- The Washington Times - Thursday, August 6, 2009

The U.S. Postal Service expects to lose more than $7 billion this year as managers consider slashing a day of mail delivery and closing hundreds of post offices across the country to help save money, postal officials said Wednesday.

Yet with labor costs accounting for about 80 percent of the Postal Service’s budget, Postmaster General John E. Potter said closing post offices would yield only “modest” savings.

The financial problems, driven by sharply declining mail volume, are so dire that Mr. Potter recently sent a letter to Treasury Secretary Timothy F. Geithner warning that the Postal Service probably won’t be able to make good on a $5.4 billion payment due at the end of September to pre-fund retiree health care benefits.

To see the list of branches that the U.S. Postal Service is considering for closure or consolidation, click here.

“Virtually every class of mail has been affected by the recession,” Postal Service Chief Financial Officer Joseph Corbett said during a briefing at the Postal Service headquarters in Washington.

Officials also announced that the Postal Service lost $2.4 billion from April through June, with overall losses expected to top $7 billion by the time the fiscal year ends on Sept. 30.

In his letter to Mr. Geithner, Mr. Potter blamed “the worst financial crisis in our history” on the recession, increased use of e-mail and online bill pay, and the steepest declines in mail volume since the 1930s.

Despite the losses, Mr. Potter said, the Postal Service’s 636,211 employees will continue to be paid and the mail still will be delivered on time.

Mr. Potter did not mention seeking a big government bailout, but expressed hope that Congress would enact legislation to ease requirements that the Postal Service pre-fund a retiree health care benefit fund.

Some members of Congress have seemed reluctant to agree to close post offices. Mr. Potter said that move remains in the review stages.

He said an initial list of about 3,200 facilities considered for consolidation or closure has been narrowed to about 800. There are more than 36,000 post offices nationwide.

Local postal facilities under review include nine in the District, five in Baltimore and one each in Silver Spring and Hyattsville.

Many of the post offices nationwide on the list are in cities where the Postal Service could sell valuable real estate where the facilities are located.

Mr. Potter said the review has “created a bit of a firestorm,” but there’s no predetermined outcome to which facilities face closure.

Postal officials say they expect to cut $3.8 billion in costs in fiscal 2010 after cutting more than $6 billion this year.

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