April 19, 2014

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Postal Services seeks 3-cent increase for first-class mail

The financially struggling Postal Service is seeking a 3-cent increase in the cost of mailing a letter, bringing the price of a first-class stamp to 49 cents. (AP Photo/David Goldman)

The financially struggling Postal Service is seeking a 3-cent increase in the cost of mailing a letter, bringing the price of a first-class stamp to 49 cents. (AP Photo/David Goldman)

WASHINGTON — It soon could cost 49 cents to mail a letter.

The postal Board of Governors said Wednesday it wants to raise the price of a first-classstamp by 3 cents, citing the agency’s “precarious financial condition” and the uncertain prospects for postal overhaul legislation in Congress.

“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,” board chairman Mickey Barnett wrote customers.

The rate proposal must be approved by the independent Postal Regulatory Commission. If the commission accepts it, the increase would become effective Jan. 26.

Under federal law the post office cannot raise its prices more than the rate of inflation unless it gets approval from the commission. In seeking the increase, Barnett cited “extraordinary and exceptional circumstances which have contributed to continued financial losses” by the agency.

As part of the rate increase request, the cost for each additional ounce of first-class mail would increase a penny to 21 cents while the price of mailing a postcard would rise by a cent, to 34 cents. The cost to mail a letter to an international destination would jump 5 cents to $1.15.

Many consumers won’t feel the increase immediately. Forever stamps bought before an increase still would cover first-class postage. The price of new forever stamps would be at the higher rate, if approved.

The Postal Service also said it would ask for adjustment to bulk mail and package rates in a filing with the commission Thursday. No details were immediately provided.

Media and marketing businesses say a big increase in rates could hurt them and lower postal volume and revenues.

The post office expects to lose $6 billion this year and is seeking help from Congress to fix its finances.

Barnett said the increase, if approved, would generate $2 billion annually in revenue for his agency.

The agency last raised postage rates on Jan. 27, including a penny increase in the cost of first-class mail to 46 cents.

Congress is considering cost-cutting moves that include ending Saturday mail delivery and most door-to-door delivery. The agency says ending Saturday mail delivery would save $2 billion each year. But many lawmakers, along with postal worker unions, have resisted such changes, saying they would inconvenience customers.

The Postal Service supports the proposed delivery changes. It also is seeking to reduce its $5.6 billion annual payment for future retiree health benefits. It missed two of those $5.6 billion payments last year, one deferred from the previous year, and is expected to miss another at the end of this month when its fiscal year ends.

Postmaster General Patrick Donahoe was to appear before a Senate panel on Thursday to press lawmakers for swift action on legislation to fix his agency’s finances.

Donahue has said that without help from Congress, the agency expects its multibillion-dollar annual losses to worsen. He has warned that the agency’s cash liquidity remains dangerously low.

The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control.

  • Mark B

    Raise the price , people will mail less. never ending cycle.

    • Sue Lawson

      I was thinking the exact same thing.

  • http://comradealan.com/ Alan Pugh

    “The post office expects to lose $6 billion this year and is seeking help from Congress to fix its finances.”

    Interesting number. The Postal Accountability and Enhancement Act of 2006, which was drafted by an acquaintance of ALEC, requires prefunding of the next 75 years of USPS pensions in advance at a rate of… you guessed it… just under $6 billion a year. This is not an expense that ANY OTHER ORGANIZATION, public or private, has ever been required to fund.

    ALEC, by the way, is a group of corporations with political ties who literally help draft new laws which will benefit their members. Two members of ALEC you may know: UPS and FedEx. Gee, I wonder why they want to bankrupt USPS? (Hint: They won’t send a letter clear across the country for two quarters.)

    • Mark B

      They should have to fund there pensions , why should the tax payer have to flip the bill for it

      • Sue Lawson

        Will the taxpayers have to pay if the bottom really drops out? Or should I have said when?….

        • http://comradealan.com/ Alan Pugh

          No, the USPS has always remained self-sufficient and has never taken taxpayer money. The recent losses are due to a law that is designed to force them to look unprofitable.

