[Senate Hearing 112-566]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-566

 
                     NOMINATION OF STEPHEN CRAWFORD

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE



                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

  NOMINATION OF STEPHEN CRAWFORD TO BE A GOVERNOR, U.S. POSTAL SERVICE

                               __________

                             JULY 12, 2012


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        Committee on Homeland Security and Governmental Affairs



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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
               Kristine V. Lam, Professional Staff Member
 John P. Kilvington, Staff Director, Subcommittee on Federal Financial 
                              Management,
  Government Information, Federal Services, and International Security
               Nicholas A. Rossi, Minority Staff Director
                   Jennifer L. Tarr, Minority Counsel
  William H. Wright, Minority Staff Director, Subcommittee on Federal 
                               Financial
Management, Government Information, Federal Services, and International 
                                Security
                  Trina Driessnack Tyrer, Chief Clerk
                 Patricia R. Hogan, Publications Clerk
                    Laura W. Kilbride, Hearing Clerk


                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Carper...............................................     1
Prepared statements:
    Senator Carper...............................................    17
    Senator Brown................................................    19

                               WITNESSES
                        Thursday, July 12, 2012

Hon. Benjamin L. Cardin, a U.S. Senator from the State of 
  Maryland:
    Testimony....................................................     1
    Prepared statement...........................................    21
Stephen Crawford to be a Governor, U.S. Postal Service:
    Testimony....................................................     5
    Prepared statement...........................................    23
    Biographical and financial information.......................    25
    Letter from the Office of Government Ethics..................    32
    Responses to pre-hearing questions...........................    33
    Responses to post-hearing questions..........................    48


                     NOMINATION OF STEPHEN CRAWFORD

                              ----------                              


                        THURSDAY, JULY 12, 2012

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 3 p.m., in room 
SD-342, Dirksen Senate Office Building, Hon. Thomas R. Carper, 
presiding.
    Present: Senator Carper.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. The Committee will be in order.
    We welcome our colleague and our nominee and at least part 
of his family, I think. I am going to ask, Senator Cardin, if 
you will just lead us off. And, once you have presented, I 
think you have a lot of other things on your plate, but you are 
welcome to stay for as long as you can. Thank you for being 
here. It is great to see you.

