Latest Postage Stamp Price Hike Buys The US Postal Service Two Weeks Of Extra Time

Tyler Durden's picture

The US Postal Service may be a woefully overstaffed anachronism of a bygone era, with a painfully mismatched cost and revenue structure, which last year reported a massive, and record, $15.9 billion annual loss for the last Fiscal year, but that doesn't mean it is going away without a fight. As of yesterday, the USPS valiantly hiked the price of first-class mail by another 2.6%, to 46 cents, up from the 45 cents which in turn was hiked a year previously. Alas, somehow we doubt this latest increase in pricing which is supposed to keep up with inflation, will do much for the long-term viability of the government service which employes some 500,000, and which has warned would run out of cash by October 2013 for two simple reasons: the ongoing collapse in mail volume sent via the USPS (with free or more effective alternative widely adopted), and a cost structure that unlike the revenue side, has managed to stay leaps and bound ahead of inflation courtesy of some rather vocal labor unions.

The WSJ reports:

The price of sending a first-class letter in the U.S. rose a penny Sunday to 46 cents as the Postal Service continues to struggle with eroding mail volume due to expanding reliance on email and the Internet to communicate and pay bills.

 

The increase comes just a year after the cash-strapped Postal Service pushed the stamp price to 45 cents, and follows the November announcement that the agency reported a record $15.9 billion annual loss for the fiscal year that ended Sept. 30. At that time, the Postal Service said it would run out of cash by October 2013 without congressional intervention.

 

There are several proposals before Congress to help keep the Postal Service financially viable, but no action has yet been taken. Agency officials couldn't be reached Sunday, but a statement on its website said the increase was prompted by the "urgency of our current financial challenges."

The fallback plan instituted some time ago has been the USPS' "Forever" model, which includes the forever stamp for domestic and international deliveries:

The Postal Service also has added a new global Forever stamp that allows customers to send letters anywhere in the world for $1.10.

 

Prices will increase by an average of 2.57% across each class of mail, according to the Postal Service. For a first-class postcard mailed in the U.S., the price is rising a penny to 33 cents. Fees on other services, such as post-office box rentals, also went up.

Alas, not even a far greater increase in prices will do much to dent a far more insurmountable issue: the relentless grind lower in USPS volumes by both first-class mail, as well as regular.

In the past decade, the volume of first-class mail has plummeted to about 73.5 billion pieces of mail in 2011 from some 102 billion in 2002. The drop-off in the volume of first-class stamped mail has been even sharper, to about 25.8 billion pieces in 2011 from roughly 51.9 billion in 2002.

And in chart format:

In other words, the price of first-class postage would need to be surging to keep up with declining volumes to keep revenues constant. Alas, it can't: "First-class mail is the agency's main revenue source and it is prohibited from raising stamp prices beyond inflation."

Maybe the USPS would be in a far better shape if the BLS-reported inflation was more in tune with if not reality, than at least the expense side of the USPS ledger, which courtesy of the record loss we know is far greater than 2% per year.

Luckily, there is a Plan Z:

"Options that Congress is considering to find a path to financial stability for the Postal Service include allowing it to sell ads, ship beer and wine and, possibly, end Saturday mail delivery."

Sell ads? Because the return on making people aware of this "great unknown" that is the US postal service will surely be effective. Well, maybe not, but it certainly will be in line with every other government "investment" proposal so far attempted.

As for the "Forever" stamps, Forever may just last for another 10 months, at least for the USPS: let's do the math here:

$16 billion annual loss offset by a 1 cent increase to 73.5 billion pieces of mail, that amounts to... $735 million. This plan should buy the USPS... two weeks.

In other words instead of running out of cash by September 30, 2013, the USPS will be money free on October 15.

But don't worry: there is a Fed for that, and if not for that, then certainly to keep Treasury issuance costs so low that Congress will have no problems in appropriating another $20 or so billion to fund the worst run government agency for one more year.

After all: will someone please think of the labor votes unions?

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Lost Wages's picture

Forever Stamps, bitchez. 

I think I need to buy a gun's picture

how is illinois california post office still going?????? its like magic, someone please explain saw something on pa teachers pension and governor in a few weeks what is going on??????

brewing's picture

i check my mail box once a week and that's too often.  technology rears it's ugly side more and more each day...

