Two More Pennies For Your Letters

First Rate Hike Since 2002; Postal Service Blames Congress, W.H.

(CBS) 
Originally, the fund was earmarked (at the request of the administration) to pay for the military pensions of veterans who subsequently went to work for the Postal Service. The USPS asked Congress to intervene, but all that happened was that the eventual use of the escrow fund is still up in the air. The agency still has to come up with $3.1 billion

Because Sunday's rate increase doesn't cover postal operating expenses, another hike is likely next year.

"As I think everybody knows, every household knows, that the cost of living has increased ... and we will ultimately begin to have to look at how we pay for those increases down the road," McKiernan said.

A one-cent increase in the price of gasoline costs the USPS $8 million, he said.

So the Postal Service is thinking about requesting another rate increase.

The USPS Board of Governors might make the formal request in late spring of this year. It then goes to the independent Postal Rate Commission, which can take (and usually does) up to 10 months to make its recommendations.

The PRC can accept the USPS request, deny it, or modify it. The Board of Governors then can accept the PRC recommendations, or override them — but only by a unanimous vote.

The Postal Service then needs a month or two to get ready for a rate change. All that puts the next increase no sooner than early 2007.

No such cumbersome process is needed for international rates: The USPS can raise them at will, and is, also effective Sunday. One-ounce letters to Canada and Mexico will cost 63 cents, and 84 cents to the rest of the world.

Within the U.S., Priority Mail packages will start at $4.05, up from $3.85, and Express Mail, up to a half pound, goes from a starting price of $13.65 to $14.40.

Postal customers with packages who want to avoid the inevitable lines Monday may want to use the Automatic Postal Center machines in many post office lobbies that accept cash or credit cards, or the USPS Web site, www.usps.com.

The U.S. Postal Service became a quasi-independent company in 1971, but its owner is the federal government, and its Board of Governors is appointed by the president. Although it does not receive direct subsidization from the government, it is reimbursed for some of the special services it provides, such as free mailing privileges for members of Congress and those in military service outside the U.S. It also does not have to pay federal, state or local taxes.