[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
MORE THAN STAMPS ADAPTING THE POSTAL SERVICE TO A CHANGING WORLD
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERAL WORKFORCE,
POSTAL SERVICE, AND THE DISTRICT
OF COLUMBIA
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 5, 2009
__________
Serial No. 111-37
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
----------
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts JOHN J. DUNCAN, Jr., Tennessee
WM. LACY CLAY, Missouri MICHAEL R. TURNER, Ohio
DIANE E. WATSON, California LYNN A. WESTMORELAND, Georgia
STEPHEN F. LYNCH, Massachusetts PATRICK T. McHENRY, North Carolina
JIM COOPER, Tennessee BRIAN P. BILBRAY, California
GERALD E. CONNOLLY, Virginia JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois JEFF FLAKE, Arizona
MARCY KAPTUR, Ohio JEFF FORTENBERRY, Nebraska
ELEANOR HOLMES NORTON, District of JASON CHAFFETZ, Utah
Columbia AARON SCHOCK, Illinois
PATRICK J. KENNEDY, Rhode Island BLAINE LUETKEMEYER, Missouri
DANNY K. DAVIS, Illinois ANH ``JOSEPH'' CAO, Louisiana
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
JUDY CHU, California
Ron Stroman, Staff Director
Michael McCarthy, Deputy Staff Director
Carla Hultberg, Chief Clerk
Larry Brady, Minority Staff Director
Subcommittee on Federal Workforce, Postal Service, and the District of
Columbia
STEPHEN F. LYNCH, Massachusetts, Chairman
ELEANOR HOLMES NORTON, District of JASON CHAFFETZ, Utah
Columbia MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois BRIAN P. BILBRAY, California
ELIJAH E. CUMMINGS, Maryland ANH ``JOSEPH'' CAO, Louisiana
DENNIS J. KUCINICH, Ohio
WM. LACY CLAY, Missouri
GERALD E. CONNOLLY, Virginia
William Miles, Staff Director
C O N T E N T S
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Page
Hearing held on November 5, 2009................................. 1
Statement of:
Bernstock, Robert, president, Mailing and Shipping Services,
U.S. Postal Service; Ruth Goldway, chairman, U.S. Postal
Regulatory Commission; Phillip Herr, Director, Physical
Infrastructure, U.S. Government Accountability Office;
Michael Coughlin, deputy postmaster general, U.S. Postal
Service (ret.); and Robert Reisner, president and CEO,
Transformation Strategies.................................. 15
Bernstock, Robert........................................ 15
Coughlin, Michael........................................ 41
Goldway, Ruth............................................ 27
Herr, Phillip............................................ 51
Reisner, Robert.......................................... 68
Letters, statements, etc., submitted for the record by:
Bernstock, Robert, president, Mailing and Shipping Services,
U.S. Postal Service, prepared statement of................. 17
Chaffetz, Hon. Jason, a Representative in Congress from the
State of Utah, prepared statement of....................... 7
Connolly, Hon. Gerald E., a Representative in Congress from
the State of Virginia, prepared statement of............... 9
Coughlin, Michael, deputy postmaster general, U.S. Postal
Service (ret.), prepared statement of...................... 44
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 11
Goldway, Ruth, chairman, U.S. Postal Regulatory Commission,
prepared statement of...................................... 30
Herr, Phillip, Director, Physical Infrastructure, U.S.
Government Accountability Office, prepared statement of.... 53
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio, prepared statement of................... 100
Lynch, Hon. Stephen, a Representative in Congress from the
State of Massachusetts, prepared statement of.............. 4
Reisner, Robert, president and CEO, Transformation
Strategies, prepared statement of.......................... 70
MORE THAN STAMPS ADAPTING THE POSTAL SERVICE TO A CHANGING WORLD
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THURSDAY, NOVEMBER 5, 2009
House of Representatives,
Subcommittee on Federal Workforce, Postal Service,
and the District of Columbia,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2154, Rayburn House Office Building, Hon. Stephen F. Lynch
(chairman of the subcommittee) presiding.
Present: Representatives Lynch, Norton, Davis, Cummings,
Kucinich, Clay, Connolly, Chaffetz, and Cao.
Staff present: Aisha Elkheshin, clerk/legislative
assistant; Jill Crissman, professional staff; Margaret McDavid,
detailee; Dan Zeidman, deputy clerk/legislative assistant; Adam
Fromm, minority chief clerk and Member liaison; Howard Denis,
minority senior counsel; and Alex Cooper, minority professional
staff member.
Mr. Lynch. Good morning and welcome. The Subcommittee on
the Federal Workforce, Postal Service, and the District of
Columbia hearing will now come to order. I want to welcome my
colleague and friend, Ranking Member Chaffetz, and members of
the subcommittee, hearing witnesses, and all those in
attendance.
The purpose of today's hearing is to examine what steps the
Postal Service has taken and plans to take since Congress
passed the Postal Accountability and Enhancement Act [PAEA]--
I'll try to keep the acronyms to a minimum--to use its
increased flexibility to grow revenue.
Furthermore, we are here to discuss barriers or limitations
to the Postal Service's innovations and what lessons can be
learned from foreign posts in this area. The Chair, ranking
member and members of the subcommittee each will have 5 minutes
to make an opening statement and all Members will have 3 days
to submit statements for the record.
Ladies and gentlemen, I will yield myself 5 minutes for my
opening statement. In the series of hearings the subcommittee
has held on the Postal Service thus far this year, the
discussion has tended to focus on the Postal Service's bottom
line or its cost-cutting and consolidation efforts; and
rightfully so, as the past 2 fiscal years have presented some
significant financial challenges for the Nation's mail system.
However, today the subcommittee convenes not to discuss
what the Postal Service has been doing to reduce expenditures,
but more so to learn about what the organization is doing to
grow revenue and the overall value of mail as part of an
ongoing effort to bring about fiscal turnaround.
Today, almost 3 years since the passage and enactment of
the landmark Postal Accountability and Enhancement Act, we look
forward to hearing what exactly has been done to grow the
business under the new price flexibilities and product
innovations afforded to the Postal Service in 2006.
First, however, I must briefly acknowledge the financial
reality before us. The Postal Service expects a net loss of
approximately $7 billion for fiscal year 2009 prior to
accounting for the recent legislation in the form of a $4
billion deferred payment to the Retiree Health Benefit Fund.
I'm pleased Congress was able to grant the Postal Service
authority to defer a share of its Retiree Health Benefits
prepayment, which allowed the organization to meet its
financial obligations and improve its cash position. However,
as my friends from both sides of the aisle acknowledged last
month, the relief measure was only a temporary solution to a
host of long-term problems.
Moreover, I would like to note that this was not a bailout.
Many Americans think the Postal Service is largely supported by
Federal Government dollars. It is not. This is an important
point I want to stress. The Postal Service is over 99 percent
self-supporting with less than 1 percent of its funds provided
by the Federal Government to support important things like mail
for the blind and overseas voting. Again, that is less than 1
percent.
Additionally, up until postal reform, the Postal Service
operated under the so-called break-even mandate preventing the
organization from even making a profit. Post PAEA--I'm trying
to stay away from these acronyms--the Postal Accountability and
Enhancement Act, however, the Postal Service is now permitted
to operate more like a business in terms of profit earning and
product diversification.
To that end, I look forward to hearing from today's
witnesses on the extent to which the Postal Service has
attempted to grow its business from the novel summer sale to
the offering of flat-rate boxes and holiday greeting cards.
Today's hearing is intended to examine the steps that the
Postal Service has taken and the results achieved so far in the
area.
And looking to the future, Postmaster General Jack Potter
recently described several initiatives the Postal Service is
potentially interested in to diversify and grow revenue. He
observed that the Postal Service has more retail outlets in the
United States than McDonalds, Starbucks, and Wal-Mart combined.
Perhaps surprising to some, he proposed that the Postal
Service should be permitted to offer its customers alternate
services such as banking, insurance, and telecommunications.
Given past experiences and the extreme caution required when
enterprising a business, I'm interested in hearing the extent
to which these newly proposed ideas have been vetted, as well
as what risks have been evaluated.
Further, I have asked today's witnesses to address what
lessons can be learned from foreign posts in the area of
product and service development and diversification. I know
there are some foreign posts such as those in Japan and France
that offer banking services and sell mobile phones, for
example. However, I also know that several countries have
privatized their Postal Services, while the U.S. Postal Service
remains an independent Federal establishment of the U.S.
Government.
In the coming months, our subcommittee will continue to
provide close oversight of the Postal Service, including an in-
depth examination of the Postal Service's business model to
help determine which longer-term changes are necessary to help
the Postal Service return to financial viability. The Postal
Service undoubtedly needs to move forward with its efforts to
grow its revenue and increase the value of mail, perhaps even
more so than focusing on cutting costs or reducing its Retiree
Health Benefit obligations.
I thank each of you for being with us this morning. I look
forward to your participation and I yield for 5 minutes to the
ranking member, Mr. Chaffetz.
[The prepared statement of Hon. Stephen Lynch follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Chaffetz. Thank you, Mr. Chairman, and thanks for
agreeing to hold this very important discussion. My comments
will be brief because we came to listen and hear from this
panel. But let me just concur and echo the sentiments the
chairman articulated, as I think he has it exactly right.
