Postal chief says post office running out of money

WASHINGTON — The post office will run out of money this year unless it gets help, Postmaster General John Potter told Congress on Wednesday as he sought permission to cut delivery to five days a week.

"We are facing losses of historic proportion. Our situation is critical," Potter told a House panel.

The agency lost $2.8 billion last year and is looking at much larger losses this year. Reducing mail delivery from six days to five days a week could save $3.5 billion annually, Potter said.

Potter also urged changes in how the post office pre-pays for retiree health care to cut its annual costs by $2 billion.

If the Postal Service does run out of money, the lingering question, Potter told the House Oversight post office subcommittee, is which bills will be paid and which will not. Ensuring the payment of workers' salaries comes first, he said, but other bills may have to wait.

Potter first raised the possibility of delivery cutbacks in January, but the idea has not been warmly received in Congress.

"With the Postal Service facing budget shortfalls, the subcommittee will consider a number of options to restore financial stability and examine ways for the Postal Service to continue to operate without cutting services," subcommittee chairman Stephen F. Lynch, D-Mass., said.

Lynch said the financial stability of the Postal Service is "critical to the American expectation of affordable six-day mail delivery."

Even if the agency succeeds in reaching its planned cost cuts of $5.9 billion, there could still be a $6 billion deficit in 2010, Potter said.

"Without a change we will exhaust our cash resources," he said. "We can no longer afford business as usual."

Asked if layoffs would occur, Potter said it is possible but he hopes avoidable.

Last week, the post office said it planned to offer early retirement to 150,000 workers and is eliminating 1,400 management positions and closing six of its 80 district offices in cost-cutting efforts. Potter said he expects 10,000 to 15,000 workers to accept the early retirement offer.

Dan Blair, head of the independent Postal Regulatory Commission, suggested that other savings are possible through closing small and rural post offices _ something Congress has resisted in the past. He added that it may be necessary to increase the limit on the amount of debt the post office can carry.

The post office had a $384 million loss in the first quarter of the fiscal year _ October through December _ which is usually the busiest period because of the holidays.

Officials said the recession has contributed to a mail volume drop of 5.2 billion pieces compared to the same period last year. If there is no economic recovery, the USPS projects volume for the year will be down by 12 billion to 15 billion pieces of mail.

Over the past year the post office says it has cut 50 million work hours, stopped construction of new facilities, frozen salaries for executives, began selling unused facilities and has cut post office hours.

Last year's high fuel prices also sapped funds from the post office, which operates more than 200,000 vehicles. Every 1-cent increase in the price of fuel costs the post office $8 million.

Blair also noted that Congress could consider appropriating money to help the post office. The agency does not receive a taxpayer subsidy for its operations, although Congress does subsidize overseas voting and free mail for the blind.

William Young, president of the National Association of Letter Carriers, stressed in his testimony that the agency is not seeking a taxpayer bailout, "but we are here to ask the Congress for help."

"At this moment, the survival of the Postal Service _ a venerable institution that is literally older than our country _ hangs in the balance," Young added.

Lawmakers also raised questions regarding recent news reports that Potter is paid as much as $800,000 a year. That is not correct, Potter said. He said his salary, set by Congress, is $263,575. He said the news reports were counting his retirement fund, the cost of his security detail and a $135,000 bonus that would be paid over 10 years after he retires.

The bonus is based on improved delivery rates and customer satisfaction, he said. Under the current financial conditions, Potter said, he would not be eligible for a bonus this year.

___

On the Net:

Postal Service: http://www.usps.com

Comments

[demand]

08:11 PM on 04/16/2009

The usps is great, it generates alot of income in the united states- paying a lot of familys incomes and a lot of tax dollars. You get the best service, but it is up to you to use the correct address and return address and choose the best way of mailing to fit whatever your mailing needs, In doing so people and bussiness save a lot of money. As for a letter : there is nothing that can compare to paying 42 cents to get something hundreds of miles, best bargain around. Get rid of the usps - yea right then without the much needed revenue we will really see what happens to the economy.

