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Postal Service bids farewell to mail delivery on Saturdays

It's been debated for months, but on Wednesday the United States Postal Service announced it's not going to deliver first-class mail on Saturdays anymore, beginning August.

The postal service said on Wednesday it will continue to deliver packages, mail-order medicine, and express mail on Saturday, but not letters, bills, cards, and catalogs. Post offices which are now open on Saturdays will continue to be open on Saturdays.

“The Postal Service is advancing an important new approach to delivery that reflects the strong growth of our package business and responds to the financial realities resulting from America’s changing mailing habits,” said Patrick R. Donahoe, Postmaster General and CEO at a news conference to announce the changes. Package deliveries rose 8.7 percent in the 2012 fiscal year.

The USPS has not specified yet what it defines as a package, but it will provide more details next month, agency spokesman Dave Partenheimer said.

The move is meant to save the financially struggling, 237-year-old agency about $2 billion annually as it wrestles with the rising popularity of email and social media eating away at its core business of delivering mail. It's also meant to counter the climbing costs of funding future retiree health benefits to its workers, as mandated by Congress, which oversees the independent agency of the government.

It remains unclear whether the USPS can unilaterally reduce service for first-class mail to five days from six days a week without congressional approval. Congress has resisted the idea, although it may be more open as it seeks to reduce spending. The USPS does not get tax money to fund its day-to-day operations.

Photo slideshow: U.S. Postal Service then and now

Sen. Tom Coburn (R-Okla.) and Rep. Darrell Issa (R-Calif.) sent a letter Wednesday to congressional leaders saying they back the USPS decision and that it deserves bipartisan support. But a Democratic aide who works on congressional issues pertaining to the Postal Service told NBC News that the move could face an uphill battle in Congress.

The Postmaster General himself seemed unclear about it, although he rang a note of confidence that Congress would agree to the move.

"We think we are on good footing with this. We think this is the right thing to do," he said.

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In January, the USPS board of governors directed management to accelerate the restructuring of postal service operations in the face of declining revenues. It said that the USPS could no longer afford to wait for legislation to salvage its business.

The agency reported an annual loss of a record $15.9 billion for the fiscal year ended Sept. 30, triple the prior year's loss and capping a year in which it was forced to default on payments to a health benefit trust fund managed by the Treasury Department. The rising costs for future retiree health benefits accounted for $11.1 billion of the losses.

On Jan. 27, the USPS raised postage stamp prices by one cent to 46 cents to help raise revenues. “We are currently losing $25 million per day,” Donahoe warned in January.

On Wednesday, Donahoe said the change to five-day mail delivery would equate to about 22,500 postal jobs, but that the agency would not resort to layoffs to make the reductions. Instead, he said it could easily meet that by eliminating overtime, through attrition and by working with unions on buyouts. The USPS currently employs about 520,000 workers.

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The move is another milestone in the long-running political dance between Congress and Postal Service managers over how to finance the delivery of mail to 151 million addresses, nearly 40 percent of the world's "snail mail" volume. Lawmakers have spent more than a year trying to nail down postal legislation, but have been unable to settle on an agreement.

Though its Capitol Hill critics complain that Postal Service should be made to operate “more like a business,” Congress has created a set of rules that all but guarantee billion-dollar losses.

Those losses are almost entirely the result of the now-defaulted “pre-funding” requirement for retiree health insurance and other accounting charges.

The Postal Service faces other constraints. It's banned from setting up retail outlets, for example, that could generate profits to help subsidize delivery costs. Worse, it is barred by Congress from charging the full cost of providing the service it is required to deliver.

The Associated Press,Reutersand NBC News' John Schoen contributed to this report.