By RANDOLPH E. SCHMID
Associated Press Writer
WASHINGTON (AP) - The head of the agency that regulates the post office questions the need to eliminate Saturday mail delivery even as the postmaster general is pressing skeptical lawmakers to approve the plan.
"Today, we stand on the brink of financial insolvency," Postmaster General John Potter told the House Committee on Oversight and Government Reform on Thursday. "The way Americans communicate has changed dramatically and we've got to change with it."
But Ruth Y. Goldway, chairman of the independent Postal Regulatory Commission, said the post office should find new ways to meet the country's needs rather than beginning with the idea that it needs to make cuts.
Two things they did agree on: The post office is facing a financial crisis and a big part of that problem rests with payments to its pension and retiree health care funds.
Battered by loss of mail to the Internet for both personal communications and bill payments, the post office lost $3.8 billion last year and is facing even larger losses this year.
The post office has cut thousands of jobs in recent years and Potter has announced a plan to make other savings by seeking permission to eliminate Saturday delivery and reducing payments to retiree funds.
The postal inspector general has concluded that the agency has been required to overfund retire pension benefits by $75 billion.
In addition, the post office is required to prepay billions into a fund for retiree health care benefits, a payment that Phillip Herr of the Government Accountability Office confirmed is not required of any other federal agency, nor of large businesses.
"Over the past three years, the Postal Service has paid $15.4 billion to Treasury to prefund future retiree health benefits. During that same time, the Postal Service borrowed more than $8 billion from Treasury so that it could make those payments," Goldway said. "Borrowing by the Postal Service to make the payments does not make sense."
Only Congress can eliminate the requirement for the payments, and under the law when the post office does borrow it must do it from the Treasury.
In addition, because the prepayments of health benefits into a federal fund are counted as income in the federal budget, eliminating them would have the effect of making the federal deficit appear bigger.
Rep. Carolyn B. Maloney, D-N.Y., asked if Saturday delivery could be continued if the post office got back the $75 billion in pension overpayments.
Potter said that could be done in the short run, but added that be believes that in the long run the frequency of mail delivery will have to decline.
Now is the best time to make that change, he said, because thousands of postal workers are scheduled to retire in the next decade, meaning the staff cuts from the reduced service could be done without having to layoff any career workers.
If the retirements come without a reduction in service, new postal workers will have to be hired and a later cutback could force layoffs.
Goldway, though, insisted that "the Postal Service should reposition its goals to meet the needs of an evolving society" rather than beginning with the premise that the it needs to be cut in size and scope to solve the deficit projections.
Potter told the committee that his agency is, in fact, seeking new sources of business, but moving into major areas would require more capital spending and risk than the agency can handle at the moment.
He did note that the post office recently reached an agreement with the Hallmark Company to include prepaid postage on envelopes so that when someone buys a greeting card they get the postage with it.
Potter also noted post offices handle passport applications and could become central locations for a variety of government services.
And he has also suggested providing postal services in locations such as office supply stores and markets instead of individual post offices across the country.
That idea did not sit well with Goldway, who commented: "Ask the small towns of America if they think government business should be conducted in Walmarts."
One other thing both Potter and Goldway agreed on: If nothing is done, the post office faces the possibility of running out of cash this fall.
On the Net:
U.S. Postal Service: http://www.usps.com
Postal Regulatory Commission: http://www.prc.gov
House Oversight Committee: http://oversight.house.gov/