WASHINGTON (WJZ/AP) — Postmaster General Patrick Donahoe warned that the Postal Service is on “the brink of default” as he battles to keep his agency solvent.

Kai Jackson has more.

This U.S. Postal Service crisis has people wondering what their local postal service will look like.

“Stop making cuts on the backs of people that can least afford the cuts they make,” said Congresswoman Helen Holton.

Without legislation by Sept. 30, the agency “will default on a mandated $5.5 billion payment to the Treasury,” Donahoe told the Senate Homeland Security and Governmental Affairs Committee on Tuesday.

And with no congressional action, a year from now — next August or September —  the post office could run out of money to pay salaries and contractors, hampering its ability to operate, Donahoe said.

“We do not want taxpayer money,” Donahoe said. “We have got to get our finances in order.”

Committee Chairman Joe Lieberman, I-Conn., said: “We must act quickly. The U.S. Postal Service is not an 18th century relic, it is a 21st century national asset, but times are changing rapidly now and so, too, must the post office.”

Sen. Susan Collins, R-Maine, noted that the post office supports a $1.1 trillion mailing industry, employing more than 8 million people in direct mail, periodicals, catalogs, financial services and other businesses.

Sen. Tom Carper, D-Del., noted several proposals have been put forward to improve postal operations and said that Congress needs to work on areas where agreement can be found. Both Carper and Collins have introduced bills to reform postal operations, and measures have also been introduced in the House.

Donahoe and his predecessor John Potter have warned for months that without changes in the law governing postal operations the Postal Service will be unable to make advance payments to cover future retiree medical benefits.

Staggered by the economic downturn and the massive shift from first-class mail to email, the post office lost more than $8 billion last year and is facing losses at least that large this year, despite having cut 110,000 jobs over the last four years and making other changes, including closing smaller, local post offices.

The Postal Service, which does not receive tax money for its operations, is not seeking federal funds.

Instead, postal officials want changes in the way they operate, including relief from the requirement that it prefund medical costs. No other federal agency has to prefund retiree health benefits, but because of the way the federal budget is organized the money counts as income to the government, so eliminating it would make the federal deficit appear larger.

When Congress restructured postal operations in 2006 it ordered the agency to establish a separate fund to begin covering those benefits, instead of using money for the post office’s general fund, starting in 2017, and to make annual advance payments to that account. The payment due Sept. 30 would be $5.5 billion.

Also, the post office wants to reduce mail delivery to five days-a-week; close 3,700 offices, further cut the workforce by up to 220,000, and to withdraw from federal retirement systems and set up its own. It also seeks the return of $6.9 billion it overpaid into retirement funds.

Contracts with its employee unions currently strictly limit layoffs and closing post offices riles local communities who complain to their members of Congress.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

Comments (3)
  1. Deft says:

    Privatize the post office and let other companies compete with it. It was never meant to be granted a government monopoly.

  2. Over priced stamps, I wonder why? says:

    For 1, why don’t they stop paying thier higher ups the giant bonuses they get. Our government nailed private companies for it during the bail outs, but the post office keeps giving them. Why should a person that makes a couple hundred thousand a year, get a bonus to almost double thier salary. They are not the ones out there humping all that mail and doing all the work. They are pencil pushers that are running the post office into the ground, like the exes. at a number of big corporation’s They would save 100’s of millions just by cutting these large bonuses out. Second, get rid of alot of the over head, namely alot of upper management that gets paid large salaries to do nothing. Third make the post office more efficient, make routes more time and cost effective, stop buying over priced vehicles ( you know the ones made for the post office only at inflatted prices). I am sure thier are car and truck manufactures that would gladly design a truck for you that would be more cost efficeint with better mpg then you get out of the vehicles you use right now. Cut out some of the over the top benefits out that employees get like double time or V time as they call it ( no need to get more then 1 1/2 for overtime like the rest of america, reduce the amout of sick time employees get ( yes employees abuse it when the get to much of it). Go to a 5 day delivery, nobody needs mail delivery on a saturday, just run skeleton crews at local branches for people who do need to mail something out in a hurry. There is alot more they could cut besides what I pointed out.

  3. Michael Mahler says:

    Like I have been saying all along, if the Postal Service has to go to Congress for funds, then it must do exactly what Congress demands of the Postal Service in order to receive the funds that they are requesting!!!!! When Congres says JUMP, their response should be HOW HIGH?!!!

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