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Postal rate hike request denied

By Ed O'Keefe

Updated 1:40 p.m. ET
Postal regulators Thursday denied requests by the U.S. Postal Service to raise postage rates in January beyond the rate of inflation, ruling that the mail agency's recent financial woes were caused by a flawed business model and not the recent recession.

The decision means stamp prices and other postage rates will not go up in January -- at least not yet -- as the Postal Service had hoped.

In July it requested the right to raise postage rates on first-class mail, periodicals and other services beyond the rate of inflation. A 2006 law allows USPS to file an exigent -- urgently necessary -- case to raise prices beyond the rate of inflation if it can prove that "exceptional or extraordinary circumstances" warranted the increase.

Though the recession and recent mail volume declines qualify as "exceptional or extraordinary circumstances" that could justify a price hike, the Postal Service's long-term structural problems are causing recent budget shortfalls, the Postal Regulatory Commission said in the first ruling of its kind.

The Postal Service could however file another exigent rate case using different arguments, regulators said.

"The Postal Service didn't make the case, didn't make the connection between the problems they suffered during the recession and the revenue they were requesting," PRC Chairwoman Ruth Y. Goldway said in an interview. The request seemed more part of the Postal Service's 10-year business plan instead of an emergency request, she said.

Thursday's ruling comes one day before USPS is set to announce billions of dollars in losses in fiscal 2010 amid declining mail volume. Postmaster General John E. Potter expressed disappointment with the ruling and did not indicate whether he would appeal the decision to a federal appeals court.

"Clearly, the Postal Service is a viable business," but legislative constraints on the mail agency are hampering its ability to operate efficiently and profitably, Potter said. The Postal Service will end fiscal year 2010 with about $2 billion in cash and available credit and will make a $5.5 billion payment to pre-fund retiree health benefits even though Congress declined a request to defer the payment, he said.

Potter is lobbying lawmakers for the flexibility to close unprofitable post offices, set delivery routes and pricing without seeking Congressional approval. Senate Democrats last week unveiled a bill supported by Potter that may come up for consideration during the lame-duck session, aides said. But Republicans oppose most of the proposals and are soon expected to introduce competing legislation.

Business leaders cheered Thursday's ruling. Tony Conway, spokesman for the Affordable Mail Alliance, a coalition of major mail customers, said the decision "has helped countless businesses stay competitive and saved tens of thousands of jobs."

"The commissioners recognized that imposing an additional tax on Postal Service customers is not the way to address its financial troubles," Conway said.

Leave your thoughts in the comments section below

By Ed O'Keefe  | September 30, 2010; 11:15 AM ET
Categories:  Postal Service  
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Comments

The United States Postal Service would have more profits if large banks and insurance companies didn't get a more than 50 percent discount on First Class postage when they send out unsolicited junk mail.

Posted by: joe_allen_doty | September 30, 2010 12:12 PM | Report abuse

joe_allen_doty - Perhaps, although you seem to be assuming that the volume of those mailings would remain relatively unchanged if those rates increased. That may or may not be true.

Posted by: bobsewell | September 30, 2010 12:37 PM | Report abuse

joe_allen_doty you've missed the point that the PRC has made. Better the small businesses make the USPS run at a loss then make them pay their fair share. The rate case that the PRC threw out not only wanted to raise the price of a stamp you would buy but also the increase in price to those very banks and insurance companies that you say should pay more.

Posted by: Fantheflames | September 30, 2010 12:40 PM | Report abuse

Maybe USPS should find an avenue into the internet(e-mail) game at a bargain rate for consumers.

Posted by: Rivery | September 30, 2010 12:51 PM | Report abuse

The problem with the US Postal Service is their Union stupid! Make USPS immediately cut their workforce by 10% including management!!!!

Posted by: Jimbo77 | September 30, 2010 1:06 PM | Report abuse

Let's just make it an even 50 cents. 44 is so baseless, so lame (no reference to the POTUS btw). I've got about a million forever stamps in my purse right now anyway.