 TESTIMONY OF HON. BENJAMIN L. CARDIN, A U.S. SENATOR FROM THE 
                       STATE OF MARYLAND

    Senator Cardin. Mr. Chairman, first, thank you very much 
for allowing me to introduce a great Marylander, Steve 
Crawford, and I thank you for the courtesy; and let me just, if 
I might, tell you how pleased I am that Dr. Crawford is willing 
to allow his name to come forward for this very important 
position.
    He has proven his leadership in both the private and public 
sectors. I think he is well suited for the U.S. Postal Service 
Board of Governors at this critical time in the history of our 
Postal Service.
    As the U.S. Postal Service confronts the challenges of a 
multibillion-dollar shortfall, the agency needs Dr. Crawford's 
intelligence, his expertise, and his leadership skills. He has 
experience in this area. He has proposed a number of innovative 
initiatives for changing the U.S. Postal Service's business 
model in a paper the agency commissioned, including creating 
new revenue streams via savings accounts and hybrid electronic 
services.
    His ideas on open source innovation and collaborative 
innovation, that is, harnessing the creativity of employees and 
customers in building a better Postal Service, are 
particularly, I think, relevant to the needs of the reforms 
within the postal system.
    At the same time, Dr. Crawford understands the importance 
of smart reforms that preserve important mail delivery services 
in our communities. As we continue to build a 21st Century 
Postal Service, his vision for an efficient and reliable 
service is critical to the agency's future success.
    Let me just point out some of Dr. Crawford's leadership 
experiences. He was the Executive Director at the Center for 
International and Security Studies in the School of Public 
Policy at the University of Maryland.
    He was the Executive Director of the Governor's Workforce 
Investment Board; and as you know, that is very much involved 
in the type of issues that are going to be confronting the 
Postal Service. He was successful in getting the Maryland 
General Assembly to give adequate budget support to those 
efforts, which is not an easy task, showing his political 
ability.
    He helped develop the National Policy Association where he 
served as the Vice President and the Chief Financial Officer. 
He became Director of the National Governors Association's 
Division of Social, Economic, and Workforce Programs, again 
showing his experience at all levels of government.
    He was Deputy Director of the Metropolitan Policy Program 
at the Brookings Institution. Today, Dr. Crawford is a research 
professor at George Washington University in the Institute of 
Public Policy where he manages public policy projects.
    He has a wealth of experience in the public and private 
sectors related directly to the challenges being faced by the 
U.S. Postal Service.
    Dr. Crawford holds a Bachelor's Degree from Cornell, a 
Ph.D. in Economic and Political Sociology from Columbia 
University, and a Master's Degree in Public Finance from 
Wharton Business School at the University of Pennsylvania--
quite impressive credentials.
    He has a strong history of civic engagement in Maryland, 
including the American Red Cross and the Frederick County 
Substance Abuse Advisory Council. He served our Nation in the 
U.S. Army where he earned six medals, including a Bronze Star 
and the Combat Infantryman Badge in Vietnam.
    The Postal Service needs people like him who can deal with 
the crisis that is currently being confronted in a direct way, 
but always mindful of the responsibilities to the public. I am 
honored to present him to you and urge the Committee to 
consider his nomination as promptly as possible.
    Thank you Mr. Chairman.
    Senator Carper. We thank you very much.
    I would ask the witness, is there anything he said that you 
would disagree with? [Laughter.]
    I have been watching your wife right behind you, Mr. 
Crawford, and she is sitting there nodding her head. She is 
saying, Senator Cardin knows my husband pretty well.
    Those are mighty nice things to say about anybody and 
especially our nominee. Senator Cardin, thank you so much. Take 
care.
    Today, we are here to consider the nomination of Stephen 
Crawford to be a member of the Postal Service's Board of 
Governors.
    I think it is great whenever one of the Senators, sometimes 
both of them, are able to come by and introduce a witness. It 
says a lot about the regard that they have for you. We have a 
whole lot of respect for Senator Cardin. So, it is good that he 
could come.
    I know our nominee is aware that the Postal Service has 
been facing challenging, even dire, financial trouble for some 
time. The trouble will come to a head in the coming months, and 
the Postal Service is reporting record losses each quarter and 
hemorrhaging, we are told, about $25 million each day.
    By the end of this fiscal year, it is likely it will not 
have enough money to meet its health and workers' compensation 
obligations; and by sometime in 2013, we are told it will not 
have enough money to continue operations at all.
    I would like to say that the situation is dire, but it is 
not hopeless. This is a set of problems that we can fix, and 
the legislation that we passed here in the Senate will go a 
long way toward allowing the Postal Service to heal itself.
