The U.S. Postal Service will default on billions of dollars in workers’ compensation and retiree health payments and could have trouble making payroll without help from Congress, U.S. Postmaster General Patrick Donahoe warned the Senate on Tuesday.
Saying that the Postal Service finds itself at a “crossroads,” Mr. Donahoe urged lawmakers at a Senate hearing to change the law governing how the Postal Service sets aside money for future retiree health benefits. He also asked for help in getting back the billions of dollars that the Postal Service overpaid into retirement and pension systems over the years.
“But such solutions can only be brought about through congressional action,” Mr. Donahoe said in testimony before a Homeland Security and Governmental Affairs subcommittee. “These are areas over which the Postal Service has no control.”
He said Congress could allow the Postal Service to access between $50 billion to $75 billion in pension obligations overpaid into the Civil Service Retirement System, as well as an additional $6.9 billion overpaid into the federal employees retirement system.
In addition, Mr. Donahoe renewed calls for Congress to allow the Postal Service to eliminate home delivery on Saturdays, a move he said would save more than $3 billion per year, though estimates from postal regulators put the figure at less than $2 billion.
Still, even without home delivery, Mr. Donahoe said the Postal Service would continue to operate post offices on Saturdays and customers would be able to get mail from post office boxes.
Mr. Donahoe said a bill proposed by Sen. Thomas R. Carper, Delaware Democrat and subcommittee chairman, would “go a long way toward improving the Postal Service’s financial situation” by allowing for a five-day delivery model and addressing the pension and retiree health benefit funding issues.
David Williams, the Postal Service’s inspector general, warned in testimony Tuesday that without action by Congress, the Postal Service “will be billed into insolvency while overfunding its benefit plans.”
In addition, Mr. Donahoe also said the Postal Service has been working to save money by cutting its workforce and consolidating post offices. And while first-class mail volume continues to drop, Mr. Donahoe said dozens of new products aim to grow revenue, including the flat rate priority boxes.
But not everybody agreed with eliminating a day of home delivery or closing post offices.
Sen. Claire McCaskill, Missouri Democrat, said she was worried the move could start a “death spiral.”
And Mark Strong, president of the National League of Postmasters, cautioned that closing post offices to save money isn’t popular with the American public.
• Jim McElhatton can be reached at jmcelhatton@washingtontimes.com.
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