[Senate Hearing 113-704]
[From the U.S. Government Publishing Office]
S. Hrg. 113-704
NOMINATIONS OF HON. JAMES C. MILLER III,
STEPHEN CRAWFORD, D. MICHAEL BENNETT,
AND VICTORIA REGGIE KENNEDY TO BE GOVERNORS, U.S. POSTAL SERVICE
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
NOMINATIONS OF HON. JAMES C. MILLER III, STEPHEN CRAWFORD,
D. MICHAEL BENNETT, AND VICTORIA REGGIE KENNEDY TO BE GOVERNORS, U.S.
POSTAL SERVICE
__________
JULY 14, 2014
Available via the World Wide Web: http://www.fdsys.gov/
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
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U.S. GOVERNMENT PUBLISHING OFFICE
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
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 MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Gabrielle A. Batkin, Staff Director
John P. Kilvington, Deputy Staff Director
Lawrence B. Novey, Chief Counsel for Governmental Affairs
Deirdre G. Armstrong, Professional Staff Member
Katherine C. Sybenga, Senior Counsel
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Andrew C. Dockham, Minority Chief Counsel
Joseph D. Moeller, Minority U.S. Postal Service Office of Inspector
General Detailee
Laura W. Kilbride, Chief Clerk
Lauren M. Corcoran, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Carper............................................... 1
Senator Markey............................................... 5
Prepared statement:
Senator Carper............................................... 39
Senator Markey............................................... 41
Senator Warren............................................... 43
WITNESSES
Monday, July 14, 2014
Hon. James C. Miller, III, to be a Governor, U.S. Postal Service. 6
Stephen Crawford to be a Governor, U.S. Postal Service........... 8
D. Michael Bennett to be a Governor, U.S. Postal Service......... 10
Victoria Reggie Kennedy to be a Governor, U.S. Postal Service.... 13
Alphabetical List of Witnesses
Bennett, D. Michael:
Testimony.................................................... 10
Prepared statement........................................... 48
Biographical and financial information....................... 130
Letter from the Office of Government Ethics.................. 146
Responses to pre-hearing questions........................... 150
Responses to post-hearing questions.......................... 165
Crawford, Stephen:
Testimony.................................................... 8
Prepared statement........................................... 46
Biographical and financial information....................... 95
Letter from the Office of Government Ethics.................. 105
Responses to pre-hearing questions........................... 109
Responses to post-hearing questions.......................... 125
Kennedy, Victoria Reggie:
Testimony.................................................... 13
Prepared statement........................................... 49
Biographical and financial information....................... 169
Letter from the Office of Government Ethics.................. 191
Responses to pre-hearing questions........................... 196
Responses to post-hearing questions.......................... 213
Miller, Hon. James C., III.:
Testimony.................................................... 6
Prepared statement........................................... 44
Biographical and financial information....................... 52
Letter from the Office of Government Ethics.................. 72
Responses to pre-hearing questions........................... 77
Responses to post-hearing questions.......................... 91
PENDING NOMINATIONS FOR GOVERNORS, U.S. POSTAL SERVICE
MONDAY, JULY 14, 2014
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 3:04 p.m., in
room 342, Dirksen Senate Office Building, Hon. Thomas R.
Carper, Chairman of the Committee, presiding.
Present: Senator Carper.
Also present: Senator Markey.
OPENING STATEMENT OF CHAIRMAN CARPER
Chairman Carper. The Committee will come to order, and that
includes the former Senator from Connecticut who is sitting in
the audience behind Senator Markey.
Chris, nice to see you. I think all of us were for Vicki
until you and Eddie showed up. [Laughter.]
It will be a close call on that. We will see if we cannot
get it through and try to get it done.
Senator Markey, I do not know what kind of timeframe that
you are on, but if you can give me some flavor, I want to be
respectful of your time.
I am going to give a statement for about the next probably
45 minutes. [Laughter.]
Probably the next 5 or 6 minutes and then introduce our
nominees.
And at some point in time, if you would like, you can go
first in introducing Ms. Kennedy, or you can go later. What
works for you?
Senator Markey. Whatever is most convenient for you, Mr.
Chairman.
Chairman Carper. Aren't you nice?
Senator Markey. Honestly, I am at your discretion.
Chairman Carper. All right. That was very senatorial, I
thought.
All right. Let me just give my statement.
And Senator Coburn is flying in from Oklahoma. I think his
plane will be in around a little before 3:30, and he will join
us as quickly as he can.
But we are meeting today to consider four nominations, as
you know, to fill vacancies on the U.S. Postal Service's Board
of Governors--important positions. We are considering these
nominations at what is a very challenging time for the Postal
Service.
I like to quote Albert Einstein. He used to say, in
adversity lies opportunity.
