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US Postal Service seeks reprieve from Congress to avert 'default'

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Donahoe reiterated a list of cost-cutting measures he has been proposing in recent months to erase the agency’s deficit, which could reach up to $10 billion this fiscal year. They include eliminating Saturday mail delivery, closing as many as 3,700 postal locations, and laying off 120,000 workers – nearly one-fifth of the agency’s work force. (This doesn’t include another 100,000 jobs lost to attrition that the agency does not plan to replace, for a total of 220,000 lost positions.)

The Postal Service will handle an estimated 167 billion pieces of mail this fiscal year, down 22 percent from 2006. E-mail communication, electronic bill payments, and the economic downturn have taken a toll on the USPS, which is facing its second straight year of losses of more than $8 billion.

The Postal Service is also hampered by high personnel costs and contractual promises made to unionized workers, including a no-layoff clause and the prefunding of retiree health benefits. In fact, wages and benefits for its 571,566 full-time employees account for 80 percent of the Postal Service's operating budget, compared with 53 percent of UPS's and 32 percent of FedEx’s, two of its biggest private competitors.

The Postal Service is asking Congress to allow it to break union contracts to lay off workers and to loosen a requirement to prefund future retirees’ health-benefit costs.

Senator Lieberman and Sens. Susan Collins (R) of Maine and Tom Carper (D) of Delaware all underscored the urgency of the situation.

“We must act quickly to prevent a Postal Service collapse and enact a bold plan to save its future,” Lieberman said. “Times are changing rapidly and so too must the Postal Service if it is to survive.”

Senator Collins characterized the Postal Service’s current financial status as “abysmal,” and called for far-reaching legislation to overhaul the troubled agency. She noted the critical role the Postal Service plays in the US economy, including supporting a $1.1 trillion mailing industry employing more than 8 million people in direct mail, periodicals, catalogs, financial services, and other businesses.

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