Faced with the possibility of losing more than $2 billion this fiscal year, the U.S. Postal Service is delivering an SOS to both ends of Pennsylvania Avenue. The Postal Service Board of Governors sent letters March 2 to all 535 members of Congress, President Bush and top administration officials urging that they undertake a "comprehensive review and overhaul of the postal laws of the United States," due to "rapidly rising rates and reduced service if reform is not enacted promptly." Postal rates increased last January and the agency is preparing to file another rate case this summer. Congressional staffers were doubtful that postal reform would gain much momentum this Congress. That is partially because the most vocal proponent of postal reform during the past five years, Rep. John McHugh, R-N.Y., no longer has a soapbox from which to speak. The Postal Service Subcommittee he chaired was eliminated in the 107th Congress and its jurisdiction folded into the full House Government Reform Committee. McHugh introduced a comprehensive reform bill, H.R. 22, in the 105th Congress. But Postal Service officials did not support the legislation. In fact, the board remained silent on the matter until late last year, when H.R. 22 was dead and buried. During a recent interview with Government Executive, McHugh said he had no plans to reintroduce H.R. 22 or a bill like it this Congress. "H.R. 22 was five years of hard work for McHugh," says Gene Del Polito, president of the Association for Postal Commerce. "The disadvantage is that it was very prescriptive. It had a single vision of what reform should look like." Del Polito and other Postal Service observers are calling for a presidential commission to study all possible scenarios of reform. "McHugh's hearings didn't answer any of the tough questions: do we still want binding arbitration for labor negotiations? If the agency wants to close a post office, should it have to go through a convoluted process to do so? Does it need to be privatized? The questions that needed to be addressed were not raised," he said. The modern day Postal Service was created in 1970 under the Postal Reorganization Act. The law created a businesslike entity requiring USPS to break even. It gets less than one percent of its budget from the Treasury. Instead, revenue comes from the sale of stamps and other mailing services. Increased competition from foreign posts, private shippers and the Internet is eating away at the agency's bottom line. An economic downturn is also having its impact, slowing the growth in the volume of mail. USPS officials claim they have little flexibility to respond to market pressures. The 1970 act created a rate-setting process that takes at least a year to complete. Additionally, it established a system that essentially drives all labor negotiations into binding arbitration. Labor accounts for nearly 80 percent of the agency's costs. "We are facing a Fiscal Year 2001 deficit likely to exceed $2 billion and a financial crisis that cannot be averted by better management alone," the governors warned in their letter. Despite its recent efforts, the board has not convinced several mailers groups, the General Accounting Office and the Postal Rate Commission of impending doom. A GAO official said USPS has yet to spell out publicly how and where the losses are coming from. "They just increased rates and here they are talking about doing it again," the official said, "but we haven't seen any numbers to show those kinds of losses."
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