We will obviously spend time and attention talking about
cost-cutting measures, but at the end of the day we need to
increase the relevancy of the U.S. Postal Service. In order for
it to thrive and to serve the citizens of the United States of
America, we need to increase its relevancy. At the same time, I
think there needs to be caution in making sure that we are not
tripping on top of the private sector and, maybe with good
intentions, maybe some unintended consequences competing in a
space that is probably best left to the private sector.
Yet the U.S. Postal Service, under our Constitution, has a
unique place in this country. And I would like to see us do
more. One of the things in particular that I think we should
pay attention to: What is the cross functionality that we can
take advantage of with other segments within government? One,
for instance, that I would like to see us continue to pursue is
the conducting of the U.S. census, something we do every 10
years, given $14 billion in order to execute it. We have real
estate, we have very able people. Again, something I think we
should continue to pursue.
What are the things that we can do with FEMA, what are the
things we can do with other government agencies that need the
types of resources that are uniquely provided by the U.S.
Postal Service?
So I look forward to your comments. I appreciate the
chairman's approach on this as well. And I hope this is the
start of a series of dialogs about the potential impact of the
potential new openings and increased relevancy for the U.S.
Postal Service. And with that, Mr. Chairman, I will yield back
the balance of my time.
[The prepared statement of Hon. Jason Chaffetz follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Lynch. Thank you. I know the gentleman has recently
arrived. I would like at this point to yield 5 minutes to the
gentleman from northern Virginia, Mr. Connolly, for 5 minutes.
Mr. Connolly. Thank you, Mr. Chairman, and thanks for
holding this hearing on the long-term viability of the Postal
Service. This is precisely the type of process we should be
conducting in order to determine those changes that will enable
the Postal Service to thrive in the future. In general, we
should be wary of short-term cost-cutting measures that could
reduce Postal Service market share and revenue in the future,
such as a shift, for example, to 5-day mail delivery. Instead
it would preferable, from my point of view, to examine changes
that enable the Postal Service to augment its existing sources
of revenue.
I'm pleased the Postal Service is examining 15 new revenue
sources that could complement mail service. These changes
should not be limited to marginal changes. For example, perhaps
it would be possible for the Postal Service to work in
partnership with community banks to integrate banks and post
offices in a manner that would help both existing community
banks and the Postal Service itself.
The goal of exploring these new revenue options should be
to preserve the outstanding services offered by the Postal
Service. We all benefit from affordable and convenient mail
delivery. The ability of the Postal Service to deliver mail
quickly, 6 days of the week, not only protects our
constituents' quality of life but also creates opportunity for
businesses that rely on mail for advertising and product
distribution. If the Postal Service did not exist, there is
little doubt that the mailing market would have oligopolistic
characteristics with negative implications for affordable and
consumer choice.
The Postal Service continues to play an important role in
limiting the prices of sending mail and packages, which helps
all consumers. The Postal Service also makes an important
contribution to our economy. Approximately 615,000 people work
for the Postal Service, generally earning high union wages, or
fairly high union wages. During the Bush administration, for
the first time in history, median wages for American families
actually fell during a full economic cycle of expansion,
recession, and recovery. Protecting high-paying blue collar
jobs such as those provided by the Postal Service must be part
of our broader efforts to help the economy recover.
Thanks again, Chairman Lynch, for holding this important
series of hearings on the long-term viability of the Postal
Service, and I look forward to hearing from our witnesses.
Mr. Lynch. Thank you.
[The prepared statement of Hon. Gerald E. Connolly
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Lynch. The Chair now recognizes the gentleman from
Maryland, Mr. Cummings, for 5 minutes.
Mr. Cummings. Thank you very much, Mr. Chairman, and I too
thank you for holding this critically important hearing on
adapting the Postal Service to our changing world. The U.S.
Postal Service is the second largest civilian employer, with
approximately 623,000 career employees.
Although consumers rank the Post Office as one of the most
trusted government agencies and it continues to excel, the Post
Office has not been immune to the downward economic trends
currently facing our Nation. While final numbers are not
available yet, it is estimated that the Post Office will
experience a $6.2 billion loss, which is over two times more
than last year's loss. This loss can be attributed largely to
two factors: No. 1, the unprecedented decline in mail volume
due to increased use of electronic communications and other
factors; and No. 2, the economic recession that is affecting
all sectors.
The Postal Service has been making a number of aggressive
cost-cutting measures, but I'm interested in hearing about the
new innovative ideas our panelists will present today. The
Postal Accountability and Enhancement Act was signed into law
in December 2006, allowing for flexibility in how services are
designed, priced and marketed. Because of that flexibility, the
Post Office has been able to create new innovative programs
such as the standard mail volume incentive pricing program this
past summer. The summer sale provided a 30 percent rebate to
eligible mailers on letters, volume above a specific threshold.
This program is estimated to have generated at least $50
million in sales.
The Postal Service has also restructured its Web site and
created mobile device functionality for its customers. This
allows greater accessibility and added convenience for postal
users. For 44 cents, we can send a letter anywhere in the
United States. We now all would have to admit that's a pretty
good bargain. The Post Office is and continues to be reliable
and of great value.
I look forward to the discussion today about expanding
services and nonpostal products directly or in partnership with
private-sector entities, and what Congress can do to help the
U.S. Postal Service.
And with that, Mr. Chairman, I yield back.
Mr. Lynch. I thank you.
[The prepared statement of Hon. Elijah E. Cummings
follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Lynch. The Chair now recognizes the distinguished
gentleman from Illinois, Mr. Davis, for 5 minutes.
Mr. Davis. Thank you very much Mr. Chairman. And let me
just echo the sentiments that have already been expressed by my
colleagues in thanking you for calling this hearing.
I think that the Postal Service is one of those critical
elements of our communications system that must be seriously
addressed. So I'm eager to hear an analysis of the impact of
the efforts that have been put forth by Postmaster General
Potter and his staff and the other entities associated with
trying to make sure that we maintain the viability of our
postal operation.
When I think of what we are facing with the impact of
electronic communication and all of the other economic
indicators that are upon us, we recognize that it is no easy
task and that there are no simple solutions to very complex
issues. But I want to commend you for your leadership as
chairman of this subcommittee, how you have been moving things
along to try and help assure that our postal operations will
continue as viable instruments of our communication system.
So I want to thank you very much and look forward to
hearing the witnesses.
Mr. Lynch. I thank the gentleman for his kind words.
What I would like to do, it is the custom of this
subcommittee to swear its witnesses before they provide
testimony. And I invite you to stand and please raise your
right hands.
[Witnesses sworn.]
Mr. Lynch. Let the record show that all of the witnesses,
each of the witnesses, has answered in the affirmative.
What I would like to do now is just offer brief
introductions of our panel of witnesses.
Mr. Robert Bernstock was named President of Mailing and
Shipping Services, a new division at the U.S. Postal Service,
in June 2008. He is responsible for development and management
of all retail and commercial products for the Postal Service,
including commercial sales and services. Mr. Bernstock has
extensive senior leadership experience with Campbell Soup Co.,
Scotts Miracle-Gro, and Vlasik foods among others.
The Honorable Ruth Goldway was designated chairman of the
U.S. Postal Regulatory Commission by President Barack Obama on
August 6, 2009, and has served with the agency since 1998. She
is an experienced regulatory and public affairs professional
with expertise in citizens' participation, consumer issues,
urban planning issues, as well as the mailing industry.
Mr. Michael Coughlin is a recent retiree from Accenture, a
global consulting technology and outsourcing firm where he
helped to manage senior-level relationships with postal clients
around the world. Mr. Coughlin also spent 32 years with the
U.S. Postal Service serving as Deputy Postmaster General and a
member of the Board of Governors from 1987 to 1999.
Mr. Phil Herr is Director of the Physical Infrastructure
Team at the Government Accountability Office. Since joining GAO
in 1989, he has managed reviews of a broad range of domestic
and international concerns. His current portfolio focuses on
programs at the Postal Service and the Department of
Transportation.
Mr. Robert Reisner is president and CEO of Transformation
Strategies and has been a management consultant for more than
20 years, specializing in strategic market transformation. He
has previously served in the executive positions at the Postal
Service, including vice president for strategic planning from
1996 to 2001.
We will now begin our witness testimony.
Mr. Bernstock, you are recognized for 5 minutes.
STATEMENTS OF ROBERT BERNSTOCK, PRESIDENT, MAILING AND SHIPPING
SERVICES, U.S. POSTAL SERVICE; RUTH GOLDWAY, CHAIRMAN, U.S.
POSTAL REGULATORY COMMISSION; PHILLIP HERR, DIRECTOR, PHYSICAL
INFRASTRUCTURE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; MICHAEL
COUGHLIN, DEPUTY POSTMASTER GENERAL, U.S. POSTAL SERVICE
(RET.); AND ROBERT REISNER, PRESIDENT AND CEO, TRANSFORMATION
STRATEGIES
STATEMENT OF ROBERT BERNSTOCK
Mr. Bernstock. Good morning, Mr. Chairman, and members of
the subcommittee. I appreciate your interest in the revenue
generation activities of the Postal Service, as that is the
primary focus of my work.
I would like to begin by recognizing Congress' active
support of the Postal Service this year, especially your
understanding of the urgency behind changing the retiree health
benefit payment structure for fiscal year 2009.
The Postal Service continues to face severe financial
challenges. Our auditors are currently reviewing our fiscal
year 2009 financials, and while I cannot give you the precise
figures, I can say that despite heroic cost reductions of over
$6 billion, we expect our mail volume to decline by
approximately 26 billion pieces, with a net loss of over $7
billion, prior to accounting for recent legislation.
