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Tuesday September 06, 2011 | 01:51 PM

It’s hard to overstate the fiscal crisis facing the U.S. Postal Service, and cutting “workforce related” costs such as overpayments to federal pension plans must be part of the solution if the federal mail carrier is to survive, says Sen. Susan Collins, R-Maine.

Collins, the top Republican on the Senate Committee on Homeland Security and Governmental Affairs, said she requested today’s hearing examining the postal service’s financial straits be held after hearing of worsening fiscal conditions throughout the Senate’s August recess. The committee is chaired by Sen. Joe Lieberman, I-Conn.

While the postal service is vital to a trillion dollar mailing industry, the economy as a whole and the house bound and the elderly in particular, it also will lose $9 billion this year and be unable to meet its payroll a year from now, Collins said in an interview this morning and in remarks prepared for the beginning of the 2 p.m. hearing.

“The news just keeps getting more and more dire,” Collins said in the interview in her Capitol Hill office. “The postal service is truly in a financial crisis.”

The postal service cannot be allowed to go under, but the sweeping changes that are needed go beyond now the fixes contemplated in bills offered earlier this year by her and Sen. Tom Carper, D-Del., Collins said.

“If it were allowed to go kaput it would be a disaster for our economy,” Collins said in the interview. But “this downward spiral is so much more severe than the postal service anticipated just six months ago that we need to start from scratch and draft a new bill.”

The union representing postal workers told the Washington Post today that the postal service’s plans for cuts are counterproductive and too draconian. And the Post reported that John Berry, director of the Obama administration’s office of personnel management, will tell senators that the issue of what to do with postal workers’ health and retirement benefits needs to be studied.

Collins says in her hearing remarks that while the possibility of consolidating post offices and closing many of them might work in some urban areas, but “simply is not an option in many rural or remote areas.  In such communities, closing the post office would leave customers without feasible access to postal services, thus violating the universal service mandate that is the justification for the postal service’s monopoly on the delivery of first-class mail.”

Collins cited the Matinicus and Cliff Island post offices as examples, saying they are both so remote that closing them would be a real hardships for residents. She also said that maintaining all of the nation’s rural post offices is less than one percent of the postal service’s budget.

Some 80 percent of the postal service budget, Collins said, lies in labor costs. She said that actuarial studies have found, for instance, “tens of billions of dollars of overpayments by the postal service to federal retirement plans, but the (Obama) administration has blocked the bulk of this repayment.”

"When such a large percentage of its expenses are labor costs, the failure to rein in these costs threatens not only the viability of the Postal Service, but also the livelihoods of postal workers themselves," Collins said in her hearing remarks.  "The worst outcome obviously for these workers would be for the Postal Service to be unable to meet its payroll – a very real possibility if we do not all act together to achieve reforms."

Collins said her proposal last year to gradually amortize the annual retirement plan payments to reduce the unfunded liability for retiree health benefits is no longer adequate to handle the financial crisis, either.

“The postal service has to preserve the value and service it provides to its customers while significantly cutting costs and streamlining operations,” Collins said in her hearing remarks.  “Sen. Carper and I have each introduced our own bills to try to avert this crisis, but the worsening conditions clearly require far more significant reforms.”

Collins said she hopes the discussion during today’s hearing will help develop a “path forward” to ease the postal service’s financial crisis.

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Kevin Miller is Washington bureau chief for the Portland Press Herald and MaineToday Media. He has worked as a journalist in Maine for 6 ½ years, covering the environment, politics and the State House. Before arriving in Maine, he wrote about politics, government and education for newspapers in Virginia and Maryland.
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