same inflation that occasionally comes with food or gas prices. Too bad and tough luck. The Post Office needs the money.
Filed under: 24/7 Wall St. Wire, Politics Tagged: FDX, UPS