    We need for our friends in the House to pass a bill. I will 
probably say this a couple of times in my comments. We need for 
the House to pass a bill so that we can go to conference and 
hammer out an even better bill than we have passed in the 
Senate.
    But the Postal Service operates, as we know, at the center 
of a $1 trillion mailing industry that puts as many as 8 
million men and women to work every day. It is a key cog in our 
economy. Its continued vitality is an important part of our 
efforts to get the economy moving again, and at a time of so 
much economic uncertainty, we cannot afford to let the Postal 
Service collapse or even to intimate that it might collapse. It 
is not helpful at all.
    As I said earlier, the Senate has passed legislation that 
attempts to address the Postal Service's near-term financial 
crisis and give it some of the tools it needs to address long-
term challenges, not just by working on the cost side, but also 
making sure that we allow the Postal Service to do some good 
work on the revenue side to grow revenues.
    Our bill would clean up the Postal Service's books by 
refunding the more than $10 billion it has overpaid into the 
Federal Employees Retirement System and setting up a less 
aggressive schedule, I think a more realistic schedule, for 
funding postal retiree health obligations.
    But even what we have done here in the Senate bill I think 
is probably more conservative than most State and local 
governments and perhaps more than most businesses with respect 
to pre-funding retiree health obligations.
    But a portion of the pension refund that would come back to 
the Postal Service from a Federal Employees Retirement System 
refund would be used to encourage about 100,000 postal 
employees to retire, an effort that could save as much, we are 
told, as $8 billion per year. That is almost half of what they 
are losing.
    Our bill would also push the Postal Service to streamline 
its processing, delivery, and retail networks, albeit at a more 
gradual pace than postal management would have liked.
    These provisions would allow the Postal Service to achieve 
billions of dollars in savings while preserving levels of 
service that many customers rely on.
    If these cost-cutting efforts do not prove sufficient in 
the coming years, the Postal Service will be permitted to move 
forward with more aggressive efforts.
    But our bill, as I said, does not just focus on cuts, it 
also encourages the Postal Service to be more entrepreneurial, 
something I understand our nominee has been an advocate for in 
recent years. It does this in part by pushing the Postal 
Service to find innovative ways to bring in more mail volume 
and make the best use of the valuable system it maintains in 
order to deliver the mail to every home and business 6 days a 
week.
    As I said before, our bill is not perfect. Anything this 
complex is unlikely to be perfect or to solve every single 
problem and challenge facing the Postal Service.
    But it gets us, I think, most of the way there; and 
depending on how serious the Postmaster General and his team 
are about continuing to cut costs in a smart way and to make 
effective use of the tools that we provide for them, the 
legislation has the potential to get us to our goal of 
financial stability for the Postal Service, and that, given 
where we are today, will be a good day's work.
    Our nominee before us today, Mr. Crawford, has significant 
academic, research, and public policy experience; and I am 
interested in learning more today about how that experience 
would benefit the Postal Service during this difficult, trying 
time.
    I would also like to hear more about how Dr. Crawford's 
background will help him, if confirmed, in working with the 
rest of the Board of Governors to tackle the major management 
challenges that they face, not just this year, but in years to 
come.
    Senator Brown may be joining us in a little bit. If he is 
able to join us later, then we will recognize him for whatever 
comments he wishes to make. If he wants to submit a statement 
for the record, we will be happy to have that.\1\
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Brown appears in the Appendix 
on page 19.
---------------------------------------------------------------------------
    Dr. Crawford has filed responses to a biographical and 
financial questionnaire. He has answered pre-hearing questions 
submitted by the Committee. He has had his financial statements 
reviewed by the Office of Government Ethics.
    Without objection, this information will be made part of 
the hearing record with the exception of the financial data, 
which are on file and available for public inspection in the 
Committee office.
    Our Committee rules require, as you may know, that all 
witnesses at nomination hearings give their testimony under 
oath.
    Dr. Crawford, I am going to ask you to please stand and 
raise your right hand.
    Do you swear the testimony you will give before this 
Committee will be the truth, the whole truth, and nothing but 
the truth, so help you, God?
    Mr. Crawford. I do.
    Senator Carper. All right. Let us give you a chance to give 
your full statement. If there is anybody in the audience that 
you would like to introduce, you are more than welcome to do 
that.
    Please go forward.