And, while there is adversity for the United States Postal
Service (USPS) now and in the last several years, there is
great opportunity as well, and we will talk a little bit about
that when we get underway.
The Postal Service operates at the center of a massive
printing, delivery, and logistics industry that employs
millions of people. I have heard as many as seven or eight
million people. And, even as First-Class Mail, like letters,
greeting cards and even wedding invitations are losing ground
to other forms of communication, I think the future is bright
for the Postal Service in a number of ways. Advertising mail is
still a popular and effective option for mail as we are
reminded every day when we check our mail. E-commerce and
package delivery are also booming, making the Postal Service a
vital partner for businesses both large and small. Even the
Postal Service's traditional competitors rely on it to carry
items the last mile, to the last 5 miles, or the last 10 miles
or even further to rural communities around our country.
For years, many people have questioned whether the Postal
Service has a future. These developments that I have mentioned
tell me, at least, that it does and potentially a very bright
one. But all of this is at risk if those of us here in Congress
continue to prove incapable of making the kind of tough
decisions necessary to make the Postal Service competitive in
the years to come. As important as the Board of Governors is,
Congress holds the keys to the Postal Service's future. The men
and women on the Board--including those before us today, should
they be confirmed--have little chance of success unless we do
our jobs and pass comprehensive postal reform legislation.
The Postal Service today carries barely enough cash to make
payroll. Its line of credit with the Treasury, as you may know,
is maxed out at $15 billion. And it has been incapable for
years of making capital investments, including the
technological investments necessary to compete with an United
Parcel Service (UPS) or a Federal Express (FedEx). Things are
so bad that the Postal Service has letter carriers on the
streets today driving inefficient, sometimes unsafe vehicles
that guzzle gas, break down, and are older than a lot of
members of my staff. That is just not acceptable.
Some observers point to the boom in package delivery and
the fact that the Postal Service occasionally makes a small
operating profit and say, well, things are OK, while they argue
that tough decisions are not necessary and that we should be
happy with a Postal Service that just limps along.
For me, that is not acceptable.
For Dr. Coburn, far be it for me to speak for him, but that
is not acceptable to him either.
The Postal Service is not acceptable to the majority of
this Committee either.
The Postal Service is just one major international crisis,
one recession, or one big spike in gas prices away from
failure. On top of that, with a few tools at their disposal and
their efforts to keep the Postal Service afloat, postal
management announced just the other week that it would be
closing an additional 82 mail processing plants across our
country and further slowing down mail delivery in every
community in the country.
This comes after the loss of about half the Postal
Service's mail processing capacity in recent years. At a time
when the future holds so much promise for the Postal Service,
this is a potentially devastating blow that will further sap
the confidence the public has in the Postal Service and its
ability to remain relevant. If we want a Postal Service that
our constituents can rely on, that families can rely on, that
businesses can rely on, and one that has a chance of continuing
the progress that we have seen made in package delivery, we
need to pass a bill--not just any bill, a bill that looks a lot
like the one that has been reported out by a strong margin in
this Committee and sent to the full Senate.
I think our Committee has done its work on this issue to
date. In February, as I said earlier, we sent a bill to the
full Senate that would save the Postal Service billions of
dollars in pension and health care costs, including by allowing
it to take full advantage of the investment its employers have
made over the years in Medicare.
The Postal Service pays more money into Medicare than any
employer in the country. They do not get full value for that,
and it is not fair. There is a serious equity problem there.
Our legislation would also provide the Postal Service with an
immediate cash infusion through a refund of its overpayment in
the Federal employee retiree system and free it to compete in
new lines of business. More importantly, our legislation will
preserve existing service standards, including the 82 plants
and Saturday mail delivery, at least for the time being, until
a lot of the reforms have had a chance to bear fruit, to raise
revenues and hopefully provide a profitable future for the
Postal Service.
I think our legislation is a solid, comprehensive, and
realistic response to a very real crisis. In my opinion, it is
the only one introduced in the House or Senate, in recent years
at least, that would actually work.
And Dr. Coburn and I, and I think the majority of our
Committee, are interested and are committed to fixing this
problem. This is one that can be fixed, and we are determined
to do that, working with all the key stakeholders who care
about this issue.
The Postal Service has indicated that the legislation would
give it the cash needed to pay down debt, account for its
pension and health care obligations, invest in capital, and
still have as much as $7 billion or more in cash on hand after
10 years.
I think that is a huge step forward especially when you are
thinking about a fleet of vehicles across the country. I think
a couple hundred thousand vehicles in the fleet. I think the
average age is over 20 years. They are fuel-inefficient. They
are energy-inefficient. They are not configured to be able to
carry a lot of packages and parcels.
