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Postal Service still wants cuts

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By Reuters

Published: Wednesday, July 17, 2013, 9:36 p.m.

WASHINGTON — The Postmaster General on Wednesday renewed his plea for lawmakers to allow the financially troubled Postal Service to switch to a five-day delivery schedule for first-class mail and to implement other overhauls needed to modify its outdated business model.

The Postal Service earlier this year pulled the plug on a plan to end delivery of first-class mail on Saturdays, bowing to pressure from lawmakers and industry groups to maintain a six-day schedule.

“The Postal Service continues to face systemic financial challenges because it has a business model that does not allow it to adapt to changes in the marketplace and it does not have the legal authority to make the fundamental changes that are necessary to achieve long-term financial stability,” Postmaster General Patrick Donahoe told the House Oversight and Government Reform Committee.

The Postal Service's financial troubles largely stem from a 2006 congressional mandate to prefund up to 75 years of its future retirees' healthcare, and dwindling revenues as more Americans use Internet and email to communicate rather than buying stamps.

The mail carrier lost $16 billion last year.

Donahoe wants lawmakers to eliminate the retiree prefunding requirement and allow the Postal Service to control its own healthcare system. The mail carrier expects to default on its next $5.6 billion payment to the Treasury for the future retirees's healthcare fund due in September.

The semi-independent government agency relies on sales of stamps and other products rather than taxpayer dollars to fund its operations. Revenue from first-class mail, its most profitable service, decreased by $198 million in the second quarter of fiscal year 2013.

“We cannot pretend these marketplace changes aren't happening or that they don't require us to make fundamental changes to our business model.” Donahoe said. “We need legislation that, together with our planned changes, confidently enables at least $20 billion in savings by 2016. If not, we go over the edge.”

The Postal Service's pleas for flexibility have so far gained little traction as Congress has several times failed to pass legislation allowing it to modify its operations.

 

 
 


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