WASHINGTON — Lawmakers today will consider various proposals to restructure the U.S. Postal Service, just days after government auditors warned that the agency must quickly address its financial viability.
Confronting a sharp decline in mail volume tied to the recession and the continuing migration to e-mail and online payment options, the Postal Service projects a net loss of $7 billion this fiscal year and debt to exceed $10 billion, leading to a cash shortfall of approximately $1 billion. Losses are expected to continue next year.
The Government Accountability Office added the Postal Service to its list of high-risk government agencies and programs on Tuesday, and it will further explain its decision today at a House subcommittee hearing.
The GAO has urged a rapid overhaul of the Postal Service that includes layoffs, plant closures and changes to retiree health benefits. Since 2006, federal law requires it to pay roughly $5.5 billion per year to cover future retiree benefit costs, while still paying $2 billion to $4 billion to cover current retiree costs.
“Any business confronting a situation like this would have to downsize or go out of business,” said Arthur Sackler, executive director of the National Postal Policy Council, which represents some of the nation’s largest mail customers, including banking, insurance and telecommunications firms.
“We’ve got a system for the foreseeable future that is built for mail amounts that are far greater than they’re likely to have,” Sackler said.
The most obvious cutback would be a reduction in mail delivery days, most likely on Saturdays. A June Gallup survey found 66 percent of Americans in support of cutting mail service to five days a week. Postal officials have introduced a plan that ends traditional mail delivery on Saturdays but keeps post offices open as normal. Mail would still be delivered to post office boxes and carriers would still deliver Express Mail packages. Congress would have to either make changes to the appropriations process or pass a law explicitly allowing five days of service. The plan could save USPS billions of dollars, but would adversely impact some of its most loyal customers.
“Reducing service is going to cost some of our members delay and they’re going to have to work to adjust,” said Jerry Cerasale, a senior vice president with the Direct Marketing Association, which represents companies and nonprofit organizations that frequently rely on weekend deliveries. Cerasale and Sackler will all testify at today’s hearing.
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