Re NVI : Post Office to Issue 'Forever Stamp'

Post Office to Issue 'Forever Stamp'

By RANDOLPH E. SCHMID, Associated Press Writer1 hour, 57 minutes ago

How about this for a hedge against inflation — a postage stamp that
stays valid for mailing a letter no matter how much rates may go up.

The Postal Service's governing board is considering issuing the
"forever" stamp — and seeking an increase of 3 cents in the first-class
rate — probably to take effect in the spring of 2007.

Like most Americans, the agency is feeling the bite of rising fuel
prices — each penny increase in a gallon of gas costs the post office $8
million — and payroll, health expenses and other costs have also been
going up.

And, unlike private delivery companies, the post office cannot simply
add a fuel surcharge to its rates.

The forever stamp would help soften the blow of a rate increase by
allowing customers to stock up. As originally proposed it would sell for
the first class rate and, once purchased, the special stamp would remain
valid for whatever the first-class rate is when it is used, regardless
of future increases.

Once the post office proposes a rate change, including the new stamp,
the matter goes to the independent Postal Rate Commission, which holds
hearings and has 10 months to consider the matter before responding.

The earliest a change would take effect would be May 2007.

The cost of a first-class stamp went from 37 cents to 39 cents in
January. Before that, the price had been unchanged since 2002.

The proposed increase would boost the price of mailing a letter to 42 cents.

The increase in January was required so the post office could place some
$3 billion in an escrow account, a step required in law.

The House and Senate have both passed bills to eliminate that
requirement and efforts are under way to resolve differences between the
two versions, but it also faces the threat of a presidential veto.

Since that increase went into the escrow account, the Postal Service
still must cover rising costs of fuel, salaries, equipment and other
expenses.

In addition to its own fuel expenses, the post office has about 70,000
employees who use their own vehicles and are reimbursed for fuel costs,
and there are some 17,000 contractors whose rates are adjusted for
rising fuel costs.

Overall, the Postal Service expects to finish this fiscal year about $2
billion in the red.

While a 3-cent increase in first-class stamps would be the most visible
change, rates will change for other types of mail also.

For example, it currently costs 63 cents to mail a two-ounce first-class
item whether it's a letter, large flat envelope or package. But the post
office makes more than 30 cents on the letter, 10 cents on the flat and
loses money on the package.

That means the agency will be looking at shape as well as weight in
setting new rates, officials have said, particularly in the face of a
decline in first-class mail as more people pay bills and send messages
via the Internet.

Congress mandated the escrow requirement in 2003 when it passed a law
reducing the amount of money the agency has to pay into its retirement
system, which auditors said was being overfunded. Instead, Congress
ordered the money to be used to reduce debt and, when that was done, to
be put into the escrow fund.

The White House has opposed the release of the money from the fund
because placing it there counts as income for the federal government and
releasing it would have the effect of raising the deficit.

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U.S. Postal Service: http://www.usps.com