There is no certainty that mail volume levels will recover
or if they will continue to decline, to be replaced with other
forms of communication. We are certain that without significant
changes, the potential exists for similarly large financial
losses in the foreseeable future.
We are actively engaged in a four-pronged effort to correct
public service finances. The first and most obvious approach is
to continue to aggressively bring down our costs. The Postal
Service has set very aggressive cost-reduction targets. The
change in delivery frequency from 6 days to 5 days and
modification of retiree health benefit fund payments are both
integral elements of the second strategy.
The third and fourth paths are the subject of today's
hearings: to be equally aggressive in our efforts to grow
revenue within the law and to change the law to provide greater
product and pricing flexibility.
An example of how we utilize our pricing freedoms enabled
by the Postal Act is the standard mail summer sale. Working
with the PRC, we developed the summer sale, offering a 30
percent price discount on incremental volume on advertising
mail for 3 months over this summer. We are still evaluating
this program, but preliminary information suggests that over
400 of our largest customers participated and mailed a
significant number of incremental pieces of standard mail to
help stimulate the economy.
I would like to give special thanks to the PRC for its
quick and thorough review of this proposal.
The summer sale, along with other revenue-generating
initiatives that I describe in some detail in my written
testimony, like the priority mail advertising campaign,
priority mail contract pricing, and consumer products at
retail, including greeting cards, are all underway, already
taking advantage of the flexibility afforded by the Postal Act.
Some have already generated incremental revenue, and others are
just hitting the marketplace.
There are additional initiatives described in my testimony
that are still in the planning stages designed to extend or
transform the business by expanding the core capabilities into
new business areas.
Three examples are, first, renewed approaches to the
distribution of product samples; second, the extension of
passport processing and enrollment services to secure
credentials; and third, the exploration of hybrid mail that is
either sent, delivered, or both, in digital form.
One of the purposes of today's hearing is to examine the
constraints that hold the Postal Service back. I outline
specific requests for changes in the postal law in my written
testimony, including the authority to provide services to State
and local authorities in addition to Federal agencies, to
provide explicit authority for purely electronic equivalence of
the traditional physical services, and to provide more freedoms
to leverage our existing assets, especially our retail assets.
While I'm excited about our revenue-generating projects and
the potential for greater freedoms, I want to be clear that
revenue alone is not sufficient to close the earnings gap. Even
at a 15 percent pretax profit margin, it would take profit
generated by almost $45 billion in new revenue to fill that
earnings gap. The four prongs together are necessary to provide
a framework for the Postal Service to be self-sustaining while
fulfilling our universal service obligation at service levels
the country has come to expect.
We are very proud of our accomplishments in meeting the
communication and commerce needs of the country. But we
recognize that without the help of Congress, we cannot close
our significant profitablity gap and adequately meet our
universal service obligation.
I would like to thank the subcommittee for holding this
hearing and to reaffirm my personal commitment to working with
you to ensure a Postal Service that meets the mailing and
shipping needs of the American public. I would be pleased to
respond to any questions you may have.
Mr. Lynch. Thank you.
[The prepared statement of Mr. Bernstock follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Lynch. Ms. Goldway, welcome. You are now recognized for
5 minutes for an opening statement.
STATEMENT OF RUTH GOLDWAY
Ms. Goldway. Thank you. Good morning, Chairman Lynch,
Ranking Member Chaffetz, Congressmen Davis, Connolly, and
Cummings. I'm pleased to be here today.
The subcommittee has a critical role to play in preserving
a treasured American asset. The Postal Service is a government
agency that connects together every American household,
business and institution through its universal service network.
It is a part of our daily life, taken for granted until taken
away; part of the fabric of the Nation, supporting its
educational, political, and charitable institutions.
Congress has played an ongoing role in revitalizing the
postal system most recently through the PAEA. The law was
designed to preserve the Service's historic attributes, while
providing change for the 21st century. But it was enacted at a
time when both the economy and the Postal Service appeared
strong. Now the landscape has changed. I think the PAE is
working, but it is hard to see how well, given the recession.
There have been clear successes. First, the Commission and
the Postal Service who work together to take advantage of
competitive flexibilities in the law. Through our rate process,
the Postal Service has used its pricing power to significantly
increase the rate of return on its overall competitive product
line. Mr. Bernstock provided the details.
Second, this year the Commission approved the Postal
Service's first-ever request to test seasonal price incentive
programs for standard and first-class mail, as well as the
first and only experimental product submitted under the PAEA.
Third, the Postal Service NSA proposals have accelerated
under the new law, rising 900 percent in less than 3 years.
Preliminary data on revenue-generation activities indicate that
overall results have been positive but modest.
Since the majority of these efforts involve price
discounts, they result in limited additional revenue and
provide significantly less contribution to overhead. So while
the Commission would like to see more progress being made,
particularly in the experimental area, there has been a
reasonable effort expended to use the new law.
The truth is that the powerful downturn in the economy
which has caused a sharp contraction in key mailing industries
like housing, finance, and automobiles would have overwhelmed
even the most ambitious of these efforts. There is a tremendous
difference between a gradual annual decline of 1 or 2 percent
in first-class mail, which was the trend addressed by the PAEA,
and a 13 percent drop in volume experienced this year.
As a result, the Postal Service could not make its payment
to the Retiree Health Care Benefit Fund [RHBF], and received $4
billion in relief this year from Congress. And for the
immediate future and perhaps some time to come, the situation
appears likely to continue.
The Postal Service has suggested that it needs additional
freedoms modeled on the examples of foreign posts. The
Commission is open to considering new perspectives; however, we
believe they need to reflect American experience and tradition.
My written testimony includes several examples from foreign
posts. There may be some activities that fit the American
model, but there is no magic bullet. Any new business
activities should meet a set of reasonable but specific
criteria, based on the core mission of the Postal Service, the
needs of society, and the expectation of a positive outcome for
both. The rationales that others are doing it does not satisfy
the criteria.
Honestly, the Postal Service has directed most of its
management resources toward reducing its cost this year by more
than $6 billion. Cuts continue--from adjusting mail routes and
renegotiating purchase agreements to removing collection boxes,
consolidating plants, and closing post offices. Now the
Postmaster agenda has asked to lift the statutory language
requiring 6-day delivery.
The Commission views proposals to reduce service with
caution. Service cuts made to address near-term financial
difficulties may have harmful long-term consequences for
universal service. And from a market perspective, the Postal
Service could harm its greatest strategic advantage, its
ubiquity.
I suggest a better alternative that Congress may wish to
amend the provisions of the PAA that set the RHBF's payments.
The annual average payment of $5.5 billion is an enormous
burden. The Commission study of alternate RHBF values found
that significantly lower payments by the Postal Service could
still meet the original funding objectives of the law.
Recalculation would be timely, as it would capture the Postal
Service's sizable work force reduction. Further, it would
provide breathing room, resources for new initiatives, and some
capital investment to enable better long-term planning for the
Service's future.
Looking forward, the Postal Service currently provides a
number of nonpostal services that could generate new revenue.
For example, the Postal Service now processes passports for the
State Department. Other Federal and State agencies that issue
licenses and permits or have retail initiatives could partner
with the Service as well. The ``America the Beautiful access''
passes sold by the National Park Service is a partnership I
have been advocating in particular.
Considering our Nation's energy efficiency priorities, the
Postal Service has the Nation's largest civilian vehicle fleet,
which could provide the critical mass needed to develop the
transformational technologies and infrastructure to be in our
national energy goals. Research indicates that postal delivery
routes are especially well-suited to electric vehicles. A
national investment and a new fleet for the Postal Service
would speed transformation, add green jobs, and reduce the
Postal Service's operational overhead for the foreseeable
future.
Those of us in the mailing community have confidence in the
value of the mail, and it is important to our economy and
society. We believe that mail, letter carriers, and post
offices serve a vital role in our community. How well the mail
comes back, however, may well depend on how deeply service is
cut now.
That concludes my statement, and I would be happy to answer
any questions you may have.
Mr. Lynch. Thank you.
[The prepared statement of Ms. Goldway follows:]
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Mr. Lynch. Mr. Coughlin, welcome. You're now recognized for
5 minutes.
STATEMENT OF MICHAEL COUGHLIN
Mr. Coughlin. Thank you, Mr. Chairman, and members of the
subcommittee. The chairman did earlier just introduce me. I am
Michael Coughlin. I want to make clear I am here not
representing any particular organization or group, but I have
spent over 40 years in the postal industry. I did spend 32
years with USPS, and for the last 10 years I have been working
in a consulting role primarily focused on foreign posts.
I have been asked here today to share my perspective on the
revenue-generation efforts of the foreign posts and the lessons
we might take from those here in the United States.
My written statement touches on the range of initiatives
undertaken by foreign posts and summarizes the very levels of
success that some of them have had. I'm not going to rehash
those here. But let me get right to what I think are the common
success factors that some of these posts have had in raising
alternative revenues and some of the lessons we might glean
from them.
When I look at something like 15 different postal
organizations around the world and their revenue-generation
efforts, I see four kinds of common management characteristics
among the more successful of those, at least in the revenue-
raising efforts.
Those four characteristics include real clarity around
strategic direction and a narrow focus on markets and segments
that they want to target. They know what they want to do and
they do it.
There is a strong innovation agenda in these organizations
and a forward-looking culture that embraces change. In those
organizations, innovation is an expectation.
