Can the Postal Service be Saved?

(CBS)  This story was written by CBSNews.com political reporter Brian Montopoli.

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It's been an ugly few years for the United States Postal Service.

The quasi-government agency announced this week that it lost $3.8 billion in the most recent fiscal year, which ended September 30th. It also delivered less mail - 26 billion fewer pieces less, a nearly 13 percent drop from the previous year. The bad news follows losses totaling $7.8 billion in 2007 and 2008.

The Postal Service, as it is quick to point out, is legally prohibited from taking tax dollars. But in order to stay afloat, the agency has been actively borrowing from the U.S. Treasury: At last count, according to Postal Service spokeswoman Yvonne Yoerger, it owes the government $10.2 billion.

Federal law dictates that the Postal Service can borrow up to $3 billion per year - but the debt cannot grow beyond $15 billion. That means that while the agency, which had revenues of $68.1 billion last year, could potentially borrow another $3 billion in 2010, it will soon no longer be able to legally borrow billions from the government.

Meanwhile, the Postal Service is estimating that without significant changes, it will lose another $7.8 billion in the coming year - and deliver another 11 billion fewer pieces of mail.

Which raises the question: Could the Postal Service be doomed?

"I don't think the Postal Service is in danger of going away totally," said Yoerger, the Postal Service spokeswoman. "But our current business model needs to be reviewed and revised to come up with a sustainable model so that we can get back to profitability while still continuing to meet our mission of serving all of the country with affordable, universal Postal Service."

Yoerger told CBSNews.com that the Postal Service is seeking "flexibility to better manage our business." Translation: We may technically be a government agency, but we're also a business -- and we want the government to get out of the way.

The agency cut $6 billion in expenses over the past year, eliminating 40,000 of its roughly 750,000 jobs and slashing overtime hours. But it says that isn't enough. And it's pushing for two major changes that it suggests could help get it back into the black in 2010.

The first is freedom from a government-mandated requirement that the agency pay more than $5 billion per year into a fund to cover its retired employees' future health benefits over a ten-year period. The government allowed the agency to forgo $4 billion of that obligation this past year, but the requirement remains on the books.

The second goal, critics say, is a fundamental threat to the identity of the Postal Service: The end of Saturday mail delivery. The Postal Service has suggested cutting Saturday service could save 3.5 billion per year, though the Postal Regulatory Commission (PRC), which regulates the Postal Service, puts that figure at $2 billion.

The head of the PRC, Ruth Y. Goldway, urged "caution" about cutting Saturday service in Congressional testimony earlier this month. She said such a move could undermine "the vitality of the mail system" and the justification for its mail monopoly.

"From a market perspective, the Postal Service could lose its greatest strategic advantage - ubiquity," she said. "Reducing service is detrimental to mail growth and to public perception of the value of the mail system."

Illinois Democratic Rep. Danny Davis, a member of the Congressional subcommittee that oversees the Postal Service (and, until recently, its chairman), told CBSNews.com in an interview that the agency "is between a rock and a hard place."

"It's just not generating the money that you need in order to keep operating," he said.

Davis said he was open to cutting Saturday service - perhaps on a rolling basis, so that certain communities would lack Saturday delivery once or twice a month - as well as loosening the health benefit requirements. He also backed a government bailout for the embattled agency if that's what it takes to keep it afloat.

"We've bailed out a lot of things, and I think the Postal Service is probably as important in one sense as some of the other places where we have put public money," he said.

Added Davis: "I'm not afraid of spending public money to keep money flowing."

Another way to increase revenue, at least in theory, would be to raise the cost of postage, which remains exceedingly low compared to other countries. But that move is bitterly opposed by the businesses (such as catalogues and credit card companies) whose mailings now make up a major portion of what the postal service handles. (In June, a Gallup poll found that two in three Americans would prefer to cut Saturday delivery if it meant keeping postal rates low.)

At the heart of the debate is the question of what the Postal Service means to America. Its mission is to bind the country together - to connect "every American household, business and institution through its universal service network," in the words of PRC chair Goldway, who told Congress that the agency is "literally part of the fabric of the nation."

But its identity, in this technological age, has become increasingly uncertain. Most Americans today communicate not by mail but by cell phone, e-mail and instant message; the notion that the Post Office provides a vital connection to the outside world seems increasingly quaint to anyone with an Internet connection.

