The financially strapped U.S. Postal Service is considering cutting as many as 120,000 more jobs or 20 percent of its work force.
Facing a second year of losses totaling $8 billion or more, the agency wants to pull its workers out of the retirement and health benefits plans covering federal workers and set up its own benefit systems.
Congressional approval would be needed for either step. Both actions could be expected to face severe opposition from postal unions, which have contracts that ban layoffs.
The post office has cut 110,000 jobs over the last four years and is currently engaged in eliminating 7,500 administrative staff. In its 2010 annual report, the agency said it had 583,908 career employees.
Postal officials have said they will be unable to make a $5.5 billion payment to cover future employee health care costs due Sept. 30. It is the only federal agency required to make such a payment, but, because of the complex way government finances are counted, eliminating the payment would increase the federal budget deficit $5.5 billion.
If Congress doesn't act and current losses continue, the post office will be unable to make that payment at the end of September because it will have reached its borrowing limit and won't have the cash to do so, the agency has said.
In that event, Postmaster General Patrick Donahoe said, "Our intent is to continue to deliver the mail, pay our employees and pay our suppliers."
The latest cutback plans were reported by the Washington Post, which said a notice to employees stated: "Financial crisis calls for significant actions. We will be insolvent next month due to significant declines in mail volume and retiree health benefit prefunding costs imposed by Congress."
In its 2010 annual report, the post office reported a loss of more than $8 billion on revenues of $67 billion and expenses of $75 billion.