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Congress must act quickly to stem Postal Service losses, PMG says

Nov. 21, 2011 - 09:13PM   |  
By SEAN REILLY   |   Comments
Several protesters briefly interrupted Postmaster General Patrick Donahoe's speech at the National Press Club on Nov. 21, while another group protested outside.
Several protesters briefly interrupted Postmaster General Patrick Donahoe's speech at the National Press Club on Nov. 21, while another group protested outside. (J. Lee / Staff)

The U.S. Postal Service faces yearly losses of $10 billion to $15 billion if Congress doesn't act soon to give it more management freedom, Postmaster General Patrick Donahoe warned Monday.

"We simply don't have the ability to cut our costs fast enough," Donahoe said in a luncheon speech at the National Press Club. "Congress needs to step back and look at the Postal Service as a business."

So far, however, neither the House nor Senate appears inclined to grant the kind of operating flexibility Donahoe is seeking. Under a bill approved this month by the Senate Homeland Security and Governmental Affairs Committee, the Postal Service would have to continue Saturday mail delivery for at least another two years a step that Donahoe said would mean $3 billion in annual costs. And a rival measure pushed by House Republicans could put the Postal Service under the control of a specially appointed oversight panel.

"We really don't need another board telling us what to do," Donahoe said.

There is also no sign that lawmakers are anywhere close to a final agreement on a USPS overhaul; some analysts don't expect any such deal until after next November's elections. "You know the phrase, ‘Speed kills?' " Donahoe asked. "Well, lack of speed will kill the U.S. Postal Service."

Last week, the mail carrier reported a net loss of $5.1 billion for fiscal 2011, driven by a steady decline in profitable first-class mail use. The amount of red ink would have been much higher, except that Congress agreed to defer a $5.5 billion payment into a retiree health care fund originally due on Sept. 30, the final day of the fiscal year. That payment is now due Dec. 16, but USPS officials have said they lack the cash to make it.

Donahoe also voiced hope that the Postal Service can reach agreement on two new union contracts without resorting to arbitration. Existing agreements with the National Association of Letter Carriers and the National Postal Mail Handlers Union officially expired at midnight Sunday, but all sides opted to continue negotiations through Dec. 7. In a news conference following Donahoe's speech, NALC President Fredric Rolando said the union is exploring a "new approach" to health benefits that could save up to $20 billion over the next decade. Rolando declined to go into details, but acknowledged that one possible change could require retirees to use Medicare instead of the Federal Employees Health Benefits Program for their primary health coverage.

Several protesters briefly interrupted Donahoe's speech, chanting, "We are the 99 percent," and "Don't privatize the post office. It's a public service," before being led out by security. Donahoe's appearance also drew about 30 demonstrators to the sidewalk outside the Press Club, where they objected to what they described as plans to cut jobs and to privatize the Postal Service.

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