STEVE INSKEEP, host:
Mail service in the United States goes back to colonial times. In fact, any list of famous postmasters would surely be topped by Benjamin Franklin, who was also involved in newspapers, sort of a new media guy for the 1700s. So it is with some pain that Americans consider the financial trouble of the U.S. Postal Service now. The postmaster general appeared before a Senate Committee that's considering what to do. And NPR's Tamara Keith has more.
TAMARA KEITH: Next summer, that's when the U.S. Postal Service says it will run out of money to pay its employees and contractors. If Congress doesn't act fast, it will start missing bills sooner - like a five and a half billion dollar payment to a retiree health benefit fund due at the end of this month. Patrick Donahoe is the Postmaster General.
Mr. PATRICK DONAHOE (Postmaster General): Our situation is urgent. The congressional action is needed immediately to avoid this default.
KEITH: He told the Senate committee on Homeland Security and Government Affairs, the Postal Service needs radical changes to its business model. For years it was all about first class mail: letters, bills, invitations. And because of the Internet - Donahoe said that type of mail is on a steep decline.
Mr. DONAHOE: I think that we could cut the price in half and not be able to slow it down all that much. Sixty percent of Americans pay bills online today. That's not going to change. That will continue to move in that direction.
KEITH: He says the Postal Service needs to adjust. And if it were a normal business it could slash costs, raise prices, do whatever it needed. But Senator Tom Carper, a Democrat from Delaware, said it can't, not without the help of Congress.
Senator TOM CARPER (Democrat, Delaware): No business, facing the kinds of difficulty the Postal Service faces today, would survive very long if it were told how many retail outlets they should have and where they should be located. Yet that's what Congress does to the Postal Service.
KEITH: So, as it has done many times before, the Postal Service is coming to Congress - asking for permission to change. But getting everything it wants could be mighty difficult. The Postal Service wants to get its hands on some 60 billion dollars it says it overpaid into employee pension funds. It wants to adjust employee health and retirement benefits, and it wants permission to lay off as many as 120,000 postal employees.
Mr. CLIFF GUFFEY (President, American Postal Workers Union): These proposals are outrageous, illegal and despicable.
KEITH: Cliff Guffey is President of the American Postal Workers Union. He says the union just agreed to a new contract with the Postal Service that included worker concessions, but maintained a no-layoff protection.
Mr. GUFFEY: Now they want to come to the congress and say, oh, we got this part of the deal, give us this part back. We think it's totally improper.
KEITH: The union also against a proposal to eliminate Saturday delivery. And it has support from Republican Senator Susan Collins from Maine. She says the savings would be minimal and told the postmaster mail order pharmacies and weekly newspapers might take their business elsewhere if they can't get Saturday delivery.
Senator SUSAN COLLINS (Republican, Maine): And once these private firms leave the Postal Service behind, they won't be coming back. And the Postal Service will suffer yet another blow to its finances.
KEITH: The Postal Service seems to be suffering one blow after another. Postmaster Patrick Donahoe told the committee he expects a net loss of 10-billion dollars this fiscal year. His goal is to get the Postal Service profitable again by 2013.
Mr. DONAHOE: Every quarter I have to report losses. And every quarter I go through the same discussion. You know, that or they can't get their head above water. They're antiquated. They're bad management. Their employees don't do a good job. None of that helps. None of that helps, because it potentially scares business away.
KEITH: Senators from both sides of the aisle repeated throughout the hearing -they think there should be a fix - and it can be bipartisan. They said the postal service is too big a part of the U.S. economy to let it go out of business.
Tamara Keith, NPR News, the Capitol.
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