Postal Updates

End to emergency rate increase could drop first-class stamp to 47¢

Feb 5, 2016, 10 AM
On Feb. 5, the Postal Service made public how it would cut stamp prices if Congress and the courts continue to reject its plea to retain all of the emergency rate increases that were approved in December 2013.

By Bill McAllister, Washington Correspondent

When the Senate Homeland Security Committee got around to holding a hearing on the future of the United States Postal Service on Jan. 21, Postmaster General Megan Brennan spoke of a “broad consensus” that could resolve the Postal Service’s financial woes.

But two weeks later, a group of 36 mailing organizations announced it was strongly opposed to a key provision in the measure that won Brennan’s endorsement.

That provision would override a rate decision and court ruling that would force the USPS to cut stamp prices in April.

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On Feb. 5, the Postal Service made public how it would cut stamp prices if Congress and the courts continue to reject its plea to retain all of the emergency rate increases that were approved in December 2013.

In April, the price for a 1-ounce, first-class letter would drop by 2¢ to 47¢, under a schedule of proposed price changes posted on the USPS Postal Explorer website.

Rates for postcards would go down to 34¢, a drop of 1¢.

The exact date for the proposed reductions has not been announced.

In a notice on its Postal Explorer website, the Postal Service said, “Absent Congressional or Court action to make the existing exigent surcharge for Market Dominant Products and Services part of the rate base or to otherwise extend it, the Postal Service will be providing notice to the Postal Regulatory Commission of the adjusted prices.

“The Postal Service intends to provide such notice of the adjusted prices to the Commission 45 days before it is anticipated that the exigent surcharge revenue target will be reached.”

The mailers declared their opposition Feb. 3 to avoid “any misimpression that a broad swath of the mailing industry is supportive of the rate-setting provisions” in Brennan’s proposal.

Moreover, the mailers vowed they “are far from consensus at the present time on any legislative path forward.”

Because the group contains some of the biggest and most influential mailing organizations — the Association for Postal Commerce, the Alliance of Nonprofit Mailers, the Direct Marketing Association, and magazine publishers — their opposition has chilled the prospects for a quick ratification of legislation to address the Postal Service’s continuing financial woes.

The Postal Service, however, told Linn’s it remains wedded to the proposal.

“We believe the provisions we have outlined are fiscally responsible and capable of gaining bipartisan Congressional support, as well as broad support among key postal stakeholders including our union and many in the mailing industry,” said spokesman David Partenheimer.

“We strongly encourage Congress to move quickly to adopt these key legislative provisions to ensure the financial stability of the Postal Service,” he said.

Ending the emergency rate increase that created the 49¢ first class stamp— as the Postal Regulatory Commission and courts have ordered — will cost the Postal Service approximately $2 billion a year, Brennan has said.

That would be “an irrational outcome” she told the Senate committee, citing the Postal Service’s ever-widening deficits.

“While we recognize that the Postal Service is not out of the woods, a limited, one-sided legislative proposal is not the solution,” the mailers countered.

Their ire is directed at a proposal by Sen. Tom Carper, D-Del., who has been one of the Postal Service’s few champions in the Senate.

His bill, however, would place a moratorium on some of the Postal Service’s cost-cutting programs, such as consolidating mail-processing plants and retail facilities, the mailers say.

The mailers did say they endorse other aspects of Brennan’s plans for the future.

Making Medicare the primary healthcare provider for postal retirees, restructuring the Postal Service’s requirement to prepay the healthcare costs of its retirees, does have the mailers’ support.

What doesn’t is the idea of extending the emergency rate increase forever.

If approved, it would be the “the first Congressionally-mandated general increase in postal rates since 1968,” the mailers said.

Stephen M. Kearney, executive director of the Alliance of Nonprofit Mailers, believes the opposition of the mailers could be crucial.

“Generally, controversial legislation does not move in Congress,” said Kearney, the former head of the USPS stamp program.

“We also have made the point that the Postal Service is doing very well financially,” he told Linn’s.

“It has had two years in a row of over $1 billion in operating profits and is making good money this year.”

The amount of cash on hand — “almost $8 billion” — is the highest in years, he said.

"Package shipping revenues are up almost 20 percent. And the Postal Service expects to take in $1 billion from election mail.”

Fuel prices are at very low levels, which also should help the Postal Service’s bottom line.

“It’s not the time to try to grab $2 billion a year extra money from the very customers that the Postal Service needs to nurture and grow for its long term health,” Kearney said.