TESTIMONY OF STEPHEN CRAWFORD \1\ TO BE A GOVERNOR, U.S. POSTAL 
                            SERVICE

    Mr. Crawford. Thank you, Mr. Chairman. I am pleased that my 
wife, Liliane Floge, is here with me. She may have to leave 
early to pick up our 12-year-old daughter who is at a camp 
performance, but we will see how that plays out.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Crawford appears in the Appendix 
on page 23.
---------------------------------------------------------------------------
    Senator Carper. Mrs. Floge, it is very nice to see you. 
Thank you for coming. Thank you for your willingness to share 
your husband with our country one more time.
    Were you all married when he was in the military?
    Mr. Crawford. No.
    Senator Carper. Please proceed. You can talk for as long as 
you want. Usually we say you have 5 minutes, but you can talk 
for as long as you want. If it gets to be about 6 o'clock, we 
will wrap it up. [Laughter.]
    Mr. Crawford. Chairman Carper, thank you for the 
opportunity to testify today. I am truly honored to be 
nominated by the President to serve on the Board of Governors 
of the U.S. Postal Service, and I am pleased to share with the 
Committee how, if confirmed, I would approach the 
responsibilities involved.
    As you know, the Postal Service faces enormous challenges. 
In assessing them, I find it helpful to keep in mind the 
magnitude of what is at stake. In my view, the Postal Service 
remains a vital national asset. It directly employs almost a 
half million Americans, and it makes possible a $1 trillion 
mailing industry that, as you just said, employs 8 million 
others.
    Although mail volume has declined from its 2007 peak, the 
Postal Service still delivered 168 billion pieces of mail last 
year to more than 150 million households and businesses. Many 
of these households depend on those deliveries for essential 
services that they could not afford were it not for the Postal 
Service's important commitment to universal service.
    Similarly, many small businesses, non-profits, publishers, 
and other mailers depend on the Postal Service's 
internationally recognized efficiency and reliability.
    Amazingly, this vital institution now finds itself on the 
verge of insolvency. It is in these dire straits, I believe, 
for three main reasons: The growth of electronic communications 
and resulting diversion of First Class Mail; the recent 
recession and its lingering impact; and the unique regulatory 
environment in which the Postal Service operates.
    While there seems to be broad agreement on these causes of 
the Postal Service's deficit, there is considerable 
disagreement about how to fix it.
    Some emphasize cutting costs by consolidating facilities, 
reducing delivery frequency, and/or changing service standards. 
Some emphasize increasing revenues by adding new products and 
services. Some call for adjusting the price cap, and many call 
for changing the current requirements for pre-funding the 
health benefits of future retirees.
    I believe that the challenges are so severe that the Postal 
Service should explore all the above as, in fact, it has been 
doing, aided recently by the Senate's passage of S. 1789. I say 
that as someone whose past experience has included privileged 
opportunities to examine the Postal Service's problems in broad 
terms.
    Yet, if confirmed, my views might evolve as I learn more. 
As a board member, I would consider all reasonable options and 
make decisions based on my sense of what is best for the 
country and the long-term health of the Postal Service. I would 
approach these decisions as someone who listens carefully and 
communicates honestly, takes seriously the interests of all 
involved parties, and yet believes strongly in innovation and 
leadership.
    I believe that my prior experience has prepared me well to 
serve on the Board and to make distinctive and significant 
contributions to its work. To be sure, I have never managed an 
organization of more than 50,000 employees. However, I have 
advised and worked closely with the top leaders of such 
organizations, especially State governors, but also corporate 
Chief Executive Officers (CEOs) and university presidents.
    I have also conducted research, published articles, and 
advised on the kind of business model innovation needed to 
harness new technologies and adapt to changing markets.
    A research colleague and I recently briefed, at her 
request, Undersecretary of Education Martha Kanter and her 
senior staff on our ideas for streamlining higher education, 
another industry where rising costs and online alternatives are 
calling into question the traditional business model.
    Finally, as a member of the Obama-Biden transition team and 
later as a consultant to the Postal Service, I have had 
wonderful opportunities to assess the problems and potential 
solutions facing the Postal Service, the mailing industry, and 
such related government agencies as the Postal Regulatory 
Commission (PRC) and the Office of the Inspector General.
    In closing, I would like to thank the Committee for its 
impressive efforts over many years to provide the policy 
framework needed to enable the Postal Service to accomplish its 
vital mission. It is clearly a difficult task in today's 
rapidly changing environment, but I am optimistic that good 
solutions are within reach.
    I look forward, if confirmed, to working with the 
Committee, with you, and with all the Postal Service's 
stakeholders on crafting and implementing such solutions. I 
appreciate the opportunity to testify today and welcome your 
questions.
    Senator Carper. Thank you. That was a very good statement. 
I am sorry that more of my colleagues were not here to hear it.
    I will start our questioning today with three standard 
questions that we ask of all the nominees. First, is there 
anything you are aware of in your background that might present 
a conflict of interest with the duties of the office to which 
you have been nominated?
    Mr. Crawford. No, Mr. Chairman, there is not.
    Senator Carper. Second, do you know of anything, personal 
or otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Mr. Crawford. No, sir.
    Senator Carper. And finally, do you agree, without 
reservation, to respond to any reasonable summons to appear and 
testify before any duly constituted committee of Congress if 
you are confirmed?
    Mr. Crawford. I do.
    Senator Carper. In that case, we can go on to these other 
questions. These are maybe a little harder to answer, but we 
