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Washington 2006
Copyright / Diclaimer / Privacy Policy

Postal Service May Be Urged to Privatize
Bush to Name Panel to Explore Agency's Mission; Potter Defends Universal Service

Postmaster General John E. Potter said cost-cutting reduced losses. (File Photo/ Ray Lustig -- The Washington Post)

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By Mike Allen and Christopher Lee
Washington Post Staff Writers
Wednesday, December 11, 2002; 12:42 PM

President Bush today named a nine-member commission to spend the next seven months looking into how to ensure the long-term viability of the U.S. Postal Service despite declining mail volumes.

Peter R. Fisher, the Treasury undersecretary for domestic finance, said at a news conference this morning that the commission is "about ensuring the long-term viability of the postal service, for mailers and for taxpayers."

"President Bush recognizes that now is the time to reassess how the Postal Service should adapt to pressure from customers, competitors and technology, and best fulfill its mission in the 21st century," Fisher said. "Inaction is unacceptable--for taxpayers, for mailers, and for current and former Postal Service workers."

The investigation is part of Bushs plan to allow private contractors to compete for nearly half of the governments civilian jobs in coming years. The commissions report, due July 31, is expected to result in the first reorganization of the mail system since 1971, when the Post Office Department became the United States Postal Service.

Postmaster General John E. Potter plans to fight to maintain the government commitment to providing affordable mail service to every residence in the country, sources said.

Administration officials and lawmakers have long worried about the long-term health of the Postal Service, which has been hit hard by competition from e-mail and the use of the Internet for paying bills. The agency also suffered disruptions after the anthrax mailings and the terrorist attacks on the Pentagon and World Trade Center.

The Commission on the U.S. Postal Service will have a broad mandate to look into the services operations, structure and finances to see how it "can execute its missions more efficiently and cost-effectively," an administration official said.

Industry officials said the commission will examine whether the USPS should have more flexibility in setting prices, adjusting service levels and cutting costs.

The post office has lost $6 billion since 1971 and owes the government $11 billion when borrowing from taxpayer funds is included, according to administration figures.

In the latest indication of its financial problems, the Postal Service announced yesterday that it had delivered fewer pieces of mail to more addresses during the last fiscal year. The service lost less money doing it than officials had expected, however.

The Postal Service, an independent governmental entity that relies on revenue from operations rather than taxpayer funding, has not turned a profit since 1999. The Postal Service delivered to 1.77 million more addresses even as mail volume declined by 4.6 billion pieces in the fiscal year that ended Sept. 30, officials said at yesterdays Postal Service Board of Governors meeting. The service lost $676 million. Earlier in the year, officials had said the agency would lose $1.35 billion.

Potter said the shortfall had been whittled through cost-cutting measures, including a reduction of 23,000 jobs through attrition.

Another factor in improving USPS finances was a postage rate increase that took effect in June, when the cost of a first-class stamp went up 3 cents, to 37 cents.

Officials have projected a surplus of $600 million this fiscal year.

Officials announced last month a review had found that USPS is on course to amass billions more dollars than it needs in its pension system. If Congress permits the agency to scale back its payments to its pension fund, it could mean a $2.9 billion savings for fiscal 2003.

The co-chairmen of the new commission are Republican Harry J. Pearce, chairman of Hughes Electronics Corp. and a longtime General Motors executive, and Democrat James A. Johnson, chairman of the board at the Brookings Institution and a former head of Fannie Mae.

The other members will be Richard C. Levin, president of Yale University, Dionel Aviles, president of Aviles Engineering Corp. in Texas; Don V. Cogman, chairman of CC Investments in Arizona; Carolyn A. Gallagher, former president and chief executive of Texwood Furniture in Texas; Norman Seabrook, president of the New York City Correction Officers Benevolent Association; Robert Walker, chairman and chief executive of Wexler Group in Washington; and Joseph R. Wright, president and chief executive of PanAmSat in Connecticut.

Staff writer Stephen Barr contributed to this report.

2002 The Washington Post Company