Facing a financial crisis attributable to plummeting mail volume, the U.S. Postal Service announced today it hopes to close a stark budget gap—amounting to a predicted budget deficit of nearly $7 billion by 2011—by upping postal rates. To the chagrin of publishers and snail-mailers alike, the proposed price changes increase rates for periodicals by as much as 8 percent and the price of first-class stamps by two cents.
If approved by the Postal Regulatory Commission, the increases would go into effect Jan. 2, 2011, and are expected to raise about $2.3 billion over the first nine months.
With the prospect of a proposed rate increase far above the announced average of 5 percent across all mail classes, periodicals mailers are prepared to fight, James Cregan, executive vice president of government affairs for the Magazine Publishers of America, said in an interview with Bloomberg Businessweek prior to the agency's announcement.
"The Postal Service is wrong on the law, wrong on economics and wrong as a matter of public policy," Cregan said, adding he believes the increase would drive away profitable mail, ultimately accelerating the service's "death spiral."
Publishers are not alone in expressing outrage.
A new coalition of over 100 magazine publishers, printers, paper producers and other groups has formed in opposition to the rate hikes. Entitled the Affordable Mail Alliance, the coalition has questioned the legality of an exigent rate hike under current circumstances. Under the Postal Act of 2006, if the Postal Service wants to increase prices above the rate of inflation, exceptional or extraordinary circumstances must be demonstrated.
According to America Post, a website maintained by Affordable Mail Alliance member the Association for Postal Commerce, the most recent recession is not a qualifying circumstance. "Economic cycles have their ups and downs...this is part of life in a country that has a free-market economy. In fact, the circumstances the Postal Service faces today are similar to those faced by businesses across America," reads a question and answer brief posted on its website.
PURLs for Profit
Secrets of List Research (2nd Edition)
