Postal Service losing billions

January 1, 2011 at 12:00a.m.

McClatchey Newspapers

PHILADELPHIA

If things had gone according to plan, postage stamps would be costing two cents more the day after New Year’s.

But things aren’t exactly going according to plan these days for the U.S. Postal Service, whose business has gone from booming to blown-to-bits in a few short years.

Just listen to Postal Service spokesman Greg Frey, a 30-year veteran in Washington, as he explains what’s at stake for the venerable agency, which got its start under Benjamin Franklin in 1775:

“We have extreme liquidity issues, and in spite of our best efforts to cut costs,” Frey said, pausing, “we just are struggling here.”

Frey enunciated those last five words slowly, and with audible discomfort, a few days ago as he laid out the reasons why the Postal Service is appealing a September decision by regulators to reject its proposed 2011 rate increases for first-class mail and postcards.

For consumers dizzy from increases that have taken stamps from 33 cents in 1999 to 44 cents in 2009, rejection of the rate increase may seem like a relief. The Postal Service was seeking to raise the price to 46 cents, effective Jan. 2.

But consider how dire things are at the Postal Service, and that smile vanishes as fast as postal revenue turns to invisible ink.

On the table now is a plan to reduce mail deliveries to five days a week instead of six. Hundreds of thousands of postal jobs have disappeared over the past few years as part of drastic cost-cutting. And government-mandated payments toward retirees’ health benefits are in jeopardy in 2011 as postal officials scrounge for money.

There have been building consolidations, too, Frey said. But even emptying out a spectacular piece of Philadelphia real estate like the 30th Street Post Office in September 2008 was far from sufficient.

It’s hard to forget the scene at its puny, basement-level replacement in Philadelphia the week before Christmas: Forlorn faces in a snaking line, being told by only two clerks that the place would be closed for the day in 20 minutes, whether they had been served or not.

When you need business so badly, should you be telling your customers that?

During the next decade, the Postal Service expects a $238 billion shortfall. You can thank the World Wide Web — with such spawn as online billing and online payments for your electric and credit-card bills — for greasing the slide to Crisisland.