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Postmaster General Talks About Ailing Postal Service

Aired November 8, 2001 - 10:22   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: John Potter, postmaster general, now testifying there in front of lawmakers. The key issue today is the post office requesting more money to help in the current anthrax scare and the fallout from it.

(JOINED IN PROGRESS)

JOHN POTTER, POSTMASTER GENERAL: The postal service is a critical element of our nation's infrastructure. It is the one element of our nation al government that has daily presence in every community in the nation, from the smallest town to the largest cities. The Postal Service is the lynch pin of the nine million person, $900 billion mailing industry. The postal service is coming off two years of negative net income, fiscal years 2000 and 2001, this despite record productivity increases during that same period.

Expenses rose faster than our rate of growth as a result of serving an ever-growing number of delivery points, an additional 1.6 million new delivery addresses each year, combined with hikes in employee salaries, hikes in energy costs, and increases in health benefit costs.

The fiscal year 2002 plan envisioned more of the same, with a planned loss of $1.35 billion, despite having just raised rates earlier this year. The potential for $2.5 billion loss in fiscal year 2003 compelled the board of governors of the Postal Service to vote for a rate case filing with the postal rate commission on September 10th this year for implementation of new rates in the fall of next year at the earliest.

Terrorism has exacerbated this bleak financial picture. The nation has been subjected to two distinct attacks, the September 11th terror attack and subsequent anthrax attack using the mail. Both were intended to kill and frighten Americans. The Postal Service has been the victim of both attacks.

Clearly, many Americans were concerned about what lay ahead in the future and the threat of anthrax in their mail. These concerns were reflected in significant losses and volume and revenue in September and October.

These months mark the start of the holiday mailing season, our busiest and most important time of the year. During this season, we generate a financial surplus, which carries through lower volume and revenue periods in the summer months.

While we are getting our hands around the short-term and long- term financial impact of the attacks, let me assure you that they are enormous. The financial impact falls into two categories. The first, a cost directly related to the September 11th and anthrax attacks. The second category relates to the business impact of these incidents.

In the category of direct impact of the terror attacks, the Postal Service has and will incur costs for damage to facilities and equipment in New York City, disruption of facility operations and associated mail handling costs, medical testing and emergency treatment of employees exposed to anthrax, protective equipment for our employees, environmental testing, and where necessary, remediation of postal facilities. Communication and education of employees and customers, implementation of new security procedures, detection technology, cleaning and filtration systems and equipment to sanitize the mail. The most significant of these expenses will be the purchase of equipment to sanitize mail and the cost associated with integrating this equipment into current operating systems.

Three criteria have been established for selection of the appropriate technology for use nationally. First, the technology must be capable of eliminating biochemical materials in the mail. Second, the technology must be compatible with postal operations. It should enable us to treat the mail and maintain current service levels. And finally, it should be the least costly, most effective technology, when considering both initial purchase cost and ongoing operating costs.

A risk assessment is under way to determine the look and amount of equipment to be purchased. With the assistance of Dr. John Marburger, director of the president's Office of Science and Technology, we have been able to assemble experts from various federal agencies, as well as research facilities throughout the United States. They have helped us to identify the available technologies that are compatible with our needs.

Over the coming months, we will be evaluating and testing these options. In the interim, we will use readily available technology and lease private sector facilities, where there is existing effective equipment.

President Bush has made $175 million available to the Postal Service for monies authorized by Congress for homeland security. We are using these monies to defray costs in the short run, including the initial purchase of sanitizing equipment.

HEMMER: John Potter, the postmaster general on Capitol Hill, talking about the ailing postal service in light of the attacks of September 11th, and clearly, the recent attacks of anthrax in the mail. You heard him say the figure $2.5 billion. His estimate right now what the post office has lost and the Postal Service has lost since the anthrax scare. There is another figure thrown about that, in total, it might be as much as $7 billion on the negative side to the postal system. And there will be some sympathetic ears in Washington, but clearly, this is a an issue that involves a lot of money with the airline industry and the bailout to the tune of $15 billion total payment and loans from the U.S. Government. The Postal Service right now saying they indeed need the help as well, something we will watch and listen to throughout the morning.

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