Donahoe asks Congress to solve crisis

September 6, 2011

Postmaster General and CEO Patrick Donahoe told a Senate committee September 6 that the US Postal Service is "in a crisis" and will default on a $5.5 billion payment to the federal government if Congress does not enact legislation this month changing its business model.

The Postal Service asked Congress last month for permission to cut its workforce by 220,000 positions in the next three years. The move would shrink the organization's employee costs by 30%, it said.

“The Postal Service is in a crisis today because it operates within a restrictive business model and has limited flexibility to respond to a changing marketplace,” said Donahoe, according to transcripts provided by the USPS. “We do not currently have the flexibility in our business model to achieve all of these cost reductions. To do so, the Postal Service requires the enactment of comprehensive, long-term legislation to provide it with needed flexibility.”

The Postal Service is asking Congress to reform its $5.5 billion annual requirement to prefund retirement health-benefits programs and return $6.9 billion in retirement system overpayments. It also wants the ability to determine its own delivery frequency, change its healthcare and retirement plan, and streamline its product development process.

In May, Sen. Tom Carper (D-Del.) introduced a bill that would allow the USPS to modernize its pension payments system, eliminate Saturday home delivery and expend its services. The Postal Operations Sustainment and Transformation Act of 2011 would also let the USPS close post offices as necessary.

US Rep. Darrell Issa (R-Calif.) put forward a bill the following month with many of the same provisions as that of Carper's bill, but also including new oversight bodies that would oversee the USPS' return to financial health.