Of course, not everyone does - and the private companies that would theoretically step in if the Postal Service were to disappear would not be mandated, as the Postal Service is, to serve every address in the country. For a small group of Americans, a mailbox is a lifeline - and the Post Office is a resource that can't easily be replaced.

"We need the Postal Service," says Davis, who says the agency keeps "that link" between people "alive." How to keep if from going the way of the Pony Express, however, remains an open question.

"We're like Humpty Dumpty on the wall," he said, suggesting the agency is teetering on the brink of disaster. "We haven't come up with anything that I know is actually a solution to the postal crisis."

[Dyonisus]

Get rid of the "bonuses". My bonus is, if I do my job, I get paid. Rumor is that the Postal bonuses paid to managerial and administrative employees is above what the losses are. I wish someone would do an actual accounting of that. We lost quite a few people to cutbacks. Then they hired two more supervisors. It would seem that if you have less people who actually do the work, you shoudn't need more supervisors who spend their time on the phone or standing around doing nothing constructive. They sure aren't working. I'm supposed to have a worksheet made out by the supervisor, every day, to show what jobs need to be done. I get the exact same worksheet every day that has both the work that needs to be done and what we have already done that week, neither of which shows what is done or not done, and I have to spend my first half hour at work trying to figure out what I need to get done that day. My supervisor does not actually work my shift, he works whatever hours he wants. Comes in late on Monday and comes in extra early on Friday so he has an extra long weekend every weekend. When I need him for something he's never here. And that's how it is everywhere. It's a good thing I'm close to retirement.

[Accountabilityinpower]

Hold those at any level (Especially the higher level,not just lower level employees like it is NOW), who make a decision that cost the potal service money, personally and finacially responsible. We will not have a negative cash flow. Anyone who steals, sexually harasses, physically assaults, files false reports, etc. will be terminated, not transferred or just momentarily demoted, and prosecuted to the fullest extent of the law.

[stopwastingmoney]

clerk at USPS 30 years now and sick of the poor management. No sense of urgency to get the mail out, the work day is one of parties and making friends IF you are one of the boss's pets. The rest of us are expected to keep our heads in the sand and pretend this circus going on around us doesn't exist. Our custodian has so little to do he does mail handler work. Our mail handler (concerning work) tells us to "slow down, this is a marathon, not a sprint". My Union steward is more concerned with becoming Union president that any contract issues we have. My boss barely knows a letter from a haystack, stupidest woman I've ever met. She got thrown out of one post office, and into ours. Been Hell since.

[stopwastingmoney]

clerk at USPS 30 years now and sick of the poor management. No sense of urgency to get the mail out, the work day is one of parties and making friends IF you are one of the boss's pets. The rest of us are expected to keep our heads in the sand and pretend this circus going on around us doesn't exist. Our custodian has so little to do he does mail handler work. Our mail handler (concerning work) tells us to "slow down, this is a marathon, not a sprint". My Union steward is more concerned with becoming Union president that any contract issues we have. My boss barely knows a letter from a haystack, stupidest woman I've ever met. She got thrown out of one post office, and into ours. Been Hell since.

[bppettie]

Apparently they have already made the decision to cut Saturday mail. But why wait six months to implement it? Save the 1 billion more by immediately stopping Saturday mail. Also, since it saves at least 2 billion/year to cut omail by one day, why not cut down to 3 days per week. Almost nothing important goes through the mail today anyway.... we can wait an extra day for our bills and who needs all the junk mail at all let alone every day? Monday, Wednesda, Friday delivery would be the way to go. Don't necessarily have to fire anyone, but as they retire, don't rehire!

[GeneJets1]

I am a letter carrier for almost 25 years and one thing is consistent. I still hear the same whining from those who think they know everything about the USPS and how it can be fixed or dissolved.

