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Postal money woes

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The financially troubled Postal Service has backed off its plans to end Saturday mail delivery this summer now that Congress has intervened to block the move to save $2 billion.

The Postal Service, which lost $16 billion last year, said in February that it would switch to five-day service for first-class mail but continue six-day package delivery starting in August. Any other corporation would go ahead and implement such a cost-saving measure.

But the Postal Service is not just any business. Although it is a quasi-independent agency that does not receive any tax dollars for day-to-day operations, it is subject to congressional oversight and thus the accompanying political pressures.

The Postal Service hoped to take advantage of what it saw as a lapse in a federal mandate that has required six-day mail delivery since 1983. However, Congress blocked the move, when it restored the mandate in a continuing appropriations resolution passed in March.

With little choice, the Postal Service backed off its plan last week saying it would pursue other savings through a possible rate increase and hopefully reopening negotiations with labor unions.

The idea was immediately rejected by the National Association of Letter Carriers, whose president, Fredric Rolando, dismissed as “insulting and unnecessary” the idea of renegotiating contracts.

The end to Saturday mail delivery would have inconvenienced Americans in the short term, but they would have adapted as people have in other industrialized nations with five-day delivery. It is that adaptability and willingness to embrace more efficient ways of doing business that has contributed to the Postal Service’s financial woes.

It has been steadily losing business with the expansion of private sector competition and the technological developments such as email, texting, online banking and e-commerce.

The Postal Service has seen a 60 percent drop in stamped mail in the last decade. Since 2006, it has cut the work force, consolidated mail processing locations and closed post offices to reduce annual operating costs by about $15 billion. Yet more needs to be done.

A major reason for the $16 billion shortfall was the congressional requirement for the Postal Service to pay upfront $11 billion dollars in future retiree health benefits, something no other agency has to do. The agency defaulted last year on the $11 billion payment.

The agency would be relieved of that mandate under a proposed overhaul of the Postal Service proposed by President Obama in his 2014 budget plan. He would cut payments to the health fund by $10.6 billion over the next two years. The proposal would also eliminate Saturday delivery and allow a rate increase for standard and first-class mail.

Having blocked one cost-saving plan, it is up to Congress and the administration working with postal officials to enact reforms that will create a more efficient operation and prevent the agency from slipping deeper and deeper into debt.

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