[oxygen]

01:18 PM on 03/26/2009

stop monopolizi­ng bulk mail distributi­on and privatize and problem solved

[wadenelson1]

11:33 AM on 03/26/2009

Having outsourced millions of rural routes as well as urban to "contracto­rs" the post office can now lay off these people without any financial consequenc­e.

[AngelaM]

10:43 AM on 03/26/2009

We don't need the Post Office. All my bills come by email. All I get is junk mail which I throw out immediatel­y. I recently tried to mail a package at the Post Office (the last time I ever did that - it's UPS for me from now on), the person behind the counter was like a cartoon figure on slow motion. I didn't know anybody could move that slowly - it was practiced, I'm sure. There was one person ahead of me, 2 people to help us and it took 20 minutes for me to mail this package. They want more money, for what? Let's do away with them, there's no excuse to have those people be paid with tax payer dollars.

[bannorhill]

10:34 AM on 03/26/2009

Another example of an efficient government program.

USPS needs a bail out.

Amtrak gets a billion dollar bail out each year.

Social security is going broke.

Medicaid is going broke.

VA is going broke.

But our government knows how to run a health care better than the private sector. Want some Florida swamp land?

[700rpm]

12:30 PM on 03/26/2009

Wasting money on unnecessar­y wars and giving tax breaks to the ultra rich probably had some impact on SS, Medicaid, and the VA, wouldn't you think?

[bannorhill]

08:46 AM on 03/27/2009

Thanks for adding to my list of government inefficien­cies.

SS and Medicaid are not funded by general tax revenue but by a special tax on every worker in the US. Wars and tax breaks did NOT cause those programs to be underfunde­d. Government mismanagem­ent and inefficien­cy did.

[PatCroft]

08:25 AM on 03/26/2009

Remember when in 1972 these neocons privatized the Post Office. Sort've. Just like they did with AmTrack. The goal was to get more for less. Back in the days where a stamp was eight cents and it was fun to collect them. Back in the days when most everyone wrote personal letters to most everyone else.

Prior to this it was probably fun to be a letter carrier smoozing with the neighborho­od.

Fast forward 40 years things are different. A stamp is no longer a fine little delightful piece of art that was engraved with delightful print engraving marks. It would be as hard pressed to smooze with the letter carrier. Time does not permit perhaps and besides these letter carriers have become the neighborho­od spies for the oligarchy. They only have time to deliver the mail and or call in the hit squads if there is a sent of pot burning in their nostrils.

And of course the privatizin­g had a heavy toll.

All of these covert business practices have changed everything where it was once fun to receive mail has become a dreaded chore. Just another example of this government­s anti labor & union practices where it probably was once fun to deliver the mail but is not any longer.

[RedRedRed325]

08:22 AM on 03/26/2009

"Potter also urged changes in how the post office pre-pays for retiree health care to cut its annual costs by $2 billion."

Everyone who has employer-s­ponsored retiree healthcare raise your hand.

Thought so. We can start there.

[linton]

07:37 AM on 03/26/2009

The post office should consider dilivering mail 3 days a week. The post office will not go bust but revenue will reduce dramatical­ly as more people continue to utilize online payments or make more transactio­ns behind computers.

[reggieb]

08:28 AM on 03/26/2009

I could handle that.

[FairTalk]

06:15 AM on 03/26/2009

We have a crisis of management­, not just in the PO but throughout America.

A failure of imaginatio­n and vision.

[linton]

07:39 AM on 03/26/2009

We have been blindsided by technology­.

[oldgeek1]

06:05 AM on 03/26/2009

Wow,

The Post Office is a Federal Government Corporatio­n, the worst of both worlds neither fish nor fowl.

In theory it is a corporatio­n but managed by the Congress.

This was one of those management tricks to kick the can down the road and the problems under the carpet.

The post office is now financiall­y broken but the Republican­s would rather spend billions in Iraq and help that country while our own goes to pot

[larry278]

08:37 AM on 03/26/2009

While the USPS is neither fish nor fowl, privatizin­g federal bureaus is a fouly dangerous idea whaich has failed repeatedly­. The reality has proven the theory to be useless & filed with peril for all.

[StLBoy]

03:12 AM on 03/26/2009

Wow.

