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Connolly: U.S. Postal Service in a death spiral
Thursday - 7/8/2010, 10:08am EDT
The Postal Service is in serious debt.
The Inspector General for USPS found $75 billion dollars in overpayments that would go a long way in helping get USPS back to black, but Rep. Gerry Connolly (D-Va.) believes that can't happen unless OPM or Congress steps in.
"Congress has to act on that $75 billion because frankly the Postal Service is being required, unlike any other agency, to overpay," Connolly said. "It's estimated that could save them $5 or $5.5 billion a year."
Under USPS's current Civil Service Retirement System payment plan, the Postal Service is overpaying its share considerably, and has done so for many decades, totaling $75 billion to date.
Faced with overcoming its debt, the Postal Service has considered cutting out Saturday mail deliveries to reduce costs, but the idea was met with opposition from the industry, the Postal Service workers unions and elected officials.
"What the Postal Service has to do is look toward a 21st century business model that makes sense. By reducing service and raising rates, they put themselves on a death spiral. They drive a lot of current customers frankly to the competition," Connolly said. "I think we have to re-imagine the Postal Service."
Connolly suggested that USPS build on their strengths - package shipping.
He also that, while first-class mailings have declined, the number of packages being shipped has increased.
"It is an important niche that the Postal Service actually has, so instead of reducing service from six to five days a week, the Postal Service ought to be looking at a 24-hour model like the competition," Connolly said.
He said looking at creative ways of expanding customer service is how USPS will be able to stay competitive.
"I think that's ultimately, in fact, how you return to profitability. Remember that the Postal Service has gone through these cycles many times," he said, explaining that some of the same suggestions that are being made today were also made back in 1976.
Those suggestions were not acted on, however, but USPS was still able to turn a profit during the 1980s, which the Congressman said means that it can be done.
"[It is] not an argument for doing nothing. I think there are things we have to do to make sure the Postal Service remains a public institution that serves the general public, but that also can be competitive. There is competition out there now. They're no longer the monopoly they once were, and they have to take cognizance of that and stay competitive."