With the U.S. Postal Service on the verge of bankruptcy, the agency’s Board of Governors was scheduled to begin discussions on an emergency postal rate increase this week.
While a rate hike would raise revenue in the short term, it also would have the likely effect of chasing away customers — something that the USPS can ill afford.
“Increasing rates cannot be part of a sustainable solution because this will add to the Postal Service’s structural deficit problem by driving more postal volume to e-commerce competitors,” said Rafe Morrissey, a spokesman for the Greeting Card Association, in comments quoted by The Washington Post Thursday.
There has to be a better way, and Congress should follow through on reform measures. Separate bills in the House and Senate would temporarily relieve the Postal Service of a legal requirement to set aside $5.5 billion a year to provide for future pension and health insurance obligations established through collective bargaining with the postal unions.
The Government Accountability Office warned last year, however, that reducing the pre-funding requirement, over the long term, could lead to insufficient reserves that might have to be covered by taxpayers.
Postal unions would rather eliminate the pre-funding requirement outright, but that would increase the likelihood that those obligations eventually will be dumped on the taxpayer.
The unions also disagree with other cost-saving proposals that could result in a loss of jobs.
Postmaster General Patrick Donohoe has put forth an alternative cost-cutting plan to create a new Postal Service health benefits plan and require retirees to make greater use of Medicare.
Clearly, something needs to be done, with the USPS losing $15.9 billion last year.
Congress should get behind cost-cutting measures that will help solve the postal service’s financial crisis without an emergency rate increase or a federal bailout.