Postal Service could ask Congress for over $5 billion

Nov. 7–WASHINGTON — Grim new revenue projections could lead the U.S. Postal Service to ask Congress for more than $5 billion this week to offset higher security costs and lower revenues due to the anthrax scare and terrorism. The $5 billion figure, more than twice the amount estimated last week, is based on reports by postal officials to their board of governors on Tuesday. The postal service may have lost as much as $800 million between Sept. 8 and Nov. 2, due to a sharp drop in mail volume, said Richard Strasser, the Postal Service's chief financial officer. New equipment to shield postal workers and customers from anthrax, plus testing and treatment for thousands of employees, could alone cost the service $2.5 billion, Postal Service officials said. Delivering mail diverted by anthrax-related facility closures, replacing a facility destroyed in the World Trade Center attack, and other business recovery expenses "will likewise be in the billions of dollars range," said Strasser. On Thursday, Postmaster General John E. Potter is expected to ask a Senate Appropriations subcommittee for a one-time outlay to cover the crisis. Robert E. McLean, executive director of the Mailers Council, an Arlington, Va.-based group of corporate and non-profit bulk mailers, said Potter may seek as much as $6 billion to $8 billion. If Congress doesn't provide the funding, Potter has said the Postal Service might need a rate increase to cover the additional costs. A big hike, McLean said, would cause bulk mailers, which account for about 70 percent of total U.S. mail volume, to turn to newspaper, radio and TV ads to reach customers. "That would create an even bigger fiscal problem for the Postal Service down the road," due to revenue losses, McLean said. "Unless Congress wants to look at an S&L-size bailout of the Postal Service, they must come to the aid of the Postal Service now." McLean was referring to federal deregulation of loan activities at savings and loan institutions in the 1980s. Cleaning up their bad loans ultimately cost the federal government about $140 billion. 3: the total Several conservative groups, including Citizens Against Government Waste and the National Taxpayers Union, oppose a Postal Service bailout. They want the Postal Service to reduce its advertising, get out of e-commerce, and submit to more oversight of its costs. Compared to last year, mail volume fell 6.6 percent between Sept. 8 and Oct. 5, more than 1.1 billion fewer pieces, according to postal officials. That includes a 15 percent decline — 50 million fewer pieces — in priority mail, delivered within two to three days; an 11 percent decline — 875 million fewer pieces — in standard mail, which includes bulk mail; and a two percent decline — 175 million fewer pieces — in first-class mail. Preliminary figures show mail volume dropped eight to ten percent from Oct. 6 to Nov. 2 compared to last year. Even before Sept. 11, the Postal Service had projected a $1.35 billion deficit for the current fiscal year, which ends Sept. 30, 2002. The agency also owes the U.S. Treasury $11 billion borrowed in recent years to cover operating costs. Under current law it can borrow only $15 billion from the Treasury. The Postal Service is a non-profit federal corporation that by law must pay its costs through fees charged to deliver mail. In recent years, the agency has been hurt by competition from private mail delivery companies, rising energy costs, the increased use of e-mail and online bill-paying services. To restore public confidence, the Postal Service plans to begin irradiating mail to kill anthrax spores and other bioterrorism agents. Later this week, it will begin shipping federal government mail to a Bridgeport, N.J. facility for decontamination. A facility in Lima, Ohio handles about 750,000 pieces a day. In addition, the Postal Service is negotiating with a Belgian company for the purchase of x-ray irradiation equipment. To date, the Postal Service has tested 122 of 260 regional mail processing facilities for anthrax. Of the 122, 66 have tested negative, 9 positive, and results for 47 are pending.