WASHINGTON — The U.S. Postal Service has cut its staff by 25,000 this year as it struggles to reduce massive deficits, Postmaster General John Potter said Monday.

Postal employment is now below 635,000, Potter said, down from about 800,000 in 1999.

Thousands of carrier routes also have been eliminated as mail volume declines, he said.

"We have an infrastructure that, quite frankly, we cannot afford based on the income we're receiving," Potter said.

The agency still faces a potential $6.5 billion loss this year, Potter said, and even with increased borrowing and other changes it could finish the year with a $1.5 billion shortfall.

Postal rates went up last week by 2 cents to 44 cents for a first-class stamp. That isn't expected to be enough to offset the likely losses. Regular increases are limited to the rate of inflation the year before and officials feared a larger, emergency increase would result in even more declines in mail volume.

The post office is seeking permission from Congress to reschedule some of its contributions to a retiree health care fund, which would reduce spending this year by $2 billion.