Senators: Feds Overcharge For Passports

Passports - June 8, 2007, CBS Early Show segment
First, Americans endured exasperating delays and ruined vacations from passport processing backlogs. Now, a congressional investigation indicates they may have been overcharged, too - perhaps by more than $100 million a year.

Sens. Byron Dorgan, D-N.D., and Charles Schumer, D-N.Y., said the State Department and Postal Service quietly gouged U.S. citizens over the government's $97 passport fees, even as new anti-terrorism laws require more travelers to carry passports. They are asking the Bush administration for an accounting of where the passport profits go.

Over the past year, as the government issued nearly 14 million new passports, it collected at least $111.4 million more in passport fees than its stated costs, according to calculations by The Associated Press based on figures from State Department and congressional investigators.

The government's standard $97 fee is just a start for some people. The State Department offers to send travelers a passport in a hurry for an extra $60 plus overnight delivery costs. Some private companies offer speedy service for $180 or more. Passport photos typically cost $15.

Since 2005, a new passport has cost $97 for adults, $82 for children under 16. At the senators' request, congressional investigators studied whether a $30 portion of that charge was justified.

The $30 is intended to cover the cost of clerks examining and accepting passport applications at post offices, State Department passport offices, courthouses, libraries, municipal offices and universities.

The investigators' findings? The government's $30 fee was roughly double the actual cost when imposed in 2002. The Postal Service, which operates 5,382 locations where people can apply for passports, estimated its costs at $13.31 in 2002. The State Department, which operates 14 passport offices, said its costs were $16.20 at that time.

"This is not supposed to be a profit-making venture," Dorgan said. "They charge 30 bucks just for passing something across the counter."

Robert Tollin of New York City, who received his passport in June just in time for his honeymoon in Mexico, was angry when informed how much the fee exceeded the costs.

"That's over a 200 percent markup," Tollin said. "Maybe I should be in the Post Office business. That's an exorbitant markup. I don't mind paying a service fee, but that's outrageous."

The remaining $67 is spent producing the passport booklet and for related costs, such as rent at passport offices, security guards and background checks. Investigators from the Government Accountability Office did not look into that portion of the fee.

A Postal Service spokeswoman, Joanne Veto, said the agency's $13.31 figure was not an accurate reflection of its costs when the fee was imposed. Congressional investigators, however, said that was the figure the Postal Service gave the State Department for use in setting the $30 fee.

The State Department said in a statement, "We aren't able to comment on GAO reports before they are officially released."

The department told the GAO it has hired a contractor to perform a new cost study of the fee before December 2008.

"It's sort of a tax," Schumer said. "Where did all the money go? What are they going to do to correct it?" Schumer and Dorgan have asked Secretary of State Condoleezza Rice to determine whether fees should be lowered.

The reputation of the government's passport agency was severely tarnished during the summer, when a processing backlog by July left more than 2 million people waiting for passports. Officials said 500,000 were left waiting more than three months, trying to obtain what typically is ready in six weeks.

Vacations, weddings, honeymoons, business meetings, education plans and nonrefundable deposits all fell victim to the delays. People lost work time waiting in long lines.