The mail processing equipment--a lot of the mail processing
centers are a generation old, 20 years old. It is not well
suited for packages and parcels.
We need to help recapitalize the Postal Service, and the
legislation that we have reported out of here will do that, I
think, with $30 billion available in capital investments for
the next 10 years or so.
We look forward to talking with our nominees today about
what they think needs to be done to address the challenges
facing the Postal Service, and the skills they think they bring
to the table. If confirmed, this group of nominees would nearly
double the size of the current Board. So there is an
opportunity with this new injection of talent, combined with
the enactment of a solid postal reform bill, to make
significant progress in the very near future.
And, with that having been said, what I think I will do is
just introduce--Senator Markey, I am going to introduce Dr.
Miller, and I will go first with him, then Stephen Crawford,
and David Bennett. And then when I come to Ms. Kennedy, we will
ask you to introduce her, and I may make a couple of ad libs on
top of what you say.
But let me just start off by, first of all, saying to all
of you, thanks very much for your willingness to take on this
important responsibility.
James Miller is currently a senior advisor at the
international law firm of Husch Blackwell. He is a member of
the Board of Americans for Prosperity and a senior fellow at
the Hoover Institution at the Stanford University.
Earlier in his career, he was the Director of the Office of
Management and Budget (OMB) and the first Administrator of
OMB's Office of Information and Regulatory Affairs.
For you, no purgatory, straight to heaven.
Mr. Miller has 8 years of prior experience in the position
he is nominated for today, having served on the Board of
Governors of the U.S. Postal Service from 2003 to 2011.
He is itching to get back into the game. Well, I do not
know that, but he is willing to get back into the game.
Stephen Crawford, nice to see you. How are you? Mr.
Crawford is a research professor at the George Washington
Institute of Public Policy at George Washington University
(GWU).
And, previously, he served as Vice President for Policy and
Research at the Corporation for Enterprise Development, and
from 2008 to 2009 he served as the Deputy Director of the
Metropolitan Policy Program at the Brookings Institution.
Mr. Crawford is a U.S. Army veteran, received a Bronze Star
for his service as an infantry office in Vietnam.
As somebody who spent a couple years over there myself
while a naval flight officer, welcome home. It is great. Thanks
for that service and for your willingness to service in this
capacity.
David Michael Bennett, Senior Vice President of Information
Management and Chief Information Officer (CIO) of British
Aerospace (BAE) Systems, a position he has held since 2010.
Previously, he practiced law in various positions with Northrop
Grumman, Electronic Data Systems (EDS) Corporation and the U.S.
Department of Commerce.
In 2012, he received the Minority Business Leader Award
from the Washington Business Journal.
Great to see you. Thanks for your willingness to be with us
today and to assume this responsibility if confirmed.
And to introduce our fourth nominee, Victoria Reggie
Kennedy, is my friend, my colleague, Senator Ed Markey.
OPENING STATEMENT OF SENATOR MARKEY
Senator Markey. Thank you, Mr. Chairman, very much and
thank you for allowing me to introduce my great friend, the
incredibly talented Victoria Reggie Kennedy, who has been
nominated by President Obama to serve on the Board of Governors
of the United States Postal Service.
Vicki Kennedy is a public service powerhouse for our
country. A brilliant, gifted attorney, advisor and public
servant, Vicki will be an outstanding member of the Postal
Service Board of Governors. She will bring intellectual rigor,
innovative and strategic ideas, leadership, and her endless
energy to this post. Indeed, Vicki's career is singularly
suited to the Postal Service Board at a time when it needs
public servants as dedicated and creative as Vicki.
From our first Postmaster, Benjamin Franklin, to today, the
Postal Service has been an integral part of our democracy. It
pushes the frontiers of communication, rain or shine, through
wartime and peace.
Vicki will bring that same steadfast service to the Board
and a wealth of expertise. When she was a partner at a major
law firm, she helped banks reorganize and recapitalize. At a
time when efficiency and funding are both issues for the USPS,
her experience will be invaluable.
Today, Vicki helps organizations develop strategies to
resolve complex issues, and today's Postal Service has no
dearth of similar business matters to resolve.
And like her husband, our beloved colleague, the legendary
Senator Ted Kennedy, Vicki believes in the importance of
helping government work at its best to serve the American
people, and that is why she is the President of the Board and
Co-Founder of the Edward M. Kennedy Institute for the U.S.
Senate, created to educate the public about the unique role of
the Senate in our democracy.
Under Vicki's leadership, this innovative hub of history
will open next year, adjacent to the John F. Kennedy Library.
The Institute will provide visitors a state-of-the-art, high-
tech, interactive opportunity to learn lessons from America's
past and develop new ideas that can help shape a better future.
She can do the same thing for the United States Postal
Service.