Posted by: forgetthis | September 30, 2010 1:13 PM | Report abuse

"The problem with the US Postal Service is their Union stupid! Make USPS immediately cut their workforce by 10% including management!!!!"

10%? How'd you come up with that number? How would that affect postal service performance? Would mail move as quickly? Would we be forced to go without mail on Saturdays? I'm assuming you've done some serious statistical analysis and can let us know the answers.

Posted by: ezcheese81 | September 30, 2010 1:24 PM | Report abuse

2 cents, gimme a break, It takes an act of the PRC to raise a stamp 2 pennies, yet every week when I fill my cars up with gas the price seems to always be going up???
HMMMMM, I wonder. I think the mailing industry lobbyists are involved in this. And it is not a tax, the USPS is not taxpayer funded.

Posted by: littleflower218 | September 30, 2010 1:26 PM | Report abuse

Every time they raise rates, I move more bill to electronic forms and pay online. A book of stamps now lasts me most of the year. All I get in the mail is junk, which shows up for less than I would pay to send the same thing.

Posted by: Flicking_Gamer | September 30, 2010 1:26 PM | Report abuse

The Postal workers are the only Fed. employees to get their medical benefgits paid in full. All other Federal employees have a 50% share. Maybe the Postal Dept should do the same. That would save a pretty good size of savings.

Posted by: shawneeturtle | September 30, 2010 1:30 PM | Report abuse

The Postal workers are the only Fed. employees to get their medical benefgits paid in full. All other Federal employees have a 50% share. Maybe the Postal Dept should do the same. That would save a pretty good size of savings.

Posted by: shawneeturtle | September 30, 2010 1:32 PM | Report abuse

@shawneeturtle: Not true. I work for the Postal Service, pay for my health insurance (through Kaiser Permanente, like lots of other people) and pay a co-pay for services. You are misinformed.

Posted by: lisaswanson | September 30, 2010 2:12 PM | Report abuse

If the government can't run the post office, this proves how Obamacare will be run.

Posted by: farmsnorton | September 30, 2010 2:18 PM | Report abuse

It seems to me that more time spent in the office than shopping for cars and whatnot would go a long way towards increasing their efficiency.

Posted by: rs11231 | September 30, 2010 2:23 PM | Report abuse

Lets set the record straight. Postal Managers (equiv to GS 15s,) get free health care insurance.

Posted by: almelbe | September 30, 2010 2:24 PM | Report abuse

While I can't comment on the internal efficiency of the USPS, as a small business owner whose products (yourbagtag.com) are low-cost & light/small, the USPS is really the only viable choice. While certainly not perfect, they do a great job of getting the product to my customers around the world at an affordable cost. If we are judging on well-run and efficiency, we should shut down most of our government agencies. At least at USPS I get my money's worth!

Posted by: swaynewilson | September 30, 2010 2:24 PM | Report abuse

It seems to me that more time spent in the office than shopping for cars and whatnot would go a long way towards increasing their efficiency.

Posted by: rs11231 | September 30, 2010 2:25 PM | Report abuse

Have an idea...you have so many UNION postal works...deliver more by bike..not trucks..and more walking..or how about a down size....pay decrease..start at the unions / supr's...everyone...20%...or---we just start using MORE internet for bill paying...JUST NOT WINDOWS...LINUX...or Mac..start using UPS or others..they seem to be making a PROFIT..even with the SLUG unions

Posted by: rw62827 | September 30, 2010 2:26 PM | Report abuse

I went to the post office today at Connecticut and L and while "helping" someone in line the clerk was on her cell phone just talking away. I guess we should have been glad she was at the counter vs in the back "finding packages". Thank goodness for the automated system they put in. Each post office should have several and reduce the overhead of so called workers.

