The U.S. Postal Service on Wednesday proposed raising its mailing prices beyond a statutory cap on rate hikes in a move that would take effect in late-January if the Postal Regulatory Commission approves the changes.

The increases would affect first-class, standard, periodicals and package mailing. The cost of a stamp would increase from 46 cents to 49 cents, while the rate for letters beyond 1 ounce and postcards would rise 1 cent.

(David Goldman/AP)

Under current law, price increases for the Postal Service cannot exceed the rate of inflation, except under extraordinary circumstances and with approval from the regulatory board. USPS officials have said the proposed changes are necessary to help balance their books in the absence of postal-reform legislation.

“Increasing postage prices is a last resort that reflects extreme financial challenges,” USPS Board of Governors Chairman Mickey Barnett said in a letter to customers on Monday.

The Postal Service recorded a loss of nearly $16 billion during the last year and is on track to lose another $6 billion in the current cycle.

Barnett said the agency would reconsider its pricing if Congress passes postal legislation to help the USPS deal with its financial problems. The Senate and the House have proposed measures to that effect, but the fate of those bills is uncertain.

Both pieces of legislation involve cutbacks in service and changes to a prefunding requirement for USPS retiree benefits that has cost the agency more than $5 billion each year.

The sponsors of those bills expressed little enthusiasm for the rate proposals on Monday and called for swift passage of their measures.

House Oversight Committee Chairman Darrell Issa (R-Calif.), who developed the House plan, described the proposed price hikes in a statement as a “desperate cry for help” that would do little to help the Postal Service in the long-term. “This rate hike and the ones sure to follow will only push more and more private-sector customers to stop using the mail altogether,” he said.

Senate Homeland Security and Government Affairs Committee Chairman Tom Carper (D-Del.), who helped create a bipartisan Senate proposal, said a congressional overhaul of the USPS is the only way to put the agency on sound financial footing heading into the future. “I hope this [Postal Service] announcement brings key stakeholders to the table and urges all parties to work harder to find common ground,” he said.

Stakeholders on Monday reacted negatively to the USPS proposal.

Mary Berner, president and CEO of the Association of Magazine Media, called the plan a “terrible substitute for badly needed legislative reform,” adding that the increased rates “will cause significant declines in mail volume and further job losses across the industry without addressing the USPS’s core issues.”

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