Deficit, Yet Bonuses, at Post Office

The U.S. Postal Service is facing a $2-billion deficit this year, yet the postmaster general has told top managers they could see performance bonuses of up to 25% of their salaries.

“This year our productivity is up,” Postmaster General John Potter said in a letter to 900 senior executives. “By pulling together, we can minimize our loss and earn additional pay for the performance achieved.”

The USPS was criticized earlier this year when it paid out $197 million in bonuses, or incentives as the Postal Service calls them, despite a $199-million deficit for last year. But this would be the first time the agency, a self-supporting government monopoly, would be granting bonuses in the face of such monumental deficits.

“It would be the biggest mistake the Postal Service could ever make,” said Gene Del Polito, president of the Assn. for Postal Commerce, which represents direct-marketing and catalog companies. “You cannot raise rates, run deficits and at the end of the day, tell people you’re going to give bonuses. If they wanted to kill the prospect that Congress would ever attend to their needs, this would do it.”

The Postal Service has increased postage rates twice this year, but USPS officials are still projecting a deficit of $1.6 billion to $2.4 billion, blaming higher fuel costs and increasing competition from online services. It considered cutting Saturday delivery but retreated when Congress balked.