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Tags: postmaster | house | losses | postal | service

Postmaster: House Must Act to Stem $25 Million-a-Day Loss

Friday, 27 April 2012 06:32 AM EDT

Postmaster General Patrick Donahoe said it’s urgent for the U.S. House of Representatives to act by next month on legislation to stem U.S. Postal Service losses running at $25 million a day.

“We have to act,” Donahoe said in a telephone interview yesterday. “It’s very important, I think, to get these issues off the table in terms of the industry. Big mailers don’t want to keep hearing the Postal Service is losing money.”

Donahoe wants a final measure that would let him close post offices and processing plants, as the House legislation would do, while including a provision from the Senate’s version that would relieve the Postal Service of a $5.5 billion annual payment for health costs.

Donahoe and the Postal Service’s board hasn’t embraced the Senate’s version, passed April 25, because it would delay closing mail facilities. He said early House action is necessary so the two chambers can arrive at a compromise.

“The later we go, the more problematic of passing a bill,” Donahoe said. “I would love to see action within the next few weeks here and wrapped up before Memorial Day,” the U.S. holiday on May 28.

The board criticized the Senate bill for delaying cutting a day of mail delivery each week and for keeping open “unneeded facilities.” Yesterday, Donahoe praised the bill’s provisions that would effectively eliminate an annual $5.5 billion payment for future retirees’ health-care costs and would authorize the service to branch out into other businesses.

Moratorium on Closings

The Senate passed its bill before the May 15 lifting of a five-month moratorium the Postal Service placed on closing post offices and processing plants.

“I hope it puts a little pressure on the House to act,” Connecticut independent Joe Lieberman, the Senate bill’s sponsor, said April 25 after the bill’s passage. He said House consideration of the bill as late as July would be “too late.”

The Postal Service is trying to cut $20 billion in annual operating costs by 2015 to stem losses that reached $3.3 billion in the quarter ended Dec. 31.

The agency says it wants to close as many as 3,700 post offices and more than 220 mail processing plants to streamline its network as mail volume has dropped each year since 2006.

The service, which has $2 billion remaining of its $15 billion borrowing authority from the U.S. Treasury, can continue operating through its fiscal year that ends Sept. 30 and won’t run out of money until next year, Donahoe said, without being more specific.

Daily Losses

“Every day that ticks by, we lose $25 million. Every day,” he said. “When you start in terms of months, you start to talk in terms of billions. So time is of the essence.”

The service doesn’t need a bailout, Donahoe said, and wants to execute its own cost-cutting plan for which it needs congressional permission to make changes, such as paring to five-day delivery and pulling out of a U.S. government health plan to manage its own employee plan.

Ron Bloom, 57, a Lazard Ltd. senior adviser who counseled the National Association of Letter Carriers union last year, said the Postal Service is in a situation where it can’t win.

“On the one side, we tell the Post Office we want you to break even as a business and so you would think therefore we should tell the Post Office to run like a business,” he said at a conference in Grapevine, Texas, on April 25.

Rural Montana

“On the other side, we say to the Post Office, if you have too many mail processing facilities, or you have post offices in rural Montana that get visited once a day and cost $100,000 a year to operate and $5,000 a year of revenue, we want you to keep it open,” said Bloom, a former assistant to President Barack Obama for manufacturing policy.

The service won’t close any facilities immediately once the moratorium ends on May 15, Donahoe said, saying he hopes the House is debating a postal measure at that point.

House Oversight and Government Reform Committee Chairman Darrell Issa, a California Republican, is the sponsor of the House’s postal legislation. He called the Senate measure “a special-interest spending binge that would actually make things worse.” The “wholly unacceptable” bill would keep more than 100 “excess” facilities open, he said in an e-mailed statement April 25.

Issa’s proposal would create a board modeled after the Defense Department’s base-closing commissions to oversee postal closures.

Under the Senate bill, states that conduct vote-by-mail procedures would be exempt from closures through the November election. Rural post office closures would be delayed for at least one year, with some exceptions. The bill also contains an expanded appeal process for customers to protest potential closures.

Maine Republican Susan Collins, a co-sponsor of the Senate legislation, said on April 25 that she encouraged Issa to get his version to the House floor “as quickly as possible” so the chambers can negotiate in a conference committee.

© Copyright 2023 Bloomberg News. All rights reserved.

Friday, 27 April 2012 06:32 AM
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