She is also a trustee of the Kennedy Center for the
Performing Arts, a member of the Board of Overseers of the
Museum of Fine Arts in Boston and a member of the Board of
Directors of the National Leadership Roundtable on Church
Management.
She is a summa cum laude graduate of Tulane University
School of Law, a Phi Beta Kappa graduate of Tulane University,
and she has received honorary degrees from Boston University,
Northeastern, University of Massachusetts, Suffolk University,
on and on. And that is an impressive list of accolades and a
testament to her intelligence, her character and her
accomplishments.
The Postal Service needs Vicki Kennedy. The Board needs
talented, proven leaders who can assess the problems facing the
USPS and creatively and capably help the Postal Service resolve
those challenges. That is exactly who Vicki Kennedy is.
We all greatly admire Vicki and have complete confidence in
her. Vicki Kennedy will shine on the Board of Governors, and
our country will be the better for her service.
I thank you, Mr. Chairman.
Chairman Carper. Thank you, Senator Markey.
All I can say, Vicki, is after listening to that
introduction to our nominees, whenever I am nominated by some
President someday, I want Ed Markey to introduce me, too. I
figure even I could get confirmed with an introduction like
that.
Senator Markey, thank you so much. It was great to see you
and then see over your left shoulder, my old friend, Chris
Dodd.
Chris, thank you very much for joining us. I know it means
a lot.
I always feel like I should ask you to come in here and sit
with us, Senator Dodd, but I am told that is against the rules.
But you know that is where my heart is.
All right. I think before we proceed--and, Senator Markey,
I know you have other things to do, if you need to leave. We
should be done here by 9 tonight, but if you need to slip out
before then, feel free to do that.
Before we proceed with your statements, committee rules
require that all witnesses at nomination hearings give their
testimony under oath.
And I am going to ask if you all will 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. Miller. I do.
Mr. Crawford. I do.
Mr. Bennett. I do.
Ms. Kennedy. I do.
Chairman Carper. Please be seated.
It is Dr. Miller, isn't it?
Mr. Miller. Yes, it is.
Chairman Carper. It is Dr. Miller. My staff keeps wanting
to call you Mr. Miller. All that work--we are going to call you
Doctor.
But you are welcome to proceed with your statement. And if
you want to introduce any family or friends here with you
today, I would just invite you to do that; please feel free.
Again, we are delighted that you are here that you are
willing to serve once more in this capacity. Thank you.
TESTIMONY OF THE HONORABLE JAMES C. MILLER, III, TO BE A
GOVERNOR, U.S. POSTAL SERVICE
Mr. Miller. Thank you, Mr. Chairman.
I should point out that Mr. Jefferson once said there is no
higher honor you can pay a man but to call him Mister and mean
it.
So, Mr. Chairman, thank you for inviting us here today.
I have a prepared statement I ask to be included in the
record.\1\
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\1\ The prepared statement of Mr. Miller appears in the Appendix on
page 44.
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Chairman Carper. Without objection.
And one of my other favorite Jefferson quotes is if the
people know the truth, they will not make a mistake.
Is that not good? That is a good one for us these days.
If people know the truth, they will not make a mistake.
Please proceed.
Mr. Miller. Thank you for holding this hearing.
Thank you for your interest in the Postal Service.
As you point out, the stress of the Postal Service brings
forth opportunities. And the things you can do with this
Committee, and the Senate can do and the House can do, can make
the difference between restoring the Postal Service to a solid
footing and seeing it become a very expensive ward of the
State.
And I commend you for the past--the progress on S. 1486. It
is a very large step forward toward the goal of restoring the
Postal Service.
And, if you confirm me, I will work to obtain that end. I
hope the House will pass a bill and that a conference bill will
become law.
I want to thank President Obama for nominating me, and
thank Majority--Minority Leader McConnell for recommending me.
Chairman Carper. Now you are getting ahead of yourself just
a little bit here. [Laughter.]
Mr. Miller. And I would like to acknowledge the three
distinguished individuals with whom I share this table, whom I
have gotten to know in the last several months and admire. They
will make splendid additions to the Board.
As budget director for President Reagan, I think I knew the
Hill pretty well, and I think most, Members of Congress knew me
or knew of me. But that was over a quarter of a century ago. So
let me tell you a little bit about myself.
Since graduate school, I have pursued really four different
careers, sometimes at the same time.
The first was academic. I was trained as a college
professor. I taught at two major universities, taught full-
time, then part-time at several other universities.
I have been associated with major think tanks--as you
noted, the Hoover Institution but also Brookings and the
American Enterprise Institute. I was on the Boards of the Air
Force Academy and also the Board of George Mason University.
Along the way, I have written 9 books and over 100 articles in
professional journals.
