Postal plan: Slower delivery, 28,000 jobs lost

WASHINGTON (CNNMoney) -- The U.S. Postal Service on Monday announced a $2.1 billion cost savings proposal that would result in the end of next-day service for regular mail and the loss of about 28,000 postal worker jobs.

The financially troubled agency officially proposed the change to its regulator, changing its national standard for regular first-class mail -- mail that requires a 44-cent stamp for the first ounce -- to two to five days from the current one to three.

The measure is tied to a plan to slash hundreds of mail processing facilities, which would mean that 28,000 postal workers could be out of a job by the end of next year.

Officials say the move is necessary to preserve the future of the U.S. Postal Service, which is on the brink of insolvency. The changes are being proposed to address an estimated 47% drop in regular mail expected over the next 10 years.

Regular first-class mail tends to pay most of the U.S. Postal Service's bills, according to Postal Service Network Operations Vice President David Williams.

"We can't sit back and wait for another 6 to 10 years to make these changes," Postmaster Patrick Donahoe said.

If the Postal Service gets its way, regular mail would no longer be delivered the next day as early as April. And most of the 250 mail processing facilities on the list would be closed next year.

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Right now, consumers on average receive regular first-class mail the day after it was mailed, according to the Postal Service. After the changes, first-class letters that used to arrive the next day, would now take about two days. And letters that used to arrive within two days would take three days or more, Williams said.

"We have to make this change for the postal service to become financially viable," Williams said.

The proposed rules are not a big surprise. The postal service asked for public comment in September on "eliminating the expectation of overnight service" for regular mail.

But the moves could have a major impact on consumers, especially those who still use the mail to pay their bills.

The Postal Service has racked up $5.1 billion in debt this year and faces a deadline to make another $5.5 billion payment to its health care retirement fund on Dec. 18.

Lawmakers in the House and Senate are working on different bills to save the postal service.

The talk of the impending cuts to service and jobs hasn't gone over well in Congress so far.

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Rep. Peter DeFazio, an Oregon Democrat, was so angry about the news of cuts he suggested in a House floor speech on Monday that "this so-called postmaster general should be fired because of a lack of any imagination or initiative," especially when it comes to laying off postal workers.

"One hundred thousand people laid off! Oh, that's just what we need in America today -- let's lay off 100,000 people. Great idea!" DeFazio said on the House floor, referencing a related plan by the Postal Service to shrink its work force by 120,000 jobs by 2015.

The Postal Service can't cut jobs in those numbers unless Congress gives it the power to break union contracts.

Sen. Tom Carper called the proposed cuts to mail plants and the slowdown of regular mail "less than ideal." But without congressional help, the Postal Service has been forced to "take matters into their own hands," said Carper, a Delaware Democrat who runs the Senate panel that oversees the service.

House Rep. Darrell Issa, a California Republican, said the postal service has known they've needed to reduce mail processing operations since 1964.

"Had USPS acted earlier, savings could have almost certainly been achieved without any impact on service," Issa said. "USPS needs to embrace comprehensive reform legislation to return to solvency."

Cutting back on next-day delivery of regular first-class mail would help make the mail processing system more efficient, postal officials said.

Right now, the Postal Service runs mail processing equipment about six hours to six and a-half hours a day, on average, Williams said. The goal is to run the equipment 16 to 20 hours a day, Williams said.

But, the cuts are quite controversial.

As a part of the cost-savings plan, Postal Service proposed in September to cut 252 mail processing plants. Generally, they'd like to bring the number of mail processing facilities down to under 200 from the 463 that exist today.

Since that September announcement of possible closures of mailing facilities, the agency has already closed 26 that were not on the list of possible closures.

Unions have opposed any moves that degrade the quality of mail service and, as a result, lose customers. They'd like Congress to solve the agency's cash crunch by relieving it from the burden of having to make multi-billion dollar payments to a fund for future health care retiree benefits.

The postal service and the unions are deep into negations on union contracts, which are scheduled to expire on Dec. 7. Both postal officials and unions say those contracts may include some cost-cutting measures.