Congress Weighs Cutting Saturday Mail Delivery

(June 23) -- The U.S. Postal Service can deliver through snow and sleet, and by mule to the bottom of the Grand Canyon, but Congress searched today for a way for the agency to deliver on a real challenge -- a balanced budget.

A joint House and Senate hearing heard a split decision from the largest postal customers about whether to cut Saturday service.

The Postal Service, which doesn't get taxpayer subsidies, is supposed to break even. But it will lose about $230 billion over the next decade if no changes are made. Mail volume has been decreasing as more people pay bills online and communicate electronically. The recession made things worse by cutting the amount of mail that businesses send to consumers.

"This must be confronted head on," Sen. Tom Carper, D-Del., said. "We probably can't rely for very much longer on customers' willingness to continue paying for a postal system that seems in many ways to be much larger than we need."

But Congress has been loath to make unpopular cuts like closing offices that don't make sense financially or giving up Saturday service, according to James Gattuso, senior fellow at the Heritage Foundation who studies regulatory policy.

"There's no upside for Congress to support a reduction of services to their constituents," Gattuso told AOL News. Voters don't call to complain about the Postal Service losing money but they do raise a fuss when their delivery service is changed or offices are closed, he said.

Gattuso also said he'd like to see Congress go to five-day service and allow private companies to compete for first-class mail business, but he doesn't think that's likely to happen.

Rep. Stephen Lynch, D-Mass., was among the skeptics. Lynch said he was worried about layoffs of postal workers and service cuts. Cutting services at a difficult time amounts to: "There's water in the boat, it's sinking, so let's drill holes," he said.

Gattuso said it's too early to say whether mail delivery will go the way of telegrams, but private competition might help generate new products or ways of doing business that keep mail delivery a healthy business.

A panel of big postal users -- Hallmark, Netflix, Amazon.com and mail-order medical services -- sent executives to weigh in before the House Oversight and Government Reform subcommittee on the postal service, and the Senate Governmental Affairs subcommittee on federal services.

Hallmark and Amazon officials urged Congress not to allow a cut of Saturday delivery service, which could save as much as $3.1 billion a year.

Donald Hall Jr., president of Hallmark, said he's worried that five-day service is just a step toward mail delivery only three or four days a week. "The future of the Postal Service hangs in the balance," Hall told the committees.

Amazon Vice President Paul Misener said he would switch one-sixth of his Postal Service business to competing delivery services if he can't get packages to customers on Saturday. Customers don't mind waiting a few extra days for a bill or a magazine, he said, but if they order something online, they don't want to wait out the weekend to receive it.

But Paul Misener, head of DVD operations for Netflix, said five-day service can work if it's part of a solution to the Postal Service's financial problems. Postal officials have pointed out that surveys show the public prefers the cut to Saturday service over rate hikes.

The U.S. Postal Service processes 24 million pieces of mail each hour and handles 40 percent of the world's card and letter mail. But even with a huge boost from the census mailings, volume was down 3.3 percent in the first quarter of this year.

Postal officials have asked for the five-day delivery schedule and a break from Congress on how it funds its retiree health benefits. The Postal Service has cut back on the work hours spent on mail processing and services and eliminated $1.4 billion in expenses during the first half of its fiscal year.

But Chief Financial Officer Joseph Corbett has said that even with a cut of 120,000 positions since 2008, the service doesn't have a workable business model and loses will be "unsustainable."