The decrease in mail volume is caused not just by the economic downturn, but by new communication technologies. My bank pays my bills now, so I don't need to waste 10 minutes and 40+ cents to mail a check. Advertisers are seeing worse return from their mail campaigns, as people have less money to spend on optional purchases. USPS is stuck in manual delivery mode that requires huge expenses of money and labor. Most of that is unnecessary today. Only parcels need to be delivered, and that is handled by courier services that have no burden of delivering daily into your mailbox. Everything else can be delivered electronically, securely, and wherever you are. Cost of USPS services will continue its climb, and with fewer advertisers it becomes a positive feedback loop.
I would let UPS and FedEx pick up all the distribution from the point of origin post offices to the destination post offices and let the locals figure out what they want to do for rural and home deliveries from there. The primary costs of the USPS is in distribution and related labor. I would also cut PO hours to 3 days per week.
My local post office has 1 full time employee and 1 rural route driver shared between 3 post offices covering a sizable chunk of the county.
Become a social media hub like Facebook. Create a postoffice.com site and email address for people and let users get all the e-mail and ads they want. They can even get the type of junk mail they want or magazine brochures.
They can have a free version, a trial version, or an annual paid subscription with no ads and military-grade email protection. Even through in online banking through the USPS and set up a service like MoneyGram. At the same-time, just offer buyouts to retirees that have pensions and gradually phase out all mail delivery.