USPS faces annual loss of $18B without cuts to Saturday delivery, stamp price increase

Nickalas Tabbert

The U.S. Postal Service warned Thursday that it may lose as much as $18.2 billion a year by 2015 unless Congress grants changes.

In a letter to Congress, Postmaster General Patrick Donahoe described an updated five-year cost-cutting plan that includes proposals to switch to a five-day delivery schedule, raise stamp prices by as much as 5 cents and to close up to 252 mail-processing centers and 3,700 local post offices.

The Postal Service has already asked Congress for permission to make service cuts and reduce annual payments of about $5.5 billion to prefund retiree health benefits, a Star Tribune article said.  

Donahoe said Thursday the mail agency's proposals would enable it to save $20 billion a year by 2015, repay its $12.9 billion debt to the Treasury and return to profitability.

In contrast, he said congressional inaction would result in significant annual losses and a "long-term burden to the American taxpayer."

"Such an outcome is highly undesirable and entirely avoidable," Donahoe said.

The plan says that if the post office were to raise current stamp prices from 45 cents to 50 cents, either in a single year or over a multi-year period, it could bring in new revenue of roughly $1 billion.  Chief financial officer Joe Corbett, however, said no formal proposals have been made to increase the price of a first-class stamp.  

The Postal Service has increased the price of the stamp four times since 2006, from 39 cents to 45 cents.

"Clearly, we are underpriced in that area," Corbett said.  "We would like the ability to move that price up."

About half of the Postal Service's cost-cutting proposals require legislative approve, the Tribune said.  

The proposal puts more than 100,000 jobs at stake in order to save $6.5 billion a year by closing mail-processing centers and post offices.  At the request of Congress, the agency agreed to wait until mid-May to begin closures so lawmakers would have time to stabilize its finances first.