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Postal Service To Cut Saturday Mail To Trim Costs

FILE - US Postal Service letter carrier Anthony Ow sorts through mail in the back of his delivery truck. (Photo by Justin Sullivan/Getty Images)

FILE – US Postal Service letter carrier Anthony Ow sorts through mail in the back of his delivery truck. (Photo by Justin Sullivan/Getty Images)

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NEW YORK (CBSNewYork/AP) – The U.S. Postal Service will stop delivering mail on Saturdays but continue to deliver packages six days a week under a plan aimed at saving about $2 billion, the financially struggling agency said.

In an announcement Wednesday, postmaster general and CEO Patrick R. Donahoe said the Saturday mail cutback will begin the week of Aug. 5.

Under the new plan, mail would still be delivered to post office boxes on Saturdays. Post offices now open on Saturdays would remain open on Saturdays.

The agency clearly thinks it has a majority of the American public on its side regarding the change.

Donahoe said Postal Service market research and other research has indicated that nearly 7 in 10 Americans support the switch to five-day delivery as a way for the Postal Service to reduce costs.

“Over the past few years, we’ve proposed moving to a five-day schedule for both mail and packages,” Donahoe said. “But our new approach is based on a great deal of customer input that we’ve heard over the course of the last six or seven months and it reflects a strong demand for package delivery on Saturdays and still enables the Postal Service to achieve significant cost reductions.”

But the president of the National Association of Letter Carriers, Fredric Rolando, said the end of Saturday mail delivery is “a disastrous idea that would have a profoundly negative effect on the Postal Service and on millions of customers,” particularly businesses, rural communities, the elderly, the disabled and others who depend on Saturday delivery for commerce and communication.

“It hurts the letter carriers because we are going to lose some positions,” Long Island letter carrier Thomas Sahl told CBS 2′s Jennifer McLogan.

New Yorkers had mixed reaction on the announcement.

“I don’t like that,” one woman said. “If I have something important, I’ll have to wait until Monday to get it.”

“I’m old school, I believe in the old way,” said one man. “Rain, hail, sleet or snow – they work, they get it done. Sometimes you need to cut back, but mail is not one of them.”

“They have to cut costs somewhere,” said another man. “It won’t bother me at all.”

“I think they need to be financially viable and I think it’s a great thing,” said another woman. “It’s about time.”

Some Long Island residents said they rely on Saturday delivery.

“I usually get my check in the mail on Saturday,” a Mineola resident told CBS 2′s McLogan.

A majority of Americans in a recent poll said they support the switch since they already use private shippers, e-mail, faxes and online banking to do their day-to-day correspondence.

Some Long Islanders told McLogan they think the Postal Service’s best days are behind it.

“I’m not sure how efficiently it’s run,” one man said.

Some in Mineola said they don’t want to lose their local branch.

“It’s really tough to close down local post offices, we rely on them,” one woman told McLogan.

“It would be a very big blow to the community,” another resident said.

Cornell University Professor of Policy and Management Richard Geddes is the author of the book, “Saving The Mail: How To Solve The Problems Of The U.S. Postal Service.” He said the one-day cutback in mail delivery will not fix the post office’s budget issues.

“This will not be enough to make the postal service sustainable for the long run,” Geddes told WCBS 880′s Wayne Cabot. “The Postal Service is now losing about $25 million every day.”

“I think even if they were to go to three days a week — say it was Monday, Wednesday and Friday — they still have to maintain this extensive delivery network. So I don’t think that would be the solution,” Geddes told Cabot. “Can we take the current extremely valuable assets, the real estate, the land, the buildings, the trucks, etc.. and use that in a more innovative way to raise the revenue?”

But Geddes said if the post office reorganizes where it’s generating its revenue, it can be sustainable in the long run.

“The U.S. Postal Service should survive and can survive and can provide effective, meaningful services,” Geddes said.

The Postal Service made the announcement more than six months before the switch to give residential and business customers time to plan and adjust, it said.

Over the past six years, the Postal Service has lost $41 billion as more people have switched from letters to e-mail and electronic banking.

“People do value the mail that they receive, however they do like to make their payments online and it has put a tremendous financial pressure on the Postal Service,” Donahoe said.

To save money, the agency has laid off 35 percent of its workforce and cut down hours of service at thousands of post offices.

Stopping delivery on Saturday is expected to save $2 billion, but it’s not enough to balance the books.

“It won’t come close to solving the Postal Service’s problems. It’s got to look at more fundamental changes in its infrastructure, its compensation costs, its retirement obligations,” said former GAO Comptroller David Walker.

The agency’s biggest problem, and the majority of the red ink in 2012, was not due to reduced mail flow but rather to mounting mandatory costs for future retiree health benefits, which made up $11.1 billion of the losses. Without that and other related labor expenses, the mail agency sustained an operating loss of $2.4 billion, lower than the previous year.

The health payments are a requirement imposed by Congress in 2006 that the post office set aside $55 billion in an account to cover future medical costs for retirees. The idea was to put $5.5 billion a year into the account for 10 years. That’s $5.5 billion the post office doesn’t have.

The Postal Service usually needs Congressional approval to make changes, but the agency said it has figured out a legal way to do it without lawmakers.

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(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)