These posts generally have the ability to recruit top
talent. Many of the key players, particularly on the revenue-
generation side, come from outside the traditional postal
experience. And one other common factor among them is they tend
to focus when they undertake those initiatives on the customer
experience and making that as positive as possible. Whatever
the successful posts set out to do, they strive to do it better
than the competition.
Now, these are the four kind of common characteristics, and
these are largely created by the management themselves, and for
the most part--there are some exceptions--but for the most part
I think these are generally within the current capability of
USPS. But every bit as important to their success is the set of
conditions that the governments of these posts have put in
place as they have looked at their posts and their futures.
There are three critically important conditions that they
they tend to have in common. The legal framework within which
they operate provides complete commercial freedom of action to
operate in a competitive market. They operate very much like
private entities do in their country and in this country as
well.
The regulator in these countries usually has a light and a
supporting hand, and their primary focus is generally on
universal service issues, the reserved areas, and the
generation of competition in their local postal markets.
Third, there is little political interference in the basic
business decisions that these posts make, provided the post
operates within the legal framework they have been given.
In my judgment, these are the fundamental success factors
for those posts in virtually all aspects of their operations.
And, of course, they generally have very solid leadership and a
very effective governance structure at those posts.
So what does this mean for USPS? Mr. Chairman, and members
of the subcommittee, I think there are two other important
factors to keep in mind in a discussion of revenue initiatives
and the authority and the flexibility that USPS has under the
law.
The first of these issues is scale. I do not want to
discourage anyone, but the problem USPS faces today is measured
in billions of dollars. Finding new sources of revenue for USPS
is important. But think about it: 1,000 projects, worth $1
million each, will generate $1 billion; or make it 10 projects,
worth $100 million. And that may not be enough.
While the recent reform law provided some additional
flexibility to the Postal Service, I frankly have not heard of
any initiatives approaching anything like that, and I don't say
that to denigrate in any way what the Postal Service and its
colleagues have tried to do. But to have a real impact in this
area, it's going to take some different and some very big
thinking.
The second issue is every bit as challenging. Unlike most
of the posts I have discussed today, here in the United States
there is a very strong philosophical aversion to a government
entity competing in private markets with goods and services
that are already available from private sources. In the past,
when USPS has attempted to offer such services, there has been
very strong and noisy resistance, and eventually USPS hears
from some of you. I have personally experienced that. I do not
see that situation changing simply because the postal revenue
problem is bigger today.
Now, given this latter challenge, whatever revenue
initiatives the USPS undertakes outside the traditional postal
arena will probably have to involve partnerships and alliances
with private entities where both parties can leverage the
strengths of the other. In the case of USPS, it has enormous
geographic reach in its retail network, and they touch
virtually every home in the country throughout their delivery
network. Some of the opportunities might include expanded
financial services availability, expanded delivery options,
government and agency services, or a link between the physical
presence of the USPS and emerging communications technologies
and services.
After hearing the Postmaster General's October 8th speech
at the National Press Club, I can imagine that some of the
bankers in this country were bristling when the Postmaster
General answered a hypothetical question at his National Press
Club speech about what new business he would like to be in, by
saying he would like to be a bank. Well, instead of immediately
thinking----
Mr. Lynch. Mr. Coughlin, you need to wrap up. We are way
over on your time.
Mr. Coughlin. Instead of thinking defensively, perhaps the
bankers ought to put their innovative hats on and try to
imagine how they can capitalize on what USPS has to offer. The
same goes for other organizations looking for really new ways
of engaging their customers.
So what have we learned from foreign posts? Frankly, I
think we have learned that what they are doing is interesting
but it's not terribly applicable to the USPS.
Thank you, Mr. Chairman.
Mr. Lynch. Thank you sir.
[The prepared statement of Mr. Coughlin follows:]
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Mr. Lynch. Mr. Herr, welcome back. You are now recognized
for 5 minutes. Thank you.
STATEMENT OF PHILLIP HERR
Mr. Herr. Chairman Lynch, Ranking Member Chaffetz, and
members of the subcommittee, I'm pleased to appear again before
this subcommittee today to discuss the Postal Service's
revenue-generation initiatives. First, I will provide an update
on the Postal Service's financial condition; second, discuss
revenue-related changes made by the Postal Accountability and
Enhancement Act of 2006 [PAEA]; third, outline actions the
Postal Service has taken to increase revenue since 2006; and
fourth, discuss issues related to generating new postal
revenues.
Turning first to the Postal Service's preliminary financial
results in fiscal year 2009 and going forward, mail volume
declined about 28 billion pieces, and revenue declined from
about $75 billion to $68 billion. Congressional action was
required to reduce the Postal Service's mandated retiree health
payment by $4 billion. Outstanding debt increased by $3 billion
to $10.2 billion. At this pace, the Postal Service will reach
its $15 billion statutory debt limit in fiscal year 2011.
Further, deficits over $7 billion are predicted in fiscal years
2010 and 2011.
With regard to revenue generation and key postal products,
PAEA gave the Service greater pricing flexibility, including
for market-dominant products to generate 88 percent of its
revenues. Market-dominant mail is generally subject to an
inflationary price cap. Competitive products are not subject to
a price cap, but each competitive product must have cover its
costs.
PAEA prohibited the Postal Service from offering new
nonpostal products and services.
Turning to actions that the Postal Service has taken since
PAEA was enacted, the Service increased average rates for
market-dominant mail in 2008 and 2009 at virtually the maximum
allowable under the price cap. This year, three targeted rate
incentives were provided to stimulate mail volume. A summer
sale was introduced for standard mail, and there is an ongoing
fall sale for first-class mail and an incentive program for
saturation mail.
For competitive products, there are annual rate increases
for priority and express mail in 2008 and 2009, and the Service
introduced volume discounts for these types of mail as well as
a priority flat-rate box.
The Postal Service has entered into about 90 contracts with
large mailers for other competitive products that are generally
volume-based, with provisions intended to lower its costs. With
regard to generating increased revenues, the Postal Service has
asked Congress to change the PAEA restriction on offering new
postal products so that it could move into areas such as
banking, insurance, and nonpostal retail services.
We previously analyzed past Postal Service forays in the
nonpostal area, reporting a loss of nearly $85 million in the
mid-nineties on 19 new products, including electronic commerce
services and a remittance processing business.
In 2001, we reported that none of its electronic commerce
initiatives were profitable, and the management of these
efforts was fragmented.
The Postal Service's interest in moving into new business
lines raises several fundamental questions. Should the Postal
Service compete in areas where there are already private sector
providers? Should antitrust and consumer protection laws apply
equally to the Postal Service and its competitors? If the
Postal Service were to compete in banking, insurance, and
retail services, should it be subject to the same regulatory
entities as its competitors? If the Postal Service used its
37,000 retail facilities to offer new nonpostal services, would
this provide an unfair competitive advantage? And how would
nonpostal activities be financed, given the Service's current
debt levels? Would it be allowed to borrow at Treasury rates?
In conclusion, we added the Postal Service to our high-risk
list this past July, noting that it urgently needs to
restructure to remain financially viable. Although it has used
its pricing and product flexibility, results to date have been
limited, in part linked to the economy. At this point, the
Postal Service has no business plan that clearly details its
proposals for entering new nonpostal markets and what specific
legislative changes would be needed.
Generating new revenues from Postal Service products and
services appears more promising than venturing into potentially
risky nonpostal areas. At the same time, much work remains to
reduce postal operational costs.
Mr. Chairman, this concludes my statement, and I'm pleased
to answer any questions. Thank you.
Mr. Lynch. Thank you sir.
[The prepared statement of Mr. Herr follows:]
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Mr. Lynch. Mr. Reisner, welcome. You are now recognized for
5 minutes.
STATEMENT OF ROBERT REISNER
Mr. Reisner. Good morning, Mr. Chairman, Ranking Member
Chaffetz, and members of the subcommittee. In my statement I
explain why I believe the Postal Service and the mailing
community can become a source of innovation and new postal
revenue through public-private partnerships that were
encouraged by Congress in section 1004 of the Postal
Accountability and Enhancement Act.
Today there is a broad consensus that bold action must be
taken to reinvigorate the Postal Service, and fortunately there
are some real and tangible opportunities to create new value
for postal customers.
To be clear, let me offer a few examples that might be
called Enabling the Last Mile, Extending Democracy's Reach, and
Promoting Green Routes.
By enabling the last mile, I refer to the many
opportunities that exist for putting technology in the hands of
the letter carrier; in other words, on the doorstep of the
postal consumer. One of the areas of greatest interest to
mailers has been wanting to know where their mail is while it's
en route to its destination. The USPS was seen as a black hole
compared with FedEx and UPS, who have invested billions to
enable their higher-end services to track and trace mail
products. This is going to change imminently because the Postal
Service is on the verge of creating a smart grid of intelligent
mail services. Now we can go beyond the bar code and offer
tracking technologies that have exciting possibilities for
adding new value for customers. What's more, we can download
applications to the scanner technology that is finally, within
the last 6 months, in the hands of the letter carriers.
Customers can realize new, tangible benefits, and new postal
revenue can be created. But to make this happen, we need to
collectively create an innovative enterprise of tests and
trials and partnerships.
A second broad theme that Chairman Ruth Goldway, in
particular, has championed has been Vote by Mail. The Postal
Service can do this and can provide many other government
services as well. To be practical and secure, it will require
connecting hard-copy services to Internet services, and that
will necessitate partnerships. But the opportunity to expand
the capacity of the Postal Service to continue to serve as
democracy's agent is here.
