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GGD-77-13 1 (1977-01-11)

handle is hein.gao/gaobaagyo0001 and id is 1 raw text is: DOCUMENT RESU L 00448 - (A05909283 Pros ard Cons of Linking Postage Rates to the Consumer Price Iaidex. GGD-77-13. Jinuary 11, 1977. 8 pp. + 5 appendices. Staff study by Victor L. Love, Director, General Government D-v. Contact: General GoTernment Di!.. Budget Function: Commerce and Transportatior: Postal Service (402). Organization Concerned: Postal Service. Congressional Relevance: House Committee on Post Office and Civil Service: Postal Service Subcommittee. Authority: Postal Reorganization Act (39 U.S.C. 101). Postal Reorganization Act Amendments of 1976. Positive and negative aspects result from linking postage rates to an index like the service component cf the Consumer Price Index (CPI). Several situations were forecast for the price of a first-class stamp between 1977 and 1984, using projections of change in the CPI. Findings/Conclusions: Assuming declinitig mail volume, forecasts show that by 1984, if postage rates were tied to the CPI, the price of a first-class stamp would be 20 cents; the Postal Service operating deficit for that year would be $4.7 billion and the cumuuative operating deficit vould be $25 billion. Using the CPI service index, the stamp voul. be 22 cents, the operating deficit $4.1 billion, and the cumulative deficit $22.6 billion. Assuming increasing mail volume, the price of a firzt-class stamp vould be 20 cents in 1984. 1ut the cumulativc deficit would be $19.9 billicn if linked to the CPI and $17.9 if linked to the CPI service component. On the positive side, indexing would enhance public understanding of rate increases, allow busiressmen to accurately forecast future postage expenses, and simplify the ratemaking process. On the negative side, indexing might increase the amount of the Federal subsidy to the Postal Service and reduce the desire to minimize unpopular rate increases. (RRS)

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