I think the first step should be to cut delivery days, and not just Saturday, to significantly save on personnel costs. Snail mail 3 days a week (or less) should be fine in this digital age. There is no good logic for a taxpayer bailout. The postal service monopoly is not a good reason for this type of largess and waste.
One thing we'll say about federal bailouts—if you pay attention, you can usually see them coming a mile away. It was true of Fannie Mae and General Motors, and it's increasingly clear that the next candidate will be the U.S. Postal Service.
The odds of a multibillion-dollar rescue package went way up this week when Postal Service management reported a $2.2 billion loss for the first quarter, more than 25% higher than last year despite the economic recovery. It now appears that the $15 billion line of credit the feds have offered USPS will be used up by the end of this year, with low odds on ever being paid back.
Postal workers already enjoy a 30% to 40% edge in pay and benefits over comparably skilled private workers, according to the Postal Service's own economic analysis. Bureau of Labor Statistics data indicate the average hourly compensation for postal union members is $41 versus $28 for private industry. Postal workers also contribute far less than private workers and even less than other federal workers to cover health-care costs. Moving to pay parity—as well as shutting down thousands of outdated post offices and ending Saturday mail delivery—would do a lot to lower USPS losses.
Thanks to the digital revolution, mail can be delivered with the click of a mouse and snail mail will continue to slowly fade away. The obligation of postal management is to negotiate this inevitable transition while protecting taxpayers from another union raid.