Senate seeks to salvage U.S. Postal Service

U.S. Postal Service trucks are seen parked near the loading dock at the U.S. Post Office sort center Aug. 12, 2011, in San Francisco. / Getty Images

(AP) WASHINGTON - With big postal cuts looming, the Senate is deciding whether to stabilize the ailing U.S. Postal Service with a short-term cash infusion while delaying most decisions on closing post offices and ending Saturday mail delivery by requiring further review.

The mail agency, teetering on the brink of bankruptcy, says it needs to begin closing thousands of low-revenue post offices and mail processing centers this year as part of a billion-dollar cost-cutting effort to become profitable again by 2015. But local communities are fretting about the economic impact and tens of thousands of layoffs, drawing the concerns of lawmakers in an election year.

Late last year, Postmaster General Patrick Donahoe agreed to delay closings until May 15 so that Congress would have time to pass legislation to shore up the agency's finances.

Postal Service warns of possible default

The bill being debated on the Senate floor this week was recently modified to take into account the concerns of mostly rural states. For instance, it would:

-Cut in half the number of mail processing centers the Postal Services currently wants to close — from 252 to 125 — allowing more U.S. areas to maintain overnight first-class mail delivery for at least three more years. Currently there are roughly 500 mail processing centers.

-Slow if not stop many post office closings by forcing the agency to consider the special needs of rural communities and undergo additional layers of regulatory approval. For instance, the Postal Service might have to downsize rather than close facilities, or factor in whether rural residents might have poor Internet service or have to travel longer road distances should a post office close.

-Require the Postal Service to wait at least two years before it could reduce mail delivery to five days a week, a cut that is being urged by the Obama administration and that could save between $2 billion and $3 billion a year.

In the meantime, the Postal Service would get a cash infusion of roughly $11 billion, basically a refund of overpayments it made in previous years to a federal retirement fund; the agency could use the money to pay down debt and offer buyouts to 100,000 postal employees. It would be allowed to make smaller annual payments into a future retiree health benefits account, which currently amounts to more than $5 billion a year; get more flexibility to cut worker compensation benefits; and be required to establish a chief innovation officer to find new ways to bring in postal revenue.

Left out of the bill was a proposal to raise the price of a first-class postage stamp by 5 cents, to 50 cents, to help pay for the added cost of keeping low-performing post offices and mail processing centers open. Estimated to bring in $1 billion, the rate increase was omitted due to concerns that a price increase would be counterproductive by pushing more consumers to cheaper alternatives of delivery, such as the Internet.

The Senate measure "does not rule out some cutbacks in services or post offices, but it would require USPS to exhaust all other options beforehand and ensure that its decisions are based on sound planning," said Sen. Joe Lieberman, I-Conn., a bill co-sponsor.

"We believe this approach offers the best hope for stabilizing the Postal Service and putting it on solid footing long-term, without dramatic and perhaps self-defeating cutbacks in service," he said.

The Senate planned to debate the measure for the next several days. The House has yet to begin consideration of a different version of a postal bill, which seeks in part to create a national commission that would make major decisions on postal cuts.

The measure comes as the mail agency has been rocked by steadily declining mail volume as people and businesses switch to the Internet in place of letters and paper bills.

Already $12 billion in debt, the mail agency says it could run out of money for day-to-day operations as soon as this fall, forcing it to shut down some of its services. The mail agency forecasts a record $14.1 billion loss by the end of this year; without changes, it says annual losses will rise to over $21 billion by 2016.

At stake are more than 100,000 jobs, part of a postal cost-cutting plan to save some $6.5 billion a year by closing up to 252 mail-processing centers and 3,700 post offices. In a report released last week, federal auditors stressed that "dramatic changes" were needed to stem the Postal Service's mounting debt and that the agency's proposal to close mail processing centers was an important part of accomplishing that goal.

The report by the Government Accountability Office also noted the challenges of making postal cuts due to community opposition. Hundreds of postal employees in cities around the nation in recent weeks have rallied to draw attention to the proposed cuts and urge lawmakers to oppose them.

Donahoe has said communities on the final closure list will be notified in July.

"The Postal Service is at a crossroads. Our business model is broken," Donahoe recently told a House hearing. He has previously criticized the Senate measure as offering only a short-term revenue fix. "We have insufficient revenue to cover our costs ... If the Postal Service were a private company, we would be engaged in Chapter 11 bankruptcy proceedings."

