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September 7, 2011 in Nation/World
Postmaster’s warnings dire
Donahoe: U.S. mail could halt next year without legislation
Postmaster General Patrick Donahoe appears before the Senate Homeland Security and Governmental Affairs Committee on Capitol Hill on Tuesday.
(Full-size photo)
WASHINGTON – The U.S. Postal Service is on the verge of financial collapse and should eliminate Saturday delivery, close thousands of local post offices, restructure its health plan and lay off 120,000 workers to survive, according to Postmaster General Patrick Donahoe.
Donahoe asked lawmakers to allow him to make “radical” changes to the centuries-old institution so it could avoid defaulting on its obligations. At a Senate hearing Tuesday, he said the Postal Service is all but certain to miss a $5.5 billion payment to its retiree health fund due at the end of the month. And that only begins the trouble, he said, warning that the postal system is heading toward a $10 billion net loss this fiscal year and is near its borrowing limit.
With operating cash running out quickly, trucks, mail processing centers and mail delivery could come to a halt by this time next year, Donahoe said.
“Failure to act could be catastrophic,” Donahoe told members of the Senate Homeland Security and Governmental Affairs Committee, which oversees the Postal Service.
The new proposals reflect heightened desperation at an agency that has been on the decline for years. The rise of email has dramatically curbed demand for old-fashioned letters, while competitive delivery companies have put the squeeze on the post office’s business model. Last year, the post office delivered 171 billion pieces of mail, down 20 percent from just four years earlier. Volume is on track to fall an additional 2 percent this year.
But Donahoe put the blame for the current crisis on federal laws and labor agreements that he said unduly restrict his agency’s ability to adapt and promise more than the Postal Service can deliver. Labor costs amount to 80 percent of the Postal Service’s expenses, and current contracts contain a no-layoff provision. Changes to the frequency of service or delivery areas require federal legislation.
The postmaster’s request arrived just as lawmakers returned from a summer break and appeared prepared to pick up where they left off – in a fierce partisan battle over government spending and job creation. The post office crisis is likely to get thrown into the mix.
Both Democrats and Republicans are quick to express their support for postal services, but even the short-term measures under discussion are likely to find opposition.
The proposed changes to mail service likely will draw the broadest opposition. Representatives of the newspaper and magazine industry, both dependent on mail subscribers, told Congress to act carefully in eliminating Saturday delivery and post offices.
“We are concerned that rural America is being thrown overboard by a postal system too eager to lavish its assets onto highly competitive urban areas,” Tonda Rush, director of public policy at the National Newspaper Association, said in a statement. “Within this context, the loss of Saturday residential delivery would be a major blow.”
Postal unions also oppose much of Donahoe’s plan.
The unions have seen the ranks of Postal Service employees fall by 130,000 already in the past four years. The layoffs Donahoe has proposed would amount to roughly one-fifth of the workforce.
They come just months after the current contracts were negotiated. Donahoe also has proposed that the Postal Service withdraw from the federal employee health insurance plan and sponsor its own. It would also offer a defined benefit retirement plan for new employees.
“I am at a loss for adjectives sufficient to the task of describing these actions by the Postal Service,” said Cliff Guffey, president of the American Postal Workers Union. “Several that come close are ‘outrageous,’ ‘illegal’ and ‘despicable.’ ”
The Postal Service and the unions are pushing the administration to lessen the immediate crisis by giving the service between $50 billion and $75 billion they claim has been overpaid into federal retirement funds. The Obama administration has appeared reluctant to throw its support behind anything that could be labeled as another bailout.
John Berry, director of the government’s Office of Personnel Management, told the committee that the president would include long-term proposals for the Postal Service in a deficit reduction plan he has promised to unveil to Congress soon. Meanwhile, Democrats and Republicans in the Senate have proposed legislation. Rep. Darrell Issa, R-Calif., chairman of the House government oversight committee, has proposed an outside commission to craft a restructuring.
But Berry said Congress would have to act before his office would have the authority to return any money that was allegedly overpaid to the retirement funds.
Stocks plummet as outlook in Europe dims 
lewis8457 on September 07 at 6:23 a.m.
of course lets bail them out we helped the banks and gm what the hell i don’t mind usps workers making 75 grand a year with full benefits while i eat dog food.
