Price Hikes For Stamps... More Failure of Government Enterprise

Higher postage prices are heading your way.  Uncle Sam and the great U.S. Postal Service have decided that the best mechanism out there now will be a price hike.  While this will only over $1.00 to an “average American household’s budget” for a year (per their estimate), this is another example of how the government cannot adequately run a business in good times nor in bad times.

The U.S. Postal Service Governors announced today a recommendation to raise a First Class stamp to $0.46 from $0.44 today.  Perhaps the larger issue is that the price of a postcard stamp would increase by the same $0.02 to $0.30 per item.  For percentages, that translates to postal inflation of 4.4% on regular First Class mail.  For post cards, that translates to a price hike of 7.1%.

The US Postal Service was getting hit hard in 2008 when its gas prices were through the roof.  Yet the price and the financial efficiency have not improved now that gas prices are down substantially.

For these changes to come about, the Postal Regulatory Commission must approve the recommended price changes.  That will likely happen, with the proposed date of January 2, 2011 as the postal inflation date.

The Postal Service keeps coming under fire.  If it is not the Internet replacing mail, it was the recession.  The proof in the pudding about how inefficient this is, the Postal Service said in today’s proposed price hike that it is projecting a deficit of nearly $7 billion for the next fiscal year.  $7 billion, ouch.  That is on top of the elimination of 1 million work hours and on top of reducing expenses by more than $1 billion every year since 2001. Other cost-cutting actions proposed in March were changes to delivery frequency, a restructuring prepayments of retiree health benefits, as well as other cuts.

The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.  The proposed price changes are expected to raise about $2.3 billion for the first nine months of 2011.

If this is still a deficit, it seems a safe bet that the workers in blue and gray will be asking you for even more price hikes down the road.

With such a solid track record as a blueprint of success, can’t you just wait for the government to manage your health care?

JON C. OGG