WASHINGTON — Postmaster General John Potter is trying to think outside the mailbox.
"We have a network of 37,000 retail outlets. America loves them, and we want to keep as many open as possible, but we cannot just sell stamps in them," he told a Senate panel Thursday.
The Postal Service said Wednesday that it has lost $4.7 billion so far this year and expects to be $7 billion in the red by the end of the fiscal year because of the recession and the movement of letters and bills to the Internet.
"Our situation is more tenuous than ever, Potter told the Senate Homeland Security and Governmental Affairs Federal Financial Management Subcommittee.
As a result, he suggested cutting Saturday service, explaining, "It is the lowest-volume delivery day, but with the same level of fixed costs as other delivery days." What's more, he said, "Most business and professional offices are open Monday through Friday, with many closed on Saturday."
Killing Saturday delivery would save the agency $3 billion a year, he said. Six-day-a-week delivery was mandated in the Postal Accountability and Enhancement Act of 2006, however, and ending Saturday delivery would be controversial.
Senators vowed to help the 234-year-old institution, but some said they opposed Saturday cuts.
"Is this really the right response to this crisis?" asked Sen. Susan Collins, R-Maine. "The Postal Service cannot expect to gain more business if it is reducing service."
Potter said post offices would be kept open on Saturdays because that is the only day many people are free to go to these facilities. Mail still be would delivered to post office boxes on Saturdays, he said.
Several hundred post offices are being studied for possible closure, including the Pinehaven branch on McMillan Avenue in North Charleston, and the agency has proposed other cost-saving moves.
The Postal Service already has sharply cut costs and staffing, Potter added, but also needs to look to additional sources of income.
He said in Australia people can renew driver's licenses in post offices, while Italians can do their banking at the facilities. Other countries' post offices handle insurance.
The U.S. Postal Service is not exploring these particular ideas, Potter said, but "other countries faced with the same dilemma have explored these areas."
He suggested that Congress allow the Postal Service to consider some activities that have not traditionally been part of the post office, adding he assumed that would come with limits or regulations.
"The real issue is about generating income from these facilities," Potter said.
Congress approves money for free mail delivery for the blind and to offer reduced rates to charities, but the Postal Service does not receive taxpayer funds for its operations.
While the Internet has taken away a lot of first-class mail and the recession sharply reduced advertising mail, a requirement imposed in 2006 that the Postal Service contribute more than $5 billion annually to a fund to prepay medical benefits for retired workers has had a larger effect. That is in addition to $2 billion paid annually for benefits for already retired employees.
Bills have been introduced to ease these payments at least temporarily.
But Postal Inspector General David C. Williams told the senators that the amount of the payments has no basis in need and was set to make sure the Postal Service did not make the federal deficit appear larger.
The payments assume an unrealistic 7 percent annual inflation in medical costs, he said, while other businesses plan for 5 percent inflation. And they do not take into account the declining number of postal employees. Williams said the annual payments could be cut to $1.3 billion.
The Postal Service has cut its staff to about 630,000 workers from about 803,000 in 1999, and Potter said the goal is about 550,000.
Congress is considering legislation that would delay the Sept. 30 health benefits payment.
McClatchy Newspapers contributed to this report.