will give it a shot.
    Legislation signed into law by President George W. Bush in 
2006 requires that by 2015, at least four members of the nine-
member Board of Governors have experience managing large 
organizations; and I, as I said earlier, co-authored that 
legislation with Senator Collins and a number of our 
colleagues.
    Our goal with this particular provision was to encourage 
the President to send nominees for the Board with relevant 
business experience, something that was sorely lacking on that 
body at the time. We now have some governors with business 
experience on the Board, but frankly not as many as we had 
hoped to have at this point when we were drafting the 2006 law.
    Would you take a couple of minutes to share with us your 
thoughts on the 2006 qualification criteria for the Board and 
also about what you think you would bring to that body, if 
confirmed?
    Mr. Crawford. I am happy to. For sure, I have never run an 
organization of 50,000 people or anything like it. I headed an 
independent agency of Maryland State Government. The full State 
government was an organization of 80,000, but I headed a small 
agency with a small staff. We did oversee all of the work force 
development operations around the State, but that is not what 
the authors of the Postal Accountability and Enhancement Act 
had in mind when they were talking about experience running a 
large logistics firm or some sort of big enterprise like that.
    I applaud the Committee's thinking. Fifty thousand is a 
high bar given that nowadays there are many CEOs of very 
impressive high-tech companies who would be disqualified.
    But putting aside the 50,000, it seems to me the bigger 
issue here is having some experience in working with leaders in 
industry and the private sector, but also having some 
connection to the public policy side of these issues because 
clearly, the Postal Service is not a purely private enterprise.
    And, I think that I have useful experience--as an Executive 
Director of three organizations, as someone who has worked in 
State government, as someone who has worked in the private 
sector, as someone who has been in think tanks where we analyze 
public policy issues, especially issues of innovation and 
economic growth and the kinds of new business models that are 
increasingly talked about as critical. And I would just add 
here, one issue is that as technologies change, quite often the 
old business models are now not well suited to exploiting their 
full potential; and yet changing business models is very tough 
once you have an established pattern.
    So, I have had the opportunity to delve into the literature 
and work with experts on that area and would hope that will 
enable me to contribution in that respect.
    But I am very serious about the innovation side. I think 
there are great opportunities for the Postal Service, and I 
think my background working on open source innovation and 
variants of that will be useful and different from what some of 
the other Board members bring to it.
    Senator Carper. Thank you for those comments.
    When we met in my office earlier this week, you shared with 
us, and you mentioned here again today, your work on the Obama-
Biden transition team. Would you talk a little bit about that 
experience and how it relates to the Postal Service, please?
    Mr. Crawford. I am happy to. It was an extraordinary 
experience for me. I think like most Americans, I sort of took 
the Postal Service for granted. My mail is there every day; I 
go out and get it. Sometimes my Economist magazine, if it did 
not arrive Saturday, I had to wait until Monday. That sort of 
annoyed me a little bit.
    But as soon as I plunged in as part of the transition team, 
I found myself interviewing members of the Postal Regulatory 
Commission, members of the Board of Governors, all the senior 
managers in the Postal Service, the leaders of all the unions, 
and the mailers and their associations.
    And so, I had an extraordinary opportunity to get a look at 
the big picture for the mailing industry and the critical role 
the Postal Service plays in that. But I also had my eyes opened 
to the challenges that the Postal Service faces because even 
then it was clear--the growth of e-mail and declining volumes 
and the increase in the number of delivery points.
    So I wrote a paper for the transition team that is a 
private paper, but everybody knows that the number of delivery 
points goes up by more than 1 million a year and at the same 
time the volume of mail goes down every year.
    Senator Carper. When do you think it peaked? What year?
    Mr. Crawford. Well, I have heard different stories on 
this--2007 is the peak that I used in my opening statement and 
that is, I think, correct, although I occasionally see other 
figures put out there.
    Senator Carper. When did you actually do this transition 
team work? Was it at the tail end?
    Mr. Crawford. In 2008-2009. The deficits and the pre-
funding of the retirees health benefits and all sorts of issues 
were there already, but they just did not seem as serious as 
they do now.
    Senator Carper. I presume others were working with you on 
this?
    Mr. Crawford. I was the head of the team, and it was a very 
small team. I had some assistants who helped out.
    Senator Carper. What conclusions did you reach then about a 
path forward for the Postal Service to avoid the kind of 
cataclysmic problems that have occurred since? What 
conclusions, if any, did you reach that might be helpful for us 
today?
    Mr. Crawford. I said many of the things that appear in S. 
1789. I was terribly pleased to see the bill shape up the way 
it did because it seemed to me----
    Senator Carper. Are you suggesting that we may have 
plagiarized the work of your report, which no one has ever seen 
on the Committee?
    Mr. Crawford. I would love to flatter myself, but I know 
better.
    Senator Carper. All right.
    Mr. Crawford. I said the Postal Service has to do something 
to increase revenues and cut costs. The volume is going down. 
Maybe there has to be some streamlining and rightsizing. I am 
not sure of the best way to do that.
    Maybe it has to be considering the frequency of delivery. 
Maybe it has to be considering shorter operating hours at small 
post offices that now serve towns that are smaller than they 
used to be.
    It was easy to put all of these options out there. I am not 
sure I appreciated all of the politics that are involved. But I 
also talked a lot about new products and services and 
innovation. I talked at considerable length about crowd 