JBlim on September 07 at 6:45 a.m.
Privatizing the Post Office was a big failure. We should have listened to the founding fathers who made it a function of government. Just nationalize the damn thing again and honor our commitments to the postal workers. The P.O. can still be streamlined to meet the needs of a modern world and kept in check through the budget process.
Radbooks on September 07 at 7:14 a.m.
Deliver mail 3 days a week and call it good! Who needs to have junk mail show up at their house every single day?
soccermomsusie on September 07 at 7:26 a.m.
I always found it telling that Publishers Clearing House would mail out the winning ticket via the UPS. But, when you won the million-dollar prize, they would send Ed McMahon to deliver the goods.
Not much of an endorsement of the trustworthiness of the postal service is it?
I wrote Publishers once, wondering where my money was. Also, I suggested using Herve Villechaize to deliver the prize after they squeezed him through some unsuspecting Grand Prize Winner’s mail slot. NO REPLY.
I suspect my letter never even made it to Publishers Clearing House.
HEAR OUR VOICE!!!
johnclarke on September 07 at 7:38 a.m.
Lewis wondering is ever make it down to Career Path Services? Don’t forget you need a referral from your case worker at unemployment.
Orphan on September 07 at 8:03 a.m.
The USPS should simply default on its obligations restructure and either kick out the union or renegotiate a contract that allows it to keep running. A labor rate of 80% is simply not realistic, no wonder USPS is in trouble.
Who was managing USPS did they get bonuses? We need to regulate them more so that this can not happen again.
Lets let the government run something else like health insurance, their doing such a fine job with USPS.
Bruce (aka thatoneguy) on September 07 at 8:30 a.m.
Don’t forget that Congress, in its wisdom, passed a law in 2006 requiring them to pay 5.5 billion a year over 10 years into their pension funds, to fund the next 75 years’ worth of payments of future retirees (at the employment level of 2006 – disregarding the fact that they have cut 120,000 workers since then – and including the pensions of people who haven’t even been hired yet, let alone retired).
If I had to, say, pay the next 20 years of my 30-year mortgage in 3 years, I’d be running a deficit too.
maria on September 07 at 8:34 a.m.
There goes Brightling’s Greeting Card business:
http://www.youtube.com/watch?v=a_W8UUiSCs8
Orphan on September 07 at 8:58 a.m.
Congress is the government LOL.
The USPO is so far behind funding their retirement program that they need to catch up now to stay solvent later.
The money put away over the next 10 years will be a lot and I do mean a lot less than it will be if they string it out. If you have Quicken go to the planning tools and figure it out yourself. The choice is 55 billion now or double or triple that later.
Bruce (aka thatoneguy) on September 07 at 9:00 a.m.
I thought this stuff was a matter of public record, i.e. laws passed by Congress. What’s with the “claim” and “allegedly”?
“The Postal Service and the unions are pushing the administration to lessen the immediate crisis by giving the service between $50 billion and $75 billion they claim has been overpaid into federal retirement funds.”
“But Berry said Congress would have to act before his office would have the authority to return any money that was allegedly overpaid to the retirement funds.”
Has there ever been another organization that was required by law to pre-pay the next 75 years of pension contributions in 10 years?
The head of the USPS and the head of the Letter Carriers’ Union were on the News Hour last night, and they both agreed that this – not the actual benefits themselves, not the no-layoffs clause – was what was breaking the USPS. When labor and management agree on a solution, then the solution seems clear. Unfortunately the poo-flinging babies in Congress are likely to just yell “No!” and fling more poo until time runs out — and then sulk when their mass mailings for the next election aren’t delivered in a timely manner for a ridiculously low rate.
Bruce (aka thatoneguy) on September 07 at 9:07 a.m.
Orphan, your post showed up while I was typing.
OK, fine. It’s more economical to pay this money now than a lot more later on. But if insisting on that amount right now will bankrupt the company, and reducing the amount required now will keep the company from going under, then what’s the smarter choice?
To go back to my requiring-me-to-pay-off-my-entire-mortgage-NOW analogy: Sure, it would cost less over the long run, but it would also render me homeless and unable to pay at all (and, in the USPS’s case, unable to provide the service it provides).
Thoreau on September 07 at 10:35 a.m.