The second career was in the Federal Government. At the
Department Transportation (DOT), I contributed to airline
regulatory reform. At the Council of Economic Advisors, I wrote
the chapter on regulation in the 1974 Economic Report of the
President. At the Council on Wage and Price Stability, I made
transparent the cost and benefits of regulation, back to your
quote, Mr. Chairman. At the beginning of the Reagan
Administration, I co-authored Executive Order 12291, which
established the regulatory review program. I went over to the
Federal Trade Commission (FTC) and chaired the Federal Trade
Commission for 4 years, and we put that agency back on the
traditional path of law enforcement. I came back to be the
Director of OMB, a member of the President's Cabinet, and
helped negotiate Gramm-Rudman-Hollings which brought the
deficit down significantly and did other things there as well.
As you have mentioned, I did serve a term at the Board of
Governors of the U.S. Postal Service, where during the 3-years
of my chairmanship my colleagues and I produced the Forever
stamp, which I think has been a great success.
I had a career in elected politics that was not
particularly successful. I ran for the U.S. Senate in Virginia
in 1994 and 1996, and I helped my wife's campaign for the House
of Representatives for the 8th District of Virginia in 1998 and
the year 2000.
I have had a career in business. I have been on several
boards of directors of companies. I have had a consulting
practice of my own. I headed a consulting group for a major law
firm. I am on the boards of three major mutual funds. I am on
the board of Clean Energy Fuels, the largest provider of
natural gas for vehicles in America. I am on the Chairman of
the Audit Committee and the Designated Financial Expert for
those firms. I am, as you mentioned here, with Husch Blackwell,
and I am also Chairman of the Executive Committee of the
International Tax Investment Center.
Today, I ask you to confirm me for this important post.
My wife of more than 50 years, Demaris Miller, asked me,
why are you doing this? You have been there, done that.
The answer is it is unfinished business.
When I was at the Board of Governors, I worked very hard,
trying to obtain the kinds of reform that you have outlined
that are needed but without success. And I would like to go
back and working with you, working with other Members of
Congress, working with management, working with the
stakeholders of this great institute, make those kinds of
changes happen and restore the financial integrity and the
viability of this important organization.
Thank you, Mr. Chairman.
Chairman Carper. Well, Dr. Miller, I sat here listening to
you talk about what you have been involved in, in your life,
saying, what a life. What a life and still going strong. That
is very impressive.
Mr. Miller. Thank you, sir.
Chairman Carper. Thanks again for your willingness to take
this on and help us fix this problem.
Stephen Crawford, you were in the Army, right?
Mr. Crawford. I was.
Chairman Carper. Tell us about your service just here very
briefly, please.
TESTIMONY OF STEPHEN CRAWFORD\1\ TO BE A GOVERNOR, U.S. POSTAL
SERVICE
Mr. Crawford. I served for three and a quarter years, the
last of which I served in Vietnam as an infantry officer, as an
advisor to an Army of the Republic of Vietnam (ARVN) infantry
battalion in the Mekong Delta, lost a good friend in the Tet
Offensive, but--so I think we all have mixed feelings about
difficult years there, but certainly a learning experience.
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\1\ The prepared statement of Mr. Crawford appears in the Appendix
on page 46.
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Chairman Carper. I have been back a number of times since
then.
I led a Congressional delegation back there in 1991 to try
to find the truth, what happened to a couple thousand of our
men, mostly men, some women, and Senator McCain and Senator
Kerry were involved in that effort in the Senate. And I feel
very good about that and have been back a couple times since.
Every time I would talk to people who served over there, I
always ask them, have you been back since the war? Most people
have not, but I always encourage people to go.
Mr. Crawford. I applaud that.
My wife and I adopted a child from Vietnam who is now 14.
Chairman Carper. Did you really? Wow.
Mr. Crawford. And she is off at summer camp, or she would
be here today cheering for us, and I could introduce her to
you.
But, yes, we went back to get her, and then we went back to
visit with her family when she was about nine.
Chairman Carper. That is great.
Mr. Crawford. So it has been a good experience.
Chairman Carper. Well, thank you for that service.
And if there is anyone in the audience that you would like
to introduce, feel free and then proceed.
Mr. Crawford. Yes, sir.
Chairman Carper. Thanks so much.
Mr. Crawford. Good afternoon, Chairman Carper, and thank
you for the opportunity to testify today and to second what
Jim, a hard act to follow, but what Jim----
Chairman Carper. I would not want to have to follow that
statement. I would just say, skip over me.
Mr. Crawford. Yes, right.
Thank you for your leadership on postal reform legislation.
It is been a long, hard struggle, I am excited about S. 1486
and commend the Committee for advancing it this far.
