The Obama administration on Monday backed the Postal Service’s proposal to end Saturday delivery and raise postal rates. (Joe Raedle/GETTY IMAGES)

The Obama administration inserted itself Monday into a years-old fight over the future of the U.S. Postal Service, backing proposals to end Saturday mail delivery and to raise postage rates beyond the rate of inflation.

The support for the proposals came as part of broader White House ideas to pay down the federal deficit.

But the administration declined to endorse the Postal Service’s request that Congress allow it to break labor contracts and lay off as many as 120,000 employees, a key piece of the Postal Service’s plans to cut $20 billion in costs.

Postmaster General Patrick R. Donahoe voiced tepid support for the White House plan, thanking President Obama for presenting “helpful recommendations.”

Although the Postal Service is a self-funding entity that doesn’t accept taxpayer dollars, it is a significant piece of the unified federal budget because its workers and retirees draw benefits from federal workers’ compensation, retirement and health-care accounts.

The White House said its proposals would provide USPS with more than $20 billion in savings in the next few years and cut the federal deficit by more than $18 billion in the next decade.

The plan calls on Congress to return about $7 billion that USPS paid into a federal retirement fund to help pay for other retirement and health-care costs. The money would be refunded over two years and could be put toward offering retirement packages or buyout options to workers, senior administration officials said.

The White House also called on Congress to forgive the $5.4 billion payment the Postal Service must make this year to prefund the retirements of its workers. In its place, the administration recommends restructuring the annual payments by spreading them out over the next several years instead of ending them in 2016.

But Rep. Darrell Issa (R-Calif.), who is pushing competing proposals, called Obama’s ideas a “thinly veiled attempt to offset continued operating losses with a taxpayer-funded bailout.”

Issa, chairman of the House committee with oversight of the Postal Service, on Wednesday plans to mark up his bill, which would allow USPS to raise prices and end Saturday mail deliveries but would also establish a financial control board to help overhaul USPS finances.

Sen. Susan Collins (R-Maine), another lawmaker closely tracking postal affairs, said ending Saturday mail “will only make matters worse and accelerate the Postal Service’s death spiral.”

The Coalition for a 21st Century Postal Service, a group of businesses reliant on the mail, also voiced concern with potential rate increases, which Donahoe has said could occur next year.

If prices rise, “postal customers would seek other, less expensive avenues to communicate,” said Art Sackler, the coalition’s coordinator. “When a business is already losing customers, the last thing it should do is increase its prices.”

The varying postal rescue plans are expected to be considered by the congressional “supercommittee” charged with identifying at least $1.5 trillion in deficit reduction over the next decade. Similar debt-reduction meetings chaired by Vice President Biden this summer included discussions on how to resolve the agency’s challenges, according to several congressional sources.

Fred Rolando, president of the National Association of Letter Carriers, called on Democrats and Republicans to work together “without resorting to ideologically driven attacks on postal employees or false claims” about the motives of the various proposals.