Posted by: lucl74 | September 30, 2010 2:34 PM | Report abuse

How to fix the Post Office in 3 easy steps:

1. Get ALL the money back from OPM that was overpaid plus the interest. (50 plus Billion) Not in increments but immediately!
2. Reduce the salaries of all management from Postmaster General down to a Post Office Supervisor. Cut out performance bonuses for all employees. Especially a $135,000 one for Potter!
3. FIRE all City-Carriers and re-hire them as Rural-Carriers. Rural-Carriers carry twice the amount of mail volume and do it in the same time or less time in most cases. Time for City-Carriers to earn that wage, instead of parking under a tree and sleeping for 3 hours on the clock. (Personally witnessed in Victorville California)

Posted by: canda3069 | September 30, 2010 3:07 PM | Report abuse

The postal service is mentioned in our Constitution, and I believe it is a necessary agency of our government. I disagree that it should ever have been even partially privatized.

Every nation on earth has a post office. America's is one of the best available, and should be a source of pride, not a basis for nickle-and-dime arguments about funding.

I would remind fellow posters that the only thing you can get for less than 50 cents at Fedex or UPS is directions to your nearest post office.

Posted by: OldUncleTom | September 30, 2010 3:38 PM | Report abuse

The plain truth is that the last few years of steadily raising rates has been entirely...entirely to pay for the bloated retirement and health insurance for surly, uninterested affirmitive action "...employees...".

Posted by: anderson2 | September 30, 2010 3:42 PM | Report abuse

Go to Monday, Wednesday and Friday delivery only. Close the bottom 20% of the least busiest post offices. The post office is needed but not in it's current form. It's time to move into the 21st century.

Posted by: VaBroker | September 30, 2010 4:03 PM | Report abuse

I have worked for the post office for over 30 years. If washington would just stay out of it , it would run much better. and by the way for you people that dont realize, the post office generates thier ownincome not from the tax payers

Posted by: jmskehan | September 30, 2010 4:06 PM | Report abuse

Cut jobs starting at the top. AND, stop giving the Postmaster General John E. Potter big raises and bonuses! Yes, he deserves a $25 bonus like the people who are doing the work--clerks, carriers and substitute carriers. As a rural carrier associate, I no longer get a bonus, which is fine. I am happy to have a job. But it is ridiculous when you give a 6 figure bonus to the Postmaster General.

Posted by: drobinson52 | September 30, 2010 4:18 PM | Report abuse

The Post Office needs a major reorganization. Start with reducing the regular employees and whatever percentage is used, i.e. 10%, double it for management, i.e. 20%. No matter what many think, we don't need daily delivery. For residential half the local routes on MWF and the other half on TTS. Business routes MTWTF. At least one post office in an area open on weekends. Pay and benefits should be based on what average workers in an area receive. Postal workers are not special, even though they think they are. Make it easier to get ride of those, especially management, that are "problems". It will upset many, but the post office can be run efficiently.

Posted by: gmclain | September 30, 2010 4:26 PM | Report abuse

Just a matter of time till they go "Postal".

Posted by: wannabersc | September 30, 2010 4:39 PM | Report abuse

If the Postal Service would print beautiful stamps as we all wish them to; and, put on more clerks especially at the busiest hours like between 5 and 6; and, charge less for mailing packages especially Xpress mail, we'd use the service more. The lines late in the day and one clerk are very discouraging even for a loyal Postal Service person.

Posted by: MiriyamGevirtz | September 30, 2010 4:55 PM | Report abuse

Post Office is just no differant than the crooks in Washington over paid monkey see monkey do!

Posted by: JWTX | September 30, 2010 4:58 PM | Report abuse

Post Office is just no differant than the crooks in Washington over paid monkey see monkey do!

Posted by: JWTX | September 30, 2010 4:59 PM | Report abuse

Keep the "face" of the post office (local offices and carriers) perhaps delivering mail on weekdays only but spin off the BMC, ASF, SCF and bulk businesses to the likes of FEDEX/UPS/DHL who's operations are geared to handle this better.

