WASHINGTON (AP) — Mired in red ink, the U.S. Postal Service is warning it
will lose as much as $18.2 billion a year by 2015 unless Congress grants it
new leeway to eliminate Saturday delivery, slow first-class mail by one day
and raise the price of a postage stamp by as much as 5 cents.
In a letter to Congress, Postmaster General Patrick Donahoe described an
updated five-year cost-cutting plan put together in coordination with Wall
Street adviser Evercore Partners Inc. It reiterates many of the mail
agency’s proposals to switch to a five-day delivery schedule, raise stamp
prices and close up to 252 mail-processing centers and 3,700 local post
The Postal Service has already asked Congress for permission to make service
cuts and reduce annual payments of about $5.5 billion to prefund retiree
health benefits. But in recent weeks, the Senate and House have stalled as
lawmakers differ widely on costs, the level of financial oversight and the
prospect of widespread postal closures.
On Thursday, Donahoe said the mail agency’s proposals would enable it to
save $20 billion a year by 2015, repay its $12.9 billion debt to the
Treasury and return to profitability. The plan, for instance, notes that if
the post office could raise current stamp prices from 45 cents to 50 cents,
either in a single year or over a multiyear period, it could bring in new
revenue of roughly $1 billion.
In contrast, congressional inaction would result in significant annual
losses and a “long-term burden to the American taxpayer.”
“Such an outcome is highly undesirable and entirely avoidable,” Donahoe
In a news briefing, chief financial officer Joe Corbett said no formal
proposals have been made to increase the price of a first-class stamp. He
said the plan notes the additional revenue the mail agency could bring in
over a single or multiyear period if it could increase stamp prices above
the rate of inflation.
Since 2006, the Postal Service has increased the price of the stamp four
times, from 39 cents to 45 cents.
“Clearly, we’re underpriced in that area,” Corbett said. “We would like the
ability to move that price up.”
About half of the Postal Service’s cost-cutting proposals require
legislative approval. Some congressional proposals have focused on providing
short-term relief via a cash infusion to prevent the mail agency’s
bankruptcy but also postpone major decisions on cuts until later.
At stake are more than 100,000 jobs, part of a postal cost-cutting plan to
save some $6.5 billion a year by closing up to 252 mail-processing centers
and 3,700 post offices. At the request of Congress, the cash-strapped agency
agreed to wait until mid-May to begin closures so lawmakers would have time
to stabilize its finances first.
Last week, the Postal Service said its quarterly loss ballooned to $3.3
billion amid declining mail volume and said it could run out of money by
The agency has been rocked by declining mail volume as people and businesses
continue switching to the Internet in place of letters and paper bills. It
also must make yearly advance payments of roughly $5.5 billion to a future
retiree health-benefit fund, something not required of other government
agencies. Without those annual payments, the post office would have posted a
profit in most recent years.
forecasts a record $14.1 billion loss by the end of this year.