WASHINGTON – Rain? Check. Snow? No problem. The same will go,as always,for sleet and hail. But delivering mail on Saturdays is contributing to unprecedented financial difficulties for the United States Postal Service.
Moving to five-day delivery is one of several cost-cutting proposals Postmaster General John E. Potter defended before a Senate committee Thursday. The Postal Service announced third-quarter losses of $2.4 billion Wednesday and expects more than $7 billion in total losses for the 2009 fiscal year,which closes Sept. 30.
Potter also pushed for consolidation of some postal stations and reduced payments to the Postal Service's retiree health fund before a subcommittee of the Senate Homeland Security and Governmental Affairs Committee.
“As we work to respond to the intense financial pressures of the deepest and most prolonged recession our nation has experienced since the 1930s,” Potter said,”an unwavering focus on cost reductions will remain an integral part of our strategy to protect the viability of the Postal Service.”
In the short term,that means doing something about the service's $5 billion yearly obligation to fund the health benefits of retired postal workers. The fund serves to prevent health care for employees of the Postal Service,which does not receive government money,from becoming a burden to taxpayers.
A 2006 law,the Postal Accountability and Enhancement Act,required pre-payments to this health fund. Other federal agencies provide health care on a pay-as-you-go basis. Potter and Postal Service Inspector General David C. Williams both asked senators to pass legislation reducing the yearly burden.
“The size of the $5 billion payments has little foundation,and the current payment method is damaging to the financial viability of the Postal Service even in profitable times,” Williams said.
Committee member Sen. Thomas Carper,D-Del.,introduced a bill July 23 that would reduce the Postal Service's obligation to the fund to $1.7 billion annually for 2009 and 2010. The payment to the fund would rise to $5.3 billion by 2019.
Carper likened the move to a couple renegotiating its 10-year mortgage after hitting tough times.
“Kids come along,somebody loses a job,the economy is tough,and they go to their mortgage company and say,‘We feel that we need to restructure that mortgage' … to something more reasonable for the economic condition that family must face,” Carper said. “Our bill is something similar.”
Reducing the obligation to the retirees' health fund would bolster the Postal Service's short-term solvency,but the question of how to operate in the digital age still lingers.
Mail volume has fallen by almost 20 billion pieces in 2009 compared to the first three quarters of last year. The spiral is driven not only by the recession but also by a permanent shift to e-mail,paperless billing and other computer services.
The Postal Services has slashed its workforce from 800,000 to 625,000 – through attrition,not layoffs – and is pondering closing or consolidating some stations to rein in costs. Potter also supports ceasing delivery on Saturday,which has the lowest mail volume of the six-day delivery week,to ease the Postal Service's finances.
There has been backlash in a number of communities that host postal stations on a list of 667 being examined for potential shutdown. Sen. Joseph Lieberman,I-Conn.,warned that though such a change is unpalatable to many towns,it is more attractive than the alternatives.
“All of us have to think about doing things that we never thought about for the Postal Service,” Lieberman said. “Our constituents are not going to be happy,but every time they express unhappiness to us,I think we've got to say that if we don't take some of these tough moves,what it means is that we're either going to have to raise taxes or we're going to have to put it on the government credit card,which is an act of irresponsibility.”
Once upon a time,Lieberman and the rest of Connecticut's congressional delegation banded together to save a small-town post office. Today,the sagging economy removes that choice.
“Those were different times,” Lieberman said. “We simply cannot do that anymore.”