The Exchange

Let’s Raise the Price of a Stamp to $1

The Exchange

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The U.S. Postal Service wants to raise the price of a stamp by three cents, to $0.49. That’s not enough. We should hike the price of a stamp to $1, fix the U.S. Postal Service for good, and end the sorry spectacle of Congress forever toying with an institution it’s too inept to govern.

The Postal Service has become a poster child for incompetence thanks to an astonishing $41 billion in losses since 2006. Any normal company that lost that much money would either be bankrupt or thoroughly thrashed by irate shareholders. Yet the Postal Service bumbles on, with even bigger troubles on the way. It predicts annual losses could exceed $18 billion by 2015.

Blame Congress

Don’t blame the Postal Service, however. Though it’s technically a “self-supporting government enterprise,” the USPS suffers from the worst problem any business could ever imagine: Congressional meddling. In essence, Congress must approve every big change to the USPS business model. As every American knows, Congress is about as productive as a teenager suffering from heat stroke. No matter how dire the agency’s financial situation becomes, Congress always seems too overwrought with other matters to do anything.

The Postal Service has a plan to save $20 billion per year, adapt to the digital age and fix its outdated business model. But it needs Congressional approval to pull that off. Changes would include the end of Saturday mail delivery, centralized mail boxes for more residential customers, reduced benefits for workers and other changes everybody would gripe about but get used to. Many companies have enacted more drastic reforms than those, and thrived. But aside from holding low-wattage hearings, Congress has mostly just yawned at the problem.

The $1 Solution

So hiking the price of a stamp to $1 seems like a straightforward way to align the agency’s costs with its expenses and save Congress the trouble of turning out a few members every now and then to listen to the Postal Service’s familiar tale of woe. The Postal Service says a mere three-cent hike in the cost of a stamp will raise $2 billion per year, so going all the way up to a buck ought to raise many billions more, even accounting for the decline in mail volume that's been occurring, plus the dropoff in sales that usually comes with higher prices. All told, those extra billions ought to more than cover the huge annual losses now expected.

The $1 stamp would appeal to both sides of the political spectrum, so it ought to enjoy bipartisan support in Congress. Conservatives disgusted by the Postal Service’s constant pleas for relief ought to be happy the agency is pricing its product at a level more likely to cover expenses. Granted, those expenses are bloated. But since Congress can’t muster the backbone to reform the Postal Service’s inefficient healthcare plan or eliminate backwater post offices in tiny towns where no sane retailer would set up shop, the next best thing is to charge whatever is required to cover costs. That’s capitalism, especially when there’s no competitor able to offer a better deal.

Liberals ought to be happy that a $1 stamp would continue to finance a level of service the Postal Service otherwise can’t afford, including hand delivery to every home in America, which is about the best deal imaginable in an era of offshore call centers and robotic workers. Maybe the service offerings could even be expanded to include Sunday delivery or sit-down chats with the mail carrier, for lonely customers eager for visitors.

If there’s concern about fixed-income seniors or other customers who might not be able to afford a dollar for every letter they mail, Congress could make postage costs tax deductible for heavy mailers below a certain income threshold, which would let the USPS off the hook and make the whole thing Congress's problem. The porous tax code can certainly withstand one more loophole, and it would give members of the tax-writing committees something to do while their colleagues argue about shutting down the government. Besides, the whole problem of oldsters overdependent on the mail will subside eventually as Millennials become adults and drive right past the post office, wondering what it is.

Most of all, a $1 stamp might force postal customers to think a bit more reverently about the mail. Americans take for granted the idea that they can send a piece of mail anywhere in the country for a price that is almost as low as free. When you pay little or nothing for a product or service, you tend not to appreciate what it takes to provide it. A $1 stamp might imbue the mail with the sort of prestige factor that accompanies upscale goods such as iPhones or haute couture that people are willing to pay full MSRP for. It might even give postal executives a bit of swagger when they head to Capitol Hill asking for help. Better them than their Congressional overlords.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

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