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U.S. Postal Service cuts mean closures, slowdown of mail service

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The consolidation of mail processing centers is in addition to the planned closing of about 3,700 local post offices. In all, roughly 100,000 postal employees could be cut as a result of the various closures, resulting in savings of up to $6.5 billion a year.

For the first time in 40 years, the delivery of first-class mail could slow down. (Photo: Associated Press)

Expressing urgency to reduce costs, Postmaster General Patrick Donahoe said in an interview that the agency has to act while waiting for Congress to grant it authority to reduce delivery to five days a week, raise stamp prices and reduce health care and other labor costs. The Postal Service, an independent agency of government, does not receive tax money, but is subject to congressional control of large aspects of its operations. The changes in first-class mail delivery can be implemented without permission from Congress.

'Imminent default' faced on $5.5 billion debt

After five years in the red, the post office faces imminent default this month on a $5.5 billion annual payment to the U.S. Treasury for retiree health benefits; it is projected to have a record loss of $14.1 billion next year amid steady declines in first-class mail volume. Donahoe has said the agency must make cuts of $20 billion by 2015 to be profitable.

"We have a business model that is failing. You can't continue to run red ink and not make changes," Donahoe said. "We know our business, and we listen to our customers. Customers are looking for affordable and consistent mail service, and they do not want us to take tax money."

Separate bills have passed House and Senate committees that would give the post office more authority and liquidity to stave off immediate bankruptcy. But prospects are somewhat dim for final congressional action on those bills anytime soon, especially if the measures are seen in an election year as promoting layoffs and cuts to neighborhood post offices.

The Postal Service initially announced in September it was studying the possibility of closing the processing centers and published a notice in the Federal Register seeking comments. Within 30 days, the plan elicited nearly 4,400 public comments, mostly in opposition.

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