Wednesday, April 23, 2014

Freedom from government could revive ailing Post Office

1/3/2014

The price for first-class postage is going up again.

Last year, the price went up by one cent. This year — Jan. 26 to be precise — the price rises 6 percent with a three-cent increase, or 49 cents for a first-class stamp. That amounts to $9.80 for a book of Forever stamps. Those increases certainly exceed the cost of inflation and go against the Postal Regulatory Commission’s standard practice to not allow price increases exceeding the Consumer Price Index. This deviation was allowed because of the USPS’s exceptional financial challenges — expected to total $6 billion this fiscal year. Though much hand-wringing is bound to occur, the cost increase isn’t a surprise, as the organization continues to work to streamline operations and reduce costs from lower delivery volumes.

The price for first-class postage is going up again.

Last year, the price went up by one cent. This year — Jan. 26 to be precise — the price rises 6 percent with a three-cent increase, or 49 cents for a first-class stamp. That amounts to $9.80 for a book of Forever stamps. Those increases certainly exceed the cost of inflation and go against the Postal Regulatory Commission’s standard practice to not allow price increases exceeding the Consumer Price Index. This deviation was allowed because of the USPS’s exceptional financial challenges — expected to total $6 billion this fiscal year. Though much hand-wringing is bound to occur, the cost increase isn’t a surprise, as the organization continues to work to streamline operations and reduce costs from lower delivery volumes.

The USPS is a self-supporting government enterprise that receives no tax dollars for its operation, though it doesn’t get to operate in a self-sufficient manner. The U.S. Postal Service could be more fiscally sound if it were able to be a completely stand-alone “business” — capable of making its own decisions — but the federal government continues to pull the post office’s strings ... often to its own detriment. Think back to the USPS’s request last year to drop Saturday delivery — we weren’t in favor of that nor were members of Congress — however, that move might have meant significant cost savings for the organization, if it had been allowed ... but it wasn’t.

We still think removing the government’s requirement for the USPS to pre-fund its’ retiree pensions makes the most sense, but other ideas are floating about too.

About 35 percent of respondents to a recent Rasmussen Reports survey said the U.S. government should consider selling the Postal Service to a private company — that response is down from 40 percent in 2011. Meanwhile 44 percent of respondents think private companies, such as FedEx and UPS, should be allowed to deliver first class mail — though that practice is prohibited from happening today. A similar amount of respondents disagree and think the mail service would operate even worse if done by a private company.

In reality, those private companies already work in tandem with the USPS to deliver packages, so cooperating with them to deliver first-class mail isn’t out of the realm of possibility. It can’t be efficient for all three delivery companies to deliver to all 152 million residences, businesses and post office boxes in the U.S. — consequently, the USPS likely is the only one delivering to every address. That is an expensive proposition that can’t go on forever. The non-permanent January price increase is expected to yield $2.8 billion in incremental revenue during the next two years, which can’t help but offset some of its previous financial losses. Those people looking for a good investment would be wise to purchase Forever stamps now before the costs go up and keep a business model afloat that continues to provide an important quality of life to Americans.

Clearly, more streamlining needs to occur, and those private companies that already excel in logistics are the perfect ones to help the USPS formulate a better plan for the future. To make that possible, however, Congress needs to let the USPS act like a private company too, one that can make independent decisions rather than waiting to ask permission at every step along the way.

 

— Jeanny Sharp,

editor and publisher

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