U.S. Postmaster General: "We're facing our own fiscal cliff"

This Sept. 6, 2011 photo shows Postmaster General Patrick Donahoe testifying on Capitol Hill in Washington.
File,AP Photo/J. Scott Applewhite

(CBS News) The U.S. Postal Service reported a record annual loss last week of almost $16 billion -- nearly three times higher than the year before. Postmaster General Patrick Donahoe is asking Congress to act now.

Donahoe said on "CBS This Morning," "What we're facing now is our own fiscal cliff in this lame duck session. It's hard. I'll tell you -- all the fiscal cliff (in the news). Hey talk about us a little bit. We have our own fiscal cliff. If they act now, we'll get this whole thing behind us and we can be profitable and then focus on growing the postal business."

In order to improve the organization's financial situation, Donahoe said on "CBS This Morning" that he's asking Congress to refinance retiree health benefits and eliminate Saturday delivery of mail. He said, "We're not asking to get dug out from under, we're taking the responsibility of doing it, but rather than pay $5.5 billion a year we think we should be paying around a billion a year (in retiree health benefits). The second thing we want to do is eliminate Saturday delivery of mail, not packages, just mail. So we would have post offices open Saturday and we would still have package delivery."

The Post Office's problems are two-fold, according to Donahoe. "The situation is this," he said. "Number one, volume has dropped. People pay their bills online. So we lost about 25 percent of our volume in the last five years. Now our people have done a nice job taking costs to balance that out. The other issue we're faced with is we're required by law to pre-fund retirement health care for people who haven't retired yet to the tune of $5.5 billion a year. That's what's hurting us from a financial standpoint. So as the volume dropped, we have not been able to make this payment."

The Postal Service isn't asking Congress for money, Donahoe said. "We want no money. What we want from Congress is this: Change the requirement on the payment structure and allow us to move away from six-day delivery. What that does is change our profit and loss by $8 billion. We would be profitable and be profitable for a number of years doing it."

He also noted that the Postal Service is self-sufficient. "Most people don't realize we're 100 percent self-sufficient. That may not sound good when you lose the money you're losing. ... We pay our own way. We take no tax money. What we operate on, what comes in the door in terms of revenue, stamps and packages."

Changes are coming to U.S.P.S. offices and staffing in the coming year. Donahoe said about half of the nation's post offices are "changing." "We're in the process of doing something called The POST Plan. We have 26,000 post offices across the country. We're changing about 13,000 -- half of them to part-time hours. That keeps them open, keeps the town's identity. The zip code, no change there. But we can do a lot more efficiently, there's no reason to have a place open eight hours a day if you have an hour's worth of business."

By the end of 2013 the workforce will also have to be reduced. "We have reduced our workforce by 280,000 people over the last 10 years, 35 percent," Donahoe said. "We're in the process right now this year of another 40,000. Our people do a tremendous job. They are very efficient."

Privatization of the Postal Service has been a topic of discussion for years, but the issue is delivering to the areas the U.S.P.S. does. "We're required by law to provide universal service to the American public at a universal price," he said. "(FedEx and UPS) are great companies. But there are many parts of the country that FedEx and UPS don't deliver, but maybe two times a week. If we had the flexibility to change delivery schedules, we would make money, too."

For more with Donahoe on changes coming to the U.S. Postal Service, watch his full interview in the video above.