USPS: The Next Amtrak?:
Rate hike on the horizon?
USPS defaulted on its $6 billion pre-payment for employee pension benefits and is losing an estimated $25 million a day. Postmaster General Patrick Donahoe has been dogged in slashing costs by closing processing facilities and post offices and proposing the end of Saturday mail delivery—a measure rejected this past March by the U.S. Government Accountability Office (GAO).
These and other operational measures, which the USPS estimates will total roughly $9 billion of annual savings, won't be enough. The Postal Service has used up its $15 billion statutory borrowing capacity, and little hope exists for a stalled Congress to renew its funding with new legislation. The USPS has pricing latitude, but it has for years stayed with scheduled rate increases in line with the Consumer Price Index. That may soon change. “Maybe mailers will be asked to pay a little more money,” Sharfman predicted...
One way or another, direct mailers will have to get used to the notion of a scaled down Postal Service. “It is going to shrink, it has to shrink,” Sharfman concluded. “As a model, what comes to mind is passenger rail service. It's preserved by Congress, important to some, but certainly not as important as it used to be.”
