June 27, 2002

Washington, D.C. -- The U.S. Post Office just launched a new advertising campaign targeted at small businesses called "Real People. Real Success."  Unfortunately, as evidenced by large postal rate increases going into effect on June 30, the U.S. Postal Service is anything but friendly to small businesses, according to the Small Business Survival Committee (SBSC).

SBSC President Darrell McKigney noted: "While the Post Office is reaching out to small business with this new ad campaign, it is hitting the bottom line of small businesses with a sizeable postal rate hikes.  Clearly, actions are not following words."

For example, the price of a first-class stamp is set to rise by 8.8%, Priority Mail by 13.5%, Express Mail by 9.4%, and periodicals by 10%.

SBSC chief economist Raymond J. Keating observed: "Why does the Post Office supposedly need a rate hike?  Because it is hemorrhaging money.  In fiscal year 2001, it lost $1.7 billion. Postmaster General John Potter told Congress in May that without a rate hike approval, losses could be top $3 billion, perhaps approaching $4 billion."

Keating added: "These massive losses come despite the fact that the cost of postage has risen dramatically over the past several decades.  For example, from 1962 to 2002, inflation (as measured by the GDP price deflator) will have registered an estimated 392% -- a whopping jump.  However, the price of a first-class stamp has skyrocketed even higher - up by 825% over this period once this latest hike takes effect."

Keating concluded: "Only a government entity could raise prices by twice the rate of inflation, and face losses registering billions of dollars.  For good measure, when a private business falters, it must focus on doing a better job for consumers, including cutting prices.  Ultimately, failure in the private sector means bankruptcy.  However, as a government entity, the Post Office's failure means it gets more money.  It's time for the U.S. Post Office to be fully privatized.  The government should sell it off, and let it truly compete in the marketplace."

SBSC is a nonpartisan, nonprofit small business advocacy organization with 70,000 members nationwide. For more information, please contact SBSC at 202-785-0238, or visit SBSC's website at www.sbsc.org.  # # #