WASHINGTON -- The U.S. Postal Service is on the verge of financial collapse and should eliminate Saturday delivery, close thousands of local post offices, restructure its health plan and lay off 120,000 workers to survive, according to Postmaster General Patrick Donahoe.
Donahoe asked lawmakers to allow him to make "radical" changes to the centuries-old institution so it could avoid defaulting on its obligations.
At a Senate hearing Tuesday, he said the Postal Service is all but certain to miss a $5.5 billion payment to its retiree health fund due at the end of the month. And that only begins the trouble, he said, warning that the postal system is heading toward a $10 billion net loss this fiscal year, and is near its borrowing limit.
With operating cash running out quickly, trucks, mail processing centers and mail delivery could come to a halt by this time next year, Donahoe said.
"Failure to act could be catastrophic," Donahoe told members of the Senate Homeland Security and Governmental Affairs Committee, which oversees the postal service.
The new proposals reflect heightened desperation at an agency that has been on the decline for years. The rise of email has dramatically curbed demand for old-fashioned letters, while competitive delivery companies have squeezed the post office's business model.
Last year, the post office delivered 171 billion pieces of mail, down 20 percent from just four years earlier. Volume is on track to fall 2 percent more this year.
But Donahoe put the blame for the current crisis on federal laws and labor agreements that he said unduly restrict his agency's ability to adapt and promise more than the postal service can deliver. Labor costs amount to 80 percent of the postal service's expenses, and current contracts contain a no-layoff provision. Changes to the frequency of service or delivery areas require federal legislation.
The postmaster's request arrived just as lawmakers returned from a summer break and appeared prepared to pick up where they left off - in a fierce partisan battle over government spending and job creation.
Both Democrats and Republicans are quick to express their support for postal services, but even the short-term measures being discussed are likely to meet opposition.
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, Associated Press reported.
Sen. Tom Carper, D-Del., noted that 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 been introduced in the House, AP reported.
The proposed changes to mail service probably will draw the broadest opposition.
