Postal Service Warns It May Need Emergency Rate Hike

Postmaster General and CEO Patrick R. Donahoe postal rate hike usps
Jose Luis Magana/APPostmaster General and CEO Patrick Donahoe

WASHINGTON -- Postmaster General Patrick Donahoe said Thursday his agency is in "the midst of a financial disaster" and may need an emergency increase in postage rates to keep operating.

"The Postal Service as it exists today is financially unsustainable," he told the Senate Homeland Security and Governmental Affairs Committee. It's a message that the postmaster general has been delivering to Congress with regularity over the past several months.

Donahoe pressed lawmakers Thursday for swift action on legislation to fix his agency's finances. Without help from Congress, the agency expects its multibillion-dollar annual losses to worsen. He warned that the agency's cash liquidity remains dangerously low.

The post office expects to lose $6 billion this year. Last year the agency lost $16 billion.

"The Postal Service is quickly moving down a path that leads to becoming a massive, long-term burden to the American taxpayer," he said. Donahoe said the rate hike may be needed because his agency's finances are so precarious and the prospects of quick congressional action are so uncertain.

The Postal Service's board of governors could decide as early as next week whether to request a special rate increase.

Under federal law, the post office cannot raise its prices more than the rate of inflation unless it gets approval from the independent Postal Regulatory Commission. The Postal Service must cite exceptional circumstances in seeking an "exigent" or emergency rate hike.

Media and marketing firms that depend on postal services have said that a big rate hike could hurt their business.

They say the impact of any rate hike would be compounded if it comes along with the regular annual rate increase expected to be announced later this year.

The agency last raised postage rates on Jan. 27. At the time, the cost of a first-class stamp went up by a penny, to 46 cents.

Lawmakers are considering cost-cutting moves that include ending Saturday mail delivery and door-to-door delivery. But many lawmakers, along with postal worker unions, have resisted such changes, saying they would inconvenience customers.

The Postal Service says it would like to end Saturday mail delivery. It also is seeking to reduce its $5.6 billion annual payment for future retiree health benefits. It missed two of those $5.6 billion payments last year, one deferred from the previous year, and is expected to miss another at the end of this month when its fiscal year ends.

The Senate Homeland Security and Governmental Affairs Committee is considering a bipartisan proposal to stabilize the agency's finances, including changing the method by which retiree health care costs are calculated.

Shipping Alcohol

Saturday mail delivery would be ended in a year and the Postal Service could start shipping alcoholic beverages to compete with private shippers such as FedEx (FDX) under a bipartisan proposal by the committee's chairman, Tom Carper, D-Del., and the panel's ranking Republican, Tom Coburn of Oklahoma.

The agency says ending Saturday mail delivery would save $2 billion each year.

"Whether it happens today, next month or next year, it's likely that postal customers will need to sacrifice at least some of the conveniences they enjoy today," Carper said.

Door-to-door service for new residential and business addresses would cease in a move that would help the agency shift to less costly curbside and cluster box delivery, under the bill. The measure would require the agency to try to convert residential addresses on a voluntary basis from door-to-door service to curbside and cluster box delivery.

The Senate plan includes changes in how pensions and retiree health care costs are calculated in an attempt to stabilize the agency's finances. It also would impose a two-year moratorium on closing mail processing plants.

The House Oversight and Government Reform Committee earlier this year approved a bill by its chairman Rep. Darrell Issa, R-Calif., for the service to gradually shift from door delivery to cluster box and curbside delivery. No Democrats on the panel voted for the measure.

Issa's bill also would end Saturday delivery and would change how pension and retiree health costs are calculated to bolster the agency's budget.

The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control.

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Andrew Vollink

Its my job to deliver your mail. Its my job to get yelled at because your check wasnt delivered to you on wednesday only to be hand delivered to you on saturday when I personally knocked on yourdoor and it is my job to listen to all of your bashing, so ,I'm listening, think about what a person will go through to deliver your mail the next time you buy your stamps

September 29 2013 at 4:37 PM Report abuse rate up rate down Reply

If you knew the companies pay the usps to send junk mail thats why its sent maybe if you could pass the drug tests back ground check finger printing that goes with it . If you actually knew anything about the post office and all you go threw to get that mail in your box ,its not just getting in your car and riding around maybe you should try it for it day bet you couldnt make it one day.

September 20 2013 at 8:42 PM Report abuse rate up rate down Reply

Eliminating to 6 Billion dollars that the Post Office has to pay the Govt. every year for future retirees 75 years from now that no other Govt\'. agency has to pay would allow the post office to use that money to run their busuness. How long could any other business stay in business if it had to give that big of a chunk of money away every year and that\'s the problem and the truth, Most people don\'t know about this so go on line and research it and find out for yourself.

September 20 2013 at 4:07 PM Report abuse rate up rate down Reply

stop junk mail reduce employees = profit 80% of mail is ads which we do not open just toss it the recycler every freakin week

September 20 2013 at 4:06 PM Report abuse rate up rate down Reply

I was at the PO at Melbourne, FL this week. Lotsa employees flitting around laughing and visiting...but only 1 person working and a line of at least 20 people. Close the post office.

September 20 2013 at 3:33 PM Report abuse +2 rate up rate down Reply

Another failure in the Obama WH. Get the price of fuel down and everybody's transportation costs would go down.

September 20 2013 at 3:18 PM Report abuse +2 rate up rate down Reply

We are releasing convicts from prison to alleviate overcrowding. Why not apply the same logic to the post office? On a different topic: why do we need 50 types of first class stamps when one forever stamp would eliminate all of those costs associated with printing, set-up and storage? Running a business efficiently isn't rocket science. Bring in somebody like Bill Gates to organize and streamline the Post Office.

September 20 2013 at 3:08 PM Report abuse +1 rate up rate down Reply

Junk mail is trash mail. Save stop Saturday. It will save $$

September 20 2013 at 3:07 PM Report abuse rate up rate down Reply

much of what we currently receive is junk mail, save the trees, shut it down

September 20 2013 at 2:52 PM Report abuse +1 rate up rate down Reply
1 reply to merymar1's comment

I go to my mail box once every 3 weeks to throw out the trash in the can provided by the bank of mailboxes at my condo. No one reads that garbage! STOP.

September 20 2013 at 3:35 PM Report abuse +1 rate up rate down Reply

England's in country rate is about 65 cents, our rate is 47 cents for a delivery area which is 59 times larger. Why can't the USPS charge what it costs to deliver mail? ....Oh, Congressional gridlock again.

September 20 2013 at 2:46 PM Report abuse rate up rate down Reply