26 Mar 2001 Yet Another Postage Rate Increase is Not Justified

Post Office Could Hold Down Costs for Customers By Reducing Waste and Boosting Productivity

The U.S. Postal Service’s consideration of yet another increase in the cost of first class mail and bulk mail, following the rate increases that took effect in January, is indefensible in light of the Postal Service’s mismanagement, a bloated payroll and more than a billion dollars lost each year due to waste, fraud and abuse.

In January, the price of first-class mail rose from 33 cents to 34 cents while the price for bulk rate mail increased by 9.9 percent. Now, the Postal Service may want another increase this year. The Postal Service is paying insufficient attention to reports by the General Accounting Office (GAO) and the Post Office Inspector General that cite unacceptable waste and poor management practices that, if corrected, would help hold down the cost of mail delivery.

According to the GAO, the Postal Service loses at least $1.4 billion annually in waste, fraud and abuse. In testimony to Congress last year, the Postal Service Inspector General said that the Postal Service needed to increase management controls in order to keep costs in line. The Inspector General cited mismanagement in contract administration, inadequate budget planning and ineffective program oversight resulting in hundreds of millions of dollars lost to fraud and mismanagement.

In addition, the Postal Service’s productivity is less than stellar. From 1990 to 1998, Postal Service productivity decreased by 0.6 percent compared to a 7 percent increase for private nonfarm productivity and a 13.9 percent increase for manufacturing productivity. At comparable productivity growth rates, the Postal Service would have saved as much as $8 billion in costs.

"The Postal Service just can’t assume that it will be allowed to continue to ignore these glaring inefficiencies," says John Carlisle, who heads regulatory programs for The National Center for Public Policy Research. "Since 1962, the price of a first class stamp has risen by 725 percent. Even with the recent hike in energy prices, gasoline has risen by less than 500 percent. Clearly, it’s time to tell the Post Office to clean up its inefficiencies and stop making consumers bail it out."

The National Center For Public Policy Research is a non-partisan, non-profit education foundation. For more information, contact John Carlisle at The National Center For Public Policy Research at 202-507-6398 or [email protected].