Postal Bailout May Cost $5 Billion, Potter Tells Senate
"Let me assure you that they are enormous," Potter said, offering an estimate of as much as $5 billion for damages, safety equipment and decreased mail volume. "We are working on the premise that the leaders of the nation want all the mail system to be protected against this type of terrorist threat in the future."
Elsewhere, at a Mailers Technical Advisory Committee meeting at postal headquarters, deputy postmaster general John Nolan said postal officials wanted to see how the holiday season goes before giving specific numbers. But Nolan said members of the Senate Appropriations subcommittee told Potter to return Nov. 13 with more specifics and an amount that will get the USPS through June.
Potter estimated USPS expenses directly related to the terrorist and anthrax attacks to be at least $3 billion, including:
• Damage to facilities and equipment loss in New York.
• Medical testing and emergency treatment of employees exposed to anthrax.
• Protective equipment for employees (masks and gloves).
• Environmental testing and, where necessary, cleanup of postal facilities.
• Communication and education of employees and customers.
• Purchase of equipment to sanitize mail entering the system.
• Disruption of operations and rehandling costs.
• Implementation of new security procedures.
Postal officials reported that net income in the past two months was $418 million below forecast and that mail volume dropped 6.6 percent in September. For October, mail volume was estimated to have dropped 8 percent to 10 percent over the same period last year. Businesses and consumers sent 2 billion fewer pieces of mail for the two-month period.
"We strongly believe these costs should not be borne by our customers through increased rates," Robert F. Rider, chairman of the board of governors, said at the board's monthly meeting earlier in the week.
The agency predicted a $1.35 billion loss for the fiscal year ending Sept. 6, 2002, which would mark its third consecutive year in the red.
President Bush had already announced $175 million in aid to help defray the costs of new equipment, including irradiation technology to sanitize potentially anthrax-exposed mail, gloves and masks for workers and vacuum systems to clean mail-sorting machines. So far, the USPS has bought 4.8 million masks and 88 million gloves.
At the technical advisory committee meeting, Nolan discussed several of the security measures on the board, including using chlorine dioxide gas, "which requires more time than other methods used to sanitize mail, but it's cheaper," he said. "However, the EPA has some problems with it."
Officials also are considering reducing the number of collection boxes or using unique IDs on every stamp the USPS sells, "but we have to keep mail convenient for people," Nolan said. "There is a very plausible argument that every incidence of anthrax in this country is caused by one letter. When you mix that with processes, such as our air machines blowing things around, we helped to make the problem worse. But we have begun to understand better what is going on here. We've cleaned the machines. We're back. We're eager for a lot of Christmas volume."
Mailers at the meeting supported the postal service's plans.
"Congress really should step up to the plate, because it's not the fault of the postal service" that these security measures must be implemented, said Joel T. Thomas, executive director of the National Association of Presort Mailers, Annapolis, MD.
However, Thomas said that no matter how much money the postal service asks for, it probably won't be enough for the security measures being discussed.
"If Congress doesn't give them the money they are asking for, they will most definitely have to raise rates," he said. "But when and how much is the question."
Joyce Bagby, postal logistics manager at R.J. Reynolds Tobacco Co., Winston-Salem, NC, likened it to the bailout of the airline industry.
"I suspect that Congress will give them the money they need," she said. "This is a matter of national security."