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article imageOp-Ed: USPS seeks to raise postage stamp prices to 50 cents, why?

By Leigh Goessl     Feb 19, 2012 in Business
On Friday the United States Postal Service (USPS) announced its desire to implement yet another postage stamp increase to its customers.
In a press release dated Feb. 17, the USPS announced an update to its business plan designed to try and reach profitability and create long-term financial stability.
Due to the lack of reform in legislation relating to the USPS, the agency said the "absence of legislative reform that quickly enables meaningful operational changes and cost reductions," has created a financial situation that will not be sustainable, and will incur a total debt of $92 billion by 2016.
“These prospective losses would be unsustainable and highly undesirable,” said Postmaster General, Patrick Donahoe. “Fortunately, as our plan demonstrates, such an outcome is entirely avoidable; the Postal Service can be profitable over the long term and not require taxpayer support.”
As a part of this updated 5-year business plan described as "comprehensive", the USPS indicated it wants to tack on another 5-cents to the recently raised postage stamp prices.
The USPS said in its plan it could raise an additional a billion dollars in revenue a year by raising the price of stamps, again.
"Legislative change allowing single-piece First-Class Mail stamp to increase to $0.50 could yield approximately $1bn of incremental Contribution," outlines the USPS.
However that's assuming people are willing to pay for it.
50-cent postage stamps? People already using the postal service far less for items relating to correspondence and bill paying. Due to electronic means to conduct business, commercial mail has significantly reduced as well. According to USPS statistics, use of First-Class Mail has declined 25 percent since 2006.
In its document, the agency noted this steady decline curve indicating, "Transactional volume declining due to e-diversion," Advertising mail is subject to more substitution options," "Mail volume highly sensitive to economic changes," and "Mail mix changes – lost profit contributions."
And another postage hike will help, how? Will it make a difference?
Seems this would just be a bigger deterrent, while many customers likely didn't mind the recent penny increase, they might think twice with adding another nickel to the cost to mail a single letter or bill.
The USPS handles more than 44% of the world s mail volume.
The USPS handles more than 44% of the world's mail volume.
File photo: USPS
The root of the problem lies with the restrictions placed on the USPS by Congress. Pretty much every move the USPS makes must receive official approval, and this includes the decision to raise stamp prices, which the Postal Regulatory Commission must support. Congressional inaction is certainly complicating the USPS' financial woes.
And we all know the bureaucracy that is involved with any government decision. The USPS asked Congress to increase the price of stamps from 44-cents to 45-cents in Oct., and this had to go through an approval process. Now, a mere handful of months later its asking for another increase? Why not save the time of bureaucracy involved and just ask to tack on 6-cents back in Oct.?
Why doesn't Congress just stop with the delays and take actual, well action?
“The plan we have developed requires a combination of aggressive cost reduction, rethinking the way we manage our healthcare costs, and comprehensive legislation to reform the business model of the Postal Service,” said Donahoe. “If provided the flexibility to quickly implement this plan, we can return to profitability and better serve the American public. If not, we risk becoming a significant burden to the American taxpayer.”
A significant burden? Not only are customers being asked to foot another nickel per First-Class mailing, in a sense, aren't they also be footing the process involved in getting stamp prices increased? It's a redundant process. This just seems to be trying to reinvent an air-filled wheel that went flat a long time ago.
Unless the government is willing to back out and let the USPS control its own pricing based on market supply and demand.
In the past Donohoe has expressed the postal delivery service's desire to separate itself from governmental constraints and operate more as a free enterprise in the business environment. This makes sense and, if accomplished, could keep a good service going. However it would take Congress to make a decision in order to get that ball rolling.
However, back to stamps. Is raising stamp prices really going to resolve the significant issues currently plaguing the agency? If anything, it's likely to be just another deterrent from using the postal service and reason for consumers to rely on email and web applications.
After all, those old fuzzy days of people waiting on their mail are long gone, there are far too many other faster ways to communicate and obtain information. That being the case, are consistent hikes on the price of postage going to really make any difference? Or does the solution lie in other proposals that would allow the USPS to be little more self-regulatory and self-sustaining?
Besides, if Congress would release some of its hold on the USPS, the government could use their time working on other serious issues plaguing the U.S.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
More about Usps, Postage stamps, postage stamp rates, 50 cent stamps, united states postal service
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