Rate hike backup data must have been held up in the mail

At first glance, the postal rate increase granted this week by the independent Postal Rate Commission -- the price of a first-class stamp will increase from 32 to 33 cents later this year -- doesn't seem out of line.
The current rate has been in effect since Jan. 1, 1995. Three percent inflation over three or four years doesn't sound bad.
But gaze a little deeper, and the Rate Commission's decision starts to look a little odd.
The year before the last rate hike was granted, the Postal Service lost nearly $1 billion. But since the 32-cent

first-class rate in place, the post office has reported profits in the past three years of $1.8 billion, $1.6 billion and $1.3 billion, respectively.
And the changes OK'd this week are expected to produce another $2.4 billion in revenues, of which about $1 billion would result from the extra penny on first-class mail -- the rest coming from less visible increases for other classes of mail.
In announcing its "reluctant" decision, the commission noted that it had asked the post office, in light of its recent profits, to delay its request and send more up-to-date information for the panel to consider.
When the Postal Service's governing board declined to provide that more up-to-date information -- arguing it could delay things by as much as three months -- the "independent" regulators simply granted the rate hike, anyway.
It is "unfortunate that the two agencies were not able to cooperate,"

 
the regulators said, "chiding" the Postal Service "for not delaying its request in order to provide more up-to-date information," according to The Associated Press.
But why should the Postal Service cooperate, when it gets what it wants even without providing the back-up data requested?
When was the last time you heard of the bank down the street expressing "disappointment" that a mortgage applicant had declined to provide up-to-date salary and credit information ... and then approving the mortgage, anyway?
Not only that, the "reluctant" Postal Rate Commission (with a heavy heart, no doubt) then proceeded to recommended a 12.3 percent increase for parcel post, and a 4.6 percent increase for periodicals ... more than the 9.2 percent and 3.9 percent hikes sought by the Postal Service, in the first place.
(That'll show 'em.)
The Postal Service says it will use the added revenues to fund a $5.6 billion "equipment and service enhancement program" this year. Postal managers also argued that it's wiser to raise rates now, rather than to wait till profits turn to losses, as occurred in 1994. (The Postal Service reports it

operates at a profit margin of 2 to 3 percent.)
But of course, even if the postmasters were to bring their books to the table, it's virtually impossible to figure out how much of those costs and expenditures are justifiable, in a situation where no competitive market exists for the postal service's main product -- first class mail.
While it is often reported that "taxpayer subsidies to the post office ended two decades ago," there are less direct forms of subsidy than direct cash handouts.
If Federal Express or United Parcel Service were someday to win a competitive bid to deliver mail in a given area, would they be provided with government land and facilities rent-free, as the postal service often is today? Would they be excused from paying into the inefficient and structurally insolvent Social Security Trust Fund, and allowed to set up their own, separate employee retirement plan, as the postal service now does?
Even without such hidden benefits, in a competitive environment, could innovative competitors deliver a first-class letter, reliably, for 30 cents, or 25? There's no way to tell, since they're forbidden by law to even try.
And until such a competitive market