Postal chief says overhaul bills inadequate

WASHINGTON Mon Nov 21, 2011 6:34pm EST

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WASHINGTON (Reuters) - Lawmakers' proposals to overhaul the U.S. Postal Service would not give the near-bankrupt agency flexibility to find billions of dollars in savings needed to return to profitability, Postmaster General Patrick Donahoe said on Monday.

Leading bills in the House of Representatives and the Senate would not allow the agency to immediately end Saturday mail delivery and would impose some limitations on facility closings, Donahoe said during a National Press Club luncheon.

"If passed today, either bill would provide at best one year of profitability, and at least a decade of steep losses," said Donahoe.

The world's largest mail carrier has struggled to cope with the loss of mail volumes as customers send more email and pay bills online, along with high personnel costs.

The Postal Service last week reported it lost $5.1 billion during fiscal year 2011 and would have seen bigger losses if Congress had not extended the due date of a massive annual payment.

Donahoe has said the agency needs to reduce costs by about $20 billion by 2015 to ensure long-term viability.

The agency wants Congress to allow it to end Saturday mail delivery and run its own retirement and health programs, and give it more flexibility to close facilities and raise prices.

Leading bills take some of these steps, but neither full house has passed a bill, and the plans differ in key areas.

A proposal from Representative Darrell Issa would create oversight groups to close post offices and cut costs. The Postal Service could designate mail delivery holidays and, later, propose eliminating Saturday mail.

A bill from a bipartisan group of four Senators would give the Postal Service flexibility to offer some new products and let it tap into an estimated surplus in a retirement account. It would make the agency wait two years to end Saturday mail and slow mail processing facility closings.

"Congress needs to step back and look at the Postal Service as a business, and give us the business model that allows us to act quickly and lower our costs," Donahoe said.

Issa said in a statement that his bill would save "a minimum of $10.7 billion a year" and that it was "disingenuous" of Donahoe to argue the bill does not go far enough.

Aides for lawmakers behind the Senate bill said they could not comment on Donahoe's remarks.

(Editing by Mohammad Zargham)

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