Summary: GAO presented its views on the effectiveness of the Postal Reorganization Act. Five years ago, the Postal Service's financial problems were so severe that insolvency was a real possibility without short-term financial assistance. At that time, concentration on other aspects of postal operations was difficult. Today, the Postal Service is more financially stable than it was in 1976 from the standpoint of being able to meet current operating expenses without borrowing. The somewhat brighter financial picture of the Postal Service must be attributed primarily to increased postage rates and volume, an infusion of appropriated funds, and improved management of postal operations. However, the financial health of the Service remains closely associated with the state of the national economy. Unabated inflation would continue the upward spiral of labor and other costs. A slowdown in the economy would ultimately affect mail volume which tends to move in an almost linear fashion with changes in population, disposable income, and overall economic activity. All of this assumes no large-scale diversion of volume to other communication modes. GAO concluded that, despite this tenuous position, Congress' decision to create the Postal Service was well founded.
