*House Subcommittee to Hold USPS Hearing

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Rep. John M. McHugh, R-NY, chairman of the House Subcommittee on the Postal Service, will hold an oversight hearing today featuring testimony from the postmaster general and two watchdog agencies: the U.S. Postal Service's inspector general's office and the General Accounting Office.


McHugh said the hearing is being called to review the uncertain future of the USPS.


"The postal service is facing shaky times and formidable challenges," McHugh said. "The crisis is, indeed, upon us."


He said that in the past year, the USPS has encountered increasing financial difficulties as mail volumes have grown more slowly than expected and as the costs of postal delivery have proved difficult to restrain.


"It is no surprise that the postal service is seeking innovative approaches to dealing with these problems, as evidenced by its possible strategic alliance with Federal Express," McHugh said.


McHugh also confirmed trends presented to the subcommittee last year by the General Accounting Office, which found that the USPS is facing a $300 million loss for fiscal year 2000, due in part to significant electronic diversion. He said the GAO will testify today that of the 880 million Social Security checks, tax refunds and other payments sent by the Treasury Department in 1999, 68 percent were sent electronically rather than mailed -- resulting in $180 million in lost First-Class mail revenue.


Moreover, based on data from the American Bankers Association presented by the GAO, banks reduced their mail volume in 1999 by nearly 18 percent compared with 1996.


In its testimony, the GAO also will highlight the key policy challenges facing Congress: whether the postal service can maintain and, where necessary, improve on the quality of mail delivery service; whether it can continue to provide affordable postal rates; whether it can remain self-supporting through postal revenues; and whether the current level and scope of universal mail service can be expected to continue long-term.


McHugh also said he would discuss H.R. 22, the Postal Modernization Act, at the hearing. H.R. 22 is stalled in Congress and will most likely not be passed by the end of this session. He said H.R. 22 would allow the USPS to preserve universal mail service in the face of its challenges because it would provide the agency with the pricing incentives and management tools it needs to adapt and survive, while strengthening the law to protect the public interest from unfair competition.


However, he said that if H.R.22 is not passed, "my fear is that rather than undertaking reasoned and gradual change as we have tried to accomplish through H.R. 22, Congress will await a crisis situation and be left with desperate choices in its duty to provide affordable universal mail delivery that binds the nation together. It is imperative that we deal with this issue now."


Other subjects that may be covered at the hearing are the USPS/FedEx strategic alliance; nonprofit postal relief; and the USPS' Revenue Assurance program, which the office of the inspector general recently reviewed. Members of the House subcommittee may have more questions about the USPS' revised internal rules on revenue deficiencies that would officially suspend retroactive collection of postage on violations detected after mail entry, unless evidence of deliberate violations is discovered.
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