And third, there are opportunities for the Postal Service
to again serve the Nation by carrying parcels that today cause
three and four trucks to travel the same route. We can reduce
carbon emissions by creating green postal routes. This will
take some reengineering and perhaps some recognition under cap-
and-trade, but there are new opportunities here if we seize
them.
In conclusion, I didn't invent these ideas, they came from
the community, from the mailing community, from letter
carriers, who have said, why not? They come from creative
mailers who have said, why can't we have a smart envelope? And
from suppliers who have shown how to do it. To tap this
creativity, mindsets that were established when the Internet
was still a future vision have to be changed. To homegrown
governmental Internet services, it's time to say, That was
then, this is now.
In the future, innovation is going to come through
collaboration and partnership where the Postal Service does
what it does best and where the private sector, through
partnerships, provides Internet services and makes mail
relevant to the consumer of the future.
If we make the modern Postal Services relevant by
connecting them to this multichannel Internet marketplace, they
will generate more mail. This is the real revenue opportunity
entailed in what we are talking about here today.
The coming years could be an exciting time of
transformation, or they could bea train wreck. The difference
will be whether there is clear public policy guidance that can
define the difference between the creative balance of what
should be public and postal, and what the private sector can do
best.
Thank you very much Mr. Chairman. I look forward to
answering any questions.
Mr. Lynch. Thank you.
[The prepared statement of Mr. Reisner follows:]
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Mr. Lynch. I yield myself 5 minutes for questions.
Mr. Bernstock, I do appreciate your honesty in your
statement that we are not going to solve this on the revenue
side alone. I think that's apparent just by the numbers. In
2008, we saw mail volume go down 9.5 billion pieces, and then
in the fiscal year ending October 1, 2009, we saw it drop 26
billion. There is no way in the near term that we can turn the
system around and solve that problem by selling more greeting
cards or any other service that we might be capable of doing
right now.
And at the same time, we are a little bit disappointed up
here with the consolidation effort and the cost-saving side. It
does not appear that the original target of closing maybe 1,400
facilities is anywhere near probable. I think the Post Office
has reduced its consolidation numbers to below 400 now, and it
won't nearly capture the savings that we thought were possible.
As well, the early retirement incentives that--well, not
great incentives--but the programs themselves have not gleaned
the type of utilization on the part of the employees, so we
still have a lot of people that are resisting an early buyout,
we still have a large work force, understandably so. Those
workers, their 401(k)'s are cut in half, most of them, so they
don't want to retire in an environment like this.
Yet we face a situation where we need transformational
leadership. We need a truly dynamic change at the Post Office
with the way we do business. And there is a saying that says
there's nothing more disruptive to the human condition than the
pain of a new idea. And, unfortunately, that is what we are
facing.
Look, I love my postal workers, and I will be the first one
to admit it. I don't want to see layoffs. I don't want to see
any of that. So I'm trying all these other measures to protect
the employees because, quite frankly, when we grade the
consumer satisfaction among the Federal agencies, the Post
Office because of the work of their clerks, because of the work
of their mail handlers, because of the work of their letter
carriers that go to every home and business in America 6 days a
week, by far they are the highest rated Federal agency that we
have in America today. They do the best job. So I think it
would be a mistargeting of our problems to look at the backs of
our employees to try to solve this problem.
So we need to change our structure. And I was wondering,
there have been a few things mentioned here today about
allowing the Post Office through the Postal Accountability and
Enhancement Act to branch out into these other areas. And I
know that there is some apprehension in competing with the
private sector.
But there are some areas--specifically, my colleague, Mr.
Chaffetz, came up with an idea about the Postal Service taking
over major responsibilities from the census. Now, the Post
Office already, through the mail handlers and the letter
carriers, they go into every home and business in America
already. And that's basically what the census does; it tracks
the population most effectively through those home visits.
Have you looked at any of that, so it would be government
taking over government work, but just doing it more efficiently
for the taxpayer? Have we looked at any of that or have we
looked at--Ms. Goldway has mentioned the Vote by Mail--have we
looked at any of those? I know they are disruptive. I know
bureaucracies are not going to be satisfied with that. But I
think we have very limited choices. Have you looked at any of
those type of initiatives that might really transform what we
are doing at the Post Office?
Mr. Bernstock. Mr. Chairman, we've looked at everything you
have said. We've looked at the fact that we have $6 billion in
cost savings that came in this year, and we are looking to lose
$7 billion. We are looking at the fact that mail has declined.
And we are looking at both huge transformational revenue
issues--as I said, $45 billion is what it would take to close
the gap. We have some initiatives underway and we have also
looked very specifically at the initiatives you have
identified.
On the census piece, my understanding is through the mail
80 or 90 percent of census responses come in. And while it's
not within my area of responsibility, I do understand that
there was a report by our operations team, meeting with the
Census Bureau, which said that for going back and knocking on
doors six or seven or eight times to get that last 5 percent,
we may not be the best-suited agency. But we are willing to
relook at that.
Vote by Mail, we are very actively looking at a range of
ways we can do that and have a series of initiatives underway.
Mr. Lynch. I have exhausted my time, so I'm going to yield
to the ranking member for 5 minutes.
Mr. Chaffetz. Thank you.
Mr. Herr, has there been any sort of analysis--or any of
you actually can answer that--the one area we can point to
where there is some cross-functionality within the government
is passports. Is that a revenue generator? Is it just a break-
even operations? Is there any sort of analysis that says, boy,
that was a good idea?
Mr. Herr. We have not done that analysis. Mr. Bernstock
perhaps, or Ms. Goldway.
Ms. Goldway. The Commission has done the analysis and it
not only breaks even, but it provides a contribution to
overhead, so, in fact, it would make a profit for the Postal
Service. It does. It is a successful revenue-generation tool.
Mr. Chaffetz. So I want to hear some ideas here. So I like
the one about that you mentioned about the National Park passes
and that sort of thing. That is not going to get us out of the
financial hole that we are in. But what are the big ideas that
are floating out there?
And I just want to express again the sincere reluctance to
get into areas where the private sector is already competing,
the financial services, the telecom stuff. I can't imagine
being supportive of that. I'm just being as candid as I can,
because they already have those services in the marketplace.
But if we look at State and local government, if we look at
Federal Government, if we look at our constitutional duties,
roles and responsibilities, it seems to me there are a number
of agencies that would benefit by the sheer structure and
magnitude of the work force, above and beyond what we have
creatively thought of today.
Mr. Bernstock. Congressman, I agree with that statement.
And we do have the authority to provide credentialing and
enrollment services to Federal agencies if we extended that
authority to State and local agencies, I think we could do even
more.
Mr. Chaffetz. How many are you doing at the Federal level?
Give me a better sense of----
Mr. Bernstock. Well, the passport, the enrollment process
on the passport is one act of business we are engaged in. We
feel we could partner with a whole range of Federal agencies,
be it TSA or Social Security or Agriculture. There's a number
of ways we can do credentialing and enrollment work.
Mr. Chaffetz. Is there a list of these out there?
Mr. Bernstock. We are actually engaged with several Federal
agencies.
Mr. Chaffetz. Can you give me more specifics about which
ones you are pursuing?
Mr. Bernstock. I don't have that data.
Mr. Chaffetz. Did you want to add something to that, Ms.
Goldway?
Ms. Goldway. I'm very, very gratified that the Postal
Service is now beginning to look at this area, because it is
potentially a great resource and a great source of stability
for the local post offices in the community.
One of the issues that came up in a hearing we had recently
is that while the post office itself may not generate a lot of
revenue, having a post office in a local community shopping
center creates revenue and economic development activity for
the rest of the community around it. So it's important, I
think, for the well-being of the economy overall to continue to
support post offices and these----
Mr. Chaffetz. I agree. We are just looking for real
specifics here.
Ms. Goldway. These abilities to connect with local
government will provide at least enough revenue to continue to
justify the service, if not solve the entire problem.
Mr. Chaffetz. Mr. Reisner, if you had to come up with a
list of the best three or four ideas that you've seen or heard
out there, what would be on that list?
Mr. Reisner. The biggest thing of all, and I think Mr.
Bernstock just talked a minute ago about the credentialing
services, the idea that government-to-government services are
something that the Postal Service can do and is encouraged to
do under the law, offers a platform for coming up with other
creative ideas. I think the most important thing is that the
marketplace bring the Postal Service the ideas, but that the
Postal Service has, as Mr. Coughlin just talked about, become
an innovative place where people have the sense that they can
come and plug and play and try ideas and test their ideas in
the marketplace to the benefit of postal customers.
Mr. Chaffetz. Mr. Chairman, I would definitely echo that. I
would like us to put out a call to the private sector to say,
please, come to our rescue here. We need the creative
innovation that is going to come from the populace across this
country with the creative, innovative ideas that are going to
be those big ideas that the Postal Service can participate in,
at the same time making sure we don't overly step into the
private sector where, rightfully, the private sector should be
leading the charge. But there are credentialing services, and
we need to continue to explore those ideas.
I tend to think that the private sector is going to help
come up with these ideas, bigger and broader. So please, if you
have those ideas, send them to us. We need them. And I see I'm
out of time. I'm going to be under time this time, Mr.
Chairman. I would just like to note that. Oh, shoot, I blew it.
Mr. Lynch. Well done. OK, Mr. Davis is now recognized for 5
minutes.
Mr. Davis. Thank you, very much, Mr. Chairman. I try to be
as optimistic as possible. And as I listened to the witnesses,
I thought of the baseball game that I was watching last night,
especially when the score got to be 7-1.
