- The Washington Times - Tuesday, November 15, 2005

BLOOMBERG NEWS

The U.S. Postal Service approved a 2-cent increase in the price of a first-class stamp, its first rate boost since 2002.

The 5.4 percent rise, approved by its board of governors, to 39 cents is effective Jan. 8, the Postal Service said. The additional revenue will be used to establish a $3.1 billion escrow account required by law, the service said.

The rate for sending a 2-ounce, first-class letter will rise to 63 cents from 60 cents, and a postcard will climb to 24 cents from 23 cents.

The agency has been battling a decline in first-class mail as more people use the Internet and e-mail. The agency reported a net loss for its third quarter in August and said income for the first nine months of the year is $250 million below forecasts.

The escrow requirement was established by lawmakers in 2003 to change the way the Postal Service funds a federal retirement account. It is part of legislation that requires the agency to pay $27 billion in pensions earned by workers during military service. Before 2003, the U.S. Treasury Department had been responsible for the pension payments.

Postal officials have been trying to get Congress to change the law. Without the escrow requirement, the Postal Service wouldn’t need to increase rates until 2007, said Postmaster General John Potter.

The Bush administration has opposed dropping the escrow funding because it would increase the federal deficit, according to the Congressional Research Service.

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