A Second Day Off for the Postal Service?

By Joe Davidson
Thursday, January 29, 2009

The U.S. Postal Service is hurting and hurting bad.

It's losing so much money so quickly that it wants the flexibility to cut deliveries from six days a week to five. This would be a popular option if we could schedule all bills to be delivered on the same day, then have that day declared the no-delivery day.

But the bills will keep piling up, even while Americans aren't using the post office nearly as much as we once did. Saying the Postal Service "is in a severe financial crisis," Postmaster General John E. Potter asked Congress yesterday to allow a cut in mail delivery. In testimony to a Senate panel, Potter said "the ability to suspend delivery on the lightest delivery days, for example, could save dollars in both our delivery and our processing and distribution networks. I do not make this request lightly, but I am forced to consider every option given the severity of our challenge."

After his testimony, Potter said the reduction in service days is the "worst-case scenario" if other efforts -- particularly a proposed rescheduling of retiree health-benefit payments -- do not produce the required savings or if mail volume falls beyond expectations. If a day is cut, he said, it would be during summer, which is the lightest delivery period and perhaps on Tuesday or Saturday, the lightest delivery days.

Any reduction would be temporary, at least in theory, but Potter left open the number of years it could last, saying it would depend on what level of service makes sense based on the revenue generated.

Getting Congress to agree to Potter's request to allow a reduction in delivery days won't be easy. Members of the Senate's subcommittee on federal financial management, government information, federal services and international security questioned him closely, and at times with implicit criticism, on the transparency of his agency's finances. Sen. Susan M. Collins (R-Maine) said she was "very disappointed" at the prospect of five-day delivery. Businesses with time-sensitive mail "are going to find other means" to deliver their information, she said. Chairman Thomas R. Carper (D-Del.) said reducing delivery days "would not be the preferred option of the Congress."

Potter asked for the flexibility to cut service days because the volume of mail, and its revenue, is dropping so sharply.

"We began this fiscal year with a projected volume loss of 8 billion additional pieces and a net loss of $3 billion," he said. "In the few short months since that forecast was developed, we are now projecting a volume loss of 12 to 15 billion additional pieces and a total net loss approaching $5 billion. I am sorry to tell you that even this revised forecast may be too optimistic."

Post office business is dropping because "a revolution in the way people communicate has structurally changed the way America uses the mail," Potter said. Many people now use the Internet for everything from paying bills to sending greeting cards to inviting people to parties.

Lower-cost junk mail -- that is, advertising -- has increased, but it produces only about half the revenue of first-class mail, according to Potter. That mail volume "would have to double to generate the same revenue as first-class mail," he said. "That level of growth, never experienced even in a strong economy, is unachievable in an economy marked by a severe downturn in advertising."

Potter also urged Congress to permit a rescheduling of retiree health benefit funding. He wants "relief from the crippling cost burden imposed by the law's requirement that we pre-fund the employer premium for the health benefits of future retirees while continuing to pay health care premiums for our current retirees."

Calling a change in the funding method "my first priority," he said, "this change would not increase the health benefit premiums paid by current or future Postal Service retirees, nor would it affect their benefits."

That's good news for the future retirees. Now let's see how many days a week they'll be working.

Contact Joe Davidson at federaldiary@washpost.com.

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