I am truly honored to be nominated by President Obama to
serve on the Board of Governors of the United States 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.
It is in these dire straits, I believe, for three main reasons:
one, the growth of electronic communications and the resulting
diversion of First-Class Mail; two, the recent recession and
its lingering impact; and three, and perhaps most importantly,
the unique regulatory environment in which it operates. While
there seems to be broad agreement on these causes of the Postal
Service's problems and deficits, there is considerable
disagreement about how to fix them. 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 prefunding the health benefits of future
retirees.
I believe that the challenges are so severe that the Postal
Service should explore all the above, and I applaud the
Committee for crafting and passing a bill that does so.
I believe that my prior experience has prepared me to serve
well 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 served on various boards and commissions, and
at present I am a member of the Board of Directors of the
American National Standards Institute whose nearly 1,000
members include trade associations, professional societies,
unions, consumer organizations, universities, government
agencies and such companies as Apple, IBM, Caterpillar,
ExxonMobil, Netflix, Verizon, et cetera, firms and
organizations that represent more than 3.5 million
professionals.
Finally, as a member of the Obama-Biden Transition Team and
later as a consultant to the Postal Service, I had exceptional
opportunities to get acquainted with the problems and potential
solutions facing the Postal Service, the mailing industry and
such related agencies as the Postal Regulatory Commission (PRC)
and the inspector general's (IG) office.
In closing, I would like to thank the Committee for its
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 you and
all the Postal Service's stakeholders on crafting and
implementing such solutions. I appreciate the opportunity to
testify today and welcome your questions.
Chairman Carper. Thank you very much. That is a very strong
resume as well and different from certainly that of Dr. Miller.
But you all have different backgrounds. I think all of you
do bring different strengths to the Board.
So, thank you for all of that.
Chairman Carper. David Michael Bennett, it is great to see
you.
Mr. Bennett. Michael is what I tend to go by.
Chairman Carper. Good to see you.
We have a guy named Michael Bennett here. He serves in the
U.S. Senate. He is from Colorado. I do not think he spells his
name with two Ts. His family could only afford one. [Laughter.]
Mr. Bennett. Well, I drop the T in my e-mail address. So I
guess that----
Chairman Carper. Oh, that is good to know.
Mr. Bennett. Yes.
Chairman Carper. All right, nice to see you. Thanks, sir,
for being here and for your willingness to serve. Please
proceed.
TESTIMONY OF D. MICHAEL BENNETT\1\ TO BE A GOVERNOR, U.S.
POSTAL SERVICE
Mr. Bennett. Thank you.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Bennett appears in the Appendix
on page 48.
---------------------------------------------------------------------------
I think my son, Michael Bennett, is here. Another Mike.
Chairman Carper. Where?
Mr. Bennett. I do not know.
Chairman Carper. He is back there, all right. He looks like
he might be pretty tall. Is he?
Mr. Bennett. He is pretty fast. He is a track guy.
Chairman Carper. What are his events? What does he do?
Mr. Bennett. He is a 400 hurdler.
Chairman Carper. Wow.
Mr. Bennett. Tough race.
Chairman Carper. At what level? Is he college?
Mr. Bennett. He is out of college. He is a personal trainer
now.
Chairman Carper. OK.
Mr. Bennett. And coaching track. Just got back from his
certification in coaching.
Chairman Carper. All right.
Mr. Bennett. And my mom, Johnnie Evans, is here.
Chairman Carper. Where?
Mr. Bennett. Right here.
Chairman Carper. Well, hi. How are you? Nice to see you,
ma'am. A pleasure.
Mr. Bennett. And my partner, Pam Jackson, is here.
Chairman Carper. Is it Pam?
Mr. Bennett. Yes.
Chairman Carper. All right, Pam, welcome. Which one is your
mom?
Mr. Bennett. In the white. [Laughter.]
All right, good joke today.
Chairman Carper. I have pretty good vision, too.
Mr. Bennett. I will hear about them when I get home.
Chairman Carper. All right. Well, you are both welcome.
Thank you all for coming.
And, for your son, thank you for being here to have your
dad's back. That is great.
Mr. Bennett. Well, I will say good afternoon, Chairman
Carper.
And also, too, one of your staff the other day said at the
end of their session with me, well, we have four very different
nominees. And that is true.
And all four of us have had a chance to get to know one
another.
I am the corporate guy. I am the guy who spent 95 percent
of his career in corporate America. Even in the years I was
practicing law, I was inside of a corporation.
Let me say good afternoon to you, Chairman Carper, and a
good afternoon also to Dr. Coburn when he arrives.
So I have a prepared statement I would like to go through,
if I may.
Chairman Carper. For each of you, your entire statement
will be made part of the record and feel free to summarize as
you wish.