          • Pablo Jones

            They took money from congress earlier this year. Not to mention the Billions in dollars of property and buildings that the Federal Government gave them when they went private.

          • http://comradealan.com/ Alan Pugh

            The USPS is still a public entity, enshrined in the Constitution, and has not “gone private.”

            Congress delivered “national security” money and ordered the USPS to add unnecessary levels of security with that funding. That was completely unrelated to the operations of USPS. The organization has been fully self-sufficient throughout their existence.

            0 — tax dollars received for operating the Postal Service. Source: http://about.usps.com/who-we-are/postal-facts/

          • Pablo Jones

            The constitution says congress has the power to establish postal offices. It doesn’t say government has to be in charge of them.

          • Sue Lawson

            Thank you.

        • Pablo Jones

          The USPS is set up to be separate from the Federal government. But do you think the Federal Government would let the USPS go belly up? If they can’t fix what is wrong on their own they will bail them out.

          Keep in mind the postal workers pay half for their benefits that Federal workers do. This savings to the employees is picked up by the Post Office and is part of the reason they are losing money.

      • Bob Owens

        They do not receive tax dollars.

      • http://comradealan.com/ Alan Pugh

        Taxpayers have never paid a single penny into the USPS. They are completely self-sufficient and they DO fund their own pension, and always have, but not 75 years in advance. That’s an unprecedented new requirement.

        • Pablo Jones

          Fully funded means that if on a given day the company went under and everyone was to receive the benefits that they put in they would get them. That means if the Post Office employes an 18 year they would be able to make payments (however large or small they may be) for the rest of their life. An 18 year old could live for 75 more years. The bulk of the money would probably be spent much earlier and only a small amount would be required towards the end.

          And this isn’t a new law. This is what all pension plans are judged by when being considered fully funded. And this is not a pension plan but it is for their health insurances which is completely optional. As I said earlier they wanted it because they didn’t want to risk losing it.

          • http://comradealan.com/ Alan Pugh

            This is a new law, and it is an unprecedented law. Not only that, but none of the savings can be used to pay for *current* benefits, so they’re simultaneously required to fund current benefits *in addition to* the next 75 years’ worth of benefits all within this ten year time span.

            To state it more simply, each year, the USPS has to pay for 8.5 years of health benefits, including benefits for people that haven’t even been born yet, let alone hired by USPS. There is nothing like this anywhere else in the private or public sector in the entire country, and that is a fact.

            Source 1: http://mrzine.monthlyreview.org/2011/nader230911.html

            Source 2: http://thinkprogress.org/economy/2011/09/28/330524/postal-non-crisis-post-office-save-itself/

          • Pablo Jones

            As I have repeatedly said this is a law the post office wanted and were trying to get for years. It is unprecedented because no where else is there a guarantee of retiree healthcare coverage and that is what they wanted. In order to guarantee that they would always have coverage they need to prefund it. They could get all that money back if they removed that benefit. It is unprecedented because no company and even the Federal government has was wanted to be locked into that kind of promise. It is a benefit that exists but should the need arise they can take it away.

            But I’ll say it again, THEY WANTED IT PRE-FUNDED so they would always have it. And they chose to do it over 10 years because they wanted to get it funded as quickly as possible.

            Of course they can’t use their funding for current costs because that would go against the whole concept of prefunding. That would be like paying into a college fund for your kid and then complaining that you can’t use that money to buy a car.

            Prefunding has nothing to do with paying for employees that haven’t even been born yet. Prefunding means they have the funds to pay out the benefits to everyone that has earned them that have retired or are currently employed. This prefunding amount is recalculated every year based on the actuarial tables.

            Pension funds are required to be at least 90% funded. The reason many are under funded so much is because they had surpluses from high stock prices and were able to take money out or cut payments. Unions were in favor of this because if payments were reduced there was more money available for raises, or higher payouts. But that bit them in the butt when the market tanked.

