The twenty-five cent stamp; why it's here and why it shouldn't be

Washington Monthly, Nov, 1987 by Marianne Szegedy-Maszak

To cool the controversy his policies had generated, Klassen vowed not to raise rates that year. Not until the election was over, that is. A secret White House memo, obtained by Jack Anderson, showed that Klassen deliberately avoided requesting a rate hike during President Nixon's reelection campaign. After the election, the deficit was announced: $438 million, more than double what it had been before Klassen took over a year earlier. The price of a stamp hopped from 8 to 10 cents.

His chosen heir, Benjamin Franklin Bailar, succeeded him three years later, declaring that the only problem with the Postal Service was its failure in "letting the public be aware of the good service they are getting.' Over the next three years, Congress poured $2 billion in emergency aid to cover huge budget deficits, and Bailar raised the price of the first-class stamp from 10 cents to 15 cents.

Billy and the jet

Then came the Bolger Boom. Imagine the roaring twenties, bathtub gin and razzle-dazzle musicals, and you will get some idea of the Postal Service's later years under Bolger. Although he was tight-fisted in his early years, particularly with labor, by the 1980s wasteful spending on consultants, elaborate modernization schemes, and executive perks caused the bubble to burst.

It was Bolger who pushed Zip Plus Four without figuring out how to get people to use it. Then there was PRISM. It started out as a simple computer system to help window clerks keep track of receipts. But before long, everyone else wanted in, including dock workers and supervisors in regional centers. The system got so complicated it didn't work and was cancelled this year. Another $50 million down the drain (cheap by Zip Plus Four standards).

Subsequent Bolger brainstorms included Intelpost, an international facsimile service that cost $1 million a year in promotion alone (charged, of course, to other classes of mail). The program's receipts in 1985 totalled $70,000, less than an assistant postmaster's salary. Then came ECOM, an electronic mail service that cost customers 26 cents per message and the Postal Service $2.00. Total loss: $100 million.

How on earth could Bolger keep funding such boondoggles? It was easy. During the Bolger era, the postage stamp went from 15 cents to 22 cents.

You might be wondering just how these enterprises could continue well after a real business would have jettisoned them. Surely the people in L'Enfant Plaza could see something was going wrong, even without the spur of the marketplace. It's "institutional hubris' argues Van Seagraves, publisher and editor of Business Mailers Review, a trade publication. "The bureaucracy becomes involved and the projects become ends in themselves,' he said. "The groups of people pushing PRISM, working with contractors, are . . . a long way away from basic postal service.'

While he may have avoided some corporate conventions (like cost accounting) Bolger did adopt at least one key element of private sector management. He got himself a jet, a nice Cessna Citation II, at $1.6 million. Never mind that he announced his hankering for a plane at the same 1983 board of governors meeting where he proposed a 15 percent rate increase.