Embattled U.S. Postal Service gets help from rural America WASHINGTON (Reuters) - As the U.S. Postal Service limps along, bleeding billions of dollars every financial quarter, congressional leaders are looking to a group of outspoken rural lawmakers for help with a dramatic restructuring of the agency. Rural Americans say they regard their local post offices as the centers of their communities. With UPS and FedEx service limited or more expensive in some areas, many rely on the Postal Service to deliver medicines, while families need it to pay bills and small businesses and craftsmen use it to ship goods to customers. The lawmakers representing these communities have fought bitterly against plans to close more than 3,600 post offices, end Saturday delivery and scale back overnight delivery - moves that have been proposed to get the Postal Service on better financial footing. Now Republican backers of a controversial bill to overhaul the Postal Service by creating oversight groups to close facilities and cut costs are courting rural lawmakers in hopes of getting a proposal voted on in the U.S. House of Representatives this summer. The timing is tricky. Members of Congress want legislation to help the service avoid default on two payments totaling $11.1 billion to the federal government before the November 6 presidential and congressional elections, which could quiet talk that a taxpayer bailout of the USPS could be needed. But lawmakers in tough races, particularly in rural areas, do not want to have to defend voting for legislation that could lead to the closure of post offices in their districts. "One of the worst things a member of Congress has to endure is an onslaught of protest from people who don't want their postal facility to close," said Representative Dennis Ross, a Republican who co-sponsored the bill with Oversight Committee Chairman Darrell Issa. "We've got to go address small groups of members and address any of their concerns," Ross said. The Postal Service, which was established in 1775, is now run as an independent government agency funded by sales of its stamps and other products, rather than taxpayer money. It has been struggling for years as consumers increasingly communicate online rather than through the mail and as its cash has been drained by massive payments for future retiree health benefits. The service lost $5.1 billion in fiscal year 2011 and $3.2 billion in the first three months of 2012. Rather than endorse legislation from the House or Senate, USPS officials want their own plan that would allow them to cut mail delivery from six days to five, make its own decisions on branch closures, end the retiree health payment, and pull employees out of federal healthcare programs and running their own plan. The Issa-Ross overhaul bill passed the House Oversight Committee in October but has stalled while the House dealt with other matters. A tentative schedule released by House Republicans last week would have the full House vote on it between the July 4 holiday and the August break. Lawmakers from both parties said if the sponsors want their bill to pass, they will have to work with rural members - many of whom feel that Issa and Ross did not consider their concerns before writing provisions to end Saturday delivery after six months and create an oversight group to close post offices. "Given the fact that there was no discussion to start with, and a draft bill got written without any interaction with any people whose districts would be severely impacted, it's about time, isn't it?" said Representative Jo Ann Emerson, a Republican who said her Missouri district's largest town has about 35,000 people. I hear concerns from pharmaceutical companies because they have mail-order drugs. Certainly the newspapers to our rural communities, all of those newspapers get mailed ... it really does change the way that we communicate with people," she said. Rural lawmakers already have won some battles. The Senate passed a bipartisan bill in April that would end Saturday mail after two years and reduce the payments for future retiree benefits. Its backers agreed to changes demanded by members from rural states, such as blocking closure of rural post offices that are more than 10 miles from another location. The Postal Service later decided to reduce hours at some post offices rather than close thousands of locations. A Reuters investigation this year found that about one-third of the offices expected to close were in communities with limited or no wired broadband access. Issa and Ross have begun negotiating changes to their bill, announcing recently an amendment capping rural post office closings that had been championed by Republican Representative Adrian Smith, who heads a group of rural members. An aide to Smith, whose district spans most of Nebraska, said he would work with Issa and Ross as part of an informal rural working group. "Most rural members are concerned about arbitrary cuts which won't yield savings," Smith said in a statement. My goal is to ensure reliable service standards are preserved and communities are allowed participation. Issa represents a California district that includes areas not far from San Diego. Ross, whose Florida district covers parts of the Tampa Bay area, some of which are rural, said he has worked with Democrats and will reach out to lawmakers who are concerned about the Postal Service eliminating union jobs. Democratic Representative Peter Welch of largely rural Vermont said the latest overtures marked a change from when many rural lawmakers and Democrats felt their opinions were ignored. "We've gone from basically no discussion and kind of a stonewall situation to active discussion and emerging concern on a bipartisan basis about preserving rural delivery," Welch said, adding that discussions had not led to specific amendments. We want to maintain rural delivery. Most of us want overnight delivery and six-day delivery, and we all support giving the latitude for innovation which is necessary with the Internet," he said. We're clearly finding some unity of interest, especially among rural members. Some House lawmakers say the bill is so flawed they do not expect to vote for it and are instead pushing for the Senate version. "Having ignored them up to now, the price they're paying is they don't have the votes to bring the bill to the floor," said Representative Gerry Connolly, a Democrat. That kind of approach is never going to get you bipartisan passage. Connolly, whose district includes populous parts of northern Virginia, said House Democrats have been meeting and have been in discussions with Senate lawmakers. Many still want to try to bring the Senate bill to a vote in the House. Issa and Ross have maintained that the Senate bill does not save enough money. In a statement after the bill passed, Issa called it a "wholly unacceptable" plan and said it would only give the Postal Service two more years rather than solve its problems. Senator Tom Carper, a Democrat from Delaware and one of the bill's authors, has a tally on his website that counts how much money the Postal Service has lost since the Senate bill passed. It was about $911 million on Friday morning. (r.reuters.com/gug58s) Editing by Bill Trott