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Federal Eye
Posted at 05:20 PM ET, 06/28/2011

Postmaster General Patrick Donohoe on tour to build support for Postal Service changes

Rein

Postmaster General Patrick R. Donahoe is on a talking points tour to implore Congress and Washington opinion-makers to save his troubled business.

The chief of the U.S. Postal Service, facing $8.3 billion in losses at the end of the fiscal year in September, told the Washington Post editorial board Tuesday that his agency could default this year on a $5.4 billion payment in health benefits for retirees. With first-class mail volume plummeting , USPS could soon exhaust a $15 billion line of credit with the Treasury Department, Donahue said.

He’s urging passage of legislation re-introduced in May by Sen. Thomas R. Carper (D-Del.) that would help put the Postal Service in the black by eliminating Saturday delivery; making it easier to close post offices; allowing USPS to market more non-postal items; and easing employee pension and retiree costs. Under the proposal, the agency could dip into federal pension funds congressional watchdogs say it has overpaid for many years to make the $5.4 billion payments.

“The bill would make us profitable,” Donahue told the editorial board. “By the end of 2011 we’re theoretically going to be in default [on our benefit payments]. We’re trying to get Congress to focus on this.”

Carper’s is one of three big bills pending in Congress to put the Postal Service on the path to solvency; Sen. Susan Collins (R-Maine) has a bill that would require arbitrators in labor disputes to take USPS’s financial condition into account before settling contract disputes. Rep. Darrell Issa (R-Calif.) proposed legislation last week that would step up regulation over the agency and mandate cost-cutting measures.

A move to five-day service would save the Postal Service about $3 billion a year. But legislation to authorize the change has languished in Congress for two years Many lawmakers say it’s a good idea, but it is nonetheless a political fireball: Post offices populate every congressional district. Donahue says he is cautiously optimistic it will happen this year. As a government agency, the Postal Service technically cannot declare bankruptcy, Donahue said. “But we don’t want to kick the can down the road. This needs to be resolved.”

By  |  05:20 PM ET, 06/28/2011

 
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