sourcing and the Web 2.0 opportunities for not just having 
passive information available on Web sites, but having a 
dialogue going back and forth, and I talked about having 
contests for kids to design stamps.
    We see this going on even in the National Aeronautics and 
Space Administration with volunteer astronomers identifying 
craters on heavenly bodies. I mean, it is extraordinary the 
resources that are out there. And so I did say quite a bit in 
my paper to the Administration about maybe hybrid mail, maybe 
postal savings accounts----
    Senator Carper. You talked about hybrid mail, I think, but 
just tell us what you mean by that.
    Mr. Crawford. By hybrid mail, I mean when the post office 
of origin scans the envelope from people who participate in 
this service and emails to the designated recipient an image of 
the front and back of the envelope. Let us say I am on vacation 
or I am a consultant and a road warrior. I open up my laptop, 
and there is an email from the Postal Service that says you 
have the following mail in your mailbox at the point of origin. 
You can decide whether you want us to send it on to you in its 
original hard copy form--maybe it is a graduation diploma and 
you want that desperately--or we can scan the contents inside 
the envelope if you give us permission--we have a high-tech 
security system--and email you an electronic version of the 
contents and you will get that immediately wherever you are, or 
we can throw it out.
    So, that has been experimented with in Switzerland. I have 
not updated my knowledge of how that works, and I am not 
advocating that for the U.S. Postal Service. In fact, it may be 
obsolete, given the rapid changes in technology; but when I 
mentioned it, that is what I had in mind.
    Senator Carper. Thank you. I asked John Kilvington, who is 
sitting behind me and is our subcommittee staff director and 
has worked on these issues for a number of years, how that 
might relate to the concept of electronic mailboxes. And, my 
sense is that it does not.
    Is that a concept that you have thought about then when you 
were doing your work?
    Mr. Crawford. I certainly did not back then, and there is 
still a great deal more I would like to learn about electronic 
mailboxes. I do think that there may be opportunities for the 
Postal Service to get into the business of identity creation 
and authentication services--electronic identity. The number of 
passwords that people struggle with and the opportunities for 
fraud are becoming serious issues in our society, and the 
Office of Inspector General has produced a paper on this that I 
find quite interesting.
    I know less about electronic mailboxes than I would like to 
know. I would like to learn more about that, but this related 
service may be an opportunity.
    Senator Carper. Maybe someday you will have the opportunity 
to be the expert on the Board of Governors on electronic 
mailboxes.
    Mr. Crawford. I would like that.
    Senator Carper. Let me just say, it is one thing to pass 
legislation. My hope is that the House will pass a bill, I do 
not care, any bill, and just call it a postal bill and pass it 
on suspension, voice vote, and we will go to conference and 
hammer something out that is hopefully a better bill than the 
Senate bill and a lot better than no bill.
    It is one thing to pass legislation, hopefully thoughtful 
legislation, but give us some idea, if confirmed, how you would 
work with your colleagues to put into action some of the ideas 
that are in our bill, a bipartisan bill, that apparently you 
considered 3 years ago.
    But how would you work with your colleagues to put some of 
these ideas into action and to further improve the Postal 
Service's financial condition?
    Mr. Crawford. There are two issues. One is if the 
legislation passes, then it is a matter of implementing it 
aggressively and as rapidly as possible, and that is a 
challenge for a big organization.
    So, it seems to me that the Board's role is to push, to ask 
tough questions, and to urge the Postal Service to get on with 
the task at hand.
    But if the legislation gets considerably changed from what 
is in S. 1789 because of conference committee compromises, then 
maybe there will not be a Chief Innovation Officer in the 
legislation. Maybe there will not be a requirement for an 
Advisory Council.
    In that case, once I got a little bit more comfortable with 
my colleagues and got to know them, I would say to them, why do 
we not do this anyway? Why do we need legislation in order to 
have a Chief Innovation Officer? Can that not be done on our 
own in the Postal Service? And, I would urge action on some of 
these things just because they are good ideas.
    If it is trying out some new service, then it seems to me 
you have to have careful market testing and the PRC involved, 
and the legislation talks about those.
    It seems to me that you have to be careful about pilots and 
experimenting and testing out new ideas, whether it is for 
digital verification services or postal savings accounts or 
whatever the little item might be--or not so little, like 
fishing licenses with State governments and things. We need 
trial and error and learning.
    One of the challenges for the Postal Service, to be honest, 
is to have a culture of innovation and to feel free to 
occasionally make mistakes because that is what happens when 
you are in an entrepreneurial situation. You learn by sometimes 
being wrong, pulling back, and trying something else.
    Senator Carper. This gives me an opportunity to inject one 
of my favorite quotes. No one ever quotes Richard Nixon, at 
least not on our side of the aisle. But Richard Nixon used to 
say, ``The only people who do not make mistakes are the people 
who do not do anything.''
    And you said a mouthful with respect to having an 
atmosphere that invites experimentation, invites innovation and 
creativity, particularly with respect to raising revenues, and 
does not discourage postal employees, managers, and others from 
being innovative and creative and knowing that if there is a 
failure, hopefully not of any consequence, it is not the end of 
the world, particularly if there are five things that work to 
grow revenues or to reduce the growth of expenses.
    One of the big jobs, I think, that the Board will have is 
to help create that environment for innovation and creativity 
and to not just say we are going to do things pretty much the 
way we have always done them and we are going to get stability 
