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Postal Service woes: First-class stamps may climb to 46 cents

Beset by a massive budget deficit, reduced volume of mail, and rising health-care costs, the US Postal Service has proposed raising postage rates again in 2011.

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Postmaster General Jack Potter talks with reporters at a Monitor Breakfast in Washington March 11. The Postal Service is raising the price of first class stamps – to 46 cents in 2011.

Michael Bonfigli/The Christian Science Monitor

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Postage rates will increase in 2011, with first-class stamps rising from 44 cents to 46 cents starting in January, pending approval by the Postal Regulatory Commission, the US Postal Service announced Tuesday. It is the latest in a series of cost-cutting, revenue-raising moves the USPS has made as it confronts plummeting service, out-of-control health-care and pension costs, and a massive budget deficit.

After only three rate changes in the 1990s, the Postal Service has boosted rates for domestic letters on seven different occasions since 2000, including five separate increases in the past five years. Postcard rates will also go up two cents in 2011 under the proposal, to 30 cents apiece.

Several business groups expressed opposition to the price hike, calling it a new tax at a bad time. But Sen. Tom Carper (D) of Delaware, the chairman of the Senate subcommittee responsible for oversight of the Postal Service, showed grudging support for the planned rate increase.

"Like many other businesses, the Postal Service is looking at every option available to them to raise revenue and cut costs,” Sen. Carper said in a statement. “Unfortunately it seems like this will be one of many painful choices the Postal Service will have to make in the near future in order to right their fiscal house and adequately address the fiscal challenges they are facing.”

The Postal Service lost $1.9 billion through the first two quarters of 2010 and is facing a deficit of approximately $7 billion next year. Fueling the fire are a toxic combination of rising health-care and pension costs and a massive decline in revenue as Americans abandon mail for electronic communication. The USPS is required by law to pre-fund the $5.4 billion needed for its retired worker health benefits, rather than coming up with it on a pay-as-you-go basis, as other federal agencies do.

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