USPS announces Saturday service cuts in effort to slash costs

(CBS News) Get ready for some big changes in your mail service. After losing $16 billion last year, the postmaster general announced Wednesday that the Postal Service intends to halt Saturday delivery of first-class mail by this summer, Aug. 1. That means most mailers, letters and catalogs would not arrive on Saturdays, ending a 150-year tradition.

The plan to shrink delivery from six days a week to five would only affect first-class mail, while packages, mail-order medicines, priority and express mail would still get delivered on Saturdays.

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Sen. Tom Coburn, R-Okla., says the move will save the struggling postal service $2 billion a year. "It's a proper business decision and (in the) long run, good for the Postal Service and good for Americans."

The Postal Service has lost $41 billion dollars over the past six years as more and more Americans turned to private shippers, email, and online banking.

To save money, the Postal Service slashed hours of service at about half the nation's 26,000 post offices and trimmed its workforce by 35 percent.

But it wasn't enough. David Walker, a former government watchdog, is part of a panel looking at possible postal reforms. Walker told CBS News' Nancy Cordes the new measure "won't come close to solving the postal service's problem. It's got to look at more fundamental changes in its infrastructure, its compensation costs, its retirement obligations, and also what it does and who does its business."

But there's just so much the Postal Service can do without congressional approval. Despite years of begging by postmasters general, Congress never passed a reform bill that would have given the Postal Service more flexibility to modernize and streamline its service.

Asked whether the Postal Service is making this announcement because they're trying to force Congress to act, Coburn said, "No, I don't think so at all. Look, they're in survival mode. You're not going to have any post office. I mean, here's the alternative: They're losing $25 million dollars a day. A day. They have to do something."

Coburn and Rep. Darrell Issa, R-Calif., the two top Republicans on the House and Senate committees that oversee the Postal Service will issue a letter Wednesday going to House and Senate leaders, asking them to support the elimination of Saturday service and change the law that has prevented the USPS from doing this in the past. The letter reads, in part, "What has impeded the Postal Service from phasing out universal Saturday delivery of letters is an appropriations rider carried in law since 1984 that ties six-day mail delivery to the acceptance of roughly $100 million in reimbursement from the federal government for services rendered by the Postal Service. According to Postal Service estimates, the rider constitutes a more than $2.5 billion annual unfunded mandate. With the current [fiscal year] 2013 government funding resolution set to expire at the end of March, we ask that the six-day mail rider be omitted from any subsequent government funding legislation, enabling the Postal Service to implement this necessary reform without impediment."

And, they point out: "This change has bipartisan support. President Obama has repeatedly called for moving to five-day delivery of mail, most recently in his FY 2013 budget. Furthermore, according to an October 2011 Quinnipiac poll fully 79 percent of Americans endorse the shift."

Technically, the Postal Service is not allowed to its reduce service unless Congress changes the law, but lawyers for the Postal Service think that they have "figured out a way around the law."

For Nancy Cordes' full report, watch the video above.