Postal Service to raise prices as Congress demands payout

October 18, 2011

The U.S. Post Office will be increasing prices, but not nessisarily cutting delivery -- yet. Image: Flickr / z0 / CC-BY-SA
The U.S. Post Office will be increasing prices, but not nessisarily cutting delivery -- yet. Image: Flickr / z0 / CC-BY-SA

The U.S. Postal Service, though it’s a government-run agency, must be entirely self-funded and maintain a balanced budget. In order to do this, the Postal Service is increasing some prices and asking for permission to reduce delivery frequency.

First Class prices to go up by a penny

As of Jan. 22, 2012, the price of a single first-class Forever Stamp will go up to 45 cents. This is the first price increase since 2009. Current stamps will still be valid once this price change takes effect, as all first-class stamps are now Forever Stamps, which are valid for a letter up to 1 ounce. Postcard prices will go up 3 cents, foreign North American continent mail will go up 5 cents and other foreign mail will go up 7 cents.

Postal Service limited by law

Legally, the post office is not allowed to raise prices any more than the rate of inflation. Currently, that is about 2.1 percent. In the 2010 fiscal year, the Post Office lost about $8 billion. The price increase is expected to raise about $888 million. Legally, the USPS must request approval for any rate changes from the Postal Regulatory Commission. Lawmakers in Congress must also vote to approve any major regulatory changes in the operation of the postal service.

Postal service required to make payments

A major part of the reason the Postal Service is unable to balance its books is the requirement that the USPS pays $5.5 billion per year into the federal budget in order to cover future retiree benefits. The USPS has requested that this payment be delayed, but doing so would increase the amount of the federal budget deficit. The National Association of Letter Carriers has also hired a former White House adviser to handle negotiations about changes to the postal service. Several changes have been proposed, including closing thousands of Post Offices, reducing or removing Saturday delivery and cutting other delivery services.

Sources

Washington Post: http://www.washingtonpost.com/blogs/federal-eye/post/postal-service-says-stamp-prices-are-going-up/2011/10/18/gIQAriktuL_blog.html
Boston.com: http://www.boston.com/news/nation/washington/articles/2011/10/18/mailing_a_letter_to_cost_a_penny_more_next_year/
MSNBC: http://www.msnbc.msn.com/id/44897142?ocid=ansmsnbc11#.Tp3bsmOP-_0

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