USPS Cuts $9 Billion in Costs – But Congressional Help Still Needed

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Congressional Help Still Needed to Relieve Fiscal Strain

WASHINGTON — The Postmaster General told a congressional subcommittee Wednesday that despite taking aggressive steps to reduce costs, the U.S. Postal Service will not survive as a self-financing entity without significant changes to current law.

Testifying before the Subcommittee on Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy on Oversight and Government Reform, Postmaster General Patrick R. Donahoe pointed out that during the last two fiscal years, the Postal Service has reduced costs by some $9 billion and the plan is to take out another $2 billion in 2011. But the Postal Service still lost a “staggering” $8.5 billion in 2010 and is projecting to be in the red this year by $6.4 billion.

Conceding that some of these losses can be attributed to Americans’ changing modes of communication, Donahoe said, but mainly “our losses are the result of an inflexible business model due to the laws that govern the Postal Service.”

He cited specifically a statutory requirement that since 2007 has required the Postal Service to prefund retiree health benefits (RHB) in amounts of approximately $5.5 billion per year. Noting that no other entity, public or private, is burdened with this responsibility, Donahoe said that the Postal Service showed a positive net income in each of the four years before RHB was imposed. But, in each of the four years since, “we have seen billion dollar losses.”

Donahoe added, “Even during two of the worst years of the recession, 2007 and 2008, had it not been for the prefunding requirement, the Postal Service would have realized a profit of $3.3 and $2.8 billion respectively. The effect of RHB prefunding is profound.”

In addition to asking for corrective legislation on the RHB prefunding, Donahoe also asked the subcommittee to look favorably on the agency’s proposal to transition to a five-day delivery schedule and to provide the Postal Service with more latitude on the products and services it can offer its customers.

He also told the subcommittee that he is in the process of aligning every aspect of the Postal Service around four key strategies: strengthening the business-to-consumer channel by innovating to enhance the value of mail; improving the customer experience by making every transaction a positive one; competing for the package business; and becoming leaner, faster and smarter by simplifying rules and streamlining its network.

The path forward for the Postal Service will require that all stakeholders embrace fundamental change “and that our employees, the labor unions and management associations, mailing industry customers and business partners (all) play a constructive role shaping our future,” Donahoe said.

6 thoughts on “USPS Cuts $9 Billion in Costs – But Congressional Help Still Needed”

  1. Bravo, the truth needs to be told but few read or listen. “Even during two of the worst years of the recession, 2007 and 2008, had it not been for the prefunding requirement, the Postal Service would have realized a profit of $3.3 and $2.8 billion respectively”.

  2. Here goes– I work for the post office in LA. I was a bulk mail clerk for more years than I can recall- my job was “centralized” to a GMF and I became a window clerk 2 years ago. I lost my week-ends off but I appreciate working on our counter serving the mailing needs of YOU the public– I like my job and my customers can sense this feeling in the way I “do business”. Sad – but true- most of my co-workers are not happy with their jobs and it shows in the way they handle customers. Often I am referred to as”the friendly one” at our counter– and That should NOT be the case.
    All of our USPS service and sales associates should be friendly with customers– I shouldn’t be the one to stand out– my co-workers should step it up a notch and sincerely greet and help our customers just as I do. Our jobs are only as tough as we make it. If we don’t change- the Post Office will lose out to private industry. The new PMG has good ideas- lets give it our all.

  3. P.M.G. Mr.Donahoe’s assessment that fundamental change is needed is quite correct and it starts with curtailing the discounts given private mailers for preparation of mailings not performed.Sometimes this runs into the thousands of dollars per drop-shipment received at N.D.C. facilities! Also considered how much mail is received and not payed for and yet processed because of non-existing or fraudulent Forms8125 .To target employees,their unions or management associations puts the blame far from where it should lie and that is at upper level management.For years the U.S.P.S. has fostered an adversarial relationship with it’s employees.E.E.O.s and grievances multiply and morale is at an all time low but now we must work together constructively for a common good because you are in “the hot seat”! I feel your pain and I am amused!

  4. I truly “feel PMG Donahue’s pain”. He has to save an organization, where all the major players are structurally acting at cross purposes, and the people charged with executing any plan headquarters can devise, must be trusted to work against their own economic interest. Good Luck to Us All.

  5. I truly “feel PMG Donahue’s pain”. He has to save an organization, where all the major players are structurally acting at cross purposes, and the people charged with executing any plan headquarters can devise, must be trusted to mork against their own economic interest. Good Luck to Us All.

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