Losing $25M a day? Congress shrugs off USPS losses

The United States Postal Service is losing $25M a day, but Congress voted against cutting Saturday deliveries. The USPS might still choose to deliver nothing but packages on Saturdays, some analysts say.

By , Reuters

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    U.S. Postal Service letter carrier Michael McDonald prepares for his delivery run in East Atlanta, Feb. 7. The U.S. Postal Service says it is losing $25M a day, but it can't eliminate Saturday mail delivery as planned because Congress won't allow the change. The Postal Service said in February that it would cut back to five-day-a-week deliveries for everything except packages, as a way to hold down losses.
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Congress foiled the financially beleaguered U.S. Postal Service's plan to end Saturday delivery of first-class mail when it passed legislation on Thursday requiring six-day delivery.

The Postal Service, which says it loses $25 million per day, said last month it wanted to switch to five-day mail service to save $2 billion annually.

Congress traditionally has included a provision in legislation to fund the federal government each year that has prevented the Postal Service from reducing delivery service. The Postal Service had asked Congress not to include the provision this time around.

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Despite the request, the House of Representatives on Thursday gave final approval to legislation that maintains the provision, sending it to President Barack Obama to sign into law. The Senate approved the measure on Wednesday.

But some lawmakers who support the Postal Service's plan have said there may still be some room for it to change its delivery schedule. They point out that the language requiring six-day delivery is vague and does not prohibit altering what products it delivers on Saturdays.

The Postal Service has said that while it would not pick up or deliver first-class mail, magazines and direct mail, it would continue to deliver packages and pharmaceutical drugs on Saturdays.

Republican Senator Tom Coburn of Oklahoma and Representative Darrell Issa of California on Thursday told the USPS Board of Governors to move forward with implementing the five-day delivery plan for mail.

"The Board of Governors has a fiduciary responsibility to utilize its legal authority to implement modified 6-day mail delivery as recently proposed," the lawmakers said in their letter to the USPS board.

The Postal Service, they said, is in such dire financial need that it must implement all measures to resolve its problems.

LEGALITY IN QUESTION

Several polls have shown a majority of the public supports ending six-day delivery of first-class mail.

The plan for a new delivery schedule would respond to customers' changing needs and help keep the Postal Service from becoming a burden to taxpayers, Postal Service spokesman David Partenheimer said.

A number of lawmakers and trade groups said the plan to cut Saturday mail service is illegal because the Postal Service requires Congress' approval before it makes such a decision.

Democratic Representative Gerald Connolly of Virginia said in a letter to the Government Accountability Office on Thursday that the Postal Service is still bound by the six-day requirement.

"Unfortunately, the Postmaster General continues to stonewall members of Congress, withholding his legal justifications for eliminating Saturday delivery from postal customers and the American public," Connolly said.

Fredric Rolando, president of the National Association of Letter Carriers, said in a statement on Thursday that cutting Saturday mail delivery would harm rural communities and small businesses and "only serve to accelerate a financial 'death spiral' for the Postal Service."

DROWNING IN LOSSES

The Postal Service, an independent agency not funded by taxpayers, has said it could need a taxpayer bailout of more than $47 billion by 2017 if Congress does not give it flexibility to change its business model and provide it relief from huge benefit payments.

It had planned to drop Saturday first-class mail delivery in August.

Ending six-day, first-class mail delivery is part of the Postal Service's larger plan to cut costs and raise revenues.

The mail carrier lost $16 billion last year. Over $11 billion of the losses come from heavy mandatory payments into its future retirees' health fund take a toll – something no other agency is required to do– but it has also suffered as more Americans communicate by email and the Internet.

The Postal Service could run out of money by October if Congress does not provide legislative relief, some experts have estimated.

"Once the delivery schedule language ... becomes law, we will discuss it with our Board of Governors to determine our next steps," Partenheimer said.

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