The U.S. Postal Service is gearing up for some big changes following its loss of $16 billion last year - beginning on Aug. 1, the service will not deliver first-class mail on Saturdays.
The postmaster general will make the announcement on Wednesday, for the plan that would only cut first-class mail - packages, mail-order medicines, priority and express mail would still be delivered on Saturdays, CBS News reported.
The measure is expected to save $2 billion for the postal service, tired of waiting for Congress to help with its monetary struggles. It's only a small help compared to the $16 billion lost, but it is sorely needed, Patrick Donahoe, postmaster general and CEO of the postal service told CNN Money.
"It's a responsible decision," he said. "It makes common sense."
Donahoe noted to CNN Money that the move would impact 22,500 jobs, which would not be achieved through layoffs. Instead, he would offer buy outs, eliminate overtime and rely more on the part-time workforce, according to CNN Money. Post offices that normally are open on Saturdays will still be - and mail will still be delivered to PO boxes.
Over the past six years, the Postal Service has lost $41 billion dollars while many Americans use private shippers, email and online banking instead, CBS reported.
Although technological advances have led to less first-class mail deliveries, the biggest problem for the postal service is a 2006 congressional mandate that requires the service to pre-fund healthcare benefits for future retirees. To make up for the shortfalls, the USPS has been borrowing billions of dollars from taxpayers, CNN Money reported.
Last year, the agency struggled significantly, defaulting twice on payments totaling $11 billion and exhausting a $15 billion line of credit from the U.S. treasury, according to CNN Money.
Many post offices have experienced significant cuts, CNN Money reported, with some only open two hours each day, and certain office locations merged with others. Service hours were cut at 26,000 offices, and the overall workforce was trimmed by 35 percent, CBS reported.
If Congress doesn't take action, the Postal Service could be nearly out of cash next month - and according to a report last year, by mid-March, the agency would be down to about $1 billion in cash, barely enough to keep it running for four days, CNN Money reported.
But Sen. Coburn, R-Okla, said he doesn't think the service is cutting its Saturday first-class deliveries as a means to prompt Congress to act.
"No, I don't think so at all," he told CBS News. "Look, they're in survival mode. You're not going to have any post office. I mean, here's the alternative: They're losing $25 million dollars a day. A day. They have to do something."
The gravity of the situation prompted Donahoe to announce he was going to his board to speed up cost-cutting measures, CNN Money reported. Meanwhile, Rep. Darrell Issa, a California Republican, and Sen. Tom Carper, a Delaware Democrat, are teaming up to consider solutions, according to CNN Money - but they have yet to share specific details on their plans.
But the unions take issue with the agency's cost-cutting measures.
"USPS executives cannot save the Postal Service by tearing it apart," the American Postal Service Workers Union said in a statement issued to CNN Money. "The USPS has already begun slashing mail service by closing 13,000 post offices or drastically reducing hours of operation, shutting hundreds of mail processing facilities, and downgrading standards for mail delivery to America's homes and businesses. The effects are being felt in cities and towns across the country."
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