Wednesday, April 09, 2003

First Class monopoly

The U.S. Postal Service will freeze their stamp rates until 2006 under legislation passed yesterday by Congress. The bill permits USPS to reduce payments to its employee pension system, which is currently overfunded. The nearly $3 billion saved by this move will be used to help pay down the Postal Service's $11 billion debt. In exchange, first-class stamp rates will remain at 37 cents for at least three more years.

A number of industry groups representing mail-heavy businesses (such as nonprofit groups) obviously applauded this action. Yet there seems to be little call among organized lobbyists for the abolition of the Postal Service's first-class mail monopoly—despite the fact opening all mail services to competition would likely lower costs and improve service in the long term. There is currently a presidential commission studying "reform" of USPS, but given the political pull of postal worker unions, any substantial change in the first-class monopoly appears unlikely.

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