The Postal Service, an independent agency of government, is subject to congressional control on major aspects of its operations.

[aldrich617]

Perhaps the Senate could agree to let the Post Office sell rural
mail-boxes. This would be a small step in the direction of allowing
the USPS to expand to provide more services to the public, but unnamed sources say that Walmart continues to be afraid of the
competition and has let its buddies in the media know that they
may never mention the subject in any article, whether it be online
or hard copy.

[ajvw]

This must be Al Gore's fault. He invented the internet.

[Twaker]

Doesn't make any difference who runs the PO. Just keep congress out of it.....they have proven many times over that they can screw up a one car funeral.

[Twaker]

Don't look now but another part of the government (Social Security) is about to take some revenue away from the PO by going to electronic delivery of SS checks.

[stormerF69]

That is OK most SS checks are electronically deposited now anyway,And they can use tax dollars else where instead of for postage.

[marychgo]

Thanks, Postal_Slave, for the facts. Too bad CBS and other media either ignore the facts or bury them well below the lede. There are PARTS of our communication process that UPS and FedEx (and fax and email) handle more efficiently than the USPS, but I don't see our need for reasonably priced (non-premium) door-the-door delivery service disappearing anytime soon!

[Postal_Slave]

"What follows are facts and context about the situation at the U.S. Postal Service, aimed at putting the flurry of recent headlines in context and clarifying what's at issue and what's at stake. The fate of the U.S. Postal Service is a major national issue affecting every American, every community, every business and yet what typically is reported is misleading and incomplete. As a result, few of your readers/viewers/listeners know the real story and or what can be done going forward. Despite what you may have heard, the Postal Service isn't broke. Nor is it losing billions of dollars a year delivering the mail. And a taxpayer bailout isn't imminent. Reduced services are being presented as a foregone conclusion, but they're not. The massive cuts in service to residents and businesses being proposed, allegedly to address these problems, are not inevitable, necessary or constructive.

The financial problems facing the Postal Service aren't caused by the cost of delivering mail; they're caused largely by Congress, and Congress can solve them. These facts can readily be verified; the conclusions flow directly from those facts.
Visit www.SaveAmericasPostalService.org for documentation.

The Postal Service isn't funded by taxpayers. All its revenue IS
earned from the sale of its products and services, meaning that the dire warnings of a taxpayer bailout are completely unfounded. The Postal Service hasn't used a dime of taxpayer money in 30 years. The Postal Service made a net profit of more than $600 million
sorting and delivering the mail the past four fiscal years. You read that correctly. Despite the worst recession in 80 years, despite competition from the Internet, despite everything you've heard, postal operating revenues exceeded costs by $611 million in the four fiscal years since 2007. Customer satisfaction and on-time deliveries are at record levels, labor costs are declining, worker productivity has doubled, and for six years running the American people have named postal employees the most-trusted federal workers. U.S. citizens and businesses benefit from the most inexpensive and most efficient mail system in the industrialized world.
So why the headlines about multi-billion losses and a Postal Service in financial free fall? There is indeed a financial problem, but it's not what you've been told. It doesn't result from mail delivery. The $20 billion in postal losses you've heard about stems from a 2006 congressional mandate that the Postal Service pre-fund future retiree health benefits for the next 75 years
and do so within a decade; a burden no other public agency or private firm faces. The Postal Service is actually paying, out of its operating budget, for the future retiree benefits of people who haven't BEEN BORN YET. That cost $21 billion since 2007 and accounts for 100 percent of the agency's red ink that period.

The other big financial problem, which also has nothing to do with the mail, is that the Postal Service doesn't have access to tens of billions of dollars of earned revenue that are sitting in surplus funds. As a quasi-public agency, it needs Congress to give it access
to its OWN MONEY. Because a dysfunctional Congress (remember the debt ceiling fiasco?) has yet to take these steps, postal officials are desperate as they face the $5.5 billion pre-funding payments due every fall. So they're proposing a series of drastic cuts: One day it's to end Saturday delivery, another day to close 3,700 post offices, or fire 120,000 employees, or close 300 processing centers. Each has serious downsides for residents and communities and local businesses, for the U.S. economy, for the future of the Postal Service. They would exacerbate rather than solve the agency's problems, by sacrificing its competitive edge and driving away customers.

