Editorial: Risky Business

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Sounds like the U.S. Postal Service won't eliminate mail delivery on Saturdays anytime soon. Lawmakers jumped all over that bad idea during last week's congressional hearing about the financial problems facing the USPS.

"If there's one thing the postal service could do that would guarantee its demise, it's eliminate service on Saturday," said Rep. Bob Barr. Postal officials said the cost savings could be enough to offset this year's projected deficit, but it would take congressional intervention to allow for such a change.

Last week, the General Accounting Office added the USPS' restructuring plans to its high-risk list of troubled government programs, putting it in the same league as the Medicare program, IRS financial management and FAA air traffic control modernization.

Testifying before Congress, the GAO offered three strategies to improve the USPS' bottom line: cut operating costs and improve productivity; generate more revenue from new products and services; and raise postal rates.

"Some stakeholders have expressed strong concern that the service could request a rate increase of as much as 10 [percent] to 15 percent in the near future. ... In the long run, raising rates may drive postal customers to increase their use of other alternatives, thereby affecting mail volumes and revenues," the GAO concluded.

Rep. Dan Burton, who heads the House Committee on Government Reform, seemed concerned about rates as well, saying, "Another rate increase should be the last option, not the first."

Yes, the postal service needs help, and it sounds as if Congress now understands the urgency for reform. Rates will increase again; the only question is when. Labor-related expenses account for 76 percent of the postal service's total operating expenses. With a work force of 798,000, it is overstaffed, and productivity has gone up just 11 percent in 30 years, according to the GAO, "despite vast changes in automation and information technology." Raising rates can't be the only answer. Customers will go away, and then the USPS will be even worse off.


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