Unions object to parts of postal rescue plan

WASHINGTON (CNNMoney) -- Union groups don't like big parts of a new bipartisan proposal in the Senate to save the U.S. Postal Service that would cut services and workers.

The new legislation announced Wednesday would, among other things, help the cash-strapped Postal Service by allowing the agency to tap a $6.9 billion overpayment to the Federal Employment Retirement System to relieve its pressing financial crunch.

The Senate panel that oversees the postal service, the Homeland Security and Governmental Affairs Committee, will consider the proposed deal to save the Postal Service next Wednesday.

But union groups oppose moves that would cut benefits and downsize the Postal Service to save it, especially the proposal to allow a cut to Saturday service after two years and a study is completed.

A coalition of 13 unions, including a few who don't represent postal workers, also say they oppose a part of the plan that would scale back workers' compensation benefits for retirement-age workers who get injured on the job. Workers' compensation changes would be aimed at future employees, according to a summary of the deal.

"Having lost the ability to continue earning a salary and retirement credits, these disabled federal and postal workers would have their workers' compensation benefits reduced just for becoming elderly," according to the letter signed by all the major postal worker employee unions to lawmakers.

Overall, the Postal Service is in a bind. Mail volume is down more than 20% over the past four years and losses have topped $20 billion.

The more pressing deadline: The Postal Service has until Nov. 18 to make a $5.5 billion payment that's due to its retiree health care fund. It's poised to default.

The bipartisan deal would make it so the Postal Service wouldn't have to worry about pressing health care deadlines by giving it more time to make payments due to its retiree health care benefit fund.

Additionally, the Senate proposal would also offer up to $25,000 in cash buyouts or up to two years of service credits toward retirement for experienced employees near retirement. If 100,000 workers take the buyout, it could save $8 billion, according to the U.S. Postal Service.

Another big part of the deal under fire: measures that could lead to the end of six-day-a-week service.

The unions point to a Postal Regulatory Commission report that says cutting Saturday service would only save 2% of the budget and require the agency to abandon 17% of its services, warning that "someone will fill the vacuum."

"Saturday delivery is important for small businesses, most of which are open on Saturday (and which create two-thirds of all new jobs), as well as many other groups including the elderly, rural and those who need weekend delivery of medicines," said Fredric Rolando, president of the National Association of Letter Carriers, which represents 280,000 postal employees.

Postal unions have also been generally opposed to any recommendations that could lead to employee layoffs.

Lawmakers behind the first major Senate bipartisan proposal to save the Postal Service include Sen. Tom Carper, a Delaware Democrat who runs the panel that oversees the U.S. Postal Service, Sen. Joseph Lieberman, a Connecticut independent who caucuses with Democrats, as well as Republican Senators Scott Brown of Massachusetts and Susan Collins of Maine.

In the workers' compensation changes, future employees who are injured on the job would continue to get two-thirds of their salary. But when they reach retirement age, then they'd only get 50% of their salary at the time of their injury.

A spokeswoman for Sen. Collins pointed out that President Obama offered similar changes to workers' compensation benefits in his proposal to save the post office.

Congress still needs to consider the plan to save the postal service, which has yet to be fully reviewed by House Republicans or the White House.

House Republicans have been working on a bill offered by Rep. Darrell Issa of California. The bill would also end Saturday service, ban the post office from promising no layoffs to new employees, and create panels -- resembling the ones convened to close military bases -- to study and recommend which post offices should be closed.

Issa said through a spokesman this week that he was reviewing the Senate bill and applauded "recognition that the Postal Service requires a fundamental restructuring."