And I was wondering if there was any way that Philadelphia
was going to get back. And I thought, you know, if you bunt,
get a guy on first base, you bunt again, get another one on
second base; that is, you come up with a number of different
ideas, but they are all kind of small in terms of generating
the big runs that you really needed.
And so when I think of changing prices for shipping
services, bring down the cost, reorganize sales, become more
competitive, I guess I'm thinking reorganize sales to sell
what, other than stamps and shipping? Or if you got got some of
the other services, is there any way that you can really be
competitive or as competitive as you need to be?
And so, Ms. Goldway, I'm thinking that eventually you get
down to this last resort business. And I wanted to ask, what
would you consider to be last resort in terms of being forced
to cut services? When would last resort come?
Ms. Goldway. The Commission has a process for making these
decisions, and it involves hearing from the public and getting
a whole range of information about costs and benefits before we
would make such a decision.
Certainly, the Postal Service has brought forward to us an
end case. We are looking at the possibility of closing some
post offices. And they have suggested that they may bring
another case about reducing service from 6- to 5-day delivery.
There is not agreement yet on what the cost savings would be to
close post offices. And there is certainly no agreement yet on
what the cost savings would be to reduce service from 6 to 5
days.
And the tradeoff between reducing service and reduction in
potential volume is something that needs to be looked at. If
you cut service, do you reduce demand more than you would if
you maintained service?
I think it's a very complicated matter. And what I think
our Commission's responsibility to do is to focus on what the
PAA tells us, which is to ensure an efficient and effective
Postal Service that provides universal service. So, we would
have to look at those tradeoffs.
I may be more of an optimist than you. I'm a Dodger--a
Brooklyn Dodger fan, and I've survived.
I think that incremental support can make a difference and
that there are many surprising things that develop in the
postal service. Netflix, for instance, is one that, at least
for a time, is bringing us in a significant amount of revenue.
And there may be about others that develop as well. I certainly
hope so.
Mr. Davis. Thank you very much. I appreciate the efforts
and the creative thinking that the Postal Service has put
forth. I just don't want Casey at the bat.
Mr. Coughlin, let me ask you, because I listened closely to
your testimony, do you have a prognosis under which we can
really pull this out and pull it off?
Mr. Coughlin. Well, that's the $68 billion question, I
think. Let me just say I'm not quite perhaps as big an optimist
as Chairman Goldway about the future of mail volume. I do think
it is going to continue to slide.
I think the short term, relatively short-term, options the
Postal Service have on the cost side are fairly evident.
They've pretty much have been talked about.
I think they need to reduce the number of delivery days. I
think we're one of the few countries in the world who still has
6-day delivery. I think they need to reduce the size of their
processing network from around 300 processing facilities to
perhaps half of that size. And I think they need to reduce the
size of their retail network.
Those are, I think, some obvious moves; and I know they are
difficult. They are not changes that are going to go down
easily, and they have some costs associated as well as some
savings.
I think the Postal Service itself needs to think in terms
of what would a 400,000-person Postal Service look like and how
would you operate and still deliver on the universal service
obligation? Because I think, in my judgment, that's probably
where it's going to go.
You need to continue to work on the revenue issues that
have been discussed. The ranking member, Mr. Chaffetz, talked
about the ideas that are generated from here.
What I would really encourage--I'd encourage, on the one
hand, the Postal Service to get out there and sell the obvious
benefits of the Postal Service in terms of its ubiquity and its
geographic reach to potential partners out there. I see new
bank branches going up constantly in growing neighborhoods out
there, new brick and mortar. I would have to ask myself as a
banker, is there a possibility to partner with an organization
like the Postal Service to provide financial services, agency
services. All kinds of opportunities are out there.
It gets complicated, I think, partly by the way that the
Federal Government is organized and the way its funding
processes work in terms of the subparts of agencies. So that
makes it complicated to kind of get an overall view of how an
agency delivers services and how it might tap into the Postal
Service. But there are a lot of opportunities out there. I hope
I'm wrong, but I think that's the direction it's going.
Mr. Davis. Thank you very much, Mr. Chairman.
Mr. Lynch. The Chair now recognizes the gentleman from
Ohio, Mr. Kucinich, for 5 minutes, who yields to the gentleman
from Virginia, Mr. Connolly, for 5 minutes.
Mr. Connolly. I thank my colleagues.
You know, listening to all the hearings we've had on this
subject, we are clearly in search as we move forward in this
century for a new, viable business model for the U.S. Postal
Service. And, on the one hand, I think we in Congress maybe
want to have it both ways.
On the one hand, we recognize the iconic value of the Post
Office in a given community, its centrality in especially rural
parts of our country; and we don't want that change. We don't
want you closing offices. We don't want you changing routes. We
don't want you cutting back on service or the numbers of days
of service.
By the way, we don't want you unnecessarily competing with
the private sector for anything.
On the other hand, why aren't you viable? Why are you
losing money? Whey aren't you making money? Why aren't you like
your competitors?
And we in Congress can't have it both ways. We're going to
have to work with you to recognize that, by statute--and, Mr.
Herr, I'd be interested, listening to your testimony, I think
one of the things we have to talk about, should the Post Office
be subject to the same regulations as the private sector? Well,
by statute, we put some requirements on the Postal Service,
don't we, that we don't put on the private sector that I think
significantly circumscribes the ability of the Post Office to
sort of break out here and just be a rational actor in the
private market?
Mr. Herr. I'd agree with that. I think part of it is we're
just simply trying to pose some questions that folks in your
situation should be considering as you take a look at this.
It is a large enterprise. It touches everyone's life 6 days
a week. I mean, as Chairman Lynch mentioned at the opening, you
know, no other institution does that 6-days a week. As you
proceed thinking about this, some of those tradeoffs, those get
raised; and I think it is important to put them on the table as
folks consider them. Because if we don't raise them now,
they'll come up later.
Mr. Connolly. I would just add to your list, though. I
think you have an obligation, GAO, to look at the statutory
limitations or expectations we put on the Postal Service that
make it different than an entity in the private sector.
Mr. Herr. And on that point we have ongoing work looking at
the Postal Service business model, and as part of that we're
factoring those kind of things into it as well. So thank you.
Mr. Connolly. OK.
Mr. Reisner, how could the Postal Service incorporate,
let's say, the banking idea that Ms. Goldway talked about
without threatening community banks?
Mr. Reisner. Well, I think that Mr. Coughlin just really
talked about it a second ago. I think that there has to be a
process that creates some kind of partnership in which the
private sector gets to do what it does best. This is the
marketplace that we live in today.
Just one quick point that I'd make, too, that I think Jack
Potter the other day in his speech at the National Press Club
created this framework and embraced something that Ruth Goldway
had endorsed, which was looking out to the future 10 years and
trying to imagine what kind of a Postal Service should we have
to serve the public purposes that we see 10 years from now. And
I can't look out 10 years and imagine that the Internet isn't a
part of that, the marketplace, at that time.
Now is it appropriate for the Postal Service to provide
those services? Probably not. And so finding partnerships where
the public sector can be compensated for its retail presence
and its ubiquity and the private sector can provide what it
provides best it seems to me is part of that 10-year vision.
Mr. Connolly. Ms. Goldway, and anyone else, what do we know
about the elasticity of demand for the price of stamps? I mean,
is the demand inelastic such that we can raise the price to
whatever we need to raise or do we see significant followup in
volume every time we, in fact, raise prices?
Ms. Goldway. Well, we have about 40 years of following the
prices.
Mr. Connolly. Ms. Goldway, I'm sorry. I cannot hear you.
Ms. Goldway. Oh. We have about 40--in the Commission, we
have about 40 years of following what we call the elasticity of
price of first-class mail. And for pretty much all that time we
could say it was inelastic. You raise the price and sales might
drop off a little, but they'd come back up. And that stamp
usage followed the rate of population growth and, to some
degree, the economy all through that time.
But things really seem to have changed in the last 4 to 5
years, and there was a slow but steady decrease in the first-
class mail, and it has been greatly increased by this
recession. And the dilemma for all of us is to see whether the
recession was an unusual event--there was a great drop-off in
mail after 9/11, but it picked right back up again--or is this
a lasting phenomenon.
I think all of us feel that the growth of the Internet
makes the role of mail very different from what it may have
been in the past and that we're all trying to find ways to make
mail relevant and valuable. So it may not be that we sell as
many stamps but what we sell is more valuable, people are
willing to pay more for it, or there is some other way in which
the community supports it.
Some of the European posts have subsidies for their mail or
specific subsidies for post offices. And in fact even those
that have had great profit in the last few years are having
real problems under this recession as well. So just assuming
you can follow a European model where there is privatization
will get you some ongoing independent Post Office is not
assured either.
Mr. Connolly. Mr. Chairman, my time has expired; and I
thank you. I do think Ms. Goldway's answer underscores--and I
thank you for it--underscores the fact that, moving forward, we
can't just tinker at the edges. We've got to figure out a new
business model that's going to work.
Thank you.
Mr. Lynch. I thank the gentleman.
The Chair now recognizes the gentleman from Ohio, Mr.
Kucinich, for 5 minutes.
Mr. Kucinich. Thank you very much, Mr. Chairman. I'm
grateful that, under your leadership, this committee continues
to look at what we can do to secure universal service to the
people of the United States.
My neighborhood in Cleveland, OH, I have seen over the last
few years the post boxes disappear from neighborhoods; and I
don't take that lightly because, to me, that has been an
essential part of the infrastructure, the Postal Service.
