Donahoe says bills 'do not come close' to saving the USPS

Tuesday - 11/22/2011, 5:05am EST

Emily Kopp, reporter, Federal News Radio

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None of the legislation moving through Congress would provide the Postal Service the speed and flexibility it needs to cut annual costs by $20 billion, Postmaster General Pat Donahoe said Monday.

They would give the Postal Service "at best a couple of years of profitability and at least many decades of steep losses," he said during a luncheon at the National Press Club in Washington.

The Postal Service lost $5.1 billion in fiscal 2011, attributing the red ink to the decline of first-class mail and the poor economy. It would have posted losses twice that amount, but it deferred a payment of $5.5 billion for future retiree health payments. Officials expect USPS to lose $14 billion this year.

Legislation passed by the Senate Homeland Security and Governmental Affairs Committee and the House Oversight and Government Reform Committee to aid the struggling agency would push back controversial measures such as ending Saturday mail delivery, he said.

Postmaster General Pat Donahoe (USPS.com)

"Both bills have elements that delay tough decisions and impose greater constraints on our business model," he said. "Lack of speed will kill the Postal Service."

The Postal Service could climb out of the red by 2013 and return to profitability by 2014 if Congress passed a law that includes everything the agency has asked for. He said the agency was working with lawmakers to "get everybody on the same page."

It is seeking a new law that would let it cut Saturday mail service and reduce its workforce. In addition, the Postal Service is studying nearly 4,000 facilities for closure. Congress does not need to interfere in that process, said Donahoe. "I think we can do these things much quicker if we can act on them now," he said.

Some lawmakers question the agency's ability to make the best financial decisions. It has long argued that its financial problems stem from a 2006 requirement that it prepay its retiree health benefit plans.

"It's incredibly disingenuous for the Postmaster General to argue that a bill that will save a minimum of $10.7 billion a year doesn't go far enough when he's not even willing to embrace the cuts it contains or even the smaller savings contained in the Senate bill," said Rep. Darrell Issa (R-Calif.) in a written statement issued after the luncheon. "The Postal Service still seems to hold the misguided belief that accounting gimmicks and an increased reliance on taxpayer support will give it flexibility to push back insolvency for a few more years."

Issa cosponsored the House legislation.

Protesters who said they were the "99 percent" disrupted the luncheon with calls to return the prepayment to the Postal Service. Security escorted them out of the room when they began to chant "Donahoe has got to go."

Meanwhile, the Postal Service is continuing to negotiate further cost savings with two unions. It has extended talks with the National Association of Letter Carriers and the National Postal Mail Handlers Union until Dec. 7.

The major issues are health care costs and labor flexibility, said Donahoe.

After the luncheon, NALC President Fred Rolando said he felt confident that the parties could negotiate an agreement.

He said they were considering integrating the union's current health care plan with Medicare for its retirees.

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