WASHINGTON (CNNMoney) -- President Obama on Monday unveiled a plan to save the U.S. Postal Service and its employees from insolvency -- a plan that includes the possible end of Saturday mail service.
The White House plan, which is part of a larger proposal to cut $3 trillion from deficits over the next decade, would first allow the U.S. Postal Service to use $7 billion from an overfunded pension account to avoid financial collapse.
It would also give the agency more breathing room by postponing a giant $5.5 billion payment due to a health care retiree fund in two weeks, as required by law.
Then it would also allow the U.S. Postal Service to bypass its regulatory commission to give it the option to raise stamp prices 2 cents to 46 cents for a first-class letter. It would also give the post office the green light to slash Saturday mail service.
Congress would need to pass the measures in the White House plan.
The White House also, for the first time, came out strongly against any efforts to allow the postal agency to void union contracts to lay off 120,000 postal workers, as proposed by the Postal Service in its own cost-cutting plans. Instead, the White House would have the Postal Service use some of the $7 billion from its over-funded pension to offer incentives and buyouts for employees near retirement.
"The plan would provide short-term relief for the postal service and take off the handcuffs to do some more of the structural reforms that are needed to get it on a more sustainable course," said a senior administration official in a briefing with the media on Monday.
Overall, the moves would free up $20 billion in cash for the next few years, according to the White House's budget office.
And if the Postal Service cuts Saturday service, raises stamp prices and makes payments to its retirement health care fund on an as-needed basis, the proposal would cut federal deficits by $18.6 billion by 2021, according to the White House's budget office.
Tom Carper, a Democratic Senator from Delaware who runs the subcommittee that oversees the post office, praised the president's proposal, saying the White House endorsed some of his own recommendations.
"The President's proposal would help the Postal Service update its business model to reflect Americans' changing communications habits and address some of the financial burdens," Carper said in a statement.
But Republicans pounced on the White House plan, especially the part about using the $7 billion from its extra contributions to the pension program.
"The President's proposal is not what taxpayers or the Postal Service needs," said Rep. Darrell Issa, a California Republican who runs the House Oversight Committee. "Rather than backing an effort to seek fundamental reform, the accounting gimmicks used in the plan are a thinly veiled attempt to offset continued operating losses with a taxpayer-funded bailout."
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.60%||3.68%|
|15 yr fixed||2.73%||2.79%|
|30 yr refi||3.64%||3.72%|
|15 yr refi||2.77%||2.82%|
Today's featured rates:
|Latest Report||Next Update|
|Home prices||Aug 28|
|Consumer confidence||Aug 28|
|Manufacturing (ISM)||Sept 4|
|Inflation (CPI)||Sept 14|
|Retail sales||Sept 14|