EnslavethechildrenforBen's picture

One day's worth of that fake election funding would pay for ten years worth of Postal Sevice funding

Zer0head's picture

Naples, FL is one of the most affluent communities in the US.

from the local rag:

Headline #1

Junk in the Trunk: Criminals targeting cardboard, dirt

"Dirt, on the other hand, is harder to steal since it requires equipment necessary to load it and haul enough off to be profitable. A ton of fill dirt sells anywhere from $2 to $5"

http://www.naplesnews.com/news/2013/jan/28/junk-in-the-trunk-criminals-t...

Headline #2

Ferrari F12 berlinetta, the smokin' hot car sold (for $750,000)

"Outside the tent, while the Scotts celebrated, auction patrons and automobile aficionados swooned over the vehicle and the missed opportunity."

http://www.naplesnews.com/news/2013/jan/26/wine-festival-trustee-wins-re...

TerminalDebt's picture

USPS - we'll deliver it today when you absolutely, positively needed it delivered a month ago.

redpill's picture

I think they mean sell ads for private companies on USPS envelopes and such.  They might as well.  Can't get any worse than LA Galaxy "Herbalife" jerseys.

 

AldousHuxley's picture

have they heard of the internets?

email?

 

USPS and lawyers/politicians hate innovation efficiency.

trav777's picture

if the USPS goes TU, how we will possibly be able to sustain the artificial middle class of diversity?

Skateboarder's picture

No need for stamps when you can't pay the bills.

forwardho's picture

its like magic

I think, look around you. the whole damn system is running on "majic"

Thats right the economy just pulled a rabbit out of it's ass.

And you saw it!

neidermeyer's picture

"Magic" , That's the answer we used to give back in the good old days when we had a question about how the computer would do something ,, "PFM" pure fucking magic ... That was back in the days of mainframes that barely had 1mb of memory and hard drives were measured in megabytes and cost about $1000/mb

TheCanadianAustrian's picture

They'll just discontinue the forever stamp program at some point. You can still use the stamps, but only for "second class" mail.

azzhatter's picture

Oh no!!! That will cost me like .06 cents per year

pursueliberty's picture

It'll cost my employer  around $2k this year.

Larry Dallas's picture

...increase was prompted by the "urgency of our current financial challenges."

How is this different than any other situation today? Stop passing the cost of your bad decisions onto us.

Cut the life-support on your pension plans and let the market adjust it.

LongBalls's picture

Another step toward a cashless society. Try paying by check with this goes down. You will have to drop your mail off at UPS?

Dr. Engali's picture

I posted this on a previous thread. Sorry for the repeat but I thought it was important.

The military is taking things to the next level getting the sheep used to their presence in the skies. Now they are using blank machine gun fire. Listen to the reporter explain things away like it's no big deal.

http://www.infowars.com/attack-helicopters-let-loose-with-machine-gun-fi...

francis_sawyer's picture

I'll only start getting nervous when they start pumping out 'Flight of the Valkyries' over loudspeakers & the choppers are Hueys with surfboards attached...

Papasmurf's picture

Place your speaker facing up with tiny Tim's "Tiptoe through the tulips" blaring full blast.  You'll be okay.

francis_sawyer's picture

That would scare the shit out of people so bad you'd have no need for the machine guns... Actually ~ all I think you'd need to do would be to paint a Star of David on your roof... It's probably written somewhere by now that those houses are not to be touched...

ParkAveFlasher's picture

"Hi I'm Francis Sawyer, it's been 3 days 6 hours and 23 minutes since my last JOOOOO! comment."

"Hi, Francis!"

 

francis_sawyer's picture

All I said was 'Star of David' (on a house roof)

~~~

From: Omens and Superstitions of Southern India by Edgar Thurston, 1912 p. 185:

"Subramaniya yantram, if regularly worshipped, will expel devils from those attacked by them, and from houses"

~~~

I also typed 'Cheeburger Cheeburger' in a previous thread... Nobody seemed to be bothered by that very much...

