Obama Endorses Ending Saturday Mail Delivery
As part of a larger proposal to cut the national debt by $3 trillion over the next 10 years, the White House said that the United States Postal Service (USPS) should be empowered to make changes that would save it from insolvency. Reducing mail delivery to five days a week, freeing $7 billion of overfunded pension for use and creating a new business model were all suggested in the plan unveiled by President Obama on Monday.
The USPS lost $8.5 billion in 2010 and has been struggling to survive in the face of increased Internet use and third-party services like UPS and FedEx. Addressing Congress, Postmaster General Patrick Donahoe requested the ability to change pricing, close locations and consider possible layoffs. The postal service, which is self-sufficient and receives no money from taxes, cannot make changes without Congress's approval.
While the White House plan encourages the postal service to increase the cost of first-class stamps and permits a cessation of Saturday services, it came out against any plans that would close post offices, lay off employees or void union contracts. The proposal, which would give the USPS breathing room to restructure, could free up to $20 billion over the next several years. It would also delay a $5.5 billion payment for future retirees' health care that is due on Sept. 30.
Postmaster General Donahue, who praised Obama's recommendations, has been asking for the ability to restructure the postal service for years. Donahue insists that the current model is unsustainable due to Americans' changing habits. "Back in 2000, about 5 percent of Americans paid their bills online. Today it's 60 percent," he said in an interview with NPR. "Slowly but surely, that first class mail volume eroded."
"A good example is comparing first-class mail to film. ... If you think about 10 years ago, people argued, 'Who makes the better film, Kodak or Fuji?' Today people say, 'What's film?' That's what we worry about. How do you manage in that world, that's what we're trying to figure out," Donahue explained.
If Saturday delivery ends, it could impact the millions of Americans who still receive and pay bills via the postal service, as well as marketers in the printing, promotional products and direct marketing industries. One side effect could see first-class mail change from two- to three-day delivery. What effect this could have on direct mail spending, which is expected to rise 3.6 percent by 2014 according to the Direct Marketing Association, is unknown.
Congress, which is currently reviewing President Obama's recommendations, needs to pass the White House's plan before the USPS can make any changes. The postal service is currently in talks with the 12 members of Congress reviewing the proposals.