In yet another attempt to stanch the flow of red ink, the US Postal Service plans to increase first class stamp prices from $0.44 to $0.45 on January 22nd, 2012. This is the first such increase in two years, and it’s expected to generate $888M in revenue.
Unfortunately, that’s just a drop in the bucket relative to the losses they’ve experienced — $8.5B in 2010, and $10B in fiscal year that ended last month — but it’s a start, I guess…
Sharp-eyed readers will note that they actually proposed an increase from $0.44 to $0.46 that would’ve gone into effect earlier this year, but that price hike was apparently never approved. The current $0.01 increase is the largest that they can enact, as such increases are pegged to the Consumer Price Index.
At the same time, the Postal Service is pushing Congress to enact reforms that would allow them to end Saturday deliveries, close locations, and raise postage prices at a rate higher than inflation. Until these things happen, I can’t see the USPS being able to balance their books. But even if these things happen, it will be an uphill battle as demand for mail service declines.
One bit of good news is that all stamps being printed are now “forever” stamps, so you won’t have to worry about those pesky little one or two cent stamps to round up your old stamps to the new rate.
Other changes include postcards going up from $0.29 to $0.32, letters to Canada and Mexico going up from $0.80 to $0.85, and letters to other international destinations increasing from $0.98 to to $1.05. Apparently these other rates aren’t pegged to inflation, as they all exceed the 2.1% CPI cap.
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I disagree with Jim.
Fedex and UPS are not stealing anything from the taxpayers. If anything, the USPS is the one stealing by running an unprofitable business and then asking for a bailout. Why punish the companies that are run responsibly?
The only business these two take from the USPS is when they offer consumers a better value. Remember Fedex cannot force customers to buy its service the same way the USPS does.
Although the USPS is forced to service unprofitable rural areas…the solution should not involve punishing the other guys that have nothing to do with that requirement.
Part of the reason for Post Office’s lost is their business is stolen by Fedex, UPS and other delivery companies. These companies run in lucrative markets, ie, major cities, while the post office has to serve all areas including hard to reach communities.
I think there should be a post office tax impose on these companies that have been stealing business from the post office.
The post office’s lost is the lost of tax payers, ie, you and I.
I wonder what the stamps should sell at for USPS to break even?
*Shadowstats.com not Shadowstates.com
Do they honestly think revenue will increase by raising the price of a stamp? It may actually decrease!
Do not forget about those forever stamps. People have been loading up on them (pre-paying) their postage. Once the price of a stamp goes up, they are going to start using their stash and stop buying new stamps.
The forever stamp program essentially pulls revenue forward at the expense of future revenue.
The reality is that the CPI is understated (look at Shadowstates.com) and Forever stamps are a great deal for consumers (bad deal for the post office). In fact, you can buy these things as an investment and when you use them up when prices are higher, you pay no capital gains tax!