You may not know this, but the U.S. Postal Service (USPS) raised the price of a first-class stamp this past weekend—by one penny, to 46 cents. It also introduced a “Global Forever” stamp, which can be used to send letters anywhere in the world for $1.10.
My advice: Stock up on “forever” stamps. For while a one-cent increase in regular stamps might not seem like much, if the USPS doesn’t get its act together, we’re likely to see far higher prices in the future. Though there are now limits on postage increases, the related financial math doesn’t come close to working over time.
The Postal Service is in trouble. The agency is bleeding red ink; has hit its authorized borrowing limit with the Treasury; and is unable to make its scheduled retirement funding contributions. Something has to give ‑ and must this year.
Sound familiar? In so many respects, the USPS is a microcosm of the federal government — two entities in desperate need of fundamental transformations that will make them more focused on the future and financially sustainable.
Like the federal government overall, the USPS has dug itself a very deep hole. In fiscal 2012, the USPS experienced an operating deficit of almost $16 billion on revenue of about $65 billion. Granted, this deficit was exacerbated by the fact that the USPS was supposed to make two larger-than-usual retiree health benefits payments last year. But it didn’t pay either. Even if you subtract these additional scheduled payments, the Postal Service would have still run a deficit of more than $10 billion. Most important, without significant legislative and operational reforms, the financial situation will only get worse.