USPS Urges Congress to Pass Legislation Allowing Cuts and Diversification into Private Sector
The U.S. Postal Service has been facing mounting annual losses which could reach $16 billion by 2016, unless Congress passes legislation allowing the agency to slash its network and workforce.
Postmaster General Patrick Donahoe recently told Congress that the agency will also have to reduce the amount it is required to set aside for retiree health benefits, drop Saturday delivery and have more freedom to offer products and services beyond mailing letters and packages.
The Wall Street Journal reported Wednesday that reduced demand for traditional mail delivery, which funds the postal service, has created a fiscal crisis that has Congress, postal employees and government officials weighing a venture into non-mail business as a way to stay afloat. Lawmakers have to decide whether the post office should be allowed to venture into the private sector, by offering products and services beyond the traditional mailing letters and packages.
The agency announcing an increase in the mailing of a letter by one cent to 45c starting in January. As well, the National Letter Carriers Association made up of 280,000 members this week hired advisors from Wall Street to help find ways to make the agency viable.
According to an Oct. 6 report by the U.S. Postal Service Office of Inspector General, Mr. Donahoe said labor is the agency’s biggest cost, so cuts there will provide the most immediate relief. With mail expected to continue to drop, the agency can’t “focus on cost cutting along” and must also raise revenues for its long-term survival.
The report also suggested, for instance, that the postal service could get more into the logistics business, helping big commercial retailers navigate customs in cross-border business. A number of U.S. legislators support the notion of branching beyond just mail. Several proposed bills would allow the postal service to offer retail products and services, such as check-cashing and the leasing of extra space in postal facilities and mail trucks to the private sector. As well, a proposal by President Obama would allow the agency to “offer non-postal products and increase collaboration with state and local governments.”
While some Republicans are suggesting that the agency offer products and services that would compete against the private sector, some Democrats are debating in Congress as to whether the government service should be expected to be profitable.