Postal Service Budget Woes Mean More Junk Mail

Postal Service tries to increase junk mail to close $11.6 billion budget gap.

Sept. 21, 2012 -- That mailbox-filling heap of junk mail is set to pile a little higher next year as the U.S. Postal Services turns to America's least-loved type of mail in an attempt to solve its massive budget woes.

Last month the Postal Service's regulatory body green lighted a deal with the direct mail advertising group Valassis giving them a 30 percent to 45 percent discount on any additional standard mail, aka junk mail, sent for the next three years.

For the Postal Service, the deal means an additional $4.7 million and $15 million in new revenue, according to the Postal Regulatory Commission. For consumers, it means another coupon-filled catalog in their mailboxes starting in early 2013, Valassis spokeswoman Cindy Hopman said in an email.

The Postal Service is in dire financial straits, hemorrhaging more than $5 billion last quarter and on track to default on another $5.6 billion benefits payment this month. It has already cut post offices, jobs and hours.

"Advertising mail is a critically important part of the economic engine that funds USPS services," USPS spokeswoman Darlene S. Casey said in an email. "The postage paid on letters, checks and bills (First Class Mail) is no longer enough by itself to fund the universal mail service Americans enjoy today."

The 83.5 billion coupons, catalogues and credit card offers that advertisers sent through standard mail brought in $17 billion in revenues for the Postal Service in 2010. The average household received 9.6 pieces of that advertising mail each week, 20 percent of which they tossed in the trash without ever opening, according to the Postal Service.

That discarded junk mail added up to 4.3 million tons of trash, according to the Environmental Protection Agency. But, as Casey pointed out, those direct mailers made up a mere 2.4 percent of the 254 million tons of municipal trash created that year.

Beyond adding to wastepaper piles, the Postal Service's push for more junk mail is striking a foul chord with newspapers, who claim the deal with Valassis puts newspaper ad sales at risk.

"The Postal Service should focus on cutting costs and getting the mail delivered on time – and not on using rates to confer a significant and unwarranted advantage on one competitor at the expense of an entire industry," Caroline Little, the president of the Newspaper Association of America said in a statement following the decision.

The Newspaper association charges that the Valassis deal – the only one of its kind that Casey said the Postal Service has made – threatens $1 billion of newspapers' advertising sales.

"Competition is fine," the Las Vegas Review-Journal editorial board wrote earlier this month. "But should the Postal Service be stacking the deck this badly?"

In an attempt to shore up it's already $11.6 billion budget shortfall this year, the Postal Service has closed 500 post offices, cut operating hours another 13,000, and bumped 9,000 employees down to part time with no benefits.

Nevertheless, low cash flow caused USPS to default on a $5.5 billion payment to pre-fund health benefits for future retirees. It is set to default on a second $5.6 billion payment Sept. 30.

As the Las Vegas Review-Journal points out, the $15 million that the direct mail deal could bring in represents one-thousandth of the budget deficit the Postal Service is facing this year.

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