U.S. Postal Service faces huge deficits

WASHINGTON, March 3 (UPI) -- The U.S. Postal Service could have a year-end shortfall of as much as $6.4 billion, the postmaster general said.

Postmaster General Patrick R. Donahoe told the House postal oversight committee Wednesday the agency suffers from "an inflexible business model" that would make it unable to pay its bills without legislative changes, CNN reported.

The postal service cut $3 billion in costs last year and will see an additional savings of about $2 billion this year, but it is crippled by pre-funded retiree medical benefits of $5.5 billion annually.

That payment is due by Sept. 30. Workers' compensation benefits in the amount of $1.2 billion are due in October.

Donahoe said the postal service will might be as much as $3 billion short of the amount needed for those payments.

He restated the postal service's request to cut mail delivery from six days a week to five. Donahoe said the postal service is earning less money from the delivery of first-class mail.

"Any business that takes this kind of monetary hit is destined to struggle, and the postal service is no different," Donahoe said.

Donahoe said the organization wants to improve customer service to better compete for the package delivery business and become a "leaner, faster and smarter organization."

He said the private agency would not seek a government bailout.