Now the next part of the infrastructure of the Postal
Service are the branches; and, of course, we know that the
postal administration has been systemically targeting branches,
particularly in areas which are economically disadvantaged.
Think about universal service. And we know they are cutting
hours. They keep trying to downsize this Postal Service.
Now, at the same time, there has been an expansion of
dealings with the private sector. The private sector take over
more and more. Now I think we need to look long and hard about
this creeping privatization that's been going on in the Postal
Service, because it's really at odds with universal service. If
the Postal Service is a money loser, why does the private
sector want to take it over? Think about that. If it loses
money, why would anyone want to take it over, even turning it
into a bank if it is such a money loser? This service belongs
to the people of the United States.
And while certainly every business model needs to be
updated, privatization is not updating the business model of
the Postal Service. It's destroying the Postal Service.
I have a question for Chairman Goldway. Welcome to this
committee, Mr. Chairman. Your testimony echoes my concern that,
in diversifying the services the U.S. Postal Service provides,
plans to move forward with providing non-postal-related
services could lead to a reduction in essential services
traditionally provided by the Postal Service and could
subordinate the provision of these services to the pursuit of
revenue. Much of the U.S. Postal Service airmail has been
already outsourced to FedEx.
Can you please explain and can you expand on the Postal
Regulatory Commission's concerns regarding cuts and essential
services until revenue generation plans have been successfully
implemented? And is the Commission concerned that moving away
from traditional services could lead to the privatization of
core services the Post Office is mandated to provide? If you
could respond.
Ms. Goldway. Thank you, Congressman Kucinich.
Both of us met each other 30 some odd years ago when we
were mayors----
Mr. Kucinich. If you could speak up.
Ms. Goldway. Both of us first met each other when we were
mayors of our respective cities about 30 years ago, so we share
this focus on the local impact of the Postal Service, I think.
I don't think the Commission is opposed to the Postal
Service providing non-postal services, and our litmus test is
that we expect the services to be in support of the mail
function. So greeting cards are fine. Money orders that the
Postal Service has provided and even electronic money orders
internationally are fine. Copying services are fine. But there
are a range of services that are fine. And we are certainly
open to the Postal Service coming up with any number of
experimental products, should they have them, that are related
to postal services that we can define as Postal Service. So we
actively support and look forward to the Postal Service coming
forward with those new ideas, and I think our record is that we
accept almost all of them.
The problem is, if you look at the Postal Service and its
network, the retail clerks that are there are paid very high
wages, and I think they should be. But look at the bank next
door and the wages that are paid to the bank next door. It's
not likely that a bank is going to want to partner with the
Postal Service unless there is some real change in wage
structure, which may result in problems as well.
So all of these proposals----
Mr. Kucinich. If I may, my time is expiring; and I just
would like to make this observation.
Mr. Chairman, concluding, if banks want to partner with
post offices the only reason they'd want to do that is so that
they could take over the post offices so that people then would
have to do their postal businesses through banking. This is
very easy to see. These things go either way.
We used to be able to go to banks and pay bills. Then they
stopped doing that. It is easy for them to take up the function
of mailing and then just take it over from the government. We
already had enough experience with the workings of banks here
to know that if we're looking for the private sector to provide
solutions for government services, we're probably looking in
the wrong place.
Mr. Lynch. I thank the gentleman.
Just briefly, I want to yield myself 15 seconds.
I think what's happening here, though, is that now we see a
model out there, a competitive model. When I go to the Stop and
Shop or you go to the Piggly Wiggly to do your shopping, there
is a bank there. There is all kinds of different things
offered. So I think the Postal Service is under that similar
pressure as well.
But I'll wait until I have 5 minutes to expound on that a
little further. But I deeply appreciate the gentleman's
comments, and I agree with the threat that he's identified.
At this point, I would like to also welcome former
Representative William Clay. Thank you very much, sir. We
appreciate your attendance, just in time to hear from your son,
the gentleman from Missouri, Mr. Clay, for 5 minutes.
Mr. Clay. Thank you, Mr. Chairman, and thank you for
conducting this hearing today. Like all of us, I am deeply
invested in the success of the Postal Service; and I'm happy we
have continued to think critically about ensuring a positive
future for the USPS.
Also, let me welcome our panel to these proceedings; and I
thank you for being here to share your expertise.
Also, as the chairman mentioned, my older brother is in the
front row, too. We welcome him, also.
Let me start off by saying much of your recent effort has
gone toward innovation in new markets. Is there any value in
expanding existing postal services to increase revenue and
customer loyalty? And anybody can take a shot at it. Ms.
Goldway.
Mr. Bernstock. Sure. I think, Congressman Clay, that
there's a balance between driving down costs and growing
revenue. And I think the tension starts with the fact that,
once again this year, we had $6 billion in cost savings. And we
did a little bit of research. We think that's the single
largest cost savings by any company in this country possibly
ever. Yet we lost $7 billion.
So all the revenue-generating initiatives that we're
pursuing within the law clearly contribute. But when you have
is a loss of that magnitude you can't get back to a stable
Postal Service or Postal Service without some changes in the
cost-saving initiatives that are not within the law at the
current time.
Mr. Clay. Has there been any effort to strengthen these
services, such as first-class mail?
Mr. Bernstock. At the current time, we're running a fall
first-class incentive program; and the impact of that we
estimate will be $50 million, $100 million in incremental
revenue, in that ballpark. But, once again, in comparison to a
$7 billion loss, it is relatively modest in the impact.
So there are things we're doing. Elasticity, as Chairman
Goldway pointed out, is increasing, both from consumers and
commercial mailers. And so we're fighting a very, very
difficult uphill battle.
Mr. Clay. So I guess that begs the question then how can
the USPS carve out their own niche in the postal market and
continue to differentiate itself from other mail services?
Mr. Bernstock. Well, as many of the panelists have said and
as we've heard, we have an enormous number of strengths. Be it
our infrastructure, our retail infrastructure, our delivery
capabilities, or our logistics capability, the fact that we're
No. 1 in trust, all of the strengths that we have should be
leveraged. What we need to do is have freedom to expand our
model as this country changes and build on the strengths that
we have.
Mr. Clay. You know, you cite examples in international
markets as evidence that USPS should include other services for
customers. How successful have these efforts been
internationally? Do they turn a profit or do they break even?
Perhaps Mr. Coughlin can answer.
Mr. Coughlin. I will comment on it. I do list in my written
statement some of the results they've had. Some of these posts
have generated as much as 75 percent of their total revenues
from non-postal sources.
Deutsche Post in Germany is an example. The Dutch Postal
Service, TNT, is generating 60 percent. But they have
undertaken major, major diversification.
The Germans, for example, have bought heavily into the
logistics business. They have made several multi-billion Euro
acquisitions to get into that business. They have had, to be
perfectly honest, although they show profits for the most part,
they have, as Chairman Goldway said, they are having a little
trouble right now with the fall in mail. And the interesting
thing about the Germans is they are getting 75 percent of their
revenues from non-postal sources, but they are getting 50
percent or more of their profits from mail. So mail is still a
pretty good business for those people.
So to call them a success, yeah, there are some success
stories, but some are not doing quite as well as they look like
they are on their surface.
Mr. Clay. Thank you, Mr. Chairman. I yield back.
Mr. Lynch. I thank the gentleman.
One of the things that I worry about, and I yield myself 5
minutes, is that adage that, just like our military, we tend to
fight the last war.
Now the things that we're looking at, as Mr. Connolly has
described as being nibbling around the edges, I look out there
and you look at some of these other countries--as Mr. Coughlin
has noted, Sweden has a system where you actually click on and
you see your mail. You can actually read some of it, you know,
the pamphlets or brochures or whatever that come to your house.
You can click on whether you want to have it delivered or not.
And that's a great environmental benefit I think in the long
run, but it will drop the volume of mail, but I think that's
really the future.
So I don't want to get caught up in addressing the things
that we see now, but I'd rather us try to anticipate, as a
commercial business would, what's coming down the line. I also
see some of even our domestic models like Earth Class Mail and
Zumbox, where it's a similar Internet-based or Internet-
centered system. And I just think we have to really, really
think long term here.
There is a book out--it's an older book--The World is Flat
by Tom Friedman. And he has one chapter there on UPS--I know my
friends from UPS are in the back here. But he gave the example
of Toshiba computer company. They had a warranty on their
laptop computers where, if anything happened, you just mail it
back to Japan. They would fix it and send it back to you within
a certain amount of days.
Well, UPS, as it describes in this story, turned that all
around, to the fact where, instead of the user just sending
their laptop to Atlanta and then off to Japan to be fixed, UPS
put their own people to work repairing those computers. And
that is totally outside of the delivery business. They now
became computer fixers, and they would save the Toshiba company
a ton of money and make their customers happier.
So, you know, it's that type of innovation and just the
transformative change that we need in the Postal Service. And I
know it is frightening, and I know that bureaucracies are even
more resistant to change, but I just see, with the drop-off in
volume, what we see coming down the line.
I see the number of retirees we have in our postal system.
We have to have a business model that allows us to continue to
provide those benefits to retirees. So we're going to fall off
a cliff here if we don't get our business model matched up with
the realities that we have here.
I know there may be some short-term disruption here, but we
just encourage you to take that chance, to think big. This is a
big problem, so the response here has to be, as I say,
transformative. We have to look at this in a different way than
just nibbling around the edges and trying to bring in a few
more million in in revenues.
