In a new proposal by the financially embattled United States Postal Service, first-class postage could rise 6.5%, or 3 cents, to 49 cents a stamp, in early 2014. The hike would increase revenue by roughly $2 billion a year. The new pricing, along with hikes for other type of mail, including postcards and packages, would take effect on January 26.

USPS Board of Governors Chairman Mickey Barnett states, “of the options currently available to the Postal Service to align costs and revenue, increasing postage prices is a last resort that reflects extreme financial challenges.” The cash-strapped Postal Services has been suffering great losses due to pre-funding payments for retiree health benefits – the service posted a $15.9 billion net loss last year, and is expected to record another $6.9 billion loss this year.

The Postal Service, which is under a congressional mandate to increase funds, will require an approval from the Postal Regulatory Commission, as rate hikes cannot exceed the rate of inflation, which is roughly 2% at present. Still, the new proposal seems like a quick fix to some. Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, states, “today’s rate increase is a desperate cry for help from an insolvent Postal Service. Revenue and volume are down dramatically and our mail delivery service, hamstrung by congressional mandates and onerous labor contracts, has been unable to sufficiently reduce costs.” Issa adds, “This rate hike and the ones sure to follow will only push more and more private sector customers to stop using the mail altogether – The rate increase poses a direct threat to the 8 million private-sector jobs that are part of the mailing industry as businesses shift from paper-based to electronic communication and mailers are priced out of business.”

The struggling Postal Service, established in 1775, and one of the few government agencies explicitly authorized by the United States Constitution, has also tried to cut costs elsewhere, including a proposal to end door-to-door delivery for millions.

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