US Postmaster General Patrick Donahoe warned yesterday that additional cutbacks could now be necessary at the US Postal Service, following the failure of Congress to pass postal reform legislation by the end of 2012.
USPS lost $16bn in its last fiscal year, and is continuing to rack up losses at a rate of around $25m per day having reached the end of its government credit limit.
But hopes that postal reform measures would be attached to fiscal reform legislation drafted to avoid America’s “fiscal cliff” were dashed as the new session of Congress was sworn in yesterday, resetting the legislative progress achieved last year.
Despite the continuing loss of mail volumes as more people use online communications, most of the Postal Service’s losses have stemmed from pension and healthcare funding arrangements set up by Congress in 2006 when USPS finances were considerably healthier.
The Postal Service drew up a five-year plan last year targeting $22m in annual cost savings, and is part-way through the process of closing more than 200 of its 461 mail processing plants and limiting operating hours at thousands of rural post offices.
But around half of its planned cost-savings relied on Congress restructuring USPS pension and healthcare funding obligations and allowing the termination of Saturday deliveries.
The US Senate managed to pass a postal reform bill last April that went some way to fixing the USPS financial crisis, but the US House of Representatives did not follow suit. With the ending of the Congressional session on 31st December, the process of drawing up legislative reforms will now have to begin again from scratch.
As he expressed disappointment over the lack of action from US lawmakers, Donahoe said yesterday that new legislation could have “quickly” restored profitability at USPS.
However, despite downsizing the postal work force by 60,000 in the past two years, Donahoe said without Congressional intervention, USPS was on an “unsustainable” path, further undermining the confidence of its customers.
“The Postal Service should not have to do business this way,” said the Postmaster General. “We will be discussing with our Board of Governors a range of accelerated cost cutting and revenue generating measures designed to provide us some financial breathing room.”
Donahoe added that the Postal Service would continue to work with lawmakers, encouraging the 113th session of Congress to make postal reform “an urgent priority”.
Congressional leaders yesterday declared their commitment to rescuing the Postal Service was “unwavering”.
Senator Tom Carper, who is taking over the chairmanship of the Senate’s Homeland Security and Governmental Affairs Committee in the new season, issued a joint bipartisan statement with continuing House Oversight Committee chairman Darrell Issa yesterday, stating their intention to drive postal reform forward this year.
“Although the 112th Congress did not come to a consensus around a package of reforms that can update the Postal Service’s network and business model to reflect the reality that it faces today, we remain committed to working with our colleagues in both the House and the Senate to reform the Postal Service so it can survive and thrive in the 21st Century,” said Carper and Issa, respectively a Democrat and a Republican.
Last year saw Congress split over whether reforming USPS pension and healthcare funding would add to the federal deficit, and whether the Postal Service should continue to be required to deliver the mail on Saturdays.
After last November’s elections, this year’s Congress was sworn in yesterday with a largely similar political make-up, with the Senate controlled by the Democrats and the House led by the Republicans.
Some changes will be seen in the lawmakers leading postal reform this year, with the Senate Governmental Affairs Committee losing Republican ranking member Susan Collins and chairman Joseph Lieberman, while the House postal subcommittee will chaired by Texas Republican Blake Farenthold in place of Florida’s Dennis Ross.
America’s postal unions said this week that postal reforms must be passed this year, with their members poised to continue pressing lawmakers to take action.
The American Postal Workers Union said yesterday that it was expecting postal reform bills now being drafted by the new session of Congress to fall along similar lines to those seen last year, although the union representing 220,000 USPS employees said there was likely to be some changes.
Cliff Guffey, the president of the APWU said: “I will be calling on APWU members to join with their co-workers, neighbors, friends, and family members to demand that Congress preserve and protect the USPS and our nation’s commitment to universal service for the American people.”