and sustainability simply on the expense side.
    There is plenty that can be done and should be done on the 
expense side, but I think there is some real potential on the 
revenue side, and we have to pursue that with a lot of vigor.
    That is not going to be something that we are going to 
necessarily impose on you, although there is some pretty strong 
language in the Senate bill to encourage that. But the Board 
needs to drive that.
    Talk to us about 5-day versus 6-day a week delivery, 
please.
    Mr. Crawford. Well, I mentioned earlier that it is 
sometimes frustrating when my Economist, a magazine I subscribe 
to, does not arrive on Saturday. Especially if it is a holiday 
Monday, I do not get it until Tuesday, and there is a new one 
on the newsstand by Friday. So, it is getting dated quickly.
    So, I would hate to see Saturday delivery eliminated, and 
yet, and I have said this in an article that I wrote, I think 
the option has to be kept on the table as a last resort. If we 
are unable to balance the books and cover costs, then at least 
we should carefully look at whether there are real savings 
involved by eliminating Saturday delivery.
    I would hate to see it come to that. I would hate to see 
the service go down, and there is some risk that revenues will 
go down and usage of the Postal Service would go down. Those 
are things we need to have the freedom to experiment with and 
learn about.
    It seems that the public is pretty ready to accept it, if 
it is necessary. Seven out of 10 in the surveys seemed to say 
that they would be OK with cutting out Saturday delivery.
    But personally, it is my great hope that through increases 
in productivity, through increased revenues through new 
services and products, through other forms of rightsizing, we 
can avoid that.
    But I am very happy that the bill includes the possibility 
of getting there. We just have to be realistic if it comes to 
that. We may need to consider it.
    Senator Carper. I have encouraged friends at the National 
Association of Letter Carriers and the current leadership and 
the previous leadership to do what I think they tried to do a 
number of years ago, and that is to negotiate with management 
to see if there is some way to continue to sustain Saturday 
delivery, but maybe to do it in a different compensation 
structure than may occur on the other 5 days.
    Mr. Crawford. Yes.
    Senator Carper. And do it in a way that allows us to 
continue Saturday delivery, but is more cost-effective. I know 
there has been some serious efforts to do that in the past, and 
my hope is that we will see some serious efforts that flow out 
of any legislation that we develop.
    Talk to us about standards of delivery. We have been 
operating to date on one- to three-day delivery, a lot of 
overnight delivery, but everything pretty much done within 3 
days, at least within the continental United States.
    Mr. Crawford. Yes.
    Senator Carper. Talk to us about the modified one-day 
delivery that is inherent in our legislation. What are your 
thoughts about that and how that relates to mail processing 
centers. We have about 480 of them across the country today. I 
think there is an interest in going to maybe 325.
    And also please comment on the 33,000 post offices that we 
have and the interest in trying to find a way to save money 
with the way we run our post offices, but at the same time to 
continue to provide a menu of options for more rural 
communities for the mail service in their communities.
    Mr. Crawford. These are tough issues.
    Senator Carper. You know what? They were, and I think we 
have come to a pretty good place. And a lot of people have 
worked on this. We got help from the folks in unions, ideas 
from them, from the rank-and-file employees, from management, 
and from customers. Democrats and Republicans worked on this 
here. I think we have come to a pretty good place. I think the 
Postal Service showed a fair amount of creativity.
    But what are your thoughts?
    Mr. Crawford. I am entirely comfortable with S. 1789's 
handling of the closing of small post offices, the provisions 
for reduced window hours, and the consolidations of two post 
offices that are nearby, but maintaining access and service, 
perhaps village postal offices or some alternative retail 
outlets.
    It seems to me there is a lot of creative leeway there to 
try to maintain access for people for whom it is essential, and 
I respect that.
    On the processing facilities and the service standards, 
there is a relationship between how quickly mail has to get a 
certain distance. It it is overnight or first-class mail, then 
there are more overtime hours and the use of equipment is 
compressed into a smaller time frame.
    It has to do with the point of entry and the time of entry. 
And so there are lots of variables in this one. But it seems to 
me that a compromise is emerging that allows some processing 
centers to be consolidated and the number of them reduced and 
at the same time to maintain service standards.
    So, I am not an expert on these things, but from what I can 
gather, reading the bill, that looks very positive to me.
    Senator Carper. All right. Thank you.
    For someone who might be watching this hearing from 
someplace across the country, there are roughly 33,000 post 
offices in communities across the country, and a lot of them 
have postmasters. Some of them pay their postmasters $50,000-
$60,000 a year to mainly sell $15,000-$25,000 worth of stamps a 
year, and that is not a viable business strategy for long.
    But, rather than say we are going to close post offices, 
what we have done is say if there are 13,000 post offices with 
economic challenges, why do we not give the communities a menu 
of options? They can say we would like to have our own post 
office.
    We may not need to have it open 6 days a week, 8 hours a 
day, but we would like to have it open 6 days a week, or we 
would like to have service at least 2, 4, or maybe 6 hours a 
day.
    The post office may not need to have a postmaster. The 
Postal Service can incentivize a postmaster who is eligible to 
retire, receive benefits and a pension, and come back to work 2 
or 4 hours a day and earn some extra money.
    For some postmasters, that would be attractive; for others, 
it would not. But that is one option.
    Another option is co-location with supermarkets or 
convenience stores or such. Another option is rural delivery. 
Rather than people coming into a post office and picking up the 
mail, have rural delivery; and maybe when they stop for lunch 
