Postal Service in for a licking

May 08, 2001|By Gary Gensler

WASHINGTON -- The Postal Board of Governors is considering the appointment of a new postmaster general. He will face enormous challenges requiring the full support of the Bush administration, because the way Americans communicate is changing rapidly.

The Internet and wireless devices greatly augment how we send and receive information. A significant portion of postal volume may be diverted to the Internet. Currently, fully one-quarter of postal revenues are from bill presentment and bill payments. The Postal Service also is at a critical financial juncture.

The new postmaster general will have to quickly establish a plan to stabilize the service's poor financial conditions.

After several years of economic success, it is projected to lose more than $2 billion this year. The Postal Board of Governors has been in a dispute with the Postal Rate Commission, and management has been unable to agree to new contracts with several of its labor unions.

With more than 900,000 employees and $67 billion in revenues, the Postal Service would rank as the second-largest employer and eighth-largest company in America.

Similar to other network businesses, such as public utilities or natural gas pipelines, the Postal Service has significant fixed costs and depends on volume for financial success. Letter carriers, however, provide the daily in-person "pipeline" six days a week, delivering the mail to more than 134 million addresses.

The Postal Service is much more than a business, however. Providing universal service at uniform rates is a vital public service. And the 38,000 post offices and branches define communities all across the land.

Critically, the Postal Service will need to work with the Department of the Treasury and Congress to pay for this year's operating losses. While statutory authorities allow the service to borrow up to $15 billion from Treasury, it is limited to annual borrowing of only $1 billion to cover operations. Beyond this year's financial shortfalls, the Postal Service needs reform in its legislative framework.

The current framework was put in place more than 30 years ago when mainframe computers were just being installed across corporate America. Dramatic changes in technology since then require that the Postal Service's laws change as well. Reform is needed regarding product and pricing flexibility, as well as the rate-making process itself.

The Postal Service is too great an American institution, though, for inaction. It has helped bind the nation since its founding. Its vitality is just as critical in this new environment. In particular, the Postal Service is essential for those less likely to participate in new technologies -- the elderly and low-income Americans -- as well as for rural Americans.

Over its long history, the Postal Service has adapted to the existence of the telegraph, the telephone, the computer and the fax. It can and must adapt to the newest technological changes.

To accomplish this, it will take leadership, innovation and a willingness to change. In their time, Presidents Lyndon Johnson and Richard Nixon, working with Congress, showed a willingness to promote postal reform. President Bush should follow their examples and be fully engaged with the new postmaster general to assure the viability of the Postal Service for future generations.

Gary Gensler was undersecretary of the treasury during the Clinton administration. He recently withdrew his name from consideration to be postmaster general.

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