NY Times: Postal Service May Have to Shut Down This Winter

The U.S. Postal Service may have to shut down this winter unless Congress steps in with emergency action to shore up its finances, according to The New York Times.

“Our situation is extremely serious,” Postmaster General Patrick R. Donahoe told the Times in an interview. “If Congress doesn’t act, we will default.”

The agency is so cash-starved that it will not be able to make a $5.5 billion payment due this month, according to the Times.

The report chronicled cost-cutting measures Donahoe has suggested in recent months to handle the Postal Service’s deficit, which will reach $9.2 billion this fiscal year. Those suggestions include:

• Eliminating Saturday mail delivery
• Closing up to 3,700 postal outlets
• Laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts.

The Senate Homeland Security and Governmental Affairs Committee is scheduled to convene a hearing Tuesday on the agency’s predicament on Tuesday.

“The situation is dire,” Thomas R. Carper, the Delaware Democrat who chairs the Senate subcommittee that oversees the Postal Service, told the Times. “If we do nothing, if we don’t react in a smart, appropriate way, the postal service could literally close later this year. That’s not the kind of development we need to inject into a weak, uneven economic recovery.”

The Postal Service’s problems are legion, not the least of which is the Internet age, in which people have flocked to the World Wide Web’s ease of emailing instead of traditional postal mail delivery.

The Times report also cited decades of contractual promises to unionized workers, including no-layoff clauses, for increasing the Postal Service’s costs.

“Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors,” the Times reported. “Postal workers also receive more generous health benefits than most other federal employees.”

Republican Sen. Susan Collins of Maine is among many rural lawmakers who opposes ending Saturday delivery, which the Times reported would trim only 2 percent from the agency’s budget. Ms. Collins, the ranking Republican on the committee overseeing the agency, told the Times that the cutback would be tough on people in small towns who receive prescriptions and newspapers by mail.

“The postmaster general has focused on several approaches that I believe will be counterproductive,” she said. “They risk producing a death spiral where the postal service reduces service and drives away more customers.”

The proposed layoffs have riled the Postal Service’s unions.

“We’re going to fight this and we’re going to fight it hard,” Cliff Guffey, president of the American Postal Workers Union, told the Times. “It’s illegal for them to abrogate our contract.”