First of all,our TOP pay after years of service is $53,684. I don't have the same pension plan as those who started prior to 1984. Most of my retirement will come from monies I invested in a 401k(like many private firms offer). As for the carrier who made $88k w/overtime,I don't know of anyone who has come close to that in all my years.
My income could be considered high in some red states where they still believe that the world was created only a few thousand years ago. The only area that is dumber has to be in the radical religious middle east. In the northeast, my income is only one paycheck away from the poverty level. People who want to work in a non- union environment could also make out well in Alabama or Misssisippi, but in my area, as in many other more developed parts of the country, those people(like Walmart employees) have to work 2 other jobs to just get by. Unfortunately the turnover rate and the quality of the workforce leaves a lot to be desired. Is that the euphoria that unionized labor critics are dreaming about?
As far as small businesses go ,they are really the economic backbone of the country. Postal employees ,police ,and teachers etc that have negotiated contracts with fair income levels can help support these small businesses in masses. The good people who work at Walmart can unfortunately only afford to shop at Walmart. So now maybe we should abandon any purchasing power(if any) that postal employees might have. Gee,that should solve the larger problems that we inherited from the union busting Ronald Reagan clones(or should I say sheep, or maybe tunnel visioned playgroung bullies).
My route is supervised daily and timed a few times a year by strict postal guidelines. I have a specified road time that I must adhere to within reason. Yes, there are days when I have less mail, the weather conditions are optimal,and traffic conditions are light. I can then take my 1/2 hour lunch,(2)ten minute breaks, travel to a rest room once or twice within my alloted time and be back off the road without exception before 5pm. Then,there are most other days,when it's raining,snowing(or snow covered),seasonal anomalies in package volume, sale flyers,etc. I still have to adhere to my road time,and in a safe manner.
Not everyone knows that in the morning, we still sort our flats(magazines and larger pieces of mail)and some letters(although most of our letters arrive in delivery point sequence). We will be getting our flats in order soon. This is a cost cutting procedure that will eliminate man hours in the office. Our routes will get longer and there will be less of them. That means less postal jobs by using mechanical substitutions.
The USPS is FAR from perfect, but I invite all of the outsiders who love to hear themselves sound important, to sit down and compare prices for the services offered(So much for privatization).
The person who claimed that we pay $53 biweekly (family)for Blue Cross, has his head up his uninformed ass. We pay exactly $110.72 biweekly with a SUBSTANTIAL increase coming in Jan 2010.
To those who think we are headed for Marxism, they should blame the Republican Marx Bros. who stole the election in Fl. in 2000,and then kept Alfred E. Newman in power 8 years, for the mess that we're in today. We have the highest rate of unemployment since 1987(Ronald Reagan?) Only shortsighted idiots would blame President Obama for the mess we're in now. The same idiots that know VERY little about the postal sevice.God bless us that we have a man in the white house with positive vision for the future.
I forgot to mention that we do have TE'S(temporary employees)working side by side with us,there has been a hiring freeze for some time now, and we have not had a cost of living raise for some time(understandably so, but it has been the bulk of our contract now and in the past,while other expenses such as medical have gone up). Overtime (if any)is at an all time low. Many job positions and titles have been eliminated through restructuring as well as early outs and attrition.
Senior citizens like your parents or grandparents,who are the most vulnerable, look forward to items like their medicines being delivered 6 days a week. We also keep an eye on them and others in times of emergency . Yes, the future is here with internet, but there is still a place for inexpensive 'in hand' delivery of more services than the average person tends to realize.

[renegade1001]

The biggest problem is that by law they have to deliver to every address no matter how rural the location is. Besides eliminating Saturday service they should only deliver to a single location for towns with a small population.

[shoppekeeper]

A few suggestions from an 'old time' user of 1st class and 3rd class bulk services.

1. Stick to the post office's core business of delivering letters. Get out of the "express mail" and package business, the usps can't compete with Fedex or even UPS. If the USPS must stay in the package business, have concierge service for clients mailing packages to make sure all the proper forms are filled out BEFORE they get to the counter. Probably reduce the number of clerks by 20%.

2. Stop trying to sell photos, shipping containers, etc. at the store. Most customers don't know which containers are free and which are supposed to be paid for. The loss of inventory must be astronomical.

3. Stamps should be sold ONLY through vending machines or through 3rd parties. If customers want a particular printed stamp, let them order 'on line'.

4. Get into the 21st century. Why not an web site where clients could buy money orders and pay bills electronically. The income from ads that could be sold from this site could probably eliminate the need for postage on all first class mail.

[astatist]

"Sorry, this line is closed"

[Live-free-or-die]

Lets run this like a business. 5 day delivery, the ability to change with the times, workers that really work instead of hiding when they finish milking their route because they might have to work like the private sector.

Provide reasonable benefits and work rules and I'm sure they can make a profit. Another classic example of how Unions are destroying our the country.

[MARINE2089]

for the past 20+ years the USPS has been adjusting routes because of volume, road time, ect so there is no hiding or milking the routes. management walks each carrier several times a year. the union doesn't have the muscle that you think...