- The Washington Times - Saturday, March 23, 2002

ASSOCIATED PRESS
Sending mail will cost more starting this summer, from birthday cards to bank statements, charitable appeals to newspapers and magazines.
The increase including a 3-cent boost to 37 cents for first-class mail may come as soon as June 30, giving the cash-strapped U.S. Postal Service a boost as it tries to cope with declining business and hundreds of millions of dollars in costs from the September 11 terrorist attacks and anthrax scare.
All that remains is for the Postal Service's governing board to set the date.
Postal Rate Commission Chairman George A. Omas yesterday announced approval of the rate agreement, which was worked out by the post office and nearly 60 organizations and businesses. The deal allowed the commission to avoid the months of legal wrangling that usually accompany rate cases.
He said the increases would give the post office "breathing room" to deal with its financial problems, "an immediate influx of revenue while holding rate increases to a reasonable percentage for postal customers."
Commission member Danny Covington said the board realizes no one likes rate increases but also recognizes that the terrorist attacks have had a profound effect on the nation and the Postal Service.
The postal Board of Governors unanimously decided the morning of September 11 just before the attacks to ask for the rate increases.
"The fact is, our options are limited. We must take the necessary action today," Robert F. Rider, chairman of the Postal Board of Governors, said at that time.
The board will take up the increases at its April meeting.
Yesterday's announcement comes only days after a General Accounting Office report warned that raising postage will never cover the Postal Service's costs.
"USPS's basic business model is not sustainable," the GAO said in a report to the Senate Governmental Affairs Committee. As mail volume declines, the Postal Service raises rates to make up for the lost business, which in turn makes more customers turn to alternatives.
Critics of the Postal Service refer to rising rates and declining volumes as a "death spiral" with serious consequences for the $900 billion-a-year mailing industry.
"They're not getting better, they're getting worse, even with the postal-rate increases," said Gene Del Polito, president of the Association for Postal Commerce. "This is the fiscal death spiral that people have been predicting."
The Postal Service plans to release a transformation plan to Congress within days. The proposal describes three scenarios for restructuring the Postal Service through federal legislation, according to Robert Cohen, a Postal Rate Commission economist.
He disagreed that the Postal Service is headed toward a financial collapse. "I don't think it's a death spiral," he said.
The agency had a loss of $1.68 billion last year and anticipated one of $1.35 billion this year, despite freezing new construction and cutting 12,000 jobs.
Then came the attacks in New York and Washington, followed by the anthrax-by-mail contamination, slapping the agency with hundreds of millions of dollars in costs.
Tom Ramstack contributed to this report.


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