Facing a $7 billion debt and an ever-decreasing customer base, the United States Postal Service announced today that it plans to jack up the price of first-class postage by $.02 to $.46. Facing an even bigger hit are magazine publishers and shippers of small parcels, who face hikes of 8% and 23% respectively.

If approved by the Postal Regulatory Commission, the new rates would kick in starting Jan. 2, 2011. The USPS predicts the increases would bring in over $2 billion in the first three quarters of next year.

While most of us won’t be that hurt by a $.02 increase, the 8% increase on periodicals has publishers seeing red.

“The Postal Service is wrong on the law, wrong on the economics, and wrong as a matter of public policy,” said a guy from the Magazine Publishers of America, who added that publishers will fight the increase.

Also impacted by the higher rates will be businesses that ship parcels by USPS. Parcels under one pound will see a 23% hike while the rest will increase by 7%.

The USPS is justifying the exorbitant rate ramp-up by citing a legal provision that allows them to increase postage at a rate higher than inflation under “exception or extraordinary” circumstances.

“We’re doing this because the Postal Service really faces a serious risk of financial insolvency,” said a USPS official, who then went on a three-hour lunch break while the line at the window continued to snake out the building.

Postal Service Seeks 2-Cent Rise in First-Class Mail [BusinessWeek]

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