Even if the current financial snafus are fixed, why would the Postal Service have a future, given the Internet? This isn't the first time the Postal Service has had to adapt to an evolving society or to technological change. It did so with the telephone, the telegraph, the fax machine and more, each time emerging stronger, offering
new and improved services to meet society's changing needs. Today, the Internet offers both challenges and opportunities. More people are paying bills online, but they're also ordering goods online that need to be delivered. One of the fastest growing profit centers
within the Postal Service is doing "last-mile" residential deliveries for UPS and FedEx, which it can do inexpensively because of its universal network is helping reduce costs for the private carriers and for their customers.

[Postal_Slave]

The point isn't that congressional action would erase all challenges, but rather that once lawmakers address the elephant(s) in the room, the pre-funding and the lack of Postal Service access to its own surplus funds, then thoughtful solutions can be devised to
meet those challenges. The entire postal community, management, labor, Postal Regulatory Commission, legislators, & the mailing industry can come together and determine how to adapt the business model and what new services would help customers. This cannot be done in the current panic mode, with congressional inaction forcing management to throw every possible cut against the wall to see what sticks, while anti-government ideologues exploit the situation.

Why is it important to save the Postal Service? Because it's the centerpiece of a $1.3 trillion mailing industry that supports 8 million jobs. Because it is indispensable in the overall economy. Because its role is included in the Constitution. Because it binds together this vast land nation, offering inexpensive service to every resident no matter how remote, and it also unifies individual communities. And, because this unique universal network has value we often don't even consider, including in the area of public safety. Under President George W. Bush, when
homeland security officials needed a way to distribute medicines to residents in the event of a biological incident, they turned to the Postal Service and letter carrier volunteers. That program is now set up in Minneapolis, a second pilot program was recently completed in Louisville, and a few weeks ago the plan was expanded to San Diego, Philadelphia and Boston. Moreover, because they know their neighborhoods and their customers, every week letter carriers save the lives of elderly residents who've taken ill or fallen down, find
lost children or missing pets, and put out fires. Each year on the second Saturday in May, letter carriers conduct the nation's largest single-day food drive, replenishing food pantries across the country.

In a time of rapid societal and technological change, we need to strengthen our universal communications and delivery network, not weaken it. It would be a national travesty to begin to dismantle this unique network, jettison its numerous capabilities and jeopardize all its contributions, when the financial challenges, when
properly understood, can be addressed in ways that are more effective and cause no damage." ~ from a press release from SaveAmericasPostalService.org

[bspdyz]

let me tell you i think the usps needs to be shut down . most of them anyway . someone is putting lotts of money in their pockets around here orsomething cause every time i go to the post office their is a 20 min waiting line ..stamp machines take your money want give stamps and they have lost 3 packages in the past 6 months costing me over a 100.00 plus my time . u belive the mail man runs after dark here. post office closes on wensday at noon . that dont matter heck they only open when they want . if you send something from dalton it goes to chattanooga then back to rockyface then back to chattanooga and dalton . they need to open their eyes and cut down on the bs..

[Obama4more]

Amazing.......

[stormerF69]

You need to write to your Georgia congressman.

[Obama4more]

by saythereverse April 17, 2012 5:13 PM EDT
Yea lets salvage the Union jobs that loose Billions every year on a service that can easily be done far CHEAPER by the private sector. WOW never any limit to the VOTE buying of the democrats.
-----

FedEx and UPS move a letter from one end of this country to the next for .45 or less...??? Bet not sucker!!!!

[aldrich617]

While the above news piece is much better than the usual media
cant about the USPS, nowhere was it mentioned that in the latest
quarter it had an operational PROFIT of $200000000 or that the
$12 billion or so in current debt level is entirely due to a
nasty, unnecessary health care prefunding mandate levied by Congress.
Congress has made it look like the USPS is bankrupt, but without their interference it would be scraping by in the black, and
unfortunately it is only Congress that can set things aright.

Donahoe is correct in saying that the postal "business model is
broken", but much of the problem is due to lack of positive
leadership at the top. The first step in saving the Post Office
should be his resignation.

For a different and more accurate take on the Postal dilemna,
check out The Ed Show segment of about two weeks ago.

[Postal_Slave]

Completely agree!

[TLUnrine1]

What is there to salvage? The Mailman's Union (ok, you are letter carriers)is running commercial/propaganda saying that the Post Office is totally self-sufficient, and works off of revenues from postage only.

To that the Union postal employees?

Mean to tell me this was just a lie? From a Lobbyist? I feel let down.