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GWEN IFILL (Newshour): The U.S. postmaster general, Patrick Donahoe, warned today that his agency is now on the brink of default. It was the latest in a series of increasingly dire assessments about the fate of an American institution.
Snow and rain may not be able to stop postal carriers from their appointed rounds, but deep financial problems may. The U.S. Postal Service, weakened by a public turning to e-commerce, says it's dangerously low on cash. Without some sort of infusion, officials warn, they won't have the money needed to make a $5.5 billion health care payment due this month -- the worst-case scenario, a complete shutdown this winter, unless Congress steps in.
The Postal Service turned 200 years old in July, but conventional mail use has dropped precipitously in recent years. Volume is down 22 percent from just five years ago, a decline which is expected to continue, driven in part by stiff competition from carriers such as FedEx and UPS.
That's left the agency facing losses of more than $8 billion for the second year in a row. Postmaster General Patrick Donahoe has responded with a series of cost-cutting proposals, among them, eliminating Saturday delivery and closing up to 3,700 local post offices, most of them in small towns, replacing them with automated centers operating out of local businesses.
Donahoe has also proposed laying off as many as 120,000 workers, nearly one-fifth of the agency's work force, and pulling workers out of more expensive federal pension plans. Pre-funding retiree benefits has cost the Postal Service $21 billion in the last three years.
All those moves would require congressional approval.
For more now on what's at stake for the Postal Service and on whether your mail will keep coming, we turn to Postmaster General Patrick Donahoe and Fredric Rolando, the president of the National Association of Letter Carriers.
Mr. Donahoe, you have described this proposal and your critics have described this proposal, your proposal, as being radical. Is it?
PATRICK DONAHOE, U.S. Postmaster General: Well, it's what we have to do in order to get our business moving in the right direction, Gwen.
Here's the situation we face. When you look at what's happened in the world from an electronics standpoint, more and more people every day pay bills, get bills through the Internet. And that's really taken a toll on our volume.
We do have to make some radical changes in order to get our finances back on an even keel, so that we can provide service to the American public.
GWEN IFILL: Is that what's happening here, Mr. Rolando?
FREDRIC ROLANDO, National Association of Letter Carriers: Good evening, Gwen. Thank you for the opportunity to set the record straight.
I was listening to the lead-in dialogue to the show. And that's an example of the type of misinformation that the American public is hearing on the news every day. I'm here to tell you that the Postal Service is not broke. The Postal Service just needs access to its own money. And Congress needs to get busy and give them that access.
GWEN IFILL: Did we say that the Postal Service was broke, or did we say that the Congress didn't give them access?
FREDRIC ROLANDO: Well, the -- both. The Postal Service is not broke because they need access to their own funds.
During the last four fiscal years, the Postal Service, with the recession that we have been through, the worst recession in 80 year, and the Internet diversion, still showed an operational profit of almost $700 million during that period of time. The $20 billion-plus dollars that you read about in losses is nothing more than a congressional mandate that requires the Postal Service, required the Postal Service to take all of their cash and put it into a pre-funding account.
The Postal Service actually has somewhere between $50 billion and $125 billion in their other funds that is not taxpayer money. They haven't used a dime of taxpayer money in over 30 years. And the Congress just needs to act responsibly and quickly to give them access to that -- those funds.
GWEN IFILL: What do you think about that, Mr. Donahoe? Is the money there, but they're not -- but you're just not being allowed to spend it?
PATRICK DONAHOE: Fred is exactly right around the issues that we have faced in the last few years.
What's happened is, our revenues have gone down in the last four years from $75 billion to $65 billion. So we have lost substantial revenue. In that same time, we have been required to prepay employee retirement funding.
What -- our people have done a great job. They have been very productive. They have made up that difference. In fact, until this past year, we had shown a profit. The problem is, when you start to look forward, even with the funding, the pre-funding money given back to us, which there's not a lot of people coming forward telling us that they're going to give us that money, the problem is, when you start to go forward, the volume and revenues continue to go down.
We are losing first-class mail at the rate of 7.5 percent a year. That's not going to change. That is not going to change. We have lost 26 percent of our volume in the last four years. We have made it up by productivity improvements.
What we're saying is, going forward, we have to make some changes, like limiting Saturday delivery, saves up $3 billion.
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