    • Pablo Jones

      The postal union wanted to prefund their retirement health insurance and were the ones that pushed the bill. They were watching other companies cut retire health benefits because they weren’t fully funded. So they asked congress to pass a bill to allow them to do it. That is why the bill was sponsored by 2 Democrats and 2 Republicans. It passed the house with a simple voice vote and passed the Senate with a unanimous consent

      The Post Office new mail volumes were dropping and they wanted to get their health insurance locked in. But they didn’t know that mail volumes would drop as fast as they would or that fuel costs would rise as fast as they did. So they shot themselves in the foot (better than other people). And that $6 billion in debt is on top of the $6 billion they owed for their health benefits. They are really $13 billion in the hole.

      But they could get that money back if they cut retire health benefits.

      • Bob Owens

        Wow. Give me some proof of that.

        • Pablo Jones

          http://www.nalc.org/news/precord/ArticlesPDF/0107-postalreform.pdf

          “More than a decade of legislative wrangling and
          political intrigue ended with the stroke of a pen
          December 20 at the White House when, with
          NALC President William H. Young as a witness,
          President George Bush signed into law the Postal
          Accountability and Enhancement Act of 2006.
          Congressional leaders in the postal reform campaign and other labor and industry officials also attended the ceremony, which was the fulfillment of NALC’s top legislative priority.”

          Seems they were pretty thrilled about the law passing. Can you find any articles from 2006-2007 where they were unhappy about it?

      • Bob Owens
        • Pablo Jones

          I didn’t say it wasn’t a problem for them. But it was an issue that they created. Go to the NALC link above and read how great they thought the bill was and how it was going to save the post office.

        • Pablo Jones

          Here are the dates and the votes

          MAJOR ACTIONS:

          12/7/2006
          Introduced in House

          12/8/2006
          Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote.

          12/9/2006
          Passed/agreed to in Senate: Passed Senate without amendment by Unanimous Consent.

          12/9/2006
          Cleared for White House.

          12/19/2006
          Presented to President.

          12/20/2006
          Signed by President.

          I would have thought the Postal Union would have a stronger presents that they would be able to get at least 1 no vote if they didn’t want it passed.

      • http://comradealan.com/ Alan Pugh

        Wow, I’ve had some disagreements with you, but this is the first time that I’ve seen you completely fabricate a story. Here’s the easily sourced truth:

        ALEC is a group funded by the Koch brothers (the billionaires behind the Tea Party movement) which allows corporate interests to “help” legislators draft laws to benefit the members’ interests. Around 200 ALEC-drafted laws pass each year.

        Source: http://www.businessweek.com/articles/2012-05-03/alecs-secrets-revealed-corporations-flee

        UPS and FedEx both have representatives in this organization.

        Source: http://en.wikipedia.org/wiki/List_of_members_of_the_American_Legislative_Exchange_Council#Corporate_members

        John McHugh introduced the legislation crafted by ALEC to put the USPS out of business.

        Source: http://votesmart.org/public-statement/224984/postal-accountability-and-enhancement-act#.UkQd_8bkuYE

        John McHugh is an alumnus of ALEC, representing UPS and FedEx.

        Source: http://votesmart.org/public-statement/224984/postal-accountability-and-enhancement-act#.UkQd_8bkuYE (Last page, middle column, near bottom.)

        The APWU has been working to get the law repealed for years.

        Source: http://www.apwu.org/news/webart/2011/11-015-prcletter-paea_report-110202.htm

        • Pablo Jones

          Did you just do a google search and paste links without reviewing them?

          I seen no link between ALEC and the passage of the bill. You said John McHugh put forward the legislation from ALEC. The only link I saw where John McHugh was tied to ALEC was a wiki link and if you looked at that source he was just a person CC on it along with the rest of the congress.

          Put your tin foil hat back on and go hide under the stairs.

          • http://comradealan.com/ Alan Pugh

            Thank you for your insightful, well-cited rebuttal. I’m glad you didn’t resort to personal attacks and kept it classy. I’m not here to talk to you at this point, just to correct your lies for anyone unfortunate enough to be reading them.

          • Pablo Jones

            It wasn’t a rebuttal, I pointed out your sources were garbage conspiracy theories, that went against the stated fact that the Postal union has been pushing for the passage of that bill for years.

            Please point out to the lies I have said.

  • Starryeyes63

    And these are the same people that will be handing your health care.