Posted by: dclars1 | September 30, 2010 4:59 PM | Report abuse

Post Office is just no differant than the crooks in Washington over paid monkey see monkey do!

Posted by: JWTX | September 30, 2010 5:02 PM | Report abuse

Post Office is just no differant than the crooks in Washington over paid monkey see monkey do!

Posted by: JWTX | September 30, 2010 5:02 PM | Report abuse

Why I don't even use the Post Office any more. Why are they still in business. I never buy stamps. I don't mail anything for many years now.

Posted by: JWTX | September 30, 2010 5:05 PM | Report abuse

Now that the USPS has been denied, a rate increase on stamps, it is time for congress to deny all "cola" increases, in federal pay and or benefits,reduce all federal spending by half. Allow the Free Enterprise system to "bid" on all government "services" from A to Z. CPA Audits on every single military "want list" spending and expense "accounts".
The Private Sector has "tightened its belts" by cutting payroll, benefits, and jobs. Its time for the Federal and many State goverments to do the same. Bid It Out To The Private Sector.

Posted by: stormpost | September 30, 2010 5:09 PM | Report abuse

The post office now delivers mail 6 days a week which is unnecessary. The only way to solve the long term problem is to deliver mail 3 days a week. Therefore, they only need half the outside workforce and vehicles which are the biggest expense items. Businesses and individuals would adjust to the new schedule or could pick up mail at the post office. Fewer post offices would have to be closed. Otherwise the post office is in a death spiral.

Posted by: fritz9 | September 30, 2010 5:25 PM | Report abuse

The post office is a cash cow that needs to be trimmed down. I honestly don't understand why they don't drop Saturday delivery. Everyone in America has had to tighten their belts. The post office should be no exception.

Posted by: GaPeech | September 30, 2010 5:34 PM | Report abuse

Get the blood sucking unions out of the postal system and it could return to making a profit. Right now, most of the revenue collected from taxpayers is used to pay fat cat union leaders and mismagaged trust funds. Public service unions in government is the cause of the extreme high costs of doing business and expenses the taxpayers are constantly having to cough up.

Posted by: lhudson828 | September 30, 2010 5:42 PM | Report abuse

It's time to revisit the obvious failures of a government run business, Sell it to Fed Ex or UPS. Why pour billions more into these blood sucking unions. The service gets worse, yet the rewards for mediocre employee performance or zero performance get better with each passing union contract.

Posted by: Eyeugize | September 30, 2010 6:55 PM | Report abuse

I have worked as a rural tour carrier for 16 years. My mail volume had NOT gone down. First-class mail has been replaced by double the junk mail. I could not deliver all my mail in 5 days. People will not want to have to wait over the weekend for their pills.Most people Don 't have a clue about all the work a carrier does. They just see a glorified paperboy. Turnover rate for this "easy" job is 85%! Once people get back behind the clerks and into the real job, they take off because its too hard! Unsafe trucks, drugged-out customers, dogs,12 he. days that you only get paid 6 for, etc. But mainly having clueless people say they KNOW that if you cut staff, service will get better. Has that ever happened anywhere? We can't get it all delivered now, let alone if there was less time and workers.

Posted by: clew37 | September 30, 2010 7:11 PM | Report abuse

What's with all the union hating? I despise my job, I'm doing close to 70 hours a week at salary, company dropped 401k matching and merit bonuses and raises three years ago, and is constantly tinkering with my health benefits... but they still pay out 4.5 cents on every dollar four times a year. Why do the dividends for my company have to come out of my paycheck?

If there was an IT union I could join I'd hop over in a second. You whackos screaming about blood sucking unions causing the economic problems today make me nuts. Its the greedy bastards we work for that are killing us, not the workers.

Posted by: sql_yoda | September 30, 2010 7:17 PM | Report abuse

Just emptied my mailbox of 5 lbs of ugly weight (junk mail advertising)... 4.99 lbs now resides in the trash can. Just send me what I need to know in an Email, and let the Post Office go the way of the Edsel.

