Postmaster General John Potter appeared before the House Committee on Oversight and Government Reform to make his case for scrapping service on Saturdays, and what he had to say about the USPS wasn’t exactly rainbows and sunshine.

“Today, we stand on the brink of financial insolvency,” he admitted to the committee. “The way Americans communicate has changed dramatically and we’ve got to change with it.”

With fewer and few people using the Postal Service these days, the USPS lost $3.8 billion last year and stands to lose more than that in 2010.

In addition to putting an end to Saturday deliveries, the Postmaster has suggested cutting back on payments to the pension plan. An inspector general report shows that the USPS has been required to overfund the pension by $75 billion, as well as having to prepay billions into a fund that covers health benefits for retired USPS employees.

“Over the past three years, the Postal Service has paid $15.4 billion to Treasury to prefund future retiree health benefits. During that same time, the Postal Service borrowed more than $8 billion from Treasury so that it could make those payments,” says Ruth Goldway, chair of the Postal Regulatory Commission. “Borrowing by the Postal Service to make the payments does not make sense.”

For some reason, USPS is the only federal agency required to make these pre-payments, and only Congress can eliminate the requirements. Additionally, by law USPS can only borrow from the U.S. Treasury to make these payments.

However, Postmaster Potter believes that even if the entire $75 billion in over-payments were to be returned, the decrease in the amount of mail would still ultimately require the cut to Saturday service.

He added that, with thousands of employees set to retire this decade, cuts to staffing at USPS could be done through attrition rather than layoffs.

Goldway chided the Postmaster for being short-sighted and pessimistic, saying “the Postal Service should reposition its goals to meet the needs of an evolving society” instead of ringing the death knell because people send e-mail instead of letters.

Potter countered by saying that USPS is attempting to find new revenue streams, but doing so is going to require investment.

But his suggestion of placing post offices in non-government places of business was given the smack-down by Goldway, who challenged, “Ask the small towns of America if they think government business should be conducted in Walmarts.”

Saturday Mail: to deliver or not to deliver [Philly.com]

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