Gridlock in Congress Leads to 3-Cent Hike in Postal Stamps

Posted September 25, 2013 at 11:55am

While the spending and debt deadlines move inexorably closer with no deals in sight, Congress is getting a stark reminder about the consequences (and cost) of its gridlock for everyday Americans.

The U.S. Postal Service proposed a 3-cent increase in the price of a first-class postage stamp, to 49 cents starting in January, and similar increases of about 7 percent in the rates for postcards and packages. The governing board said it’s the only way to muddle through its “precarious financial condition.” The Postal Service has been falling deeper and deeper into a budget hole over the past two years because the Republican House and Democratic Senate have been unable to agree on a collection of cost-savings measures.

But the price hikes wouldn’t come close to solving the problem. The new rates would raise about $2 billion in additional revenue in 2014, cash that could be used to help cover regular expenses. But the Postal Service is projecting another loss like the $6 billion projected for the fiscal year now coming to an end, mainly because of its requirements for pre-funding payments for retiree health benefits.

Under law, the Postal Service may only raises prices more than inflation under exceptional circumstances and with approval of an independent Postal Regulatory Commission.

Postmaster General Patrick R. Donahoe wants permission from Congress to revamp and streamline the way his system does business in the Internet Age, starting with ending Saturday delivery and closing thousands of post offices and half the mail processing centers. (Mail volume has declined almost 30 percent in the past five years.) But every version of legislation Congress has been considering in the past two years would trim back, prevent or dictate alternatives to those proposals in important ways.

The debate in this Congress hasn’t gone beyond the House Oversight and Government Reform Committee, which approved a bill in July that would cut delivery to five days a week, phase-out delivery to residential doorsteps and turn management of the Postal Service over to a newly created federal overseer.

While the congressional impasse drags on, the agency defaulted on two $5.6-billion payments to its retiree benefits plan and is on course to miss another one this fall. What to do about the pre-funding of the benefits is among the many things lawmakers have not agreed on.