USPS - 5-day mail service savings overstated?

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WASHINGTON — The decision on whether to cut back mail delivery from six to five days a week was complicated Thursday by a report suggesting that the U.S. Postal Service had overstated the savings to be gained.
The U.S. Postal Regulatory Commission said Thursday that it had found only $1.7 billion in savings, compared with the Postal Service’s estimate of $3.1 billion. The commission also warned that the Postal Service had underestimated by as much as $386 million annually the loss of revenue that could come by dropping Saturday delivery.
The Postal Service, which anticipates operating at a $238 billion cumulative loss over the next decade, said last year that it would seek a five-day delivery schedule as soon as this year to cut costs. Congress currently mandates six-day delivery and must approve any change.
The commission, which approves postal rates and operates independently of the Postal Service, made no recommendations about dropping a delivery day. Its members were evenly split over the proposal, said Ruth Goldway, the commission chairwoman, who supports maintaining a six-day service schedule.
She also warned that the plan does nothing to address what she believes is an inequitable effect on delivery to rural and remote areas.
“It’s really going to be up to the Congress to say whether they think the service cuts and the impact on rural areas, and the questions about how you interpret the law, are enough of a concern to outweigh some of the savings,” Goldway said.
The Postal Service doesn’t receive taxpayer funding, so cuts have no effect on the federal deficit or the national debt. However, the Postal Service expects to lose $7 billion this fiscal year. Of that, about $5.4 billion is money the Postal Service must pay into a fund to pre-pay health care expenses for future retirees.
Postmaster General Patrick Donahoe said the Postal Service will not only continue to stick by its proposal for a five-day plan but will push for Congress to approve it. The Postal Service “remains in the midst of a period of great financial instability,” he said in a statement, and “remain convinced of our findings.”
Since announcing the proposal, the Postal Service has argued that profound technological and social changes have changed the way Americans communicate, and that as a result, it needs to rethink its delivery schedule in the digital age.
The chairman of the House Committee on Oversight and Government Reform announced this week that he would look into the Postal Service’s recent labor agreement with the American Postal Workers Union. And the top Republican on the oversight subcommittee that oversees U.S. mail warned that the Postal Service’s proposal alone wouldn’t close the gap. The agency also has problems with legacy benefits, workers compensation and its facilities, said Rep. Dennis Ross, R-Fla.
“The real issue facing the Postal Service right now is labor costs, which make up 80 cents of every dollar they spend,” he said.