Postmaster General's Pay Package Under Fire

WASHINGTON, Feb. 17, 2009— -- These are tough times for the post office, but not for the postmaster general.

Even with stamp prices set to rise another two cents this May, the U.S. Postal Service is awash in red ink. In January, Postmaster General John Potter told Congress that he might be forced to cut back on mail deliveries to five days per week.

"I am forced to consider every option due to the severity of the challenge at hand," Potter said in testimony last month in front of a Senate Homeland Security and Governmental Affairs subcommittee. "If current trends continue, we could experience a net loss of $6 billion or more this fiscal year."

Potter's base salary rose from $186,000 in 2007 to more than $260,000 last year. On top of that, he received a "performance" bonus of $135,000. Between Potter's salary, bonuses, retirement benefits and other perks, total compensation was more than $850,000.

"$800,000 doesn't pass the basic sniff test," said Rep. Jason Chaffetz, R-Utah, who is the ranking member for the House subcommittee on the Postal Service. "It can't be right."

Potter declined a request for an interview. A statement from the Postal Service Board of Governors to ABC News outlines that federal law requires the Postal Service to provide comparable private sector compensation to its employees for comparable services.

"The governors adjusted certain salaries and added performance-based incentives to some of the compensation packages to try and address the issue of pay comparability, and the fact that even in these very difficult times, the postmaster general continues to exhibit visionary leadership," the statement said.

Potter's spokesman also pointed out that the post office receives no taxpayer money and that Potter's salary is far lower than that of other corporate executives in the private sector. FedEx's CEO made almost $9 million last year and the CEO of UPS took home almost $3 million.

Congress Authorized Postmaster's Higher Salary

"If the Postal Service was truly a private enterprise, then they would be able to compensate their executives in the manner that they would like to," said consumer Ivan Eland from Washington, D.C. "But I think it's sort of a quasi-government operation, and therefore, you know, there has to be some public accountability."

The timing of the postmaster's raise strikes many as strange, since the post office lost $2.8 billion last year. Potter has said there were "serious concerns" that the losses this year could be twice as high.

"I don't mind paying for performance, but the performance has been going the wrong direction," Chaffetz said. "So, there is a mismatch here."

Why the big raise for Potter? In late 2006, Congress authorized higher salaries for top post office executives as a way to retain and reward quality executives. That's exactly what Congress has blasted Wall Street for doing.

While the need to compensate the postmaster competitively with his private sector counterparts strikes accord with some, in this economic whirlwind, consumers we spoke to found it incongruous.

"Given the current state of the economy, I don't think it's really fair, and if you think about how most people live, that amount of money is just outrageous," said Carlos Ahumada. "I don't think it's fair, whatsoever."

For rank-and-file postal employees -- who generally make between $19 and $26 per hour and did not receive raises -- the postmaster general's bonus and perk raised eyebrows.