As Stamp Costs Increase, Fight Over Rate Hike Continues

The USPS wants the prices to stay permanent, while the mailing industry wants them overturned.

U.S. Postal Service letter carrier Jamie Jasmon struggles through snow and below zero temperatures while delivering the mail.

The cost of a first-class stamp increased to 49 cents, the largest hike in 11 years.

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The cost of a first-class stamp increased from 46 to 49 cents on Sunday, the largest hike in 11 years. The increase is scheduled to be in effect for 24 months, to allow the Postal Service to recover recession-related losses. Yet even as the price change has taken effect, two competing appeals are seeking to alter it.

One comes from a coalition of mailing-industry organizations, which on Jan. 23 filed an appeal with the U.S. Court of Appeals. The group asked that the Postal Regulatory Commission's decision to raise prices by 6 percent, well over the 1.7 percent rate of inflation, be reversed, as The Washington Post reported. Though the Postal Service is an independent government agency and does not rely upon tax dollars, it cannot raise prices above the rate of inflation without the commission's approval.

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The new prices will affect these organizations' mail, including magazines, newspapers, and advertising, as well as personal letters and other first-class pieces. Parties in the appeal include the Newspaper Association of America; the MPA - Association of Magazine Publishers, formerly known as the Magazine Publishers of America; and the Direct Marketing Association, a marketing industry trade group.

"[The rate increase] will simply drive mail from the system, which harms the financial viability of both the Postal Service and its business customers. It is a lose-lose proposition." said Peggy Hudson, the senior vice president of government affairs for the DMA in a Jan. 23 press release about the appeal.

In addition, the Postal Service is seeking to change the rate hike's timeframe, but in the other direction. In its own Jan. 23 appeal, the USPS asked that the rate hike be made permanent.

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The Postal Service had already asked the Postal Regulatory Commission to make the new prices permanent when the commission approved the price increase on December 24. However, the commission declined, saying it would only leave the new prices in place long enough to recover money the USPS lost during the Great Recession.

Even if the Postal Service loses its appeal, at least two members of Congress stand ready to take the Postal Service's side. Sens. Tom Carper, D-Del., and Tom Coburn, R.-Okla., have proposed legislation that would both make the rate change permanent and allow the USPS to raise its rates up to 1 percent above the rate of inflation. In addition, the bill would allow the Postal Service to have more input into its rate changes in the future.

The fight over the $2.8 billion the USPS expects to make from the more expensive stamps may seem small in comparison to the service's projected $68 billion in revenue in 2014, but it takes on special significance given the USPS's poor finances. The Postal Service lost $5 billion in fiscal year 2013, a loss that nevertheless was also an improvement over the record $15.9 billion the USPS lost in the previous year.

 

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