September 07, 2011|By Ed O’Keefe, Washington Post

WASHINGTON - The White House said yesterday it will include a financial rescue plan for the US Postal Service in a broader $1.5 trillion deficit reduction package it is due to send to Congress in the coming weeks.

In advance of those recommendations, the Obama administration is asking lawmakers to give the Postal Service a 90-day extension to pay billons of dollars in mandatory annual retirement payments due at the end of its fiscal year on Sept. 30.

If approved, a delay would buy time for Congress, the White House, and postal officials to draft a package of reforms for the cash-strapped delivery service, whose leader warned again yesterday that it is teetering on the brink of financial collapse and likely to go broke within a year.

“I’m operating right now with a week’s worth of cash,’’ Postmaster General Patrick Donahoe warned senators. The Postal Service’s weekly costs total about $1 billion, he said.

USPS could post a $10 billion loss for its fiscal year, Donahoe said, as mail volume continues to drop.

The White House declined to detail what a postal rescue package might include, but one senior administration official said the plan would be “consistent with the Postal Service’s mission and its obligations to all of its stakeholders, including its workers.’’ The official spoke on the condition of anonymity because the official was not authorized to speak publicly on the issue.

The Postal Service’s pleas for help have become an annual occurrence on Capitol Hill and usually result in no changes. But lawmakers said yesterday that they are willing to address the issue in a meaningful, bipartisan fashion.

Senator Joseph Lieberman, a Connecticut Independent who chaired yesterday’s Homeland Security and Governmental Affairs Committee hearing on the issue, said his panel would draft legislation to address the concerns.

Two of the panel’s members, Senators Thomas Carper, Democrat of Delaware, and Susan Collins, Republican of Maine, are pushing competing proposals, but both signaled yesterday that they are willing to collaborate on a plan.

Carper’s bill would give the Postal Service the flexibility to cut Saturday mail deliveries, close thousands of post offices, and give USPS access to money it has overpaid for decades to federal retirement funds.

Collins, who opposes curtailing mail deliveries because of potentially adverse effects on rural and far-flung areas, wants to overhaul the Postal Service’s payments to prefund future retiree benefits, which cost USPS about $5.5 billion annually.

In the House, Representative Darrell Issa, Republican of California, is pushing for changes that would end Saturday mail and allow post offices to close, but that would also establish a financial control board to overhaul postal finances if USPS defaults on its payments.

The Postal Service is a self-funding entity drawing revenues from the sale of stamps and shipments, but its workers draw benefits from the federal government’s health care, retirement, and workers’ compensation funds.

Office of Personnel Management director John Berry, who oversees the health care and retirement funds, said Congress should carefully study a Postal Service proposal to withdraw from the federal health care and retirement funds to save money.

Postal “employees and retirees are well-served by the existing health benefits program and retirement system,’’ he said.

In addition to structural reforms, Senator Claire McCaskill, Democrat of Missouri, suggested that USPS should mount a national advertising campaign promoting the value of printed mail.

“You cannot get money by text message,’’ McCaskill said. “I really think that there is a longing out there right now, especially in these uncertain times, for some of the things that have provided stability over the years.’’

Donahoe said a campaign is in the works. Aides said it will debut for the holiday shopping season.

Lieberman voiced his support, suggesting, “We should be writing more passionate letters to those we love.’’

McCaskill agreed. “I’m going to go back to my office and write one to [House Speaker John] Boehner,’’ she joked.