National Press Club

U.S. Postal Service in acute financial crisis, Postmaster General says

October 9, 2009 | By Hope Katz Gibbs

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The 234-year-old U.S. Postal Service is in acute financial crisis, John Potter, the 72nd Postmaster General said Thursday during a National Press Club luncheon.

After losing a projected $7 billion in the fiscal year ending Sept. 30, Potter said he is working to help the USPS reinvent itself. It won’t be an easy task, as 28 billion fewer pieces of mail were sent last year compared to fiscal year 2008, he said. Potter said that holiday mail, one of the traditionally highest volume periods of the year, was flat last year — and he expects it to be flat this December, as well.

In addition to more people using email rather than snail mail, and the lagging economy that is causing fewer people to mail printed ads pieces and other promotional materials, Potter believes the USPS’ deficit also grew out of a three-year-old law that added more than $5 billion to annual costs for prefunding retiree health benefits.

“I was nervous about it because I knew we just couldn’t afford to pay that bill when it came due last week,” Potter told the gathered crowd. “Our mailers were nervous, too. They were concerned we’d have to pull back on service to make ends meet — and that would have negatively affected their businesses.”

To stave off the deficit, Potter cut $6 billion in expenses and reduced the USPS career workforce by 40,000 positions. But the man who led the USPS for eight years, and championed the development of a strong privacy program, said that unless the USPS makes significant changes he forecasts losses of $5 billion per year for the foreseeable future.

Options he’s considering include reducing the current six-day per week deliver service of the mail to five days per week, which would cut $3 billion per year from the budget; and adding additional products and services for sale at the organization’s thousands of retail outlets as do postal services in other countries. In Japan, he noted, postal customers can purchase life insurance. In France, postal stations sell mobile phones.

“I am not wedded to any one approach, but we need to generate new revenue,” the postmaster insisted, noting that solutions may not come easily because of the way the USPS is organized. It is overseen by Congress, but is charged with running like a business. He did admit that politics is an issue he contends with, but said he’d prefer to keep his eye on the real issue of finding ways to balance his budget.

Potter did get defensive, however, when he referred to critics complaining that the USPS has a negative impact on the environment.

“We process the mail using less energy than ever,” he said. “But we’re going to do better than that: we’re going to cut energy use by 30 percent in our 34,000 buildings over the next five years. We’re going to reduce petroleum use by 20 percent in our fleet of 219,000 vehicles. And that fleet includes almost 44,000 alternative-fuel-capable vehicles, the largest civilian inventory in the world. We have embraced change when it comes to being environmentally responsible. We did it not only because it was good for business but — even more importantly — it was good for America.”

Potter also philosophized about his role as postmaster general.

“The only thing we can do about yesterday is to learn from it,” he said. “The only thing we can do about today is to make the best of it. And tomorrow? Well, it would be a mistake to think — even for a moment — that we can’t influence the direction of our future, that we can’t bring a new level of financial stability — and success — to the Postal Service. The options to bring this about are only as limited as our imaginations.”