April 15, 2010 / 4:56 PM / 8 years ago

US Post office finances dire but service cuts hurt

* Lawmakers skeptical of cutting Saturday delivery

* Changing retiree health benefit payments a possibility

By Diane Bartz

WASHINGTON, April 15 (Reuters) - Lawmakers discussing the dire state of the U.S. Postal Service’s finances voiced concerns on Thursday over plans to cut Saturday delivery and close post offices in certain areas.

The U.S. Postal Service faces a potential shortfall of $238 billion in the next 10 years because of the popularity of e-mail online bill payment services and other factors, Postmaster General John Potter told members of Congress.

“Today we stand at the brink of financial insolvency,” said Potter, who asked for legislation that would allow changes to how the postal service calculates payments for retiree health benefits, potentially to a “pay as you go system” rather than the prepayments used at present.

“I urge you to take a close look at this issue as a first step,” Potter said.

While lawmakers appeared open to that shift, discussions of cutting Saturday delivery or closing post offices prompted concerns from both Democrats and Republicans about everything from competitors stepping into the gap to Americans without computers not receiving their bills quickly enough.

“Please, please, please — I would strongly suggest that you continue Saturday deliveries,” said Rep. Diane Watson of California.

“Personally, I have deep concerns about moving from a six-day delivery to a five-day delivery,” said Rep. Jason Chaffetz. “There are many unintended consequences for credit card (bills) and medicines delivered through the mail.”

Rep. Darrell Issa urged Potter to “right-size” the post office, expressing concern about post office employees who are underemployed but also about the prospect of the post office taking what are now full-time jobs and making them part-time.

    Potter said cutting Saturday delivery would be done without cutting career employees — by reducing overtime, letting non-career employees go and by offering buyouts to people approaching retirement age.

    The USPS in February reported a loss of $297 million for the first quarter of its fiscal year, blaming the recession and the use of electronic mail. The USPS, which delivers nearly half of the world’s mail, has posted net losses since 2007.

    In addition to the erosion of its business due to email, the service also faces competition from FedEx Corp (FDX.N) and United Parcel Service Inc (UPS.N).

    Chaffetz said that he planned to introduce legislation to create a commission to consider closing post office facilities in order to remove some of the politics from what can be a hot-button local issue.

    In a report released this month, the General Accountability Office (GAO) urged Congress to form just such a panel of independent experts to make recommendations that could include removing the requirement that mail be delivered within six days, reducing USPS’s operations, and allowing it to do business in new areas unrelated to mail.

    The GAO also said Congress should consider providing financial relief, including modifying its retiree health benefit obligations and revising the law on collective bargaining with its workers, to ensure that binding arbitration takes its financial condition into account. (Reporting by Diane Bartz, editing by Matthew Lewis)

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