SENATE chairman demands Postal Service overhaul

<br>WASHINGTON (AP) _ Congressional leaders angry over two postal rate increases this year and talk of a third told Postal Service officials Tuesday that the country's system for mail must be overhauled.

Tuesday, May 15th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ Congressional leaders angry over two postal rate increases this year and talk of a third told Postal Service officials Tuesday that the country's system for mail must be overhauled.

``It's obvious that the ox is in the ditch big time,'' said Sen. Fred Thompson, R-Tenn., chairman of the Senate Governmental Affairs Committee.

The Postal Service is projecting losses this year of up to $2.4 billion, even after raising the price of a first-class stamp by a penny, to 34 cents. It announced earlier this month that it would increase rates on most other classes of mail, including post cards and advertising, on July 1.

Thompson said Congress must review 30-year-old Postal Service laws and ``nothing should be off the table, including the future of the postal monopoly itself.''

Postmaster General William J. Henderson, who retires this month, said he expects Congress to make major changes.

``I think the monopoly will be gradually reduced and opened to competition,'' he said. ``There's a lot of resistance to it today. It's kind of like speaking about the devil,'' he said.

David M. Walker, U.S. comptroller general, said there are serious problems in the agency and ``the answer is not merely to increase rates.''

In announcing the second round of rate increases this year, Postal Board Chairman Robert F. Rider said the agency acted ``to assure the financial integrity of the nation's postal system.''

Richard F. Strasser, postal chief financial officer, said at the time that the agency faces losses of between $1.6 billion and $2.4 billion this year.

He said that as recently as February the loss had been estimated at $3 billion, but the agency has cut spending by freezing hiring and some 800 building projects and by increasing productivity.

Postal officials also have suggested eliminating Saturday mail delivery as a way to save money, but the proposal drew criticism in Congress and elsewhere.

The board has raised the possibility of filing another rate case this summer designed to raise rates sometime next year.

While the post office no longer receives tax money for its operations, it remains a part of the government subject to supervision.