Postal chief: If we do
nothing, we're Greece
By Jennifer Liberto
@CNNMoney June 12, 2012: 1:44 PM ET
WASHINGTON (CNNMoney) --
The head of the U.S. Postal Service said Tuesday that if the service doesn't
cut costs and Congress fails to act, it's going to be in the same dire straits
as Greece.
Postmaster General Patrick
Donahoe drew chuckles from a group of postal policy conference attendees by
comparing the beleaguered, indebted Postal Service to the beleaguered, indebted
nation.
He said that Greece's
ratio of debt compared to gross domestic product is 1.61 and the U.S. Postal
Service's ratio of debt compared to revenue is 1.51.
Donahoe clarified later
that he was sincere in the comparison, except he didn't think the U.S. Postal
Service is on the verge of default or a bailout.
"But, it's
true," said Donahoe, speaking with reporters at a postal policy forum called
Postal Vision 2020. "Unfortunately, if we don't do something we will look
like that."
He added that the U.S.
Postal Service's cost-cutting plan, and legislation passed by the House and
Senate, would prevent the Postal Service from having "to go down that
path."
Next deadline for USPS:
Aug. 1
Last month, the Postal
Service announced plans averting closures of rural post offices and delaying
consolidations on postal plants. Only 48 plants are to be closed or
consolidated in July and August. Other consolidations happen in 2013 and 2014
-- and could be trumped by Congress.
The Postal Service
reported a $5.1 billion loss last year, citing the recession, declining mail
volume and a congressional mandate to prefund retirement health care benefits.
The health care mandate is
a major liability for the Postal Service. Officials have said they won't have
the cash to make a $5.5 billion payment that's due Aug. 1, nor the $5.6 billion
payment due Sept. 30.
Unions say the health care
payments are the main cause of the Postal Service's financial woes and should
be eliminated. They say plant closures and mail service delays turn more
customers away and should be avoided.
But Donahoe pushed back
hard on the union's argument, saying those who make that argument are
"irresponsible."
"The idea that if we
just eliminate the prefunding and we'll be OK -- wrong!" Donahoe said.
"That's entirely wrong."
He said that even without
making the regular payments to prefund retirement benefits, the U.S. Postal
Service is still an "unsustainable business."
The Senate passed a postal
rescue bill in April. The House has a vastly different approach that Donahoe
expects will be considered next month.
Donahoe for the first time
lent public support to the Senate plan, even though the Postal Service board
blasted the measure when it was passed, saying it put too many restrictions on
the agency.
"The way the Senate
bill is set up, I'll take that, because it leaves the door open to change the
system," Donahoe said.
Other changes he wants to
pursue include creating a new health care system for Postal Service employees,
he said.
Donahoe also made a plea
for ending Saturday mail service and shrinking excess capacity from the postal
network.
"We've just lost way
too much in first class mail to maintain six-day delivery -- it makes no
sense," said Donahoe, who spoke plainly without a script to the audience,
many of whom have businesses that depend on the Postal Service.
Lawmakers don't agree that
the U.S. Postal Service needs to end Saturday service. The Senate bill forces
the agency to study the issue for two years before allowing Saturday service to
go away.
First Published: June 12,
2012: 1:41 PM ET
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