US Postmaster General: No More 'Business As Usual'
By Judith Burns, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Congress has given the U.S. Postal Service some
short-term relief from pressing financial obligations but longer-term solutions
may require changes such as moving to five-days-per-week mail delivery, U.S.
Postmaster General John Potter said Thursday.
The Postal Service is facing up to $5 billion of red ink a year, "so people
cannot expect business as usual," Potter said in remarks at the National Press
Club. He called for "monumental changes" to remake the Postal Service and allow
it to operate in a more business-like way.
Congress agreed last week to slash the amount of money the Postal Service must
pay this year to pre-fund retiree health benefits, reducing the obligation to $
1.4 billion from $5.4 billion. Potter said the change - which was signed into
law by President Barack Obama - is a patch, not a solution to the Postal
Service's financial woes.
"We are not going to ask for a bailout," Potter stressed. He also wants to
avoid seeking an increase in the Postal Service's $15 billion borrowing
authority with the U.S. Treasury Department, saying digging further into debt "
is not our goal."
Plans to shutter some post offices and branches, which will be announced on
Friday, may save $20 million to $100 million, a fraction of the $5 billion
annual budget gap the Postal Service needs to fill.
Options to put the Postal Service back in the black include allowing it to cut
back on traditional mail delivery, reduce its workforce and sell more than
stamps at its retail outlets.
The Postal Service could save about $3 billion a year by eliminating Saturday
mail delivery, an option that Potter said has to be considered given the
declines in U.S. mail volume.
Even bigger savings could be realized if Congress lightens the requirement for
the Postal Service to pre-fund retiree health benefits, as it agreed to do for
2009. Potter said the Postal Service has "overfunded" the future obligations and
could reduce contributions without any harm to retirees.
Asked whether a postal rate-hike might be in the offing, Potter said, "we'll
have to make that decision after the new calendar year," and noted that raising
rates could be counterproductive if it further depresses mail volume.
Although a weak economy and the growing use of electronic communication have
cut into traditional mail, Potter rejected suggestions that the Postal Service
is obsolete. He said the Postal Service's revenue is still higher than 95% of
the companies in the Fortune 500, and that it has more retail outlets than
McDonald's Corp. (MCD), Starbucks Corp. (SBUX) and Wal-Mart Stores Inc. (WMT)
combined.
Using post offices to sell cellular telephone services, or as an agent for
banks and insurance companies, is another option that the Postmaster General
wants to pursue. While Potter said he'd love to jump into the banking business,
he's not optimistic on the prospects, summarizing the problem in a single word:
"politics."
-By Judith Burns, Dow Jones Newswires; 202-862-6692; Judith.Burns@dowjones.com
(END) Dow Jones Newswires
10-08-091646ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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