The Obama administration is endorsing a plan to rescue the U.S. postal service which would end Saturday mail delivery to cut losses, as well as sell non postal products, reports Reuters.
The plan, which was announced along with deficit reduction package, would save the United States Postal Service more that $20 billion in the next few years. The plan involves refusing the $6.9 billion the mail carrier says it overpaid into a federal retirement fund, and would restructre the annual payment to prefund retiree health benefits, a massive monetary amount, according to USA Today.
The postal service has been deeply affected due to the advent of email and online bill pay. It has said that it will need to downsize drastically, otherwise it will not be capable of delivering mail by the end of summer 2012. The Postal Service lost $8.5 billion last year alone. They have cut more than 100,000 workers in the last few years, but still face major economic burden.
Payrolls need to be reduced by about 220,000 by 2015, reports Reuters. The agency is looking at thousands of post offices and 300 processing centers for possible closure.
However, the five day delivery system, argue analysts, could harm e-commerce businesses that rely on the US postal service to carry their products- eBay shares have fallen 6 percent this month lone.
On the other hand, the Postal Service agrees that mail traffic on Saturday is not enough to support delivery.
Senator Tom Carper (D-Del), who proposed a bill with many of the same suggestions, welcomed President Obama's statement.
Reports USA Today:
"I have been saying for some time now that Congress and the administration need to come together on a plan that can save the Postal Service and protect the more than seven million jobs that rely on it," he said in a statement.
Rep. Darrell Issa, R-Calif., who has his own postal reform bill in the House, responded that "the president's proposal is not what taxpayers or the Postal Service needs."
Currently, the U.S. Postal Service relies not on tax dollars, but rather stamps, packages and other services to fund operations.