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House panel passes bill to cut back mail delivery

A view shows U.S. postal service mail boxes at a post office in Encinitas, California in this February 6, 2013, file photo. REUTERS/Mike Bla
A view shows U.S. postal service mail boxes at a post office in Encinitas, California in this February 6, 2013, file photo. REUTERS/Mike Bla

By Elvina Nawaguna

WASHINGTON (Reuters) - A House of Representatives committee advanced a bill to end Saturday delivery of first-class mail and eliminate direct-to-door delivery to help the struggling U.S. Postal Service shave costs. But the plan faces stiff opposition in the Senate.

The House Oversight and Government Reform Committee voted 22-17, along party lines, late on Wednesday to send the bill to the full Republican-led House. But if it passes there, Democrats who lead the Senate have said they would oppose service cuts.

Most lawmakers agree Congress must do something to help the Postal Service, which lost $16 billion last year because of dwindling mail volumes and massive payments into its future retirees' health fund.

The Postal Service, which does not receive tax dollars, has said it could need a taxpayer bailout of nearly $50 billion by 2017 if it doesn't get permission from Congress to overhaul its business. The agency wants to cut $20 billion in costs by 2017.

The bill, introduced by Republican Representative Darrell Issa, the committee chairman, revives a previously defeated plan to move to five-day delivery of first-class mail to save about $2 billion annually, but continue Saturday delivery of packages and pharmaceutical drugs.

The bill would also convert all homes and business deliveries to either curbside or neighborhood clusterbox delivery. It includes a waiver for people with extreme hardship and an option to pay extra for continued door delivery.

Direct-to-door delivery costs the Postal Service about $353 per address each year. Curbside delivery costs $224, and cluster boxes cost $160 per address.

Eliminating door delivery, Issa said, would save the agency $4 billion annually. The Postal Service has already phased out direct-to-door delivery for newly built homes.

The bill also addresses the massive payments the Postal Service must make into a fund for its future retirees' healthcare. It would allow the agency to forego past due payments and postpone payments until 2015. The agency expects to default on its next installment of $5.6 billion due in September.

Democratic Representative Elijah Cummings said the bill would hurt Postal employees by intruding on negotiations between the Postal Service and the unions. The National Association of Letter Carriers said the bill would worsen the Postal Service's financial troubles by degrading service and driving customers to alternatives.

The Greeting Card Association, which supports Issa's plan for clusterbox delivery and reviewing the heavy healthcare prefunding requirement, opposes other parts of the bill such as eliminating Saturday delivery, said Rafe Morrissey, GCA's vice president of postal affairs.

The Postal Service said it would evaluate Issa's legislation and determine whether it would do enough to provide the flexibility it needs to reform its operations.

(Reporting by Elvina Nawaguna; Editing by Karey Van Hall and Vicki Allen)

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