Not surprising, considering the minute cost of sending a 1st class letter thousands of miles in a day or two. Jeez, people take that for granted.
Orphan on September 07 at 10:36 a.m.
thatoneguy I’m not saying its right or wrong to pay it now, I was simply pointing out that it will cost a lot more later. Retirement solvency may depend on the fact that this amount is paid now. There is more to it than they are telling us.
The USPO has been mismanaged for years to get to this point and changes need to be made.
You do realize that your mortgage company can call your home loan due at any time right?
Bruce (aka thatoneguy) on September 07 at 10:59 a.m.
^ Yep, and they probably wouldn’t be able to get the money even by selling the house.
nslopeofw on September 07 at 11:46 a.m.
On a lighter note, i was just at the almost defunct Borders books, and there were PLENTY of pro-Obama books to be had for 80% off. A few liberal books as well. Seems like all the conservative (except one copy of Sarah Palin’s first book) were already sold out. Anyway, go get your copy now, cheap. After he saves the post office, they might be worth something.
johnclarke on September 07 at 11:56 a.m.
Why thank you nslopeofw, for that completely off topic attempt to slam President Obama.
BlondeSquawker on September 07 at 1:05 p.m.
I saw the Sarah Palin “Going Rouge” book at the Goodwill store a few days ago for fifty cents.
- just sayin’
BlondeSquawker on September 07 at 1:18 p.m.
Oh, and thanks, Maria! You owe me a new keyboard!
-just sayin’
misjustice on September 07 at 1:42 p.m.
Dennis Hastert and Tom DeLay (the felon in red satin pants) ensured that the USPO would be in this financial situation when they passed (by voice vote only) the bill requiring the USPO to fully fund, in ADVANCE, the pensions of workers 75 years in advance. Yup! They are saddled with funding the pensions of workers not yet born.
Hastert and DeLay did the bidding of their corporate masters, UPS. And now, the lemmings and know nothings will help twist the knife into the back of the USPO; killing off one of the most important federal institutions this nation has ever had.
Idiots!
Just sayin’…
Thoreau on September 07 at 3:28 p.m.
to nslopeofw: WTF ?
cryssT on September 07 at 4:14 p.m.
While the post office is at it, I’m all for a centralized mail box on each block. It can’t be broken into and I can get packages there. Would save me the cost of a POB.
nslopeofw on September 07 at 4:22 p.m.
Thoreau-
TF is that just like the auto and banking industry, Barrack will want to dump billions into another system that has rarely if ever been profitable.
Instead, why not turn ALL mail over to Fed-Ex, UPS, etc? It would save billions of tax dollars annually that could then be used to pay for all the free social programs Obama wants to give away at the expense of the middle class.
And, as an added bonus, all you Obama worshipers can get his books cheap right now at Borders, as they dont seem to be selling that well. (Up to 80% off for hardcovers)
misjustice on September 07 at 6:03 p.m.
@BlondeSqawker, you aren’t funny.
I am friends with Maria and got a call from her husband today; she is in the hospital due to an accident on the family farm. She may not pull through.
BlondeSquawker on September 07 at 6:20 p.m.
Oh my, that’s terrible, MisJ. Sorry to hear it. Let us know if you hear anything more.
JBlim on September 07 at 7:41 p.m.
I was down at the bus station and I saw the Sarah Palin “Going Rouge” book in a urinal. It had been there for some time. I’m sure some true believer will find it irresistible.
nslopeofw on September 07 at 9:39 p.m.
Well Blim, i have my copy, so I know its not mine. I also have my Reagan calendar. Saved it.
So if you want to complete your Obama collection, there is only 4 days until the Borders store shuts its doors forever. There are tons of O books still on the shelves. Maybe you could find a nice Barney Frank, or Jimmy Carter as well. There are even some Obama children propaganda books right next to the Ayatollah Khomeini teaching aids. You could prolly get both for a song.
BlondeSquawker on September 08 at 8:31 a.m.
We bought a cheap copy of Palin’s book and burned it in the street on the Fourth of July.
-just sayin’
toughlove on September 14 at 12:13 p.m.
This has an easy solution. Let’s force postal customers to purchase stamps under the interstate commerce clause. After all, just like Obamacare, you never know when your computer might break down.