Potter Begs for Five-Day Delivery, Health Care Relief

Postmaster General Jack Potter on Wednesday asked a Senate panel to consider “temporarily” reducing mail delivery from six to five days a week and for legislative relief from the U.S. Postal Service’s nearly $5.8 billion yearly healthcare benefit obligations.

Speaking before the Subcommittee on Federal Financial Management Federal Services and International Security, Potter outlined the circumstances that have brought the USPS into this financial state, despite aggressive cost-cutting and productivity improvement measures.

“Simply put, the Postal Service is in acute financial crisis,” Potter said.

“If current trends continue, we could experience a net loss of $6 billion or more this fiscal year despite the most aggressive effort in our history to take cost out of our system,” he said. “The maximum loss we can absorb while allowing us to meet all of our obligations under current law and close the year with a positive cash balance is $5 billion.

"[But] continued deterioration of the economy may depress mail volume and revenue even further than we expected, for a longer period than we expected [so] it is possible that the cost of six-day delivery may simply prove to be unaffordable. If that should occur, it could become necessary to temporarily reduce mail delivery to only five days a week. We would do this by suspending delivery on the lightest volume days.

“Toward this end, I reluctantly request that Congress remove the annual appropriation bill rider, first added in 1983, that requires the Postal Service to deliver mail six days each week.,” he continued. “Any such action would be taken under the direction of our Board of Governors and only when absolutely warranted by financial circumstances. Were we to do so, we would make every effort to maximize the benefits to our customers while minimizing any disruption to our mailers.”

He continued:

“Second, we are asking for a legislative change to provide relief from the crippling cost burden imposed by the law’s requirement that we prefund the employer premium for the health benefits of future retirees while continuing to pay health care premiums for our current retirees.”

The PMG explained that the Postal Accountability and Enhancement Act of 2006, despite other reforms, left the USPS with annual payments ranging from $5.4 billion to $5.8 billion between 2007 and 2016 to cover health care benefits for retired postal employees while still paying the benefits of current employees.

Specifically, Potter asked that the Senate to amend the PAEA to allow the U.S. Office of Personnel Management to pay the USPS’s portion of retirement benefits for current employees--a move he said would save the USPS up to $24 billion through 2016.

“This will free up a tremendous portion of operating revenue to offset our current operating expenses,” he said.