Postal panel OKs 2first-class stamp Third-class postage rises at higher rate

January 05, 1991|By Los Angeles Times Knight-Ridder News Service contributed to this article.

WASHINGTON -- The U.S. Postal Rate Commission agreed yesterday to raise the cost of mailing a first-class letter to 29 cents, a 4-cent increase, clearing the way for higher rates to go into effect next month.

The independent commission pared a penny off a 30-cent rate that the U.S. Postal Service had requested last March. It also authorized use of a 27-cent stamp on most envelopes provided by utilities, department stores, insurance companies and similar firms for paying bills.

The rate for postcards, now 15 cents, is scheduled to rise to 19 cents -- also a penny lower than the Postal Service had requested.

Postal Rate Commission Chairman George W. Haley said the rate increases, the first since 1988, were designed to impose a heavier burden on third-class "junk" mailers, reversing the trend of rate increases in recent years.

Compared with the 16 percent rate increase on first-class mail, the commission approved increases of 25 percent on third-class or bulk mail and 22 percent on second-class items such as newspapers and magazines.

"The most important part of this is our effort to restore an equitable balance between the two biggest classes of mail -- first and third class," Mr. Haley said at a news briefing. "There has been a trend toward increasing the burden on first class and lessening it on third class. We have tried to arrest that trend."

Direct-marketing executives complained that the higher third-class rates would put some companies out of business.

"It's a devastating thing," said Richard Barton, executive vice president of the Direct Marketing Association, which represents mail marketers. "The backbone of the entire catalog industry is ,, getting hit with a horrendous increase."

Mr. Barton said oversized fashion catalogs would face a 35 percent increase in their postal rates on top of a 25 percent increase imposed less than three years ago.

"I think it's going to push some marginal catalogs right up against the wall, and put some of them right out of business," he said.

But consumer advocate Ralph Nader said first-class postal customers had subsidized third-class mail "for too long." In an interview with the Knight-Ridder News Service, Mr. Nader said business rates should be raised, first-class rates frozen and expenses cut at the Postal Service.

Although the Postal Service's board of governors has the power to reject recommendations of the commission, whose members are appointed by the president, it has done so only once in the past 10 years. The commission's advice generally is accepted by the Postal Service, and both Mr. Haley and Postmaster General Anthony Frank said they thought yesterday's proposal would be no exception.

Mr. Frank, who said he expected that the higher rates would go into effect Feb. 3, ridiculed the commission's decision to settle for 29 cents, calling it "a kind of populist push [that] saves the average family $2 a year."

Mr. Frank criticized as confusing the proposed 27-cent discount rate for consumers who use business-reply envelopes for paying bills. Such courtesy envelopes contain bar codes and an extra four-digit zip code that make their processing easier.

Mr. Haley said the commission adopted that feature to let consumers share in the benefits of cost-saving advances in automation, as business users have done. He denied that purchasing 27-cent and 29-cent stamps would be awkward, noting that most consumers make bulk purchases of stamps.

He estimated the new rates would produce additional revenue of $6.2 billion a year, bringing Postal Service income in fiscal 1992 to $48 billion. The commission is required by law to enable the Postal Service to break even on expenses, he said.

Asked why the commission had not attempted to cut Postal Service operating costs instead of raising rates, Mr. Haley replied: "We on the commission are not managers. We are not in a position to micro-manage the agency."

Mr. Haley said he did not expect the Postal Service to reject the 29-cent rate or put it into effect under protest while asking the commission to reconsider.

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