- The Washington Times - Wednesday, March 25, 2009

WASHINGTON (AP) - The post office is facing a severe financial crisis that will not ease any time soon, Postmaster General John Potter told a House subcommittee Wednesday.

“We are facing losses of historic proportion. Our situation is critical,” Potter said in seeking permission to reduce the number of days mail is delivered each week, an idea he first broached in January.

The post office was $2.8 billion in the red last year and is facing even larger losses this year due to the sharp decline in mail volume in the weak economy.

Potter raised the possibility of cutting mail delivery from six days-a-week to five in January but the idea has not been warmly received in Congress.

“With the Postal Service facing budget shortfalls the subcommittee will consider a number of options to restore financial stability and examine ways for the Postal Service to continue to operate without cutting services,” subcommittee chairman Stephen F. Lynch, D-Mass., said.

Lynch said the financial stability of the Postal Service is “critical to the American expectation of affordable six-day mail delivery.”

The post office is also seeking changes in its required pre-funding of medical costs for retirees that could cut its annual costs by $2 billion, a move endorsed by several subcommittee members.

“We are not here today to ask for a taxpayer bailout, but we are here to ask the Congress for help,” William Young, president of the National Association of Letter Carriers, said in his prepared testimony.

“At this moment, the survival of the Postal Service _ a venerable institution that is literally older than our country _ hangs in the balance,” Young said.

Even if the agency succeeds in reaching its planned cost cuts of $5.9 billion, there could still be a $6 billion deficit in 2010, Potter told the House Oversight subcommittee on the federal work force and Postal Service.

“Without a change we will exhaust our cash resources,” Potter said. “We can no longer afford business as usual.”

He estimated that delivering mail five days-a-week instead of six would save $3.5 billion per year.

Last week the post office said it plans to offer early retirement to 150,000 workers and is eliminating 1,400 management positions and closing six of its 80 district offices across the country in cost-cutting efforts.

Dan Blair, head of the independent Postal Regulatory Commission, suggested in his testimony that other savings could be realized through closing small and rural post offices _ something Congress has resisted in the past. He added that it may be necessary to increase the limit on the amount of debt the post office can carry.

The post office had a $384 million loss in the first quarter of the fiscal year _ October through December _ which is usually the busiest period because of the holidays.

Officials said the economic recession contributed to a mail volume drop of 5.2 billion pieces compared to the same period last year. If there is no economic recovery, the USPS projects volume for the year will be down by 12 billion to 15 billion pieces of mail.

Over the past year the post office says it has cut 50 million work hours, stopped construction of new facilities; frozen salaries for executives, begun selling unused facilities and has cut post office hours.

Last year’s high fuel prices also sucked funds away from the post office, which operates more than 200,000 vehicles. Every one-cent increase in the price of fuel costs the post office $8 million.

Blair also noted that Congress could consider appropriating money to help the post office. Currently the agency does not receive a taxpayer subsidy for its operations, although Congress does subsidize overseas voting and free mail for the blind.


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Postal Service: https://www.usps.com

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