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Sunday, November 04, 2001

By Frank Reeves, Post-Gazette Staff Writer

Even before anthrax attacks that left two postal workers dead, there were warnings that the U.S. Postal Service was in trouble. The agency, required by law to operate without taxpayer subsidies, had racked up an operating deficit of $1.7 billion through September as a slowing economy cut into mail volume and revenue. There were predictions it could end the year more than $2 billion in the red.

The anthrax-by-mail attacks could further erode the financial standing of the U.S. Postal Service, which was operating $1.7 billion in the red through September and could plummet to $2 billion by year's end. Now, many believe, confidence in the system must be restored. On Friday, a customer heads into the North Side post office on California Avenue. (Gabor Degre, Post-Gazette) Related Coverage Direct mail companies that send mass mailings revamp procedures

And the outlook wasn't getting brighter: The General Accounting Office, a congressional watchdog agency, last year warned that the Postal Service eventually could lose much of its core business and primary source of income, first-class mail delivery to 134 million addresses in the United States, as increasing numbers of people turned to e-mail, e-bill paying and e-commerce as an alternative.

But as bad as all of that sounds, it's nothing compared with what observers fear could happen in the wake of the anthrax-by-mail attacks. If Americans pull back on their use of mail at a time the agency is confronting sharply higher bills for security and worker protections, the dire GAO predictions could occur much sooner than anyone could have expected, threatening the Postal Service's primary mission to provide universal mail service throughout the country.

"The problems that existed prior to Sept. 11 will greatly worsen as the postal service incurs increases in security, labor, workers' compensation and environmental costs," warned U.S. Rep. John M. McHugh, R-N.Y., who has been the principal sponsor of legislation to overhaul the Postal Service.

Even critics of the Postal Service warned that if Americans lose confidence in the mail, it could hurt an economy that appears to be in the midst of a recession.

"If Americans stop opening the mail and business cannot be conducted through the mail, it will be a frontal attack on our nation's economy," said John Estes, executive director of the Main Street Coalition for Postal Fairness. "Appropriate expenditures must be committed to assure the public of the safety of the mail as well as to protect postal workers."

Nonetheless, the Washington, D.C.-based coalition has opposed legislation sponsored by McHugh that would allow the Postal Service to expand its online services and free the agency to set its own prices and offer new services without prolonged review. McHugh argues that the changes would help put the agency on more solid financial footing without taxpayer aid, but the coalition counters that the legislation would enable the Postal Service to compete unfairly with the private companies offering comparable services.

The group also objects to what it says is the Postal Service's tendency to favor large-volume mailers over its regular customers. The coalition includes the Newspaper Association of America, of which the Pittsburgh Post-Gazette is a member.

In testimony last week before two congressional committees, Postmaster General John Potter sought to reassure lawmakers that the Postal Service was doing all it could to protect its 800,000 employees and the public from the anthrax threat -- a threat, experts say, that has been overblown, given the difficulty of spreading anthrax through the mail and the comparatively low number of fatalities and illnesses associated with the latest outbreak.

Potter's testimony came as the magnitude of the threat seemed to grow. Last month, two postal employees who worked at the main mail processing center in Washington, D.C., died from inhalation anthrax, and more than 15,000 postal employees across the country have begun receiving antibiotics, although only nine have contracted some form of the disease so far.

In addition to Washington, D.C., anthrax spores have been found in government mail rooms and mail processing centers in Trenton, N.J., and Kansas City. Last week, investigators began testing 200 mail processing and distribution centers for the anthrax spores, including the General Mail Facility on the North Side. New Jersey plans to test all of its post offices. Once the tests are completed, the evidence will be turned over to the Centers for Disease Control and Prevention.

U.S. Postal Service officials stressed there is no evidence that anthrax has spread to any of the facilities and no reason to believe that employees or customers of centers are in danger. But measures to protect postal workers and restore public confidence aren't likely to come cheap. Potter told lawmakers that the Postal Service would need at least $2.5 billion to buy equipment needed to sanitize mail at postal processing centers across the country.

The Postal Service also is looking to Congress to compensate the agency for the $300 million in revenue it's lost since Sept. 11. And it has applied for a 2-cent increase in stamp prices in anticipation of a deficit this year.

While U.S. Postal Service officials have yet to submit a formal request for an emergency aid package, many expect Congress will approve some form of a bailout even though it would violate a long-standing requirement that the Postal Service operate without taxpayer subsidies.

Congressional debate over an aid package could trigger a wider debate about the long-term viability of the Postal Service, which in recent years has generated about $70 billion in annual revenue.

"Understandably, there are calls to start subsidizing the Postal Service again with taxpayer [money]," McHugh said. "However, we in the Congress have a fiduciary responsibility to the taxpayers to not blindly send money to a sinking ship without also shoring up that ship."

McHugh has suggested that lawmakers might want to consider some of the provisions proposed in his "Postal Accountability and Enhancement Act" as part of any aid package.

And Paul Boyle, a lobbyist for the Newspaper Association of America, agrees that Congress has got "to restore confidence or people will just look at the mail and not touch it."

But Boyle said the association and other members of the Main Street Coalition would oppose attempts to attach so-called postal reform legislation to an aid package.

"McHugh's bills are still contentious and controversial," Boyle said.