Postal Service Asks for 2-Cent Stamp Increase

After nearly three years of the 37-cent first-class stamp, the U.S. Postal Service asked Friday for a 2-cent increase -- but said it hoped Congress would pass legislation enabling it to withdraw the request.

The increase, which would bring the cost of a first-class stamp to 39 cents, would be part of a 5.4% across-the-board hike in postage rates.

The main reason, the postal service said, is not the cost of business, but the cost of legislation.

In 2003, Congress reduced the amount of money the service paid into its pension fund after auditors discovered the agency would be contributing too much in the future.

For three years, the money was directed toward paying off the postal service’s debt. Then it was to go into an escrow account. The Bush administration proposed in its 2006 budget to use the escrow account to pay for postal workers’ unfunded future healthcare costs.

Current rates won’t allow the service to generate the $3.1 billion that it must put into the account next year, said Jim Quirk, a spokesman for the service.

“It was a pay-as-you-go system,” said Quirk. “It wasn’t intended

House and Senate committees are considering legislation to eliminate the escrow requirement. If the legislation passes, Quirk said, the postal service will not need to raise rates until 2007.

The rate increase request highlights the need to streamline the postal service’s business practices, said Bill Ghent, a spokesman for Sen. Thomas R. Carper (D-Del.). He added that congressional efforts last year were thwarted by insufficient cooperation from the White House.

“It’s been 30 years since we passed major postal reform,” Ghent said.

The independent five-member Postal Rate Commission will consider the rate increase in a process that usually takes 10 months and includes public hearings. The postal service, which said it needed the rate increase for January 2006, has asked for expedited hearings.

“We will speed it up as much as we can,” said Stephen Sharfman, general counsel for the rate commission, whose members are appointed by the president. “It depends on the extent and complexity of the issues raised by the public.”

The postal service, which is prohibited from making a profit, has been facing financial problems as the Internet has cut into the use of standard mail. The service is delivering fewer pieces of mail to more addresses, stretching resources.

Some organizations suggest eliminating the agency’s monopoly on standard mail and letting private entities compete.

“The rate increase still does not address the structural weaknesses of the postal service,” said Leslie Paige of Citizens Against Government Waste. Paige said the service needed competition or better regulation because its accounting practices and ventures into nonpostal activities made the system inefficient.

Under the postal service’s petition, a first-class letter would cost 39 cents for the first ounce and 24 cents, up a penny, for each additional ounce. The cost to send a post card would rise from 23 to 24 cents.