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Donahoe Trades Blame With Congress Over Postal Finances

April 17 (Bloomberg) -- U.S. Postmaster General Patrick Donahoe today blamed Congress for not helping to stem billions of dollars in losses while the top House member overseeing the service pointed back, saying management is responsible.

Donahoe, in testimony for a House oversight hearing, said congressional gridlock on a bill to overhaul the Postal Service’s business model is worsening the agency’s financial situation, following a $15.9 billion loss in the 2012 fiscal year.

He called on Congress to ease a requirement that it pre-fund future retirees’ health-care benefits, which the service and its unions blame for most of the losses, and to let the service exit the health plan covering U.S. government workers in favor of setting up its own.

Representative Darrell Issa, the California Republican who had backed Donahoe’s plan to end Saturday mail delivery over objections of much of Congress, countered by saying the Postal Service has itself to blame for its financial predicament.

“You would think given this sobering financial reality, senior management would be utilizing every tool available to cut costs and increase revenue,” Issa, chairman of the House Oversight and Government Reform Committee, said in a statement prepared for the hearing.

“Instead, little action has been taken,” he said. “The Postal Service has developed this pattern of saying the right thing, but then delaying reforms, scaling them back or just scrapping them entirely.”

Nine Days

Issa urged the service to accelerate closings of mail-processing plants, a change other lawmakers have protested. Yesterday, Montana Democratic Senators Jon Tester and Max Baucus proposed a bill that would make it harder to close post offices in rural areas.

The service is losing about $25 million a day even after cutting 25,000 jobs this year, Donahoe said. Last week, management was ordered by its board to halt plans to end Saturday mail delivery starting in August, after Congress put language in a temporary funding bill preventing such a move.

The Postal Service has only enough cash on hand to cover nine days of operating expenses, Donahoe said in his prepared testimony.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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