Lawmakers to weigh postal overhaul

WASHINGTON — Lawmakers will consider various proposals today to restructure the U.S. Postal Service, just days after government auditors warned that the agency must quickly address its financial viability.

Confronting a sharp decline in mail volume tied to the recession and the continuing migration to e-mail and online payment options, the Postal Service projects a net loss of $7 billion this fiscal year and debt to exceed $10 billion, leading to a cash shortfall of approximately $1 billion. Losses are expected to continue next year.

The Government Accountability Office added the Postal Service to its list of high-risk government agencies and programs on Tuesday, and it will further explain its decision today at a House subcommittee hearing.

The GAO has urged a rapid overhaul of the Postal Service that includes layoffs, plant closures and changes to retiree health benefits. Since 2006, federal law requires it to pay roughly $5.5 billion per year to cover future retiree benefit costs, while still paying $2 billion to $4 billion to cover current retiree costs.

"We're paying into something that no one else is required to pay into," said Fredric Rolando, president of the National Association of Letter Carriers, which represents most mail carriers in large cities and suburbs. Competing House and Senate proposals that would adjust the payment schedule are moving toward votes in the coming days. Beyond the benefits adjustment, however, it is unclear how best to proceed.

"We've got a system for the foreseeable future that is built for mail amounts that are far greater than they're likely to have," said Arthur Sackler, executive director of the National Postal Policy Council.

The most obvious cutback would be a reduction in mail-delivery days, most likely on Saturdays. A June Gallup survey found 66 percent of Americans support cutting mail service to five days a week. Postal officials have introduced a plan that ends traditional mail delivery on Saturdays but keeps post offices open as normal.

Mail would still be delivered to post-office boxes and carriers would still deliver Express Mail packages.

Congress would have to either make changes to the appropriations process or pass a law explicitly allowing five days of service. The plan could save USPS billions of dollars, but would adversely affect some of its most loyal customers.

"Reducing service is going to cost some of our members delay, and they're going to have to work to adjust," said Jerry Cerasale, a senior vice president with the Direct Marketing Association, which represents companies and nonprofits that frequently rely on weekend deliveries. Cerasale, Rolando and Sackler will all testify at today's hearing.

Few believe the Postal Service can afford to expand in the coming years, but Rolando wants the Postal Service to exploit its unrivaled delivery network for other sources of revenue: Mail carriers could conduct follow-up interviews for the 2010 Census, partner with private delivery companies to deliver packages to remote locations, or provide a medication-delivery service, he said.