Postal Service gushing red ink, audit says


WASHINGTON - The U.S. Postal Service is plagued with so many chronic financial, operational and labor problems that the government-owned monopoly must be overhauled quickly in order to survive, according to a government audit prepared for a Senate hearing today.

The findings by the General Accounting Office are expected to add momentum to efforts in Congress to restructure the $67 billion-a-year Postal Service in the wake of threats by the government-backed enterprise to end Saturday mail delivery and raise postage rates to avert bankruptcy.

David M. Walker, comptroller general of the United States and head of the GAO, warns in testimony delivered to the Senate yesterday that the Postal Service is at growing risk of not being able to continue providing universal postal service vital to the national economy at reasonable rates while remaining self-supporting through postal revenues.

The GAO, a nonpartisan congressional investigative agency, projects that Postal Service deficits could reach $4.9 billion in barely two years.

In his remarks, Walker also says that the Postal Service has no comprehensive plan to address its numerous financial, operational or human capital challenges, adding: "The sense of urgency is growing. "

Walker is scheduled to deliver his testimony to the Senate Governmental Affairs Committee, headed by Sen. Fred Thompson, Republican of Tennessee, today. Thompson, who ordered the inquiry, vowed to press Postal Service leaders to reveal the true state of the agency's finances.

The Postal Service's spending is driving up its debt, which is expected to reach its $15 billion legal ceiling in the next 16 months. It is the nation's largest civilian employer, with nearly 782,000 career and 115,000 seasonal workers receiving a payroll of $1.6 billion every two weeks. The Postal Service is urging Congress to revamp its 1970-era legal framework to help reduce a projected deficit of up to $2.4 billion this year brought on by the nation's economic slowdown, high labor costs and customers' shifting to less expensive, Internet-based communications and bill-paying.

Spokesman Mark Saunders said the Postal Service wants the freedom to adapt more quickly to the changing economy by changing postal rates, introducing new products and cutting costs without the legal constraints imposed by Congress.

"We're not looking for deregulation; we're looking for re-regulation," he said.

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