Postmaster General Patrick Donahoe faces a Senate panel on Wednesday.
WASHINGTON (CNNMoney)
Last week, Donahoe announced Saturday delivery of most mail will end after Aug. 5, although packages and deliveries to post office boxes would continue.
Appearing before the Senate Committee on Homeland Security and Governmental Affairs, Donahoe defended the cuts to Saturday delivery as part of a broader effort to stem the bleeding at the agency, which just reported a $1.3 billion loss for the three months ended Dec. 31. Other cost-cutting moves the agency is pursuing include cutting post office hours, consolidating postal plants and creating its own healthcare program for employees.
"We must take courageous, aggressive and, yes, sometimes controversial steps now to ensure a reliable Postal Service for our customers and a bright future for our employees," Donahoe said in his prepared testimony.
Critics, unions and some lawmakers have questioned whether the Postal Service has the power to end Saturday delivery without Congress' OK. In the past, the agency said federal law prevented such a move.
But last week, Donahoe insisted agency officials were confident they could make the move on their own.
"We urge Congress to take no action that would prohibit the change to five-day mail delivery," Donahoe said in his testimony.
The key culprit for the Postal Service's woes has been a 2006 congressional mandate requiring it to pre-fund healthcare benefits for future retirees. The USPS has been borrowing billions of dollars from taxpayers to make up for the shortfalls.
At the same time, technological advances have led to a decline in first-class mail, which most consumers use to pay bills and stay in touch.
Donahoe is expected to stress that resolving the "prefunding requirement alone will not fully address the problem," at the Postal Service.
He'll point to a drop in first-class mail by 40% over the past 5 years.
But union chiefs will argue the Postal Service could fix its problems by hiking rates on first-class mail and getting rid of its prefunding mandate. They oppose moves to cut service, such as on Saturdays, that would drive more customers away.
"The USPS has already made deep cuts to service; slashing service further will only weaken this great institution, make it less relevant and less competitive," said Cliff Guffey, president of the American Postal Workers Union, in prepared testimony.
The Postal Service is, by law, an independent establishment of the executive branch. The agency doesn't normally use tax dollars for operations, but it has exhausted a $15 billion loan from Treasury. 
First Published: February 13, 2013: 10:03 AM ET
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