By Emily Stephenson
WASHINGTON (Reuters) - Senator John McCain unveiled a bill on Friday to revamp the U.S. Postal Service, including an end to Saturday mail delivery, the latest of a series of legislative proposals to shore up the financially shaky mail service.
The proposal, which would also create advisory groups to reduce the number of post offices and cut costs, is based on Republican Representative Darrell Issa's bill in the House of Representatives, a McCain spokesman said.
A Republican-controlled subcommittee advanced the bill Wednesday in a party-line vote.
Mail volumes have plummeted as Americans send email and pay bills online. The Postal Service says it must downsize or it will have to stop delivering mail by the end of next summer.
"Congress can no longer enact temporary fixes that avert financial crisis for only a brief period," McCain, a Republican, said in a statement. "Congress, the Postal Service, labor unions and the mailing community must be willing to lay everything on the table and make hard choices."
McCain's bill leaves out some of Issa's less popular ideas, such as phasing out delivery to front-door mail slots, requiring Alaska to pay the agency to deliver in rural areas, and boosting the USPS borrowing limit by $10 billion.
Democrats have balked at the idea of allowing the agency to break contracts with unions, and some lawmakers from both parties oppose ending Saturday mail delivery.
The Senate Homeland Security and Governmental Affairs Committee is hammering out a bill its backers say will earn bipartisan support. Moving to five-day mail has been contentious, and a Senate staffer said lawmakers from rural states were particularly concerned about the proposed change.
The Issa and McCain bills do not include proposals favored by lawmakers in both parties to return a $6.9 billion surplus in a Postal Service retirement fund and to restructure a massive annual payment for pre-fund retiree health benefits.
The Postal Service, which receives no taxpayer revenue to fund daily operations, says it will default on a $5.5 billion retiree health payment due on September 30.
A report issued on Thursday by the agency's regulator argued Congress should adjust the amount of the pre-payments to a level the service can afford.
(Read the report here: http://1.usa.gov/qGeHdw )
Lawmakers put off until Monday a continuing budget resolution that includes a measure extending the payment's due date until mid-November.
(Reporting by Emily Stephenson; Editing by Tim Dobbyn and Todd Eastham)