ABC News' Amy Bingham reports:
America’s second-largest employer is in dire straits and it’s all the Internet’s fault.
The U.S. Postal Service is facing an $8.3 billion budget shortfall this year, in large part because of losing almost half of its first class mail to online bill pay and email communication.
After laying off 110,000 employees and cutting $12 billion over the past four years, the service is now looking to end mail delivery on Saturdays, a move it said would save $3.1 billion per year.
“That’s savings that we desperately need,” said U.S. Postal Service spokesman David Partenheimer. “It’s not the only thing we need to do to get out of the financial hole but it is very important.”
According to a 2009 Gallup Poll 66 percent of Americans are OK with the postal service cutting mail delivery on Saturdays, but far fewer support paying more for their mail.
Just 38 percent of respondents were in favor of raising stamp prices and less than half, or 48 percent supported pumping tax revenues into the mail system.
But even within the postal system, there is disagreement over whether a five-day delivery system will actually solve the problem. Despite not delivering mail, post offices would stay open, express or overnight mail would still be delivered and P.O. boxes would still receive mail.
The Postal Regulatory Commission, a president-appointed agency that oversees the Postal Services’ operations to ensure it doesn’t abuse its monopoly, estimated that cutting a delivery day would take three years to fully implement and would only save $1.7 billion per year thereafter.
“The key factor is that the Postal Service thinks it can take all the mail that it would otherwise deliver on Saturday and deliver it on Monday with no extra cost,” said regulatory commission chairman Ruth Goldway. “When we look at the operations it just can’t happen.”
Despite not receiving any taxpayer money, the USPS is technically a government agency, so in order to eliminate a delivery day it has to get Congressional approval. Partenheimer said it has been trying to get approval since 2009, but this is the first year any legislation has been introduced.
While a shortened delivery schedule would help close the budget gap, both Partenheimer and Goldway said the real issue is the $5.5 billion the Postal Service has to pay every year into a fund for the health benefits of its future retirees.
“That’s the real structural problem for the Postal Service right now,” Goldway said.
Goldway said without the retiree fund payments, which were mandated starting in 2006, the mail service would be posting profits.
“If the Postal Service hadn’t had to pay this over the past six years, as of 2010 it would have ended with $1 billion surplus and still have $12 billion to 13 billion left to borrow from borrowing fund,” Goldway said. “Instead, at the end of 2011 it will end up with no cash and an empty borrowing fund.”
As it stands now, USPS will not be able to make the payment by its September due date, Postmaster General Patrick Donahoe told USA Today on Wednesday.
"On September 20th, I won't be able to pay my bills," Donahoe said.
Rep. Darrell Issa, R- Calif., the chairman of the House Oversight Committee, introduced a bill that would that would create a congressionally-appointed commission to take over the Postal Service if it did, in fact, miss the payment. Issa’s spokesman Ali Ahmad said the goal of the commission would be to get the Postal Service back in the black.
“For an institution which is hemorrhaging money and is seeing a serious decline in demands for their products… it makes perfect sense because taxpayers are going to be on the hook for this,” Ahmad said.
A member of the Oversight Committee Staff said the large retiree health program payments are necessary because without a stockpile of funds, USPS will face the same problem Social Security is now struggling with. As revenues continue to drop, it will have to pay out more in health benefits than it is taking in.
If USPS cannot pay for its employees health care costs during retirement, that burden will fall to the federal government, the staffer said.
If Issa’s bill passes, his commission will not be about "helping the Postal Service avoid obligations,” like the retiree pre-payments, but will instead find ways to cut costs so the $5.5 billion retirement fund payments can continue, the committee staffer said.
“Unless there is real structural reform, the Postal Service won’t be here in two years, let alone 10,” the staffer said. “They haven’t been able to reduce expenses to meet the fact that 20 percent of mail volume is gone and, frankly, is not coming back.”