U.S. Postal Service looks to cut 220,000 jobs

WASHINGTON Fri Aug 12, 2011 2:05pm EDT

On the deadline day for U.S. citizens to file their income tax returns, a woman stands at the front of the line at a mobile post office near the Internal Revenue Service building in downtown Washington, April 15, 2010. REUTERS/Jonathan Ernst

On the deadline day for U.S. citizens to file their income tax returns, a woman stands at the front of the line at a mobile post office near the Internal Revenue Service building in downtown Washington, April 15, 2010.

Credit: Reuters/Jonathan Ernst

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WASHINGTON (Reuters) - The U.S. Postal Service would eliminate about 220,000 full-time jobs and shutter about 300 processing facilities by 2015 under a proposal to bring its finances in order, a postal official said on Friday.

The Postal Service needs to cut payrolls to about 425,000 employees and take over its retirement and health benefits instead of participating in federal programs, Postmaster General Patrick told Reuters.

The mail carrier, which receives no taxpayer funds, has been struggling with falling mail volumes as people communicate increasingly by email and pay bills online.

The agency reported a $3.1 billion net loss in its most recent quarter. It expects to be insolvent next month and default on a $5.5 billion retiree health payment.

Donahoe said the agency hopes to reach a deal with Congress by the end of September to give the mail agency more control over its finances and hiring.

"We know that the (mail) volume will continue to drop off from a First Class standpoint, so we've got to do the responsible thing and get ourselves in order," Donahoe said.

"It's our goal to work with both houses of Congress ... to help craft a bill that would be passable and signed by the president by the end of September."

That timetable will be difficult to achieve with Congress on recess until September 6 and with lawmakers bogged down by partisan wrangling over the budget deficit.

The agency has said it does not have enough authority to manage its finances and infrastructure. Past attempts to end Saturday mail and raise rates beyond inflation have been denied by Congress and the Postal Regulatory Commission.

CLOSING POST OFFICES

The Postal Service announced last month it would study almost 3,700 post offices for closure and said it would replace them with retailers contracted to provide postal services. The plan met with backlash from some lawmakers.

Donahoe said union leaders were "not coming out in favor of" the staff-cut plan. The Postal Service could lay off as many as 120,000 workers by 2015, and not fill another 100,000 expected to open up through staff departures.

But Donahoe said there was interest from legislators in the proposal to take over health and retirement plans, which he said could save $400 million to $500 million annually.

A bill from Republican Representative Darrell Issa would eliminate Saturday delivery and create groups to oversee finances and close post offices. Senator Tom Carper's and Senator Susan Collins's bills would return funds the Postal Service says it has overpaid into federal retirement programs.

"The only other way out of the pre-funding is for someone to give us the money to get out from under it. If that can't occur, we have to put other responsible proposals on the table," Donahoe said.

"This is strictly what we need to do between now and 2015 to get the organization profitable."

(Reporting by Emily Stephenson, editing by Anthony Boadle)

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