Senators are urgently trying to save the struggling U.S. Postal Service after its announcement that it will cut Saturday delivery starting in August.
In a hearing Wednesday before the Senate Homeland Security and Governmental Affairs Committee, senators and post office advocates agreed on the importance of immediate congressional changes to the Postal Service’s operations, though there was no agreement on the specifics of how to do so.
Postmaster General Patrick R. Donahoe urged Congress to allow the agency to form its own health care plan and not restrict the agency in its move to a five-day delivery week. A new system in which the Postal Service managed its own health care for employees and switched to a new business model could save up to $7 billion by 2016, he said.
If Congress doesn’t act soon and the Postal Service doesn’t change its business model, it could require a taxpayer bailout that could total over $45 billion by 2017.
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Sen. Bernie Sanders, a Vermont independent, and Rep. Peter DeFazio, an Oregon Democrat, introduced legislation Wednesday that would repeal the Postal Accountability and Enhancement Act, under which the Postal Service prefunds 75 years of benefits for retirees in 10 years.
The current retiree health benefits have crippled the Postal Service and cost the agency $11.1 billion in the past year. The Postal Service estimates that 20 cents of every dollar in revenue go to health care costs.
Repealing the prefunding mandate on retirement benefits is one part of the Postal Service’s problem, Donahoe said. He said the agency can’t function with Congress’ restrictions on five-day delivery and must move to a changed business environment.
Robert Rapoza, president of the National Association of Postmasters of the United States, said changes should come in innovation and expansion in services as well as flexible pricing.
Senators charged that Donahoe acted illegally when he cut Saturday delivery. Sen. Carl Levin, D-Mich., said making any legislation is irrelevant if the Postal Service doesn’t follow it.
“Apparently, you believe you have the legal authority, despite what Congress said, to cancel the sixth day,” Levin said. “There needs to be congressional oversight.”
The Consolidated Appropriations Act of 2012 states that six-day delivery and rural delivery must occur at the same rate they did in 1983, and senators said this means the Postal Service acted illegally.
Jeanette Dwyer, president of the National Rural Letter Carriers’ Association, agreed in testimony that the cut in delivery is against the law and said her union alone would lose about 20,000 jobs with no Saturday service, which would amount to losses much greater than the 22,500 jobs Donahoe estimated would be lost across the whole Postal Service.
There are discrepancies between several of the job-loss statistics given by Donahoe, said Jennifer Warburton, director of legislative and political affairs at the National Association of Letter Carriers. She said more clarification is needed to take further steps in legislation.
Sen. Jon Tester, D-Mont., argued that the new five-day week works fine for those in urban areas, but that some of his rural constituents – many of whom do not have broadband Internet access – will suffer.
His larger concern was that the Postal Service won’t remain in rural America and as a result will disappear from the nation.
“I’m one of those guys who says, ‘Don’t shut it down,’” Tester said.