USPS postmaster general warns of sharp stamp price hike

USPS Postmaster General John Potter has warned that a postal rate increase planned for 2006 could be 4 cents or more for first class letters unless restrictions on how the agency operates are eased.

Potter asked a joint House-Senate hearing on the future of the post office to free USD3 billion in postal funds from an escrow account and to remove a USD27 billion obligation for the agency to cover military retirement benefits for its workers who previously served in the armed forces.

The agency is facing a future clouded by shrinking mail volume and rising costs. It is asking Congress for help becoming more flexible in responding to market conditions and for funds to cover anti-terrorism efforts.

Last year Congress passed a law lifting a requirement for the post office to overfund retirement benefits, a step that resulted in Potter’s pledge not to raise rates until 2006.