Lots of posters demonstrat­ing their collective ignorance about a subject they know so little about.

The USPS hasn't received tax dollars for its operations since 1982. They add nearly two million delivery points to their nationwide network each year, and operate more than 37,000 post offices from coast to coast (just the suggestion that a small, rural post office be closed will send your local career politician into grandstand­ing mode).

Bulk mailers earn a discount on their mailings because they presort it themselves­.

The Internet is not the primary culprit. According to the USPS, the highest volume of mail occurred in 2006 -- more than 212 billion pieces of mail. Correct me if I'm wrong, but the Internet didn't just happen three years ago. It's the economy.

And for those who think that UPS and FedEx do such a great job, check out their assortment of rural, residentia­l and fuel surcharges -- not to mention annual price increases. Oh, I forgot; private sector companies are above criticism. After all, the private sector banks, housing and auto industries had nothing to do with America's current economic mess.

It's much easier to blame the government -- even the one agency that doesn't get a penny of taxpayer money.

[c1ee]

05:38 AM on 03/26/2009

You seem to know what you're tlaking about. You got my vote of confidence ;)

[viflyer]

06:41 AM on 03/30/2009

As far as I am concerned, IF they need to be subsidized from the Government to maintain their level of service than SO BE IT. I don't care if they make money. In fact, I would prefer they DON"T.

Let them return profits, if any, to the people they serve, ALL OF US.

I am sick of people that don't understand that we are in this together. This is OUR Postal Service. get rid of it via privatizat­ion and we will be sorry.

[BillMelater]

03:06 AM on 03/26/2009

It's not a gubmint job anymore.

[gmlaster]

03:02 AM on 03/26/2009

The Post Office just lost a much-await­ed birthday box my mother sent to my six-year-o­ld son. Not wanting to trust it to regular mail, she paid for Priority to make sure the box got here on time for his birthday, which of course it didn't. When I tried to track the box, they told me it was her fault for not sending it by the even more expensive Express Mail. And...they won't give her the money back.

When I wrote the Postmaster­, the only answer we got was: Sorry, your box is just gone, but if it ever turns up, we'll send it along. We apologize for the inconvenie­nce, but you only paid Priority and it wasn't insured, so we absolve ourselves of any responsibi­lity. That was in February. It's almost April, and still no birthday box for a heartbroke­n little boy who was expecting a big, expensive Thomas the Train set, but instead got nothing on his birthday from his out-of-tow­n grandma.

The post office sucks, which is why its hemorrhagi­ng money. It's just a shadow of the marvelousl­y efficient organizati­on it used to be. Lost mail is just the half of it. Boxes of undelivere­d mail have been turning up under bridges and even in some mail men's houses. Is it any wonder that people pay extra for FedEx and UPS?

For my son's sake, I sure wish that we had. He'd been counting the days, waiting for that new train set.

[calickizzle]

04:02 AM on 03/26/2009

Why didn't your mother just purchase the train set from Amazon and have them ship it, wrapped, and with a personaliz­ed card?

It is the 21st century these days. Gifts can be purchased and sent over the Internets.­..

[Ping]

12:17 AM on 03/26/2009

The only reason for this is mismanagem­ent.

[sylviechen]

12:12 AM on 03/26/2009

Get real. We live in an electronic Twitterize­d, Digged, Texted, emailed, pdf'd, picture, video world.
As newspapers die, so will the Post office. Catalogs in the mail? Stupid. Web access eliminates the need. Third class mail for advertisin­g? It makes money at a discount, keeping the delivery system in business. If all companies performed online access to its customers, you would eliminate over 80 percent of billing pieces. Use the web for marketing, 75 percent of 3rd class mail. What's left? Personal letters, legal stuff notificati­ons, property and state and irs tax stuff.

I bet you that within 30 days, a crack group of experts could turn the PO system into an all electronic communicat­ions system for the future. We no longer live in a Newtonian, physical world. Heck, even my Netflix film will be downloaded electronic­ally.

It will happen, sooner than you think. Now, who gets to fund the un employed postal workers and their pension fund (most lucrative among all govt agencies)?