Postal service in fiscal trouble, rate hike requested
Postmaster General Patrick Donahoe, left, accompanied by Jonathan Foley, director, Planning and Policy Analyst, US Office of Personnel Management, testifies on Capitol Hill in Washington on Thursday before the Senate Homeland Security and Governmental Affairs Committee hearing on reforming and renewing the US Postal Service. AP Photo
WASHINGTON — Postmaster General Patrick Donahoe said Thursday the Postal Service had no choice but to ask for an emergency rate hike given the agency’s dire finances.
One day after his cash-strapped agency proposed raising the first-class stamp price to 49 cents, Donohoe urged swift action by Congress to overhaul the Postal Service and fix its finances. The post office expects to lose $6 billion this year. It wants to raise stamp prices by 3 cents next year. The request must be approved by the independent Postal Regulatory Commission.
“We did not want to take this step, but we had no choice due to our current financial position,” Donahoe said.
Donahoe appeared before the Senate Homeland Security and Governmental Affairs Committee to press for approval of bipartisan legislation that would allow his agency to end Saturday delivery after one year and cease door-to-door delivery for new residential and businesses addresses. Many lawmakers and postal worker unions say the delivery changes would inconvenience customers.
“The choice is simple: greater flexibility and authority now, or massive taxpayer exposure and service degradation later,” Donahoe said.
Donahoe noted that his agency’s request for a price hike probably won’t be decided for three months, a delay that he said hampers the Postal Service’s ability to run an efficient and competitive business.
“That’s not a good environment to be in when you are fighting for your life,” he said.
John F. Hegarty, national president of the National Postal Mail Handlers Union, said the post office’s fiscal woes were a result of the health care payments for future retirees.
“Most losses in the last few years have nothing to do with the failed business model or the obsolescence of postal services,” Hegarty said.
The National Association of Letter Carriers says ending Saturday delivery would in particular hurt small businesses along with rural residents and the elderly, who depend more heavily on the mail for prescription drugs and other goods.