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Postal Service could start shipping alcohol under Senate proposal

U.S. postal workers load their trucks with mail for delivery from their postal station in Carlsbad, California February 6, 2013. REUTERS/Mik
U.S. postal workers load their trucks with mail for delivery from their postal station in Carlsbad, California February 6, 2013. REUTERS/Mik

By Elvina Nawaguna

WASHINGTON (Reuters) - The cash-strapped Postal Service could tap a rich new revenue stream if Congress adopts the idea of two senators who want to allow it to ship alcohol, a business reserved for more than a century for its private competitors.

The two Republican and Democratic senators late on Thursday introduced legislation to change a 1909 law that prohibits the Postal Service from shipping alcoholic beverages. The ban started a decade before prohibition-era laws made producing, selling and transporting alcohol illegal across the country.

Senate Homeland Security and Governmental Affairs Committee Chairman Tom Carper, a Delaware Democrat, and the panel's senior Republican, Tom Coburn of Oklahoma, jointly sponsored the legislation, whose main purpose is to help the Postal Service tame its runaway finances.

"If it were to shut down, the impact on our economy would be devastating," Carper said. "With the right tools and quick action from Congress, the Postal Service can reform, right-size and modernize."

Supporters of Postal Service reform argue that the 238-year-old mail carrier is stuck in an outdated business model, whose problems include private competitors United Parcel Service Inc and FedEx Corp. The mail-carrier lost nearly $16 billion last year and without action, some expect it to run out of money by October.

The Postal Service estimates alcohol shipments could bring in up to $50 million annually, a spokesman said.

Coburn called the proposal "a rough draft" and hoped it would be part of a solution that "will protect taxpayers and ensure the Postal Service can remain economically viable while providing vital services for the American people."

The senators hope to hold hearings on the Postal bill after Congress returns in September from a month-long recess, but with intense budget and debt ceiling discussions expected in the fall, it is unclear what attention the Postal Service will get.

Much of the Postal Service's financial troubles stem from a 2006 congressional mandate to prefund up to 75 years of its future retirees' healthcare over 10 years. Mail revenues have also dwindled as more Americans prefer to use Internet and email communications.

Carper and Coburn's bill includes other provisions such as replacing the current prefunding requirement with a new plan spread over 40 years.

The agency already has defaulted on two payments to that health fund and expects to default on its next payment of $5.6 billion due at the end of September.

The House Oversight Committee Chairman Darrell Issa, a California Republican who has pushed for Postal Reform, said he will work with the two senators. He introduced a bill last month that would ease the healthcare prefund payments, cut Saturday delivery of first class mail and completely eliminate door-to-door delivery.

The Postal Service said it is evaluating whether both the Senate and House bills would enable it to save the $20 billion by 2017 it needs to prevent a taxpayer bailout.

(Reporting by Elvina Nawaguna; editing by Jackie Frank)

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