Mr. Bennett. Thank you.
It is my pleasure to be here before you this afternoon. I
want to thank President Obama for his decision to nominate me
to become a member of the United States Postal Service Board of
Governors.
I believe that the Board of Governors has a critical role
in our Postal Service and, ultimately, to the American people.
So with integrity, pride and diligence will I serve on the
Board. I am committed to exercising every aspect of my legal,
business and technology experience to help the United States
Postal Service continue to evolve with America.
As a longtime resident of our Nation's Capital, a native
North Carolinian, proud graduate of Duke University.
Chairman Carper. Did you say native North Carolinian?
Mr. Bennett. Native North Carolinian.
Chairman Carper. Oh, really? Where were you born?
Mr. Bennett. Charlotte.
Chairman Carper. Really.
Mr. Bennett. Yes.
Chairman Carper. Ever hear of Boone?
Mr. Bennett. Yes, absolutely.
Chairman Carper. My wife is from there.
Mr. Bennett. Oh, OK.
Chairman Carper. She used to live in Charlotte.
Mr. Bennett. Great connection.
Chairman Carper. Got her to move to Delaware.
Mr. Bennett. OK.
Chairman Carper. Yes.
Mr. Bennett. Anyway, I am a native North Carolinian, proud
graduate of Duke University and the George Washington
University Law School, at which my colleague is a professor.
And, most importantly, I am someone who uses mail services
on a very regular basis. I still pay all my bills by mail and
send cards out and the whole bit and send letters.
I believe in the mission of the Postal Service.
My current experience as Chief Information Officer of a
100,000 multinational company specifically gives me the skills
necessary to drive change in our ever changing world. I am
honored to have an opportunity to serve my fellow citizens
through one of the most important institutions in America.
Some of the changes in our culture have caused many to
question the intrinsic value of the Postal Service.
I believe that our Postal Service is an essential part of
the fabric of our Nation. It is a vital part of our economy as
well as a material force in our personal lives.
It is sometimes the soul option for businesses in remote
areas to receive products that are essential to maintain
manufacturing machinery or a steady flow of product for resale.
The Postal Service has personal impact for many who are
unable to travel to a pharmacy, for instance, for various
reasons, and essential medications are delivered to their
doorsteps by a United States Postal Service carrier.
It is the only institution in this country that can touch
every single American every day. That is an incredible national
asset.
And that turns me on for some reason. I just find it
incredible that you have an institution that can touch 300
million people every single day.
There is probably no other country on the planet that has
an institution with the capabilities of our United States
Postal Service. Unfortunately, some take this 200-plus-year-old
national treasure for granted. I recognize this treasure and
want to be a part of creating even more value in it for the
American people.
I am honored, yes, but I am also excited about what is
possible for the Postal Service. I am eager to explore all of
the various ways the institution can serve the American people
through its vast network of facilities, distribution networks
and, most importantly, the employees. As I think about how many
companies have transformed themselves over the past decade, to
drive efficiency in and increase corporate value, solving
challenging business problems, I get excited considering the
possibilities for transformation in the United States Postal
Service. Transformation is driven by innovation. I look forward
to working with the Board, with other Board members, and
challenging management on various innovative ideas to drive
value throughout the enterprise.
Throughout my career, I have led transformational business
programs which have led to cost savings, streamlined business
processes and, ultimately, greater value to customers,
employees and shareholders alike. I look forward to sharing my
experience gained as a result of leading large, technology-
centered innovation initiatives to create greater value for
America.
And, finally, we should continue to look for ways to
leverage the knowledge and skills of our incredible workforce.
Our people are our largest and most valuable asset. When I was
growing up, my stepfather was a Postal Service mail carrier in
Charlotte, North Carolina. There was not anything he did not
know about locations and getting around Charlotte. We can
leverage these human capabilities to continue transforming the
Postal Service to be the business, current and future, America
needs and wants. I want to get started.
Thank you for this opportunity. I look forward to your
questions.
Chairman Carper. I like that; I want to get started. It is
good.
We have a fellow who is the U.S. Secretary of the
Department of Transportation, who is a former Mayor of
Charlotte.
Mr. Bennett. Yes.
Chairman Carper. Anthony J. Foxx. I do not know if you know
him. Foxx with two Xs.
Mr. Bennett. I do.
Chairman Carper. And I think he is very funny.
Mr. Bennett. In fact, he used to go to the doctor that my
mother was the receptionist for.
Chairman Carper. Wow.
Mr. Bennett. When he was a little kid.
Chairman Carper. No kidding.
Mr. Bennett. So he knows my mother well.
Chairman Carper. Wow. So your mom was the Director of First
Impressions at that office.
Mr. Bennett. Absolutely.
Chairman Carper. OK. That is great.
