Postmaster: Money woes behind rate hike request

WASHINGTON (AP) — Postmaster General Patrick Donahoe said Thursday the Postal Service had no choice but to ask for an emergency

rate hike given the agency's dire finances.

One day after his cash-strapped agency proposed raising the first-class stamp price to 49 cents, Donohoe urged swift action

by Congress to overhaul the Postal Service and fix its finances.

The post office expects to lose $6 billion this year. It wants to raise stamp prices by 3 cents next year. The request must

be approved by the independent Postal Regulatory Commission.

"We did not want to take this step, but we had no choice due to our current financial position," Donahoe said.

Donahoe appeared before the Senate Homeland

Security and Governmental Affairs Committee to press for approval of


legislation that would allow his agency to end Saturday delivery

after one year and cease door-to-door delivery for new residential

and businesses addresses. Many lawmakers and postal worker unions

say the delivery changes would inconvenience customers.

"The choice is simple: greater flexibility and authority now, or massive taxpayer exposure and service degradation later,"

Donahoe said.

Donahoe noted that his agency's request for a price hike probably won't be decided for three months, a delay that he said

hampers the Postal Service's ability to run an efficient and competitive business.

"That's not a good environment to be in when you are fighting for your life," he said.

The bill would also change how health costs for future retirees are calculated. The Postal Service is seeking to reduce its

$5.6 billion annual payment for future retiree health benefits. It missed two of those payments in 2012, one deferred from

the previous year, and is expected to miss another at the end of this month, when its fiscal year ends.

"There is no single easy solution to this

problem," said the panel's chairman, Sen. Tom Carper, D-Del., who

sponsored the

legislation along with the committee's ranking Republican, Sen.

Tom Coburn, R-Okla. "It's been a problem years in the making

and will take years to fully address. But with urgent action from

Congress, the collapse of the Postal Service is avoidable."

Coburn said he was optimistic that the Senate could reach a compromise bill.

"We're going to solve the problem; we're going to get a bill," Coburn said.

The House Oversight and Government Reform Committee approved a bill this year that would allow the Postal Service to gradually

shift from door-to-door delivery to cluster box and curbside delivery. No Democrats voted for the measure.

The bill, introduced by the chairman, Rep. Darrell Issa, R-Calif., also would end Saturday delivery and change how pension

and retiree health costs are calculated.