In financial crisis, Post office turns to Congress

WASHINGTON (AP) - Postmaster General Patrick Donahoe warned that the Postal Service is on "the brink of default" as he battles to
keep his agency solvent.

Without legislation by Sept. 30, the agency "will default on a
mandated $5.5 billion payment to the Treasury," Donahoe told the
Senate Homeland Security and Governmental Affairs Committee on

And with no congressional action, a year from now, next August
or September, the post office could run out of money to pay
salaries and contractors, hampering its ability to operate, Donahoe

"We do not want taxpayer money," Donahoe said, "We have got
to get our finances in order."

Committee Chairman Joe Lieberman, I-Conn., said: "We must act
quickly. The U.S. Postal Service is not an 18th century relic, it
is a 21st century national asset, but times are changing rapidly
now and so, too, must the post office."

Sen. Susan Collins, R-Maine, noted that the post office supports
a $1.1 trillion mailing industry employing more than 8 million
people in direct mail, periodicals, catalogs, financial services
and other businesses.

Sen. Tom Carper, D-Del., noted several proposals have been put
forward to improve postal operations and said that Congress needs
to work on areas where agreement can be found. Both Carper and
Collins have introduced bills to reform postal operations, and
measures have also been introduced in the House.

Donahoe and his predecessor John Potter have warned for months
that without changes in the law governing postal operations the
Postal Service will be unable to make advance payments to cover
future retiree medical benefits.

Staggered by the economic downturn and the massive shift from
first-class mail to email, the post office lost more than $8
billion last year and is facing losses at least that large this
year, despite having cut 110,000 jobs over the last four years and
making other changes, including closing smaller, local post

The Postal Service, which does not receive tax money for its
operations, is not seeking federal funds.

Instead, postal officials want changes in the way they operate,
including relief from the requirement that it prefund medical
costs. No other federal agency has to prefund retiree health
benefits, but because of the way the federal budget is organized
the money counts as income to the government, so eliminating it
would make the federal deficit appear larger.

When Congress restructured postal operations in 2006 it ordered
the agency to establish a separate fund to begin covering those
benefits, instead of using money for the post office's general
fund, starting in 2017, and to make annual advance payments to that
account. The payment due Sept. 30 would be $5.5 billion.

Also, the post office wants to reduce mail delivery to five
days-a-week; close 3,700 offices, further cut the workforce by up
to 220,000; and to withdraw from federal retirement systems and set
up its own. It also seeks the return of $6.9 billion it overpaid
into retirement funds.

Contracts with its employee unions currently strictly limit
layoffs and closing post offices riles local communities who
complain to their members of Congress.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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