Postmaster General Says Postal Service Near Bankruptcy
Due to competition, technological changes and labor costs, the United States Postal Service (USPS) is “on the brink of default,” Postmaster General Patrick Donahoe warned on Tuesday. The White House said that a plan is in the works to rescue the agency.
By the end of the month, USPS will be unable to make a $5.5 billion payment to retiree health benefits, Donahoe said.
Donahoe proposed several changes that would save $20 billion, including eliminating Saturday delivery, replacing some rural post offices with ATM-like kiosks and downsizing its workforce.
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USPS has long faced competition from Fed Ex and UPS. It has also lost business to the Internet as more Americans use email to send messages and pay bills online. USPS is also required to place its workers in the federal government's retirement, healthcare and worker's compensation system.
USPS has been entirely self-funded for about 30 years, but has to operate under rules established by Congress. Donahoe cannot implement his proposed cost-saving measures without congressional approval.
To save money, Donahoe is also asking Congress to let USPS put its employees under its own retirement and healthcare system.
This proposal, in particular, met resistance from the National Association of Letter Carriers (NALC), a union representing USPS workers. “These new legislative proposals constitute a transparent attempt to gut our benefits and reduce our bargaining rights without negotiations,” NALC President Fredric Rolando wrote on his blog.
One issue of controversy, on which Donahoe and Rolando both agreed when they both appeared on “The Newshour” on Tuesday, is the congressional requirement that USPS pre-fund retiree benefits. No other government agency faces that requirement.
“The postal service is not broke. The postal service just needs access to its own money and Congress get busy and give them that access,” Rolando said.
Donahoe agreed that USPS should not be required to pre-fund retiree benefits. He also said, however, “the problem is, if you start to look forward, even with the pre-funding money given back to us … the volume and revenues continue to go down.”
At a Senate hearing on Tuesday, U.S. Office of Personnel Management Director John Berry said that the Obama administration will submit a plan to fix the USPS's budget woes in a few weeks, along with its planned deficit reduction proposal. Berry also said that the administration has not taken a position on Donahoe's specific proposals.
