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U.S. Postal Service renews push for five-day mail delivery

Postal clerk Arin Vickers sorts mail for delivery in the U.S. post office at RAF Alconbury, near Huntingdon, central England June 11, 2013.
Postal clerk Arin Vickers sorts mail for delivery in the U.S. post office at RAF Alconbury, near Huntingdon, central England June 11, 2013.

By Elvina Nawaguna

WASHINGTON (Reuters) - The U.S. postmaster general on Wednesday renewed his plea for lawmakers to allow the financially troubled Postal Service to switch to a five-day delivery schedule for first-class mail and to implement other overhauls needed to modify its outdated business model.

The Postal Service earlier this year pulled the plug on a plan to end delivery of first-class mail on Saturdays, bowing to pressure from lawmakers and industry groups to maintain a six-day schedule.

"The Postal Service continues to face systemic financial challenges because it has a business model that does not allow it to adapt to changes in the marketplace and it does not have the legal authority to make the fundamental changes that are necessary to achieve long-term financial stability," Postmaster General Patrick Donahoe told the House Oversight and Government Reform Committee.

The Postal Service's financial troubles largely stem from a 2006 congressional mandate to prefund up to 75 years of its future retirees' healthcare, and dwindling revenues as more Americans use Internet and email to communicate rather than buying stamps.

The mail carrier lost $16 billion last year.

Donahoe wants lawmakers to eliminate the retiree prefunding requirement and allow the Postal Service to control its own healthcare system. The mail carrier expects to default on its next $5.6 billion payment to the Treasury for the future retirees's healthcare fund due in September.

The semi-independent government agency relies on sales of stamps and other products rather than taxpayer dollars to fund its operations. Revenue from first-class mail, its most profitable service, decreased by $198 million in the second quarter of fiscal year 2013.

"We cannot pretend these marketplace changes aren't happening or that they don't require us to make fundamental changes to our business model." Donahoe said. "We need legislation that, together with our planned changes, confidently enables at least $20 billion in savings by 2016. If not, we go over the edge."

The Postal Service's pleas for flexibility have so far gained little traction as Congress has several times failed to pass legislation allowing it to modify its operations.

"Ultimately, we've kicked the can down the road, first in 2006 by not doing enough and every year since," said Oversight Committee Chairman Darrell Issa of California, a supporter of a five-day mail delivery schedule.

"We in the House, we in the Senate must get together and we must do it this year," Issa said about a Postal Service overhaul.

But the Postal Service still faces a Congress that remains gridlocked on reform and preoccupied with other legislative priorities.

On Wednesday, Representative Elijah Cummings, the top Democrat on the oversight committee, questioned Issa's push for five-day delivery.

Instead, Cummings has introduced a bill that would create a new position for a chief innovation officer to develop more competitive products for the Postal Service.

It would also permit the Postal Service to provide non-postal services, such as check-cashing, warehousing and logistics and public Internet access as alternative ways to raise revenues. Cummings' bill would also delay the next payment into the healthcare prefund until 2017.

"If we reject extreme measures that harm postal workers, increase the Postal Service's debt and destroy existing services, I believe we can identify common-sense provisions that provide common-ground solutions," Cummings said.

(Reporting by Elvina Nawaguna; Editing by Karey Van Hall and David Brunnstrom)

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