Recession spurs Postal Service bid to cut mail deliveries

Citing the U.S. Postal Service's declining financial situation, Postmaster General John Potter urged Congress Wednesday to drop an annual appropriations provision requiring mail delivery six days a week.

During a hearing on the impact of the current recession on the Postal Service, Potter told the Senate Homeland Security and Governmental Affairs Federal Financial Management Subcommittee that dropping the appropriations rider could allow USPS to save money during periods of low volume by temporarily rolling service back to five days a week.

"I'm forced to consider every option due to the severity of the challenge at hand," Potter said of his request.

The recession and continual loss of mail volume to private sector competition and Internet e-mail has already caused a $1.3 billion loss for the first quarter of fiscal 2009, with losses of $6 billion or more estimated for the year, Potter said.

He also cited a projected 12 billion to 15 billion drop in pieces of mail for fiscal 2009.

Senate Homeland Security and Governmental Affairs ranking member Susan Collins, R-Maine, warned Potter that with her new membership on the Appropriations Committee, he should expect some opposition to his request.

"I'm rather fond of the universal service language," Collins said, referring to the annual rider. She expressed concern that cutting delivery days would lead people and businesses to find other methods of delivering letters, direct mail or packages.

Federal Financial Management Subcommittee Chairman Thomas Carper, D-Del., who called the hearing to see what temporary help Congress could offer the Postal Service during the recession, worried that cutbacks in service might make USPS appear less attractive to customers, but suggested the prospect of a "test drive" to Potter.

Potter said cutbacks would only be used during lighter volume periods, such as July and August this year and in 2010, and would not be in place during the fall and winter holiday seasons.

Potter asked for relief in covering the cost of current and future retiree health benefits. A 2006 law requires USPS to make payments between $5.4 billion and $5.8 billion over the next 10 years to a trust fund for future retiree benefits, while paying for current retiree benefits out of operating revenues.

The postmaster general requested an eight-year period in which USPS would be allowed to pay current retiree health benefits out of the trust fund, a change he said would save $24.6 billion through 2016. The USPS is due to make $2.3 billion in payments for current retiree health benefits in fiscal 2009.

Carper and Collins already have called for a two-year reprieve to allow use of the trust fund, but were wary of allowing any further relief. "Depleting the reserve fund for eight years would further delay the management reforms the [USPS] should be making to promote its future viability," Collins said.

In the House, Reps. John McHugh, R-N.Y., and Danny Davis, D-Ill., have introduced a bill that would allow USPS to pay current retiree health benefits out of the trust fund through 2016.

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