The next rate increase has long been scheduled for 2006. Some expect a first-class stamp will be 41 cents, perhaps even as much as 45 cents. In total revenue, it seems certain to be one of the biggest increases the Postal Service has ever imposed. When it became an independent agency in 1971, first-class stamps cost 8 cents, and the service has more or less managed since then to keep stamp prices in line with inflation. But the frequency of rate hikes has increased sharply in the past 12 years, and the presidential commission was clearly worried that postal officials will be unable to keep future hikes below the inflation rate. The fundamental problem remains that the Postal Service must charge more for something that is free to Internet users.
Meanwhile, despite his own commission's report, President Bush has actually performed some budgetary sleight of hand this year to force stamp prices higher. His latest budget includes an accounting change that requires the Postal Service (meaning stamp buyers) to pick up the entire retirement costs for postal workers' military service -- about $27 billion. Although all other federal agencies must also give their workers credit for time in uniform, none of them have to pay for it through retirement costs. Postal officials say making rate payers shoulder the burden of this benefit puts the Postal Service at a competitive disadvantage with private companies like FedEx and UPS, which already have lower personnel costs.
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Worse still, the rule is retroactive to 1971, when Congress made the Postal Service independent; this provision alone will cost customers $17 billion. A number of Republican and Democratic lawmakers who oversee the Postal Service have said they disagree with the new rule, but there is no congressional action to overturn it in sight.
There is a long tradition at 1600 Pennsylvania Ave. of letting the Postal Service twist in the wind. Ever since Richard Nixon succeeded in kicking the old Post Office Department out of his cabinet in 1971, the Postal Service has been something of a big, unwanted chunk of the federal bureaucracy. Charged with making it on its own, without the direct support of federal taxpayers, the agency has stumbled from rate increase to rate increase. The huge agency has never had an advocate with a pulpit as big as its problems.
Postmaster General John E. "Jack" Potter, a career postal worker and the nation's 72nd postmaster general, has been amazingly successful in squeezing savings out of what remains a massive bureaucracy and the only part of the federal government that claims to touch everyone, every day. But Potter knows that there are limits to how much he can save by rearranging the locations where letters are canceled or delaying construction of new post offices.
Whatever he does to change the agency's structure, he knows those changes alone won't bring back the missing mail.
Author's e-mail: bmcallister@cox.net
Bill McAllister is a former Washington Post reporter who has covered the U.S. Postal Service for almost 20 years. He is currently Washington correspondent for Linn's Stamp News.
