Republicans blast White House plan to revive Postal Service

"The Postal Service is on an unsustainable course and it's bad not just for the Postal Service but the economy and the federal deficit," he said.

The overall plan is expected to reduce the federal deficit by $18.5 billion over 10 years, the official said. 

House Oversight and Government Reform Chairman Darrell Issa (R-Calif.), whose panel oversees the agency, called the plan is "a thinly veiled attempt to offset continued operating losses with a taxpayer-funded bailout."

Issa's panel will consider on Wednesday a proposal to save the Postal Service $10.7 billion a year.

Officials said the postal service is expected to default on the $5.5 billion retiree health payment due at the end of September unless Congress provides relief. USPS expects to lose upward of $10 billion when its fiscal year ends, on Sept. 30. 

Lawmakers have indicated they want to give the agency an extra 90 days to make its payments while legislative proposals are considered. 

The administration isn't calling for a reduction of workers; it instead wants the agency to offer early retirement and buyouts, possibly using the surplus FERS fund for that. The plan also doesn't allow USPS to withdraw from FERS because the move "needs greater scrutiny and additional time for analysis," an official said. 

The congressional debt-cutting supercommittee will consider ways to help USPS reorganize as it seeks to identify at least $1.5 trillion in deficit reduction over the next decade. 

Opposition to the plan also came from the Senate. 

Sen. Susan Collins (R-Maine), ranking member on the Homeland Security and Governmental Affairs Committee, who introduced postal reform legislation in February, said that "unfortunately, the administration's proposals will not prevent the Postal Service from becoming insolvent."  

"There is no response to the Postmaster General's proposal to restructure the Postal Service's underlying health and pension costs," she said. "There is little attempt to address the workforce issues that drive 80 percent of USPS's expenses."

On the other side of the aisle, Sen. Tom Carper (D-Del.), chairman of the subcommittee that oversees the agency, said the administration's plan includes many of the recommendations he suggested to President Obama earlier this month, which were included in legislation introduced in the spring. 

"The president's proposal would help the postal service update its business model to reflect Americans' changing communications habits and address some of the financial burdens associated with the postal service's future retiree healthcare costs and payments to the federal pension systems," he said. 

"What the president has put forward today appears to be a meaningful response to a very real and dire crisis that has the potential, perhaps in combination with other proposals that have been made in recent months, to address the challenges facing the Postal Service in the near term and in the years to come."