Why a stamp should cost a buck

This post comes from John B. Saul of MSN Money.

Here's how we can all pitch in to save the U.S. Postal Service: Pay $1 for a first-class stamp.

Sure, that's going to cost the average U.S. household about $80 more a year to mail its 2.8 letters a week, but think of it like football on campus: That muscled-up activity brings in the most money and supports volleyball, water polo and other sports that don't fill stadiums. First-class mail plays the biggest financial role in making it possible for the Postal Service to reach every address in the nation -- 150 million residences, businesses and post office boxes.

A buck a stamp might not be a bargain for mailing letters across town, but if you're in the Lower 48 sending happy birthday wishes to an oil-worker friend in Barrow, Alaska? You can't beat it -- and some argue that the post office should charge according to the distance the mail will travel.

We could avoid that if we all just ponied up $1 to mail a first-class letter. It would still spread out the actual costs of mail delivery and would get the post office out of the $9 billion deficit hole it sees up ahead.

Plus, right now the Postal Service is giving away the store compared with other nations. What cost 44 cents in the U.S. costs 60 cents to mail in Australia, 59 cents in Canada and 70 cents in Great Britain -- where there's no place 3,000 miles away.

Besides, what company would promise to take your envelope and fly it across the country and take it to the right person for a mere 44 cents?

So what does the post office think of the idea?

Not much.

Raising the cost of a first-class stamp by a penny once brought in an additional $1 billion in revenue each year for the Postal Service, said Ernie Swanson, communications program specialist for the USPS Seattle District. Under that formula, $1 stamps would pour $56 billion into the post office's annual revenue stream of more than $67 billion.

Problem solved.

But that old formula is broken. Now when the price of a stamp goes up, more people turn to email, other delivery services and online bill paying.

"A one-dollar stamp might have the opposite effect," says Sue Brennan, national spokeswoman for the Postal Service, driving consumers away and actually decreasing revenue.

Use of first-class mail has been declining for years: down 25% in five years and nearly 50% in the past 10. That trend (.pdf file) is expected to continue, even without a $1 stamp.

Let's say enough people realized what a bargain even a $1 stamp would be and decided to stick with the post office, bringing in half of that former billion dollars for each penny increase. That would still bring in more than $25 billion.

Once again, problem solved.

But there's another hitch in getting a $1 stamp: By law, the post office can only raise the price of a first-class stamp by the rate of inflation, which has been historically low the past few years. The Postal Service did file for a 2-cent "exigent rate increase" last year, an emergency measure that was turned down by the Postal Regulatory Commission.

The Postal Service appealed, but on Tuesday the commission told it to concentrate instead on cutting costs, which is in keeping with the latest post office plans: layoffs, reductions in processing facilities and slower mail delivery to save $3 billion. Post continues after video.

What the post office really wants is more flexibility. For instance, that would make it easier for the post office to do away with Saturday delivery, which now takes an act of Congress.

There's lots of support for that. "If the Postal Service is supposed to survive on its own, Congress must give it more true independence," a Los Angeles Times editorial said. "That means allowing postal managers to decide how many days a week to deliver, to set the rates and to look for innovative ventures such as Internet services that might redefine its mission for the next century."

Here's another idea.

This week the Postal Service dedicated its fourth semi-postal stamp, which sells for 55 cents -- 11 cents more than a first-class stamp -- and $11 for a sheet of 20.

Semi-postal stamps, authorized under a 2010 law, raise money for selected causes. The extra money from the "Save Vanishing Species" stamps goes to help save tigers (this week's stamp shows an Amur tiger cub), African and Asian elephants, rhinos, great apes and marine turtles. The net proceeds from the stamps go to the U.S. Fish and Wildlife Service to support the Multinational Species Conservation Fund.

How about a semi-postal stamp to save the Postal Service?

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