Some Say Post Office Has Few Options

ByABC News
November 8, 2001, 8:29 PM

Nov. 9, 2001 — -- If the U.S. postal service doesn't get billions in a Congressional bailout, observers believe it will likely seek to pass on huge terrorism-related costs to consumers and businesses.

Steep increases in postage rates were in the works even before anthrax mailings inflicted unexpected new costs. The Postal Service, anticipating a $1.35 billion shortfall this year — an estimate that has since grown — on Sept. 11 filed a request to raise the price of a first-class stamp from 34 to 37 cents.

The Sept. 11 request is subject to a lengthy government approval process, and already the post office needs more money.

"The postal service is in probably the most significant crisis of the last 30 years, certainly," William Henderson, a former postmaster, told ABCNEWS.

Asking for $5 billion in emergency funds from Congress Thursday, Postmaster General John Potter said the direct costs to the U.S. Postal Service from the Sept. 11 attacks and the anthrax mailings will be between $3 billion and $4 billion.

In addition, even with a recent six percent postage hike, lost revenue from fewer pieces being mailed could cost the postal service almost $2 billion this year.

"While we are getting our hands around the short-term and long-term financial impact of the attacks, let me assure you that they are enormous," Potter said.

Many say an outdated quasi-governmental structure under 1970 regulations leaves little flexibility on cutting costs, eliminating unprofitable facilities or generating alternate sources of income.

And, they say, competition from rival shippers, e-mail and other modern-day communications has been costing the Postal Service customers — and money — for years.

"It was never set up by Congress to be a competitive enterprise," said Gene Del Polito, president of the Association for Postal Commerce, which represents companies that frequently use the mails. "Back in 1970, there was no such thing as … Federal Express, e-mail, the World Wide Web, so it literally had the world to itself."