Time to Raise Rates on Junk Mail

In early July, facing a projected deficit of $7 billion for 2010, the U.S. Postal Service proposed a combination of rate increases and cutting Saturday mail service. In part, this deficit is due to the 17 percent decline in deliveries, down from a high of 213 billion pieces handled in 2006.

But the recently created Affordable Mail Alliance (AMA) has announced its opposition to raising rates. Their argument: other carriers like FedEx and UPS are also suffering from budget shortfalls due to the recession, so the Postal Service’s deficit does not qualify as “extraordinary circumstances,” which are required for the Service to raise rates beyond inflation.

Yet what the AMA is really saying is that the Postal Service should not be able to control its own business decisions, even though it does not receive a single dollar of taxpayer support. Why? Because this rate increase will hurt the bottom line of AMA members—700 businesses and nonprofit organizations that bombard Americans with billions of unwanted catalogs, solicitations, and funding appeals every year. If rates increase, AMA members won’t be able to spam America as much and might make fewer sales.

What the American public (and the U.S. Congress) really needs to ask is whether this decrease would be a bad thing.

According to Earth911, about 19 billion catalogs are sent to Americans each year. The environmental consequences are huge: the deaths of 53 million trees, the use of enough energy to power 1.2 million homes for a year, the use of 53 billion gallons of water, and the release of 5 million tons of carbon dioxide emissions. Add to this the billions of other pieces of unwanted mail that Americans receive, and you have a major contributor to the nation’s environmental problems.

In its press release, the AMA gives lip service to the fact that this postal increase will hurt everyday Americans too—even though the proposed rate increases are limited to a few pennies and will therefore only significantly affect bulk mailers. But if this is really a concern for the coalition, how about this: let’s raise the rates just for advertising and direct mail solicitations. These increases can help keep the Postal Service solvent, minimize effects on individual Americans, and, in the process, reduce total junk mail and the resultant environmental impacts (not to mention mailbox clutter).

This is a model that has proved effective with cigarette taxes: the higher they go, the fewer cigarettes people buy (but not enough to reduce net tax revenue). So why not apply this formula to another problematic industry? Americans need a strong postal service, but certainly wouldn’t suffer from a reduction in Land’s End catalogs, car insurance quotes, and urgent appeals from their college alumni funds.

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