So, again, you know, do you have anything like that, some
big moves that would help us take a bite out of the deficit
that we see?
Mr. Bernstock. Chairman Lynch, I speak for the Postal
Service; and we fully agree with what you're saying. We are 5
percent of the world's population and 40 percent of the world's
mail. We have been the world's innovator in hard-copy mail, and
what's frustrating is we believe we have the same kind of role
to play within digital communications.
It is hard for us to look at Sweden leading the United
States. We believe we should be out in front of the technology
changes that are occurring, not for any other reason than to
foster commerce and to be a market maker and to have the result
be that the United States is a leader in this transformation to
digital products and that we offer hybrid products.
So I think, with these kind of transformational moves in
concert with the cost savings we've talked about, we can have a
thriving, growing Postal Service.
Ms. Goldway. I'd just like to add the Postal Service has
presented hybrid mail products to us in the past, and we've
approved them. Mailing online and post TCS were both approved
by the Postal Regulatory Commission, Postal Rate Commission at
the time. It was the Postal Service that found that they could
not implement those programs. They weren't up to the task.
Now if there is some partnership that they can develop I
think the Postal Regulatory Commission would certainly review
that. I'm not sure that there is any need for any legislation.
We'd be interested in looking at those issues.
Mr. Lynch. Yeah, I'm just thinking of it this way. You see,
what Wal-Mart and these Stop and Shop and Piggly Wiggly and
Harris Teeter, these big box stores, have done is they didn't
try to recreate their own bank. They didn't try to recreate
their own mail facility. They brought the Post Office in. They
brought the banks in.
When you think about our scale, as Mr. Coughlin has
outlined, that's also an advantage if we use it the right way,
use that as leverage. And we have 37,000 post offices out
there, and so we own the footprint. And what we put in there--
and it may be--I'm not suggesting go out there and start the
U.S. postal bank, but can we bring in other services within the
footprint of the postal facility to offer more than what we're
offering right now and have that entity, that private entity,
pay some of the freight there, since we already own a lot of
the facilities? Although I'm surprised to see how much we're
still leasing. I don't know. I'm trying to multiply our
competitive advantage where we can.
Mr. Bernstock.
Mr. Bernstock. Yeah, Chairman Lynch, the greeting card test
we're running now is a very good indicator of what you're
talking about. Before we went out and launched that, we went to
consumers and the feedback was that, yes, they would be very
pleased to have greeting cards offered in the Postal Service.
They thought it was appropriate and would expect to purchase
them there. So there is a whole range of other products that we
could sell that we actually think would grow the market and our
customers would want those.
In addition, beyond passports, we think there is a series
of transactional activities we can be involved in. So I would
agree there is a lot more we can do with the facilities that we
have.
Mr. Lynch. Yeah. I appreciate that. I know change is
difficult----
Mr. Bernstock. Some would require changes in the law. Some
would not.
Mr. Lynch. We're happy to work with you and with the postal
employees as well to see what we can do.
The Chair recognizes the gentleman from Illinois, Mr.
Davis.
Mr. Davis. Thank you, Mr. Chairman; and I certainly agree
that we've got to think big. I think part of the problem,
though, is we don't think we'll like the answers that we get.
It's kind of like everybody wants to go to heaven, but nobody
wants to die.
We generate at one location, but then we spend at another
one. I mean, we generate as people come in to purchase whatever
it is that they are purchasing, but the output is as we
maintain or try to maintain the concept of universal service.
I know it is difficult to receive a piece of first-class
mail, for example, if you live out on P.O. Box, like I used to
live, you know, where the carrier would go 5 miles before
delivering another piece of mail. Well, I don't know how much
you generate from the Post Office as you sell whatever product
you are selling.
It seems to me that we've had some experiences and continue
to have some experiences with bailouts. We've put resources
into places. I think we have to do some serious thinking in
relationship to what it is that we expect.
I rely don't want to have cancer and have somebody tell me
I've got a sore. I don't want to have pneumonia and somebody
have me believing or thinking that I've just got a cough, I've
got a little cold.
So I agree that there are no shortcuts or easy routes or
easy ways home. But I do think we're going to have to go for
the big picture in terms of reevaluating our thinking relative
to what it is that we want from our Postal Service.
I never will forget. A guy made a speech when I was in the
eighth grade. He came to our school. He said, I want you to ask
yourselves three questions: one, who am I; two, what do I want;
and, three, how do I propose to get it. And I think we're going
to have to ask ourselves those three questions about our Postal
Service.
I'm a staunch union supporter, always have been, always
will be. I believe that people should get the maximum of what
can be received in terms of quality of life and expectation,
but I also believe that there has to be realistic thinking in
relationship to how do we manage a way to do that.
If anyone would respond, I would appreciate it. If not, Mr.
Chairman, I thank you very much for the opportunity.
Mr. Lynch. Have they just signaled votes? They have.
What I would like to do is recognize the gentleman from
Virginia, Mr. Connolly, for 5 minutes.
Mr. Connolly. I thank the Chair.
Mr. Coughlin, do you believe that the USPS has a culture of
innovation? And, if not, why not?
Mr. Coughlin. I think it has pockets of innovation.
Mr. Connolly. I'm going to ask every one please to speak
into the microphone. I cannot hear you, believe it or not, up
here.
Mr. Coughlin. I believe there are pockets of innovation
within the Postal Service. I do believe that there are some
conditions that exist. And I will say I don't think it's unique
to the Postal Service. I think it's a characteristic of
government generally that discourages risk taking and
discourages innovation and it doesn't generate an environment
where innovation is expected on the part of employees.
Mr. Connolly. Or rewarded.
Mr. Coughlin. I'm sorry?
Mr. Connolly. Or rewarded, perhaps.
Mr. Coughlin. Well, that's a difficult issue as well.
I mean, I spent 32 years there. I think it is the greatest
work force in the world. There are some enormously creative
people there, and they are going to need all of that creativity
as they go forward. I do believe that Jack Potter and his team
have done a terrific job in terms of generating an environment
that encourages people to come forward with new ideas, and the
move of bringing in people like Bob Bernstock and some of his
colleagues to help support the traditional postal thinking has
to help in the long run.
And want I go back to the chairman's comments earlier about
the future. I wish I had an answer to what that business model
ought to be. I don't right now. I do think that these things
evolve over time.
One of the things I mentioned in my testimony was I believe
one of the possibilities for the Postal Service down the road
is in this nexus between their geographic physical presence and
the communications technologies that are out there. I think
that's some of what, for example, the Swedish example you
mentioned gets to. So, yes and no is the answer to your
question about innovation in the Postal Service.
Mr. Connolly. I thank you.
Ms. Goldway, you intriguingly noted that the Postal Service
fleet is one of the largest in the country and that in some
ways, given the route structure, it is tailor made for
electrification and sort of talking about innovation, cutting-
edge green technology being deployed. Could you expand a little
bit on that? Have we done any studies to know how many
CO2 and noxious gases could be avoided, what the
energy savings can be?
Ms. Goldway. This is an issue I've entered into just in
January of this year; and I've discovered that there is a whole
range of expertise, far greater than mine. I do have many
studies that I can forward to you about this.
It appears that the Postal Service is ideally suited for
transition to an electric vehicle fleet. Its current vehicles
get about 8 to 12 miles to the gallon, and they are all at
least 18 years old.
Unfortunately, given the financial reality of the Postal
Service, they don't have the capital to buy new vehicles; and I
think it would be worthwhile to find funds in some of the other
subsidies that are provided through the government and have
those directed to the Postal Service so that they could invest
in new vehicles, reduce some of their overhead, and lead the
country in a national transformation.
Mr. Connolly. Let me ask you, because I think we're on to
something here, how many vehicles in the fleet?
Ms. Goldway. 150,000. Although I think it may be 140,000
now. They've reduced them a bit.
Mr. Connolly. Any idea what it would cost to replace them
with electric vehicles?
Ms. Goldway. What I think the thinking is--and I believe
that Congressman Serrano is working on some legislation--is to
develop a program so that you phase in over 3 to 5 years enough
vehicles with enough testing so that you know exactly what to
buy. But it is billions of dollars that are needed.
Mr. Connolly. My time is about to expire, but I just want
to pick up on your thought.
It seems to me, Mr. Chairman, again, both Mr. Coughlin,
where he was pointing us to, we legislatively can look at how
we can help foster a more innovative culture or we may be part
of the problem.
Second, with respect to what Chairwoman Goldway is talking
about, we were willing to put billions into Cash for Clunkers.
Are we willing to invest into our own Postal Service to give it
that cutting edge, innovative delivery of service to help make
it more competitive, to give it the capital it lacks right now
and do a good thing for the environment and the auto industry
while we're at it?
Ms. Goldway. I think all of us at the table would support
that effort and work with you to make sure that happens.
Mr. Connolly. Thank you so much.
Mr. Lynch. I thank the gentleman.
I think this panel has suffered enough. We've actually got
votes on the floor, but I did want to thank you for your
willingness to come before the subcommittee and offer your
thoughts and suggestions. We appreciate that. You're on the
ground level where you can offer unique perspective.
I will hold the record open. I know there were several
hearings going on this morning, so my Republican colleagues
could not all attend, so I leave it open for their comments as
well.
But I want to thank you for your willingness to come
forward and to help the committee with its work. Thank you very
much. I bid you good day.
[Whereupon, at 11:43 a.m., the subcommittee was adjourned.]
[The prepared statement of Hon. Dennis J. Kucinich
follows:]
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