Lawmakers call for reform of the Postal Service

Lawmakers called for major changes at the Postal Service Tuesday, after hearing testimony on the agency's gloomy financial outlook during a Senate Governmental Affairs Committee hearing. "It's obvious the ox is in the ditch big time," Committee Chairman Fred Thompson, R-Tenn., said. With growing debt, declining revenues and increasing costs, the Postal Service could lose an estimated $2.4 billion this fiscal year.

In an attempt to remedy the situation, the Postal Service announced March 8 that it would halt new construction, leasing and expansion projects for the year.

Now, agency officials are preparing for another postal rate hike in July, which could be as much as 15 percent across-the-board. Postal rates increased 4.6 percent in January. The new increases, averaging 1.6 percent, will go into effect July 1. "The Postal Service framework established by Congress in 1970 appears to be near a breaking point," Thompson said. "There is a lot we need to understand about the problem. However it is my belief that nothing should be off the table, including the future of the postal monopoly itself." The modern-day Postal Service was created in 1970 under the Postal Reorganization Act. The law created a businesslike entity requiring the agency to break even. It gets less than 1 percent of its budget from the Treasury. Instead, revenue comes from the sale of stamps and mailing services. But Postal Service officials say the statute is outdated and doesn't give the agency the flexibility it needs to respond to an ever-changing marketplace. In April, the General Accounting Office added the Postal Service to its list of federal agencies and programs vulnerable to fraud, waste, abuse and mismanagement. Comptroller General David Walker told legislators that the Postal Service faces major financial, operational and human capital challenges. More postal rate increases will not fix the agencies' problems, he said. "We need to be able to put on the table things that historically have not been put on the table," Walker testified. "For example, what is the definition of universal postal service given the growth of technology and what are we willing to pay for it?" Postmaster General William Henderson, who is leaving the agency after 30 years at the end of the month, agreed with GAO's assessment. He said reform of the agency's statutory structure will eventually have to take place. "I think the monopoly will be gradually reduced and opened to competition," he said. "There's a lot of resistance to it today. It's kind of like speaking about the devil."

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