WASHINGTON – The Senate offered a lifeline to the nearly bankrupt U.S. Postal Service on Wednesday, voting to give the struggling agency an $11 billion cash infusion while delaying controversial decisions on closing post offices and ending Saturday delivery.
By a 62-37 vote, senators approved a measure that had divided mostly along rural-urban lines. Over the past several weeks, the bill was modified more than a dozen times, adding new restrictions on closings and cuts to service that rural-state senators said would hurt their communities the most.
The issue now goes to the House, which has yet to consider a separate version of the bill.
“The Postal Service is an iconic American institution that still delivers 500 million pieces of mail a day and sustains 8 million jobs,” said Sen. Joe Lieberman, I-Conn., a bill co-sponsor. “This legislation will change the USPS so it can stay alive throughout the 21st century.”
The mail agency, however, criticized the measure, saying it fell far short in stemming financial losses. Postmaster General Patrick Donahoe said if the bill becomes law, he will have to return to Congress in a few years to get emergency help.
“It is totally inappropriate in these economic times to keep unneeded facilities open. There is simply not enough mail in our system today,” the Postal Service’s board of governors said in a statement. “It is also inappropriate to delay the implementation of five-day delivery.”
The Senate bill would halt the immediate closing of up to 252 mail-processing centers and 3,700 post offices, part of a postal cost-cutting plan to save some $6.5 billion a year. Donahoe previously said he would begin making cuts after May 15 if Congress didn’t act, warning that the agency could run out of money this fall.
The measure would save about half the mail processing centers the Postal Service wants to close, from 252 to 125, allowing more areas to maintain overnight first-class mail delivery for at least three more years. It also would bar any shutdowns before the November elections, protect rural post offices for at least a year, give affected communities new avenues to appeal closing decisions and forbid cuts to Saturday delivery for two years.
At the same time, the Postal Service would get an infusion of roughly $11 billion, basically a refund of overpayments made in previous years to a federal retirement fund. That would give it immediate liquidity to pay down debt to forestall bankruptcy and finance buyouts to 100,000 postal employees.
The agency could make smaller annual payments into a future retiree health benefits account, gain flexibility in trimming worker compensation benefits and find additional ways to raise postal revenue under a new chief innovation officer.
Other bill provisions would:
• Place a one-year moratorium on closing rural post offices and then require the mail agency to take rural issues into special consideration. Post offices generally would be protected from closure if the closest mail facility was more than 10 miles away. The exception would be cases in which there was no significant community opposition.
• Shut five of the seven post offices on the Capitol grounds.
• Take into account the impact on small businesses before closing mail facilities.
• Cap postal executive pay through 2015 at $199,000, the same level as a Cabinet secretary, and create a system under which the top people at the Postal Service are paid based on performance.
The Senate bill faces an uncertain future. The House version, approved in committee last year, would create a national commission with the power to scrap no-layoff clauses in employee contracts and make other wide-ranging cuts.
“This of course kicks the can down the road,” complained Sen. John McCain, R-Ariz., who unsuccessfully pushed for a commission in the Senate bill.
Noting that more people every year are switching to the Internet to send letters and pay bills, Donahoe called the Postal Service’s business model “broken.” The agency has estimated that the Senate bill would only provide it enough liquidity to continue operating for two or three years.
At stake are more than 100,000 jobs.
The agency, $12 billion in debt, says it could run out of money for day-to-day operations as soon as this fall, forcing it to shut down some of its services. The mail agency forecasts a record $14.1 billion loss by the end of this year; without changes, it says annual losses will exceed $21 billion by 2016.
The Postal Service, an independent agency of government, does not receive taxpayer money for its operations but is subject to congressional control.