Lawmakers question plans of Postal Service to cut costs

Lawmakers from both parties are resisting the Postal Service’s attempts to end Saturday deliveries and close branches in order to make up its budget shortfall.

The U.S. Postal Service (USPS) is facing a cash shortfall of $1.5 billion this year. That’s because the recession and a shift toward e-mail and other new technologies are cutting into USPS revenue, which is expected to drop by $6 billion, an 8 percent decrease from last year, according to USPS spokeswoman Yvonne Yoerger.

In past years when it faced deficits, the USPS borrowed money from the Federal Financing Bank, but the agency doesn’t want to approach its $15 billion credit limit. The agency has borrowed nearly half of its limit and can only borrow up to $3 billion each year.

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To make up for the shortfall, the Postal Service is seeking a new, weekday-only delivery schedule. By ending weekend service, the agency would save about $3.5 billion a year, Yoerger said. The USPS has also called for funding pension payments for current employees by taking money from a trust fund for the pensions of future retirees. That would net another $2 billion each year.

Either option would be enough to make up the shortfall, but members of Congress remain skeptical of the proposals, especially the plan to end Saturday deliveries.

Sen. Susan Collins (R-Maine) said that she’s concerned that a reduction in service would lead to a loss in customers.

“[Small businesses] point out to me that if they’re trying to do a sale bulletin and there’s no delivery on Saturday and there’s a Monday holiday, it would be out of date by the time the delivery would be made,” she said. Small newspapers would be especially hurt without Saturday deliveries.

Collins, the top Republican on the Senate Appropriations subcommittee that considers USPS funding, said she supports maintaining a rider in an appropriations bill that requires the USPS to deliver six days a week. That provision has been left intact in the House version of the financial services and general government spending bill. Rep. José Serrano (D-N.Y.), who is shepherding the bill through the lower chamber, said that people depend on Saturday service and “would be greatly inconvenienced by missing a day’s delivery.”

The American Postal Workers Union has also come out against weekday-only service, arguing that USPS’s funding shortfall is only temporary and that revenues will return once the economy recovers.

The Postal Service’s best bet may be to change the way it funds employee pensions. A bill allowing the change has garnered 336 House co-sponsors. The House Oversight and Government Reform Committee could mark up the bill as soon as this week, according to Republicans on the committee.

But the bill could run into trouble in the Senate; Collins said that she wants to limit the agency to borrowing funds from future retirees to just two years instead of eight, which is the time frame the House legislation calls for.

She said that taking money from pensions for future retirees for more than two years “relieves the pressure on the Postal Service too much to achieve efficiencies.”

Other USPS proposals have won little support from Congress. Postal officials are looking to consolidate some of the service’s more than 3,000 post offices to save money, but lawmakers across the country have resisted proposals to close branches in their communities.

In one letter to the Postal Service seeking to stop the closure of an office in Manchester, N.H., the Granite State delegation wrote that the move would hurt postal workers during a recession.

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“[E]specially in these tough economic times, we encourage [postal officials] to consider the quality and performance consistently demonstrated by this center so we can protect these New Hampshire jobs,” the bipartisan delegation wrote.

But Sen. Tom Carper (D-Del.), chairman of the Homeland Security and Governmental Affairs subcommittee looking at the agency’s budget shortfall, left the door open to any option that fixes the problem permanently.

He said that the drop in revenue is due not just to the economy but also to new technology that won’t be going away.

“The real problem needs to be addressed,” Carper said. “There are several options on the table. I wouldn’t preclude any of them.”