francis_sawyer's picture

Perhaps having Rob Reiner [MEATHEAD] as a son-in-law, made Archie Bunker the way he was... Then again, probably not...

~~~

Reiner playef 'Mike Stivich' [A POLLOCK]... Nobody seemed too bothered to have a few yuks at their expense either...

Overfed's picture

And they have the nerve to ask why we think we need rifles chambered in .50 BMG.

Zymurguy's picture

$0.46 stamp just to mail a letter?

Shit, maybe I should look into that email fad thing everyone's talking about.

Honey, whats that number to America On Line?

Skateboarder's picture

Lycos is all the rage, I hear.

Lord Koos's picture

If you don't like the post office, you can always send it via FEDEX for $13 instead.

azzhatter's picture

Git you one of them puters

Never One Roach's picture

Just walk over to Jethro and hand the letter to him...he's still liv'n in that thar shed a yonder.

mayhem_korner's picture

 

 

Why don't they just borrow from their pension fund?  Work(ed) for Timmay.

RSBriggs's picture

They can't.  The Postal Retirement money goes into the "general fund" and gets spent.  The Post Office is the only entity that has to fund lifetime future retirement benefits for all their employees, to the tune of billions of dollars, and the government just steals the money.  Kind of like they do with Social Security....

TheFourthStooge-ing's picture

That's not even the half of it. Congress requires the Post Office to fully fund its pension fund decades ahead (it's something crazy like 75 years or so). Congress then promptly loots this fund, leaving behind IOUs.

The Post Office would actually be turning a profit if not for the onerous pension funding rules imposed upon it.

The Wall Street Journal article is a smear job. Tarring the subject with the brush of government waste and ineptitude allows the WSJ to give the story a strong slant while maintaining a faux posture of journalistic "integrity".

This whole Post Office thing is a stalking horse, one which can only be recognized when placed in proper context. The excessively burdensome pension funding requirement was created for one purpose: to kill the Post Office. The postal system is one of the federal government's legitimate responsibilities, as enumerated in the constitution. If the Post Office can somehow be killed off without a constitutional amendment, it will set a precedent for dismantling the constitution piecemeal.

Post Office hit pieces like this are well designed propaganda. That one of the Tylers fell for it just illustrates the effectiveness of the smear.

L_Conquistador's picture

The USPS is damned near just another federal entitlement program, for its "workers".  According to the postal employee I know, it's common for workers to sabatoge the sorting systems, in order to slow down the process and earn that overtime pay.

wisefool's picture

The US postal service is the only current agency still named in the constitution. I have no idea what documents the porn mongers at the SEC. Perhaps Elliot Spitzer should get to the bottom of it or the 200+ other "Agencies"

SmoothCoolSmoke's picture

You do know that not one penny of taxpayer money goes to running the Post Office.

Midas's picture

Smooth--

Don't waste your time.  I have learned there is a certain segment of people who go into a subroutine about the Post Office when it is brought up.  When postage rates go up, not even ZeroHedgers blame the Ben Bernank.  Why is that?  At least the last article on the Post Office had a hot chick.  I'm all for privatization/elimination, but lets start with the TSA, CIA, FBI, Dept of Energy, Dept of Eduacation, Homeland Security, Pentagon, etc etc.  You know, the outfits that bill the taxpayer for thier "services."

RKDS's picture

Amen.  They don't like facts getting in the way of their delusions.

neidermeyer's picture

What do the Post Office and Thom McCan have in common?

 

50,000 black loafers.

TerminalDebt's picture

yeah not one penny, many pennies, in fact 15B dollars worth of pennies

Jeepers Creepers's picture

Uh, actually a whole lot of taxpayer pennies goes torunning the Post Office, that's why they're having issues, they blew through their $12 billion dollar loan:

http://money.cnn.com/2012/03/05/news/economy/postal_service_loan/index.htm

Let's just put these people on welfare, it's a lot more honest. 

 

Midas's picture

If your "friend" knows that is happening why doesn't he not be part of the problem and tell a postal inspector about it?  1-877-876-2455

pods's picture

See something, say something only works applies to fellow proles.

pods

cxl9's picture

The Postal Service is a vast, ridiculously inefficient welfare project for otherwise unemployable people. A vast fleet of trucks burns millions of gallons of fuel to deliver dead trees to nearly every home and business in the country, which are then promptly thrown into recycling bins and hauled away by another fleet of trucks. Stop the madness already. Shut it down, sell off the assets, liquidate the pensions, and send all those little worker drones home to watch TV and collect food stamps.