[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
Available via the World Wide Web: http://www.fdsys.gov/
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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
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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\
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\1\ The prepared statement of Senator Brown appears in the Appendix
on page 19.
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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.
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\1\ The prepared statement of Mr. Crawford appears in the Appendix
on page 23.
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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.]
A P P E N D I X
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