Mr. Bennett. Absolutely.
Chairman Carper. OK. Thanks for your testimony again.
Mr. Bennett. Thank you.
Chairman Carper. Ms. Kennedy, it is great to see you and
thank you for your willingness to serve and please proceed.
Your entire statement will be made part of the record.
TESTIMONY OF VICTORIA REGGIE KENNEDY\1\ TO BE A GOVERNOR, U.S.
POSTAL SERVICE
Ms. Kennedy. Thank you, Mr. Chairman.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Kennedy appears in the Appendix
on page 49.
---------------------------------------------------------------------------
I am pleased to join James Miller, Stephen Crawford, and
Michael Bennett to appear before you this afternoon as
President Obama's nominees to the Board of Governors of the
United States Postal Service, and I am honored and humbled by
the confidence and trust that President Obama has placed in me.
I look forward to answering your questions and hearing
firsthand your thoughts and concerns about the Postal Service,
and if confirmed, I look forward to working with the Committee
and with other Members of Congress to strengthen the Postal
Service in a long-term and comprehensive way.
I would also like to thank my family for their support, and
some of them are here today: my mother, Doris Reggie; my son--
--
Chairman Carper. Your mom is here?
Ms. Kennedy. My mom is here, Doris Reggie. My son, Curran
Raclin. My son, Congressman Patrick Kennedy, and his wife, Amy.
And their two little ones were also here, but they have stepped
out for a few minutes; they are very tiny.
Chairman Carper. Do they realize they are missing your
testimony? [Laughter.]
Ms. Kennedy. Yes. I think that food has won out.
And my daughter, Caroline Raclin, is working in the
Philippines, and Ted Kennedy, Jr. has a campaign in
Connecticut, but they are here in spirit.
Chairman Carper. I would call those excused absences.
Ms. Kennedy. I think so.
And I really want to thank in a very personal way, my
Senator, Ed Markey, for such a gracious and warm introduction,
and my friend, Senator Chris Dodd, for being here. It really
means the world to me that they are here.
And I have other dear friends who are in the audience.
Chairman Carper. Well, let the record show I could barely
see Chris Dodd's lips moving when Senator Markey was speaking.
[Laughter.]
Ms. Kennedy. The Postal Service is a vital public asset. As
my friend, Michael Bennett, said, it has near daily contact
with every American household and business. There are more than
31,000 post offices, stations and branches across this country,
many of which serve as a focal point of local identity and a
center of community interaction. With 500,000 hardworking and
dedicated employees earning a solid middle-class income, the
Postal Service is an essential part of the fabric of American
life. Because of the governing principle of universal service,
no matter where you live in the United States, you are entitled
to the same postal service as every other American. And without
a doubt, as our Founding Fathers understood when they included
the Postal Clause in Article I of the Constitution, universal
service unifies us as a Nation.
As we meet today, however, and as we have been discussing,
the Postal Service is facing a serious financial crisis. If
confirmed, I would work with my fellow board members to look at
comprehensive ways to address this crisis. I would, likewise,
work with them to listen to the concerns and ideas of key
constituency groups to craft long-term solutions to long-term
problems, to position the Postal Service to be nimble and ready
to take advantage of opportunities for growth in its core
business, letter and package delivery, and not to undermine its
essential strengths. I think it also important to look at the
possibility of expanding into related business lines while
always maintaining timely universal service and protecting and
nurturing the core business of the Postal Service.
The mailing industry in this country generates $800 billion
in economic activity, and the Postal Service is a key part of
the distribution network for that activity. Its competitors
even rely on its exceptional distribution infrastructure for
the key last mile delivery, to connect the smallest towns and
rural areas to e-commerce. A recent inspector general report
has concluded that preserving that infrastructure could allow
the Postal Service to reap as much as a half-billion dollars of
additional revenue in the near future because of private sector
manufacturing innovations, such as 3-D printing, that will need
the sophisticated, full service delivery infrastructure that
the Postal Service has in place.
I believe that the Postal Service can and should be at the
leading edge of innovation in envisioning the new ways that
Americans communicate with each other and with the rest of the
world. I also believe it should have the regulatory flexibility
to take advantage of opportunity and innovation when it is in
the public interest.
If confirmed, I believe that my skills and experience can
make a positive contribution.
I would keep always paramount, if confirmed, a focus on the
public interest. The Board of Governors should set policy to
ensure the long-term financial well-being of the Postal
Service, and it should assure that senior management follows
and executes that policy. I believe in a full airing of the
issues and a robust dialogue with all interested parties as we
seek, in the public interest, the best way to return the Postal
Service to a safe and secure financial footing.
I look forward to discussing these and other issues with
this Committee today and, if confirmed, with the Committee and
Congress