Obama to USPS: No Mail on Saturday
After an ongoing debate about the future of the U.S. Postal Service (USPS), President Obama come up with a plan to save the USPS from a potential financial collapse. According to his economic growth and deficit reduction plan announced on Monday, an end to Saturday mail service may be the part of the solution.
The White House deal is part of a general plan that proposes to cut $3 trillion from the deficit over the next 10 years. It would allow the USPS to use $7 billion from a pension to avoid economic calamity.
The Postal Service lost $8.5 billion last year and is facing even more loss as first-class mailing competes with the Internet and the weak economy has resulted in great reduction of advertising mail.
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In order to deal with the financial loss, the USPS has cut more than 100,000 workers; however, that has proved to be insufficient. The post office claims it must let more workers go and close more offices in order to keep the business running.
The President’s plan to aid the USPS not only includes nixing Saturday service. The plan orders that the nearly $7 billion the post office has overpaid into the federal retirement system should be refunded to the agency. Obama also suggested that its payments for advance funding of retiree medical benefits be restructured, and said the post office should be allowed to sell non-postal products and raise postage rates.
Currently, the post office cannot raise rates more than the amount of inflation.
According to CBS, Postmaster General Patrick Donahoe said that the president "has offered helpful recommendations to stabilize the Postal Service's financial crisis."
“We are forced to face a new reality today,” Donahue said in a statement released Thursday. “With the dramatic decline in mail volume and the resulting excess capacity, maintaining a vast national infrastructure is no longer realistic. Since 2006, we have closed 186 facilities, removed more than 1,500 pieces of mail processing equipment, decreased employee complement by more than 110,000 through attrition and reduced costs by $12 billion.”
Obama’s plan would also give the USPS more time to pay the $5.5 billion required by law to a healthcare retiree fund in two weeks.
"The plan would provide short-term relief for the postal service and take off the handcuffs to do some more of the structural reforms that are needed to get it on a more sustainable course," said a senior administration official in a briefing with the media on Monday, according to CNN.
Sen. Tom Carper, D-Del., who proposed a bill with many of the same suggestions Obama is advocating, agreed with the President’s plan.
"I have been saying for some time now that Congress and the administration need to come together on a plan that can save the Postal Service and protect the more than seven million jobs that rely on it," he said in a released statement.
However, according to the Associated Press, Rep. Darrell Issa, R-Calif., responded, "The president's proposal is not what taxpayers or the Postal Service needs."
Issa said Obama's plan "will certainly cost taxpayers money." Currently, the post office does not receive tax funds for its operations.
Overall, the President's larger, $3 trillion deficit plan calls for $1.5 trillion in new taxes over the coming decade. He also promised to veto any bill coming out of Congress that does not include new revenues.
