In September 2000, the US Postal Service projected a surplus of $150 million for Fiscal Year 2001. By March 2001, however, postal officials project a deficit of between $2 and $3 BILLION.

What happened? That is exactly what the House Government Reform Committee will ask in a government oversight hearing on April 4, 2001. Committee Chairman Dan Burton (R-IN) has invited Postmaster General William J. Henderson to "explain the challenges facing the Postal Service in fulfilling its mission of high-quality, affordable, and universal service."

The Postal Service's projections of a surplus was based in part on the increase in postal rates that went into effect in January, 2001. However, the newly projected deficit prompted postal officials on March 8, 2001 to order a freeze on 800 construction projects around the country.

It has also been reported that the Postal Service is preparing to seek another increase in postage rates later this year.

The House Committee is expected to ask Postmaster Henderson to explain the dramatic and sudden shift in the Postal Service's financial outlook and his strategies for dealing with increasing economic challenges.

“Right before entering its busiest time of the year, the holiday season, the Postal Service was looking at big gains. Instead, it now seems that they’re going to be two to three billion dollars in the red,” said Chairman Dan Burton.

“We need to know what happened here. The Postal Service can’t continue to run this way without serious harm to the affordable mail service the American people deserve. Something has to be done.” The Chairman added, “We need to hear how the Postal Service plans to control costs. Beyond that, we need to look into turning the current problems into future solutions.”

Oversight of the Postal Service, having previously been handled at the subcommittee level, has been elevated to the full Committee in the 107th Congress.

In addition to Postmaster General Henderson, members of the Postal Board of Governors and Comptroller General David Walker have also been asked to testify. [Full list of witnesses]

In his testimony on April 4, 2001 Postmaster General Henderson suggested that in order for the Postal Service to operate within its budget, modernization would be necessary along with possible reductions of some customer services.

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