Post Office Hopes Idea Of 'Forever Stamp' Sticks

By Christopher Lee
Washington Post Staff Writer
Thursday, May 4, 2006

Nothing lasts forever -- except, just maybe, the cost of mailing a letter.

After increasing rates 13 times in 32 years, the U.S. Postal Service proposed a way yesterday for consumers to lock in the price of a first-class stamp, which officials want to raise by 3 cents, to 42 cents, next year.

Postal officials pitched the idea of creating a "forever stamp" that would be good for sending first-class mail no matter how much -- or how often -- the cost of a postage stamp goes up. The announcement came on the same day that the Postal Service said it would seek to raise the price of a first-class stamp for the second consecutive year.

The forever stamp, which would cost the same as a first-class stamp, would provide a hedge against future postal rate increases and end the search for 2- or 3-cent stamps that usually follows a price increase. The stamps could pose unusual challenges for the Postal Service, however, and officials say many details still have to be worked out.

The proposed increase -- which, like the forever stamp, would have to be approved by the independent Postal Rate Commission -- would take effect no earlier than May 2007. Rates were last raised in January, when the cost of a first-class stamp went up by 2 cents, to 39 cents.

Consumers could squirrel away forever stamps for months or years; they essentially would gain value every time rates increase.

If the cost of sending a first-class letter is raised to 42 cents next year, for instance, the forever stamp would be sold for that amount. If the first-class rate then increased by 2 cents a year or two later, forever stamps would sell for 44 cents. But forever stamps purchased at the 42-cent rate still would get a first-class letter where it needs to go.

"If you buy it, it can be used forever on single-piece first-class letters," said Stephen Kearney, vice president for pricing at the Postal Service.

The cost of a first-class stamp has gone up 13 times since 1974, when the price was raised from 8 cents to a dime. Kearney said rate increases soon could become an annual affair.

"A lot of other shipping companies raise their prices every year, and we are actually committed to moving to a one-year rate-change cycle," he said. "That's part of what motivates the idea of the forever stamp -- to make that impact not affect consumers as much."

The idea is popular, even among the Postal Service's critics.

"A lot of people will be placing their bets on these stamps," said Pete Sepp, a spokesman for the National Taxpayers Union, which wants private delivery services to be able to compete more directly with the post office. "Given the prospect of endless Postal Service . . . rate increases down the road, I imagine they will run out of forever stamps. They won't be able to print those stamps fast enough."

The Postal Service, which has a $69 billion annual budget, expects to finish this fiscal year about $2 billion in the red. It faces rising fuel, health-care and other expenses as well as a requirement to put about $3 billion a year into a congressionally mandated escrow fund. When the price of a gallon of gasoline goes up 1 cent, for instance, it costs the Postal Service $8 million a year. The agency, which employs 700,000 people, is funded by operating revenue, not taxes.

Forever stamps may pose a few challenges to the Postal Service. For one thing, strong early sales of the stamps could lead to sagging revenue down the road, especially if consumers buy the stamps in large numbers to avoid higher postal rates in later years. And then there is the question of why anyone would ever buy a regular first-class stamp again if it costs the same as a forever stamp but its value could never grow.

"Until we flesh out the details, it's an open question," Kearney said in an interview. "We don't have the detailed proposal ready. Today we are committing to the concept and the principle of doing it. There will be more specifics about when and how the stamps will be made available."

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