Postmaster General Patrick Donahoe laughs when asked about the postapocalyptic movie The Postman starring Kevin Costner. That 1997 film, set in the year 2013, is about hope being restored to a band of survivors through the false belief that mail delivery is continuing to keep civilization connected.
“When society is at the end of the road, you’ll still have the Postal Service,” Donahoe said in an interview with National Journal Daily.
But 2013 has arrived. And Donahoe is the first to acknowledge that his quasi-independent agency is facing a bundle of problems that have left it bobbing in red ink.
In all, the Postal Service is expecting to lose more than $20 billion in 2012 and 2013. The Internet and the rise of email and online bill-paying have taken away business. And a 2006 law requiring the agency to prepay its retiree health benefits continues to add billions of dollars in losses each year.
Meanwhile, customers or lawmakers are concerned about various steps the Postal Service wants to take, such as ending letter delivery on Saturdays, and what it plans to do with some unprofitable rural post offices.
The agency announced last month a request to raise about $2 billion in annual revenue through a 3-cent hike that would raise the price of a first-class stamp to 49 cents and a 1-cent increase that would push the rate for mailing a postcard to 34 cents.
The Postal Regulatory Commission still must approve the rate-hike proposal. Donahoe says he hopes for a favorable decision by the end of the year so the new prices can take effect at the end of January — “to allow time for customers to make software changes that they need to make in mail production.”
Businesses that rely on the mail, including magazine publishers and mail-order companies, are lobbying furiously against the increases, which would exceed the rate of inflation. But Donahoe said the proposal is going forward only because Congress has not been able to agree on postal-reform legislation.
“We’ve exhausted many, many options already on things we can control,” he added.
The Postal Service’s five- and 10-year business plans project rate increases that merely match inflation, not exceed it. But those plans assume Congress will approve legislation that nixes the requirement under the 2006 Postal Accountability and Enhancement Act that the service prefund 75 years’ worth of retiree health benefits in 10 years — which Donahoe calls the most critical need financially — and that the USPS is also given more flexibility to deal with its fiscal problems.
He said the cloud that hangs over the Postal Service is the idea that it has continually large financial losses — and that it produces a “crisis of confidence” in some large customers.
But a planned markup Wednesday of a bipartisan Senate bill from House Homeland Security and Governmental Affairs Committee Chairman Thomas Carper, D-Del., was scrapped, as some lawmakers expressed a range of concerns. The Senate passed a bill in the last session to address some of the problems, but the House did not vote on the bill, nor did it pass its own version.
This session, a new measure from House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., was approved by his committee along party lines. It includes efforts to soften previous proposals to close rural post offices and would immediately end Saturday mail service.
In the interview, Donahoe said that if members of Congress were able to get together on a bill, and it were signed into law, he sees Saturday delivery possibly coming to an end by Memorial Day. But he said, “Our biggest concern in the House and the Senate has been, I guess, the push-back against changes in delivery schedule.”
Going forward, the Postal Service can effectively and affordably deliver mail five days a week, he said. “We’ll still deliver packages and medicine on Saturday. But when you’ve lost the volume we’ve lost — almost 30 percent — you can’t continue to do these things going into the future if you’re planning on being self-sufficient,” Donahoe said. “So we’ll be a seven-day package deliverer and a five-day mail deliverer,” he said. “And I think the faster we get there, the better it is for everybody.”
Donahoe acknowledged the congressional resistance to consolidation of some facilities, including rural post offices. “What that caused us to do was to take another approach, which is moving more to a part-time status for some of our less-used offices,” he said. “It’s nice to have an outlet in a place in what we’d call deep rural America where a person can go to the post office on the off-hours, access their mailbox, and pick their package up, without having to travel real far.”
Some lawmakers have said the Postal Service has been too focused on cost-cutting and not enough on raising new revenues. But Donahoe said the agency has been working on that front, too, offering ideas for allowing states to use post offices to process driver’s licenses or hunting and fishing licenses.
But, he said, “I will tell you this, there are no states that are knocking our doors down trying to get us to transfer their work. The big problem that you have with some of that kind of work is, it’s going to the Internet, anyway.”
There may be other opportunities in data-delivery, “in terms of being able to send very secure digital messages, whether it is banking and health care or those kind of things,” Donahoe said. “We think there are opportunities for us to be in that space that make sense and would help the economy in general, the American public in general.”
And then there are calls, from Sen. Chuck Schumer, D-N.Y., and others to end Prohibition-era restrictions on shipping beer, wine, and other spirits through the Postal Service.
“That’s big business,” said Donahoe, “when you go and take a look at the world of wine clubs, and there are a lot of small microbreweries, and small firms that make things like specialty bourbons, and what-not.”
Donahoe, who started out as a clerk in a mail-processing plant in Pittsburgh 39 years ago, says the Postal Service will not go away. While it has been sometimes frustrating trying to get everybody on the same page, he says, “my job is to keep plugging away [and] don’t let up.”