The service expects the Saturday
mail cutback to begin the week of Aug. 5 and to save about $2 billion
annually, said Postmaster General and CEO Patrick R. Donahoe.
"Our financial condition is urgent," Donahoe told a press conference.
The move accentuates one of the
agency's strong points — package delivery has increased by 14 percent
since 2010, officials say, while the delivery of letters and other mail
has declined with the increasing use of email and other Internet
services.
Under the new plan, mail would
be delivered to homes and businesses only from Monday through Friday,
but would still be delivered to post office boxes on Saturdays. Post
offices now open on Saturdays would remain open on Saturdays.
Over the past several years, the
Postal Service has advocated shifting to a five-day delivery schedule
for mail and packages — and it repeatedly but unsuccessfully appealed to
Congress to approve the move. Though an independent agency, the service
gets no tax dollars for its day-to-day operations but is subject to
congressional control.
Congress has included a ban on
five-day delivery in its appropriations bill. But because the federal
government is now operating under a temporary spending measure, rather
than an appropriations bill, Donahoe says it's the agency's
interpretation that it can make the change itself.
"This is not like a 'gotcha' or
anything like that," he said. The agency is essentially asking Congress
not to reimpose the ban when the spending measure expires on March 27
and he said he would work with Congress on the issue.
The agency clearly thinks it has a majority of the American public on its side regarding the change.
Postal Service market research
and other research indicated that nearly 7 in 10 Americans support the
switch to five-day delivery as a way for the Postal Service to reduce
costs, the agency said.
The
agency in November reported an annual loss of a record $15.9 billion
for the last budget year and forecast more red ink in 2013, capping a
tumultuous year in which it was forced to default on billions in retiree
health benefit prepayments to avert bankruptcy.
The financial losses for the
fiscal year ending Sept. 30 were more than triple the $5.1 billion loss
in the previous year. Having reached its borrowing limit, the mail
agency is operating with little cash on hand.
The agency's biggest problem —
and the majority of the red ink in 2012 — was not due to reduced mail
flow but rather to mounting mandatory costs for future retiree health
benefits, which made up $11.1 billion of the losses. Without that and
other related labor expenses, the mail agency sustained an operating
loss of $2.4 billion, lower than the previous year.
The health payments are a
requirement imposed by Congress in 2006 that the post office set aside
$55 billion in an account to cover future medical costs for retirees.
The idea was to put $5.5 billion a year into the account for 10 years.
That's $5.5 billion the post office doesn't have.
No other government agency is
required to make such a payment for future medical benefits. Postal
authorities wanted Congress to address the issue last year, but
lawmakers finished their session without getting it done. So officials
are moving ahead to accelerate their own plan for cost-cutting.
The Postal Service is in the
midst of a major restructuring throughout its retail, delivery and mail
processing operations. Since 2006, it has cut annual costs by about $15
billion, reduced the size of its career workforce by 193,000 or by 28
percent, and has consolidated more than 200 mail processing locations,
officials say.
***
Why would the USPS take such radical measures? The simple truth is that the postal service is a fundamentally sound business, though not without its challenges. If you look closely, you'll see a concerted campaign to drive USPS out of business, despite the fact that it operates without government subsidies and, potentially, at a profit. It's being subjected to a politically manufactured crisis in order to ram through drastic change. But without the USPS, citizens will face much higher costs without better service. Below, I outline three common misconceptions about the USPS and explain why they're misleading.
***
Why would the USPS take such radical measures? The simple truth is that the postal service is a fundamentally sound business, though not without its challenges. If you look closely, you'll see a concerted campaign to drive USPS out of business, despite the fact that it operates without government subsidies and, potentially, at a profit. It's being subjected to a politically manufactured crisis in order to ram through drastic change. But without the USPS, citizens will face much higher costs without better service. Below, I outline three common misconceptions about the USPS and explain why they're misleading.
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