Obama deficit deal would slash USPS spending

Steve Chiotakis: The Federal Reserve is meeting today and tomorrow, talking about a new policy to keep interest rates low. It’s an effort to kick start the economy at a time when others in Washington are talking about the cutting the deficit.

Part of President Obama’s $19 billion deficit-cutting plan over the next ten years proposes to close post offices, ending one day of delivery,
and laying off tens of thousands of postal workers.

Marketplace Washington Bureau Chief John Dimsdale reports.

John Dimsdale: Financially, the Post Office is staggering from a one-two punch. Email and e-vites have replaced a lot of mail deliveries, and the slow economy has put a damper on corporate direct mail campaigns and junk mail.

The Postal Service lost $8 billion last year and isn’t doing any better this year. So the President is endorsing many of the postmaster general’s ideas for saving money. Closing post offices and mail handling facilities will cut labor costs by reducing employees.

But Bob McLean, a consultant for corporate users of the mail system, says Congress is unlikely to go along with Postal Service cuts.

Bob McLean: Doing that during a recession of course means the elimination of a lot of well-paying jobs for middle class citizens and most members of Congress, as you can imagine, during a recession the last thing they want to do is be the source of job cuts rather than job creation.

The president’s support for increasing the price of stamps is another idea that will take a licking in Congress.

In Washington, I’m John Dimsdale for Marketplace.