Consumer Federation of California

The beleaguered U.S. Postal Service backed down from its cost-saving plan to eliminate Saturday mail delivery, acknowledging that Congress barred a move that supporters said was essential to addressing the agency’s dire financial condition.

Despite the retreat, the governing board said Wednesday that it’s not possible for the Postal Service to meet its goals for reduced spending without altering the delivery schedule. Delaying "responsible changes," the board said, only makes it more likely that the Postal Service "may become a burden" to taxpayers.

The Postal Service said in February that it planned to switch to five-day-a-week deliveries beginning in August for everything except packages as a way to hold down losses.

But that announcement was a gamble. The agency essentially was asking Congress to drop from spending legislation the longtime ban on five-day-only delivery. Congress did not do that when it passed a spending measure last month.

"By including restrictive language … Congress has prohibited implementation of a new national delivery schedule for mail and package," the postal Board of Governors said in a statement Wednesday.

The board said it was disappointed by the congressional action, but would not disregard the law. It directed the Postal Service to delay putting in place the new delivery schedule until Congress passes legislation that gives the agency "the authority to implement a financially appropriate and responsible delivery schedule."

The board made the decision in a closed meeting Tuesday.

Officials said that to restore the service to long-term financial stability, the agency must have the flexibility to reduce costs and come up with new revenues.

"It is not possible for the Postal Service to meet significant cost reduction goals without changing its delivery schedule ‘ any rational analysis of our current financial condition and business options leads to this conclusion," the board statement said.

An independent agency, the service gets no tax dollars for its day-to-day operations but is subject to congressional control. It lost nearly $16 billion last year ‘ $11.1 billion of that due to a 2006 law Congress passed forcing it to pay into future retiree health benefits, something no other agency does.

"Given these extreme circumstances and the worsening financial condition of the Postal Service, the board has directed management to seek a reopening of negotiations with the postal unions and consultations with management associations to lower total workforce costs, and to take administrative actions necessary to reduce costs," according to the statement. It offered no giving further details.

It said the board also asked management to look at further options to raise revenues, including a rate increase.

The Postal Service already is executing a major restructuring throughout its retail, delivery and mail processing operations. Since 2006, it has reduced annual costs by approximately $15 billion, cut its workforce by 193,000 or 28 percent, and consolidated more than 200 mail processing locations.

GOP Rep. Darrell Issa of California, chairman of the House Oversight and Government Reform Committee, said he was disappointed in the change of plans announced Wednesday and noted that polls show a majority of people support the reduced delivery schedule.

"This reversal significantly undercuts the credibility of Postal officials who have told Congress that they were prepared defy political pressure and make difficult but necessary cuts," Issa said in a statement.

"Despite some assertions, it’s quite clear that special interest lobbying and intense political pressure played a much greater role in the Postal Service’s change of heart than any real or perceived barrier to implementing what had been announced."

Sen. Tom Carper, a leader on postal issues, said he hoped Congress would pass new legislation to address the agency’s problems.

"Even though today’s decision by the Postal Service’s Board of Governors delays its controversial proposal, the urgent need for the administration and Congress to work together to save the Postal Service by making hard decisions and tackling controversial issues like Saturday delivery remains," Carper, D-Del., said in a statement.

Over the past several years, the Postal Service has advocated shifting to a five-day delivery schedule for mail and packages, and it repeatedly but unsuccessfully has appealed to Congress to approve the move.

The idea to cut mail but keep six-day package delivery played up the agency’s strong point. It’s package service is growing as more people buy things online, while the volume of letters sent has slumped with increased use of email and other internet services.

The Senate last year passed a bill that would have stopped the postal service from eliminating Saturday service for at least two years and required it to try two years of aggressive cost cutting instead. The House didn’t pass a bill.