Posted by: leedolce | September 30, 2010 7:26 PM | Report abuse

My business depends on USPS. I support anything they need to keep our airport station open Saturday and Sunday. If it comes to cutting hours and staff, you know the weekend stations will be among the first to go, and my business and customers will suffer, like all other mail order businesses that offer exceptional service like mine. For the complainers about junk mail, OPT OUT! Stop and think: It would be detrimental to our economy to eliminate USPS.

Posted by: mmabq | September 30, 2010 7:45 PM | Report abuse

The Postal Department needs to raise the rates of the junk mail that fills our mail boxes each day, and leave first class users alone.

Posted by: sparrowdancer1 | September 30, 2010 7:49 PM | Report abuse

The Postal Department needs to raise the rates of the junk mail that overflows into our mail boxes each day, and leave first class users alone.

Posted by: sparrowdancer1 | September 30, 2010 7:56 PM | Report abuse

didn't they raise the rates once to clean up anthrax?..are they still getting anthrax mail?...NO. Then they said they had to raise it to cover the cost of rising gas prices and those prices have leveled off. What happened to the idea of a 4 day delivery week and/or eliminating Saturday mail. Or just raise the cost of JUNK MAIL, which ends up filling my trash can to the brim. My dad's neighbor works for the post office, you should see the $500,000 stunner he lives in, his kids go to private schools and his wife doesn't work. The price of postage is already ridiculous and I personally have started paying bills online because of postage costs. And one other thing, I end up with all my neighbors mail in my mailbox and I have to deliver it myself...where do I send my bill?

Posted by: connie1118 | September 30, 2010 9:00 PM | Report abuse

I got tired of the increase in postage rates, year after year,

I haven't written a check to pay a bill in over six years, until about six months ago, when checks were written for child care.

I pay about thirty bills a month, electronically, rather than have a hassle with the USPS.

The only time I seem to be going to the Post Office is the day before Thanksgiving Day, when I drop off my Christmas Cards for my current and potential clients.

I've even switched over to a Pitney-Bowes postal machine, so I don't have to get stamps.

Posted by: Computer_Forensics_Expert_Computer_Expert_Witness | September 30, 2010 9:33 PM | Report abuse

the Post Office get no federal tax dollars like DOD or DOJ get. they are totally self-sufficient, something the PO will not tell you....

Posted by: Rockvillers | September 30, 2010 9:35 PM | Report abuse


OVERPAID and BONUS greedy supervisors, managers, postmasters, area managers, district managers, national managers are ruining what was once a good service.

It's time to clean house in front office.
at the badly mismanaged post office.

Posted by: chicago77 | September 30, 2010 9:41 PM | Report abuse

You're nuts if you think UPS and FedEx represent a better delivery offering than USPS. What can you get at either for under a dollar? The rate could go up to a dollar a letter and you'd still be way ahead than with UPS and FedEx!!!

And the commenter who complained about the problem being too few clerks is so very confused. If you want more clerks so that you face shorter lines, then you have to increase the revenue so that they can hire more clerks! This is not about unions. When unions were strongest, so was America. The problem is congress interfering with how this business is run, when it is NOT supported by tax dollars. I can understand if they are the one funding it and therefore set the rates it can charge, but how can you tell a business it is fiscally on its own then tie its hands and not let it set its pricing by what the market will bear?

Like I said, they could go to $1 per letter and they still wouldn't lose any business to FedEx or UPS.

Posted by: Dutton1 | September 30, 2010 11:41 PM | Report abuse

Eliminate parcel post, but contract with UPS or FedEx to offer equivalent service at post office counters.

Start closing post offices but contracting with CVS to offer postal services. That's how they do it in Canada.

Posted by: Nemo24601 | October 2, 2010 4:14 PM | Report abuse

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