During yesterday’s hearing hosted by the Senate Homeland Security and Governmental Affairs Committee, titled “U.S. Postal Service in Crisis: Proposals to prevent a Postal Shutdown,” Postmaster General Patrick Donahoe testified that USPS is already studying 3,700 retail facilities for possible closure. This is the same number of closures the USPS previosuly suggested, but its proposal now includes additional reforms to employee health care and retirement benefits.
“The USPS is seeking far-reaching legislation to allow the Postal Service to establish its own health benefits program, administer its own retirement system, and lay off its employees,” said Senator Susan Collins (R-Maine). “This is a remarkable turnabout from its previous proposals. I appreciate that the Postal Service has now proposed several ‘Big Picture’ ideas, but many details remain unclear.”
Collins has been outspoken about preserving rural post offices during the USPS bankruptcy crisis. At yesterday’s hearing, she testified that closing post offices in some rural communities is “simply not an option.”
“In some communities, closing the Post Office would leave customers without feasible alternatives and access to postal services,” she said. “The fact is that maintaining all of our nation’s rural post offices costs the Postal Service less than one percent of its total budget. That’s not where the problems lie.”
However, she did commend the USPS proposal for consolidations and closing some post offices by moving them the local grocery stores or pharmacies.
Donahoe said the USPS would save $20 billion and return to solvency by 2015 if it eliminates Saturday delivery; closes approximately 3,700 post offices; shrinks its workforce by 220,000; pulls out of the federal employee health care plan and creates its own; does away with a defined benefit retirement plan for new employees, and requests the return of $6.9 billion in overpayments to the Federal Employee Retirement System. Also under consideration in pending legislation is the move to 5-day delivery by eliminating Saturday postal deliveries.
“Today the United States Postal Service is the second largest employer in the United States, second only to Wal-Mart,” said Senator Joseph Lieberman (D-Conn.). “And with 32,000 Post Offices, it has more domestic retail outlets than Wal-Mart, Starbucks and McDonalds combined. Sadly, these impressive statistics belie a troubled business on the verge of bankruptcy.”
By the end of this fiscal year, on Sept. 30, the USPS projects that it will incur a $9 billion loss; reach its $15 billion borrowing limit; not make its $5.5 billion retiree health benefits payment; and thus, become insolvent. USPS recently summarized this situation as the equivalent of facing Chapter 11 bankruptcy.
In the Government Accountability Office statement from the Director of Physical Infrastructure Issues Phillip Herr, he testified that “it is not clear how USPS will address public resistance to facility closures that could lengthen the timeframes for implementation.”
USPS expects to reduce costs by closing about 300 mail processing plants and 12,000 retail facilities and reducing its total workforce by 125,000 career employees by 2015.
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