Postal Service urges speedy action on cuts

Posted: May 06, 2012

WASHINGTON - With financial losses mounting, the nearly bankrupt U.S. Postal Service is urging the House to quickly pass legislation that would give it broad authority to close thousands of low-revenue post offices, reduce labor costs, and end Saturday delivery.

At a meeting Friday, the Postal Service's board of governors said that a bill passed by the Senate last week doesn't go far enough to give the agency the latitude it needs. That bill would provide the Postal Service with an $11 billion cash infusion to help pay down ballooning debt but halt the immediate closing of up to 252 mail-processing centers and 3,700 post offices.

The Postal Service called the closings a critical part of its cost-cutting plan to save $6.5 billion a year and regain profitability by 2015. Anxious for legislative action but uncertain when the House may act, the mail agency said it would proceed with planned closings after May 15, but in a "methodical and measured" way that considers the needs of rural communities.

At stake are more than 100,000 jobs, and the situation has caused anxiety in many communities across the country, particularly in rural areas that rely more heavily on postal service for the delivery of prescription drugs, newspapers and other services. The mail agency forecast a record $14.1 billion loss by the end of this year; without changes, it said, annual losses will exceed $21 billion by 2016.

The Senate bill would slow if not stop thousands of the closings. With prospects for immediate House action uncertain, nearly half the senators in letters this week called on Postmaster General Patrick Donahoe to wait on closing any mail facility until Congress passes final legislation. The Senate measure would block about half the closings of mail processing centers planned by the Postal Service, from 252 to 125; 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 at least two years.

The House version, which passed on a party-line GOP vote in committee last fall, calls for far more aggressive cost-cutting. House Democrats remain largely opposed to the bill because of the potential for wide-ranging layoffs, while rural lawmakers worry about the election-year impact on their communities.

On Friday, the Postal Service stressed that the Senate plan fell far short in stemming losses.

For instance, the Senate bill would give an $11 billion cash infusion and defer payment requirements that would help the Postal Service make an initial profit of $8.1 billion this year. In the following years, however, the mail agency would return to annual losses of between $2 billion and $4 billion as it grapples with continuing labor costs and health payments, even after assuming the mail agency can eliminate Saturday mail delivery beginning in 2015, according to an initial postal analysis reviewed by the Associated Press. The Senate bill allows for an end to Saturday delivery in two years, and then only as a last resort.

The House version, cosponsored by Rep. Darrell Issa (R., Calif.), also provides for an $11 billion infusion but allows the Postal Service to proceed with its full proposed cuts, including ending Saturday delivery after six months. If the agency fails to achieve significant cost savings within two years, a national commission and independent control board would then step in to make more drastic cuts.

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