August 7, 2009 in Nation/World

Postal deficits threaten Saturday mail delivery

Carrie Wells McClatchy

Cut or close

Senators were more sympathetic to a proposal that the Postal Service made earlier to consider closing nearly 700 postal facilities out of 32,000 nationwide.

WASHINGTON – U.S. Postal Service plans to cut billions of dollars in losses would end regular Saturday mail delivery and reduce health benefits to retired postal workers, officials warned Congress on Thursday.

The Postal Service lost $2.4 billion in the last quarter and estimates it will lose $7 billion this fiscal year.

“Our situation is more tenuous than ever,” Postmaster General John E. Potter told a hearing of the Senate Homeland Security and Governmental Affairs Federal Financial Management Subcommittee.

As a result, he suggested cutting Saturday service, explaining, “It is the lowest-volume delivery day, but with the same level of fixed costs as other delivery days.” The Postal Service, which has been battered by the recession and a loss of customers to the Internet, faces a $700 million cash shortfall by the end of the fiscal year, Sept. 30. On the same day, a payment of up to $5.8 billion for retirees’ health benefits comes due.

Congress is considering legislation that would delay the health benefits payment.

“If the legislation is not passed, we will not make the payment,” Potter said.

Killing Saturday delivery would save the agency $3 billion a year, he said. Senators vowed to help the 234-year-old institution, but some said they opposed Saturday cuts.

“Is this really the right response to this crisis?” asked Sen. Susan Collins, R-Maine. “The Postal Service cannot expect to gain more business if it is reducing service.”

Carriers’ hours already have been reduced and will be cut more. Officials are bouncing around ideas for selling nonpostal-related items at post offices. Congress has the final say on Saturday service, but the Postal Service has discretion over layoffs and other matters.

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