Senators Challenge U.S. Postal Service's 10-Year Rescue Plan

March 19, 2010 -- The top Republican on the Senate panel that oversees the U.S. Postal Service said Thursday that a financial overhaul plan that includes cutting mail delivery from six days to five could set off a "death spiral" for the agency.

The Postal Service "will have to present a compelling case that reduced delivery will not further decrease volume, setting off a death spiral," Sen. Susan Collins of Maine said.

Postmaster General John Potter made his first appearance before Congress since announcing a 10-year strategy for pulling the Postal Service out of debt. He said lawmakers must allow the agency to take drastic actions, including eliminating Saturday deliveries, laying off workers and closing post office branches.

A $4.8 million study made public on March 1 predicts the Postal Service will lose $238 billion over the next decade as consumers and businesses conduct more transactions online. Cutting a day of delivery will save the Postal Service $40 billion over the next decade, Potter said.

"Serious questions need to be asked and answered before Congress simply changes the course and embraces major change in mail delivery," said Sen. Dick Durbin, D-Ill., who chairs the Senate Appropriations Subcommittee on Financial Services and General Government.

The Postal Service is not funded by taxpayers, but federal law requires that mail be delivered six days a week to every household and business in the country.

Postal Service Inspector General David Williams said Thursday that the Postal Service is "moving in the right direction" but not fast enough to avert "an economic catastrophe."

Williams said Congress should fix laws that require the Postal Service to prepay for its retiree benefits, which result in overpayment.

"I am not aware of a business in the world that could forfeit $7 billion annually, before it opens its doors, and survive," Williams said.

The agency also needs to pare its network of post offices and retool its workforce to give it more flexibility to respond to the fluctuating mail flow, he said.