US Postmaster General renews call for freedom to set prices

If the Postal Service is to be run like a

business, it needs the freedom to set its prices like a business, Postmaster General John Potter said Thursday.

Potter told the President's Commission on the Postal Service

that his agency is hampered by the complex 16-month process involved in setting rates.

The post office, because it has a monopoly, should still be

subject to review, he said, but that process "should not stifle the ability to meet customer preferences and finance the national mail system for the future."

Potter suggested that the Postal Service's governing board be

allowed to set prices for mail service, with an after-the-fact review by an outside agency.

His comments came at the final public session of the commission, convened by President Bush to review the operations of the Postal

Service and make recommendations for its future. Its report is expected by the end of July.

A series of postmasters general have complained in recent years

that the rate-setting process stifles their ability to compete in the marketplace by offering volume discounts, making rapid price changes where necessary and offering new services.

Under the current system the agency proposes a rate change which

is then reviewed by the independent Postal Rate Commission for up to 10 months. The commission then makes a recommendation which the board can agree to, ask for reconsideration of, or overrule if unanimous.

The agency has been plagued by losses in the last couple of

years as mail volume dwindled in the wake of the terrorist attacks, the anthrax scare and the weak economy.

"For the first time in our history we will have two straight

years of significant decline in First Class mail volume _ the loss of over 3 billion pieces of mail," Potter said.

That led to a rate increase last year to the current 37 cents.

Potter has promised to hold rates steady until 2006 under legislation allowing the agency to cut excess retirement payments it was making.

Potter said that increasing use of the Internet is also taking a

toll and that is likely to get worse in the future as more and more people receive and pay bills electronically. First-class mail is the agency's biggest money maker and the largest part of that is bill paying.

Other recommendations from Potter included:

_Set aside the requirement that the Postal Service break even

and allow it to retain earnings in good years to help cover losses in other years.

_Include benefits, not just wages and work rules, in contract negotiations and streamline the collective bargaining process.

_Eliminate restrictions on closing post offices and relocating

or consolidating mail facilities.

If those steps don't put the agency on a solid footing, Potter

added, other steps that could be considered include reducing the number of days mail is delivered, relaxing on-time delivery standards, considering other sources of income, asking nonprofit organizations, which receive reduced rates, to pay a larger share of the mail costs and having the taxpayers assume the burden of paying for universal service.

The Postal Service does not receive any tax money for

operations, though it did get a special appropriation to help cover the costs of damage from the attacks on Sept, 11, 2001 and the anthrax attacks.

The possibility of reducing the number of days that mail is

delivered has been suggested in the past, but has always proven unpopular.

Potter said that change "won't happen on my watch, but I

envision a day when that could happen."

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