At Postal Service, many problems, few solutions

WASHINGTON -- The same forces that have ravaged the music, newspaper and book publishing industries are aimed at the U.S. Postal Service, threatening much more than Saturday delivery.

Postmaster General John Potter told Congress last week that the Postal Service may run out of cash just in time for the November elections and Christmas shopping season.

Even if anyone knew how to fix the Postal Service -- an independent agency written into the Constitution -- Congress, regulators and postal management are at loggerheads over what to do next.

Its main customers are not waiting to find out. Businesses of all kinds foresee a death spiral of shrinking service and rising prices and are getting out as fast as they can, encouraging their patrons to use digital alternatives such as electronic bill payment, e-mail document delivery and Web catalog shopping.

Since its peak delivery of 213 billion pieces of mail in 2006, volume has dropped 17 percent to 177 billion pieces this year. Average deliveries have fallen from five pieces of mail to four, and Potter said that's headed fast to just three.

With nearly 600,000 workers, the Postal Service is the nation's second-largest civilian employer after Wal-Mart. The agency does not get direct taxpayer subsidies, but it is governed by Congress and for three years has borrowed its $3 billion annual limit from the Treasury. Potter is forecasting a $7 billion loss this year that would put Postal Service debt near its statutory limit of $13.2 billion. Ending Saturday delivery is at the top of his must-do list, but it requires approval from Congress. "The time to change the frequency of delivery is now," Potter said.

Resistance in Congress

But few members of Congress support ending Saturday delivery, saying it will only hasten the decline of the mail. There is also stiff congressional resistance to closing post offices sprinkled liberally in every member's district, laying off employees, and outsourcing stamp sales and other post office functions to big-box retailers.

Potter said he is doing all he can to avoid layoffs of career workers, reducing the number of part-timers and encouraging early retirement of as many as 300,000 workers over the next decade.

In a testy hearing Thursday of the House Committee on Oversight and Government Reform, Democrats and Republicans were dubious about Potter's claim that the agency will pile up a $238 billion loss within the decade. The Postal Service is heading into contract negotiations with its powerful unions, where it will demand concessions.

Democrats lauded the Postal Service as a source of secure, well-paying jobs, some lawmakers saying they came from postal families. Rep. Dennis Kucinich, D-Ohio, said the Postal Service is vital to the poor and elderly "on the opposite side of the digital divide" and strongly opposes further closing of post offices.

But Rep. Darrel Issa, R-Calif. and the committee's ranking Republican, said Congress should not try to halt the digital communications revolution that greatly benefits the economy.

"We should not be fighting to have people move paper," Issa said. He said the Postal Service already has too many workers for six-day service and should lay off workers before it ends Saturday delivery. Potter conceded that many unnecessary workers are on the payroll.

The agency will have to radically reduce the number of post offices -- 36,500 -- and processing plants -- 600 -- said Phillip Herr, an official with the General Accountability Office. Processing plants will soon be 50 percent under capacity, he said. Also, people are buying fewer stamps, a key service of post offices.

Potter said polls that show people much prefer ending Saturday delivery to other cost-cutting measures, such as ending door-to-door home delivery. While two-thirds would accept five-day delivery, he said 90 percent said "absolutely not" to substituting neighborhood "cluster boxes" for home delivery.

Reinvention urged

Ruth Goldway, the new chairwoman of the Postal Regulatory Commission appointed by President Barack Obama, slammed Potter's downsizing approach and said the agency should be "reinvented" instead by expanding services. The commission has little power, but Goldway suggested turning post offices into one-stop shops for government services that would issue passports and national park passes, expand the money-order business and "reinvent the letter carrier" to be the "eyes and ears of the community and the sales and service point for small businesses."

But such ideas cost money and wouldn't come close to replacing the loss of revenue from business customers, said Gene Del Polito, president of the Association for Postal Commerce, a trade group for business postal users.

"When customers, primarily business customers, leave the postal system because they're using some other medium, how are you going to be able to continue to pay for whatever it is you believe the nation should have?" Del Polito said. "What you're finding out now is if you can't pay for it, you've got to figure out what it is you need, not what you want."