Rethinking Snail Mail In 21st Century

(CBS)  President Bush Wednesday signed an order creating a commission to look into overhauling and perhaps even privatizing the U.S. postal system.

The bipartisan nine-member commission will be led by two business executives: James A. Johnson, the vice chairman of Perseus, a financial services company, and Harry J. Pearce, the chairman of the Hughes Electronics Corporation.

The U.S. mailing industry runs about $900 billion a year — about 8 percent of the gross domestic product — and employs 9 million workers.

"Because the Postal Service touches every American and plays a crucial role in a $900 billion domestic mail industry, we cannot afford to ignore these challenges," White House spokesman Ari Fleischer said in a written statement.

Postmaster General John E. Potter will fight to maintain affordable, universal mail service, but said he welcomes the commission's work.

"Volume growth is at risk, from competition and technology, while the number of addresses and delivery points increase as the nation's population grows," Potter said.

The universal service requirement calls on the agency to provide First Class mail delivery to everyone in the country at a uniform price.

Of the service's 30,000 offices around the country, about half of them are not profitable, according to a Postal Service official.

However, Congress limits the post office's ability to close local offices, which are often seen as community hubs and gathering places.

A report is due July 31.

American Postal Workers Union president Bill Burrus told CBS Radio News he already knows what it will say.

"These nine individuals have nothing to do except show up, take the report out of their valises and present it to the American public," he said. "It's a done deal.

"This is an opportunity to achieve privatization of the U.S. Mail, [which] they would like to divide up among their cronies," Burrus said. "They can make a number of CEOs make $15 or $20 million a year."

Not so, said Treasury Under Secretary for Domestic Finance Peter R. Fisher.

"This is not a stealth project to privatize the Postal Service as an ideological term as you all think of it," he said. "This is about ensuring the long term viability of the Postal Service for mailers and for taxpayers. Nothing more and nothing less.

"We do want the commission to give us the best ideas they can to make our mail delivery system viable in the 21st century."

On Tuesday, the Postal Service reported it had ended its financial year in the red, but not as deeply as expected.

A work force reduction of 23,000 employees through attrition helped slice estimated losses in half, to $676 million, Potter told the agency's Board of Governors.

Officials had budgeted a loss of $1.35 billion for the year that ended Sept. 30. Last year, the Postal Service lost $1.6 billion.

Burrus predicted a privatized postal system of haves and have-nots, with customers in some areas pay $5 or more for each item delivered, or driving significant distances to pick up their mail.

"The real losers [from postal privatization] would be those in rural and inner city communities, those who least can afford the lost of United States Mail service," said Burrus.

The Postal Service operates under a law developed by a presidential commission in the early 1970s. It does not receive a taxpayer subsidy for operations and is required to pay its way from revenues and to break even over time.

Postal managers have contended in recent years that the long and clumsy system that takes nearly a year to change rates limits their ability to compete with private firms and to offer new types of service.

"Without postal reform, the widening divergence of volume growth and delivery point expansion will make it impossible to continue the long-term success that has been achieved since postal reorganization," Potter said Wednesday.

The other commission members will be Dionel Aviles, president of the Aviles Engineering Corporation; Don V. Cogman, chairman of CC Investments; Carolyn Gallagher, the former chief executive of Texwood Furniture; Richard Levin, president of Yale University; Norman Seabrook, president of the New York City Correction Officers' Benevolent Association; Robert Walker, chief executive of the Wexler Group; and Joseph Wright, chief executive of PanAmSat.