TOPICS > Politics

Citing Financial Woes, U.S. Postal Service Announces End of Saturday Delivery

February 6, 2013 at 12:00 AM EST
Neither snow nor rain nor heat nor gloom of night may prevent the Post Office from its appointed duties, but budget cuts will. The United States Postal Service announced it will stop Saturday delivery in August 2013. Jeffrey Brown talks with Postmaster General Patrick Donohue about the implications of this decision.
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JEFFREY BROWN: The U.S. Postal Service announced today it plans to end Saturday mail delivery beginning in August. Under the plan, post offices already open on Saturdays will remain so. Packages will also continue to be delivered on Saturdays. But home and business mail would end.

The move would save an estimated two billion dollars annually. The Postal Service ended the last budget year with a record loss, nearly $16 billion dollars. Today’s decision was criticized by several members of Congress, who may try to overrule the agency. And the head of the letter carriers union called the move — quote — “a disastrous idea that would have a profoundly negative effect.”

Joining us now is Postmaster General Patrick Donahoe.

And welcome to you.

You spoke today of being in a — quote — “very scary position financially.” How scary?

POSTMASTER GENERAL PATRICK DONAHOE: Well, here’s where we are right now.

As you mentioned, we had a pretty substantial loss last year, and those were accounting losses because, in fact, $11.1 billion of that $15.9 billion is attributed to pre-payment for retiree health care that we didn’t even pay. We defaulted. But you have got to count that in terms of your accounting rules.

So what happened last year, when all was said and done, we had a loss of about two billion, a little over $2 billion from an operating revenue perspective. The problem that you have going forward is each year that we have had these losses brings the cash levels down farther and farther.

At one point in October this year, we had four days of cash on hand. That’s entirely too small amounts of money for an organization our size or any size.

JEFFREY BROWN: Now, you have wanted to do this, to stop the Saturday delivery for a while, and Congress has several times said no. This time, you think you can just go ahead? Is this a — getting around Congress on this?

PATRICK DONAHOE: The way we interpret the continuing resolution, as part of appropriation that the Postal Service gets, we have looked at this in a number of different ways.

Our — the money that is appropriated to us from Congress is different than money appropriated to other agencies. We, in fact, are refunded for services provided a year earlier. So as we have looked at this, and then it’s like, we’re not so sure that this applies.

The key thing is this. The Postal Service needs to make serious change. We need to address a number of issues, six to five day of letter mail for two billion dollars, reforming our health care, resolving long-term payments that we know we’re responsible for and want to make, as well as owning our own health care and moving out of the federal system. That’s worth $7 billion dollars a year.

We can not only shrink the gap from a standpoint of loss, but we can get back on good firm financial footing and pay our debt down. Now, there are people who will be critical.

JEFFREY BROWN: Yes.

PATRICK DONAHOE: Oh, you shouldn’t make these changes. But you cannot put your head in the sand and hope problems will go away.

JEFFREY BROWN: Well, speaking of that, I cited the criticism from the president of the letter carriers.

I just want to — I just want to understand. He is saying that this would be harmful to and specifically small businesses, rural communities, the elderly, the disabled, others who depend on Saturday delivery.

Now, are you denying that there will be that kind of pain, or are you just saying, yes, but we have no choice?

PATRICK DONAHOE: We have no choice at this point, and we do not know the extent of impact that we will see.

We have done many surveys. According to every survey that we have done that’s been done outside the Postal Service, 70 percent-plus of Americans consistently say the Postal Service, who takes no money now — we get no tax money — shouldn’t get a tax bailout and should live within their means, meaning if we need to eliminate delivery on Saturday, we do.

Now, our proposal is to eliminate delivery of mail, but to continue to deliver packages, which includes medicine for the elderly and handicapped and the rural areas. And that’s what our customers have told us. Last year, we made some changes with post offices. We talked about having to close small non-profitable postal offices.

We did a lot of — we spent a lot of time in the field and heard back from customers. They said to us, listen, we don’t care if you shrink the window hours. Just leave the post office open so we can access our mail. We have done that. That will save us a half-billion dollars. It’s a win-win with the customers.

Here’s the problem we’re facing, Jeffrey, no matter what anybody thinks on this. People pay bills online. In 1980 — or in the year 2003, we delivered 51 billion — with a B — pieces of stamped mail out of the mailbox. This year, it will be 21 billion; 30 billion pieces in less than 10 years at 46 cents apiece is a differential just in that group of $14 billion.

Nobody is stepping up saying I will take a pay cut that makes those kinds of differences up. Nobody is saying any other opportunities for us to make these changes. What we’re trying to do is take a rational business approach on this, common sense, trim where we can, keep delivering the growth products like packages. But when we have lost that much mail, you cannot continue to deliver six days a week with that kind of loss.

JEFFREY BROWN: All right, let me just ask you briefly, if you would, because given the kind of changes you’re just talking about, people paying online, for example, where is this headed? Does the American public have to get used to a lesser service and perhaps at some point the end of the Postal Service?

PATRICK DONAHOE: No, not at all.

We think the future is very bright, as long as you take the steps to get the finances in order. Our plan — our plan has us getting back in the black and paying the debt down. Now, will there be some changes? Absolutely. Some of the changes, we have discussed already. We have already made plenty of changes.

Since the year 2000, this organization, the Postal Service, has reduced the head count, head count, payroll, not jobs or job descriptions, payroll, by 305,000 employees, 193,000 since 2008. We have — our people do a great job. They’re very productive.

We have done anything and everything in our power to try to catch up to the loss that we have got in volume. People say, suggest we raise prices dramatically. That will chase more volume away. We are trying to take a very businesslike approach. We think it’s a win-win. Everybody has a little skin in the game here and in the end you have a strong Postal Service that’s delivering packages, direct mail, and commercial first-class mail into the future.

JEFFREY BROWN: All right, Postmaster General Patrick Donahoe, thanks very much.

PATRICK DONAHOE: Thank you, Jeffrey.