The Carter administration yesterday endorsed continued operation of the U.S. Postal Service as an autonomous, "businesslike" agency with one major exception - presidential appointment of the postmaster general.
In testimony before House subcommittees, a White House aide suggested that the postmaster general be named to a six-year term, subject to Senate approval. Since abolition of the old Post Office Department seven years ago, the top postal executive has been named by an independent, nine-member board of governors.
W. Bowman Cutter, executive assistant director of the Office of Management and Budget, said resumption of presidential appointment would give the Executive Branch "general control and perspective" over the U.S. Postal Servide while leaving day-to-day authority in the hands of an autonomous management.
The Carter spokesman also opposed any increase in federal subsidies to underwrite postal losses and refused to take a stand on proposals to end Saturday residential mail delivery or close little-used rural post offices. Such decisions properly are those of the postmaster general, Cutter stated.
While key Democrats in Congress applauded the administration's support for again making the postmaster general a presidential appointee - a view supported in legislation currently before postal subcommittees - they were angered by the President's apparent decision to back away from substantial reform of the Postal Service.
During his campaign for the presidency last year, Carter had called for returning the Postal Service to closer White House control. But, under repeated questioning yesterday, Cutter said that administration had concluded that the basic reforms launched in 1970 "remain viable and sound."
The White House official said postal working conditions have been "greatly improved," service "in most instances" is timely and productivity is at a high level.
He opposed provisions in legislation before the House that would eliminate the independent board of governors, and said the directors should be the final authority on postal policy. Cutter also opposed a provision that would permit Congress to veto postal rate increases.
Rep. James H. Hanley (D-N.Y.), chairman of the Subcommittee on Postal Operations and Services, immediately denounced the White House decisions.
"In essence, the administration would support those who envision a 24-cent stamp in few years and rate hikes for all classes of mail," he told Cutter. Without some changes in postal financing, the nation will have to "contemplate bankruptcy" for the agency, Hanley added.
Another ranking Democrat, Charles H. Wilson (Calif.) who heads the Postal Personnel and Modernization Subcommittee, also expressed shock at the administration's virtual support for the status quo.
"Why appoint the postmaster general if the purpose of the board (of governors) is still the same thing?" Wilson asked. He also emphasized that "it is not our intention" to have the postmaster general serve a six-year term, which effectively would insulate the position from immediate change because of a new national administration.
Cutter said the White House decision - based on recommendations of OMB and the Domestic Council which were sent to the President - represented a "balancing of two sets of concerns": that postal management requires "considerable" autonomy to make decisions but that issues of "great public importance" require a direct tie between the White House and postmaster general.
On the question of whether new subsidies should be approved to hold down proposed postal rate increases, the White House official said the administration supports a goal of self-sufficiency for the Postal Service by 1984, without new subsidy.
Cutter noted that proposed legislation that would permit a subsidy equal to 15 per cent of the previous year's postal budget would mean outlays would rise by between $14 billion and $16 billions over the next five years.
Give "scarce resources and infinite demands" from all sectors of the national economy new money should come from higher rates and postal efficiencies, he added. Permitting any agency increases based on a percentage of its budget removes incentives to cut costs and improve efficiency, he said.
For fiscal 1979, which starts Oct. 1, 1978, the proposed new subsidy would amount to $27 billion in addition to $800 million of funds appropriated to underwrite lower postage for publications.
A U.S. Postal Service spokesman said yesterday his agency now expects a deficit of about $400 million in the current fiscal year ending Sept. 30, down from $12 billion a year earlier.
To raise revenues and cover projected losses, the Postal Service already has proposed an extensive set of rate increases to take effect next May. The Postal rate proposals include a continued 13-cent, first-class rate for individuals but a boost to 16 cents an ounce for other users.
Overall the rate increases proposed last July would bring in more than $2 billion in additional annual revenues to balance a projected budget of some $2.4 billion in the 12 months starting next March 25.