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Postal Service looks to new Congress for rescue

By Elvina Nawaguna

WASHINGTON (Reuters) - The Congress that expired this week might have steered the nation away from the "fiscal cliff" of potentially devastating tax hikes and spending cuts, but it did not do much to save the U.S. Postal Service from its own fast-approaching cliff.

The cash-strapped mail carrier that lost almost $16 billion in the past year, ran into its legal borrowing limit and defaulted twice on required payments to the federal government, now turns to the newly sworn-in Congress for help.

The Postal Service loses $25 million every day, it says, as more Americans communicate by email and the massive payments for future retiree benefits take a toll.

It could run out of money in a little more than nine months, according to some estimates.

But Congress, bogged down by disagreements between lawmakers from rural and urban districts and distracted by fiscal policy fights, has not been able to agree on legislation to overhaul the struggling agency.

A bipartisan bill passed the Democratic-led Senate last year that would have ended Saturday mail delivery and eased its benefit payment obligations.

But the Republican-led House of Representatives, which had advocated for aggressive post office closures, never voted on a postal bill.

And several of the key negotiators left Congress or changed committees this week, leaving the future of postal legislation uncertain as the agency's financial condition deteriorates.

"It's important that they prioritize postal service legislation," said Art Sackler, head of the Coalition for a 21st Century Postal Service, which represents mailers. "We don't want to have it get lost again in the big shuffle."

As the 112th Congress expired this week, so did the proposed legislation that would have provided some legislative direction for the Postal Service as it seeks a more profitable business model.

In a prepared statement, Postmaster General Patrick Donahoe called Congress' inaction disappointing and said he would be looking to the new set of lawmakers to make postal reform legislation a priority.

Some of the players are changing. The Senate bill succeeded in large part because it was pushed by a bipartisan group of members, several of whom had experience and knowledge on postal issues.

Joe Lieberman, a Connecticut Independent who led the Senate Committee on Government Affairs, has retired. Massachusetts Republican Scott Brown lost his bid for re-election, and fellow Republican Susan Collins will no longer sit on the relevant committee.

That means all eyes are on Thomas Carper, a Delaware Democrat who now leads the government affairs committee and is expected to lead the Senate push for legislative reform in the new Congress.

DELAY THE POSTAL SERVICE'S DEMISE

House Republicans last year criticized the Senate bill, which they said would only delay the Postal Service's demise, but were unable to get enough support to pass their own bill.

Carper and Republican Representative Darrell Issa of California, the chairman of the House Oversight and Government Reform Committee and a lead voice on postal legislation last year, said in a joint statement on Thursday they were committed to working together to reform the postal service.

Sackler said his group expects that the compromises reached by the previous Senate will be reintroduced in the new Congress.

Some of the compromises, he said, included delaying the ending of Saturday mail delivery for a year while giving the Postal Service time to figure out a profitable business model, as well as spreading the funding of the future retiree health benefits program over 40 years, up from the current 10-year requirement.

The postal service has blamed much of its recent troubles on this pre-funding requirement as well as on the reduced mail volumes as more people communicate electronically. About 70 percent of last year's loss was attributed to the future retiree health benefits program.

"The Postal Service should not have to do business this way, which has undermined the confidence of our customer base and the $800 billion mailing industry we serve," Donahoe said in his written statement, released Thursday.

The Postal Service, he said, had made changes to its operations to allow Congress to pass legislation that will save it. Over the last two years, it has shed about 60,000 jobs, reduced hours at some of the post offices and consolidated some of its facilities, while increasing package volume.

Sackler said, if nothing is done soon, the Postal Service could run out of money by October.

"The bottom line here is that there is a postal cliff impending and Congress really needs to act," he said. "We need the bill passed and signed by the president."

(Reporting By Elvina Nawaguna; Editing by Karey Wutkowski and Vicki Allen)

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