Postal Service: Next for a bailout?

GRANDVIEW, Ohio - The temperature is 12 degrees below zero. Snow crunches under Shawn Carter's boots. Yet the 13-year veteran mail carrier trudges on, as he does every day, delivering various forms of paper to 400 homes and businesses.

"My bag doesn't feel any lighter," says Carter, 35, warmed by five layers of clothing. "But I know things are changing."

These days, the check isn't in the mail. It's increasingly on the Internet - and that's bad news for the U.S. Postal Service. Electronic communication and a withering economy have pushed the Postal Service into its worst financial crisis since Benjamin Franklin founded the institution in 1775.

The Postal Service has lost $7.9 billion in the past two years. It has borrowed money to pay its bills. Mail volume fell 4.5 percent last year and the Postal Service expects a bigger drop this year. Last week, the agency asked Congress for permission to consider reducing delivery from six days a week to five.

Most Americans realize the Postal Service they've known for generations has to change. A new USA TODAY poll indicates that most support cutting back mail services - closing post offices, trimming deliveries from six days a week to five - rather than raising stamp prices or using taxpayers' money in a huge bailout.

"We have to make adjustments quickly to keep the ship afloat," Postmaster General John Potter says. "We have to weather the storm of the bad economy first and figure out how traditional mail fits into an electronic world."

The Postal Service has withstood challenges from the telegraph and telephone. It has adapted to stagecoaches, railroads, airplanes and other innovations that quickened the pace of American life.

Now, it's facing a range of modern problems that could cause it to run out of cash this year or early next.

"The last thing we want to do is not be able to make payroll and provide service to the American people," Potter says.

The Postal Service's biggest challenge: the cost of providing health care to current and future retirees. Its $53 billion obligation is greater than those of the Big Three automakers. The service owes its retiree health fund $7.4 billion this year.

"We have all types of legacy issues - work rules, routes that need to change, the health fund - that need to change for us to change with the times," Potter says.