at a gas station or at a convenience store, folks may want to 
buy stamps or drop off packages for mailing, they can meet 
their rural letter carrier at that location.
    There is a bunch of different options; but the idea is to 
say it is not one way, one size does not fit all, but to 
provide the communities with some options and then to have a 
real conversation, a real negotiation. Maybe in the end, let 
the communities vote, maybe vote-by-mail, to say which of those 
options they like.
    And vote-by-mail is, I think, a great idea for States. We 
have a couple of States--Oregon and Washington--who are already 
doing that. One of our Senators from Washington State said to 
us a couple of months ago, I think she said that--I do not 
know, maybe it was Oregon--they had vote-by-mail a couple of 
years ago and their participation was in the low 70s. Very 
good.
    They are looking to get maybe 80 percent turnout this time. 
That is terrific compared to a lot of places in this country 
where it is barely 50 percent.
    I think there is an opportunity maybe to do something more 
cost-effectively, that is, encourage more people to vote, get 
better results for less money, and provide a nice piece of 
business for the Postal Service, too. That might work.
    Those are the kinds of things we have to be thinking about.
    I have a question here on pre-funding retiree health 
benefits. I think we have already heard from you on that, and I 
will give you a question in writing to explore a bit more on 
that.
    I have at least one more question then. In the coming 
months if Congress and the Administration are unable to come to 
agreement on postal reform legislation, the Postal Service will 
need to make some tough decisions about how to preserve 
operations with a dwindling amount of cash.
    This will be put, if you are confirmed, in your lap and the 
lap of the other Governors. But if you are confirmed, how would 
you direct the management of the Postal Service as it seeks to 
keep the business running during this crisis that we would 
face?
    Mr. Crawford. Well, I think the Postmaster General has made 
it clear that you have to set priorities if you cannot pay all 
your bills. Right?
    So, the first priority is to deliver the mail, and that is 
important to the whole Nation's commerce, to our economy. It is 
unimaginable to think what would happen if suddenly that 
stopped.
    So, to do that you have to pay people's salaries and you 
have to pay suppliers, pay for the fuel for the vehicles. So, 
those are the first priorities.
    There has already been a delay in paying the $5.5 billion 
pre-funding annual payment for the retirees health benefits, 
and that could happen again with $11.1 billion due in August. I 
guess the first installment is due on August 1 and the rest by 
September 30.
    So, do those payments get delayed again? Workers' 
compensation--I suppose those payments are further down the 
list than the payment of salaries.
    Senator Carper. Let me just ask, do you have anything else 
that you want to add or take away? Is there anything you 
asserted that you would like now to reverse and take a 
diametrically opposed position?
    Are you happy with what you have been able to put on the 
table? Do you want to refine anything?
    Mr. Crawford. No. I am excited about the opportunity. I am 
impressed by the seriousness of the challenges before the 
Postal Service and very hopeful that the House will produce a 
bill, it will go to conference, something will happen before 
September 30 that will create a Federal Employees Retirement 
System refund, and some things will start happening that will 
give the Postal Service the flexibility it needs.
    And then it seems to me the job for the Board, for 
management, for the whole Postal Service and the wonderful 
employees is to implement; and that is a big challenge in 
itself. It is nice to have flexibility, but you have to use it 
well.
    I would not be interested in this position if I were not 
optimistic that solutions are within reach. But I look forward 
to talking to lots of others in the industry because I know 
that there are no silver bullets. We need to put together a 
very creative package to get through this. I think it can be 
done, and I am excited about it. I thank you for the 
opportunity.
    Senator Carper. You are quite welcome. We appreciate the 
President's submitting your name to us and giving us an 
opportunity to consider that nomination, and we appreciate very 
much your willingness to serve.
    I like to kid around a little bit, and we have done that 
some here today. Having said that, the situation that the 
Postal Service faces is dire. It is serious. We know that.
    But there is hope in a hopeless world, and there is, I 
think, reason to be hopeful for the Postal Service, too. I will 
say again, the legislation that we passed with a bipartisan 
majority in the Senate does not solve all the problems. It does 
not make the Postal Service viable or profitable forever. But I 
think it helps get them headed back in the right direction, and 
it is something that can be improved upon, and it needs to be.
    I know you worked for National Governors Association and 
had the opportunity to call any number of governors, from 
States and territories, governor. I was wondering, did you ever 
think in those years that someday people would refer to you as 
governor?
    Mr. Crawford. I did not.
    Senator Carper. And you would not have to run for the 
office, would not have to raise a dime, kiss a baby, or do any 
of that?
    Mr. Crawford. That is true.
    Senator Carper. This is a way to get to be called governor. 
Now people can call you governor, if you are confirmed, maybe 
for the rest of your life, and they will not know that you did 
not have to set up a super PAC or any of that stuff.
    Mr. Crawford. Will you speak to my wife and my 12-year-old 
about this?
    Senator Carper. I will. All governors have first ladies or 
first husbands. It is a package deal.
    I think that is it. The record will remain open for our 
colleagues if they would like to submit statements for the 
record or if they have questions that they would like to ask 
you. I think their deadline for doing that is noon tomorrow. 
So, I expect you might hear from some. We would ask you to 
respond promptly.
    With that having been said, this hearing is adjourned. 
Thank you so much.
    Mr. Crawford. Thank you, Mr. Chairman.
    [Whereupon, at 3:50 p.m., the Committee was adjourned.]


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