The Looming Post Office Bailout

The United Stares Post Office is issuing new ‘forever’ stamps @ $0.44 with the idea that the stamps will remain valid, regardless of rate increases that occur in the future.

Beginning in January, all new stamps good for 1 ounce of first-class mail will be marked as “forever.”

The move is designed to help customers cope with postage increases, a U.S. Postal Service official told The Associated Press on Tuesday. The official requested anonymity to discuss a policy that hasn’t been announced formally.

In reality, this move is only kicking  the can down the road and stetting up a possible ‘bail out’ of the USPS:

However, consider the implications of this action. The Post Office is currently experiencing a severe budget deficit and has been unable to gain approval for a postal rate increase. In addition, they are threatening to stop delivering mail on Saturdays as a way to cut costs. As Peter Schiff astutely points out in this interview with The Daily Bell, the Post Office is trying to solve their short term revenue problems at the cost of even bigger problems down the road.

The Post Office will try to use any short term increase in sales from these forever stamps to solve their immediate fiscal problems. But if the Post Office is already having trouble operating at full capacity with current prices, imagine how difficult it will be to do so in five or ten years after inflation has pushed their costs up AND they are selling even fewer stamps because so many people already purchased them in the past.

In fact, this move is setting the stage for a future taxpayer bailout of the Post Office because it virtually guarantees its future bankruptcy.

The low price of stamps is not the reason why the Post Office is facing such huge deficits. The Post Office is seeking a 5.6% increase in the price of stamps despite an inflation rate of just 0.6%.

The government run US Postal service lost $8.5 billion last year and is projected to lose nearly $7 billion next year. This is the same government that is beginning  to run our health care system under the guise that it will ‘reduce costs.’

Comments
  • John Carey January 12, 2011 at 11:59 pm

    Yeah that makes me feel all warm and fuzzy inside. Can’t run a post office, however matters of health care are now in their hands…nice.

    • steve January 13, 2011 at 6:15 am

      It is truly absurd to think that the government that can’t deliver mail without loosing billions of dollars is some how administer health care for everyone in the country. And save money.

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