Postal Service counts on Congress to get it out of a tight spot

Postmaster General John Potter asked lawmakers on Thursday to support the U.S. Postal Services' 10-year action plan, saying legislation was crucial to helping USPS address its urgent financial situation.

Potter acknowledged the strategy, which includes cutting delivery days and revamping employee benefits programs, is "both ambitious and aggressive," but said the status quo is not an option.

"Without fundamental changes, the Postal Service's losses will continue," he told the Senate Appropriations Subcommittee on Financial Services and General Government. "By 2020, cumulative losses will exceed $238 billion."

USPS is prepared to proceed with the plan, despite the difficulties, according to Potter. Perhaps the most sweeping proposal is the shift from six- to five-day mail delivery. This is "the single most effective way for the Postal Service to substantially reduce operational costs," he said, noting five-day delivery would allow USPS to reduce annual net costs by about $3 billion.

"Should Congress approve a change that grants us the latitude to change the frequency of mail delivery, know that we are committed to implementing an in-depth communications plan for our customers and our employees to make the transition as smooth as possible," Potter testified.

He committed to providing customers with six month's notice before implementing the change, which he estimates would occur no earlier than mid-2011. He also pledged that the effect on employees would be minimal, with downsizing occurring through attrition rather than layoffs.

Sen. Susan Collins, R-Maine, expressed skepticism, noting this was not the first time the Postal Service has asked lawmakers for help.

"My frustration is that over and over again the postmaster general has promised that if only Congress would allow the USPS relief from its financial obligations and take other actions, it would be on a solid financial footing," Collins said. "But time and time again I've been disappointed by the results when I agreed to these requests."

USPS must "present a compelling case that reduced delivery will not further depress volume, setting off a death spiral," she said.

Sen. Richard Durbin, D-Ill., remained neutral, but outlined a number of questions he would like answered "before Congress simply changes course and embraces major changes in mail delivery." These included: Who will benefit? Who is going to be harmed? Can we mitigate the impact? How reliable are the estimates we're working on? And have all the options been identified and explored?

Postal Service Inspector General David Williams also warned that USPS must weigh potential savings against possible decreases in volume and revenue.

Phillip Herr, director of physical infrastructure issues at the Government Accountability Office, said the watchdog agency will analyze the proposal when it receives the official version. But Herr also encouraged Congress to consider a number of issues before accepting the schedule change, including how eliminating Saturday service would affect USPS' efforts to grow mail volume. GAO also noted there was no time to waste.

"The longer it takes for USPS and Congress to address USPS' challenges, the more difficult they will be to overcome," Herr said.