USPS rate increase may not stop trouble

Presort.com   December 30, 2013    

Doctors don’t normally treat ugly lacerations with one of those tiny, circular adhesive bandages, so why is the Postal Regulatory Commission trying that approach with the U.S. Postal Service?

Recently the commission, by a 2-1 vote, approved a 6 percent increase in the Postal Service’s first-class, bulk mail, periodical and package service rates, effective Jan. 26.

That means the cost of first-class stamps will rise from 46 cents to 49 cents. The increase, which is above the rate of inflation (commission approval is required for that), is for no more than two years. Its specific intention is to allow the Postal Service to make up $2.8 billion in losses between 2008 and 2011 that the commission said can be attributed to the Great Recession.

There’s one problem. The Postal Service during the period in question lost $20.2 billion. It lost $15.9 billion in 2012. The fact that it lost just $5 billion in 2013 is being treated as good news in some quarters.

We’re loath to write off $2.8 billion as small change, but it really is when you’re talking about that much red ink.

The Postal Service says it’s in a desperate situation because of congressional inaction on proposals such as ending Saturday mail delivery and reducing payments on retiree health benefits. A bill passed in 2006, with bipartisan congressional support, required it to pre-fund those benefits for the next 75 years through regular payments of $5.5 billion to the U.S. Treasury over 10 years. It’s defaulted on the last three installments.

Conspiracy theorists think the requirement is a deliberate attempt to wreck the Postal Service and its unions, and point out the agency was profitable before it was enacted. Supporters of the requirement claim those profitability numbers were hollow because they didn’t reflect the agency’s retiree benefit liabilities, and say the pre-funding is necessary to ensure those debts will be paid off.


[Continue reading at JDNews.com]