Postage rates increase Sunday

By MARCELLA S. KREITER, United Press International  |  June 28, 2002 at 2:25 PM
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With postal rates about to go up for the third time in four years, catalog companies and direct marketers Friday worried the latest increase will further erode their price-sensitive businesses and consumer watchdog groups railed against waste.

The U.S. Postal Service is increasing the price of a first class stamp 3 cents on Sunday to 37 cents. Other rates also are going up.

"Catalogers can't pay for it because they're not that profitable," catalog consultant Maxwell Sroge said. "Whose going pay for it? The consumer is going to pay for it in added shipping and handling and higher prices. It's a farce to say that it's an extra cost to industry. It's really a tax on consumers."

United Parcel Service spokesman David Bolger said the increase could have a negative impact on his company as well.

"It's of great concern to us," he said. "If the Lands' Ends and L.L. Beans of this world can't send out as many catalogs as they had because of the increase, that could have a deleterious impact on us.

"Although the one getting the most attention is the first class stamp, rates all across the board -- for parcel packages, for express service -- also are being increased. It's a tremendous concern for the entire industry."

The cost of mailing a letter didn't hit double digits until 1974 and rates didn't change at all between 1932 and 1958, when it cost just 3 cents to mail a letter.

"There's an interesting statistic," USPS spokeswoman Judy Winiarz said. "CNN put that 3 cents (for a 1932 first class stamp) through an inflation calculator and it came out to 37 cents today."

Be that as it may, many people are not happy with the impending boost.

"I think it's unbelievable the way it goes up every couple of years," crabbed Kim Katelo of Chicago as she stood in line to buy 60 3-cent stamps. "I just don't understand why they keep raising the rates."

"In the long run, this rate hike will not serve anyone's interest -- least of all the post office," said Leslie K. Paige, vice president of Citizens Against Government Waste. "This substantial increase comes a little more than a year after the last increase and is, without doubt, only a prelude to the next, inevitable, rate case, which could come as early as October of this year. These rate increases are coming faster and are ever more draconian. We've had three hikes in four years and none of them have stemmed the flow of red ink."

The group, which called for an independent audit of the postal service, said a General Accounting Office report notes that despite the increase, the postal service will wrack up its third consecutive deficit this year, with $13 billion in debt and $80 billion in additional liabilities looming. Yet, Paige said, the postal service has no debt reduction plan in place.

Sroge said the postal service would be better off following the example of corporate America in trimming costs. He suggested the postal service divest itself of its planes and trucks and turn over management of its buildings to the General Services Administration.

"The other thing they spend tens of millions on is the inspection service," Sroge said. "We've got an FBI whose job is to look for fraud and prosecute fraud in other areas of government operations. Why does the postal service need its own postal inspection service?

"Basically when you get down to it, what they have to do -- if they don't do it, it's a never-ending problem -- is divest themselves of a variety of operations and buy it on the outside on a variable basis. That's what practically every major U.S. corporation has had to do in the past couple of years. What they're suggesting (as reforms) is cream skimming. That's not reorganizing in the true sense of those words."

USPS spokeswoman Winiarz blamed the postal service's latest financial woes on the economic downturn that followed the Sept. 11 terrorist attacks, coupled with the unanticipated costs of dealing with the anthrax letters sent through the mail and general increases in transportation costs.

In addition to the first class stamp increase, rates for postcards will increase 2 cents to 23 cents, presorting fees will go from $125 to $150, priority mail is going from $3.50 to $3.85 for a one-pound package, periodical rates are increasing 10 percent, parcel post rates will increase 6.4 percent and pickup service will increase from $10.25 to $12.50 per pickup.

Why not just boost first class rates to 40 cents and get it over with?

"An increase of more than 3 cents on the price of first class mail stamp would impose an unfair share of the burden of operating the Postal Service on first class mail users," the USPS says on its Web site. "A 3-cent increase results in a more equitable distribution of postal costs among all mail classes."

Besides, Winiarz added, "We can't. We're mandated by law to break even. We cannot put up a profit."

The first federal postage stamps were issued in 1885 when it cost 2 cents to mail a letter. According to the Smithsonian Institution, the postal service played a key role in disseminating news in the early days of the country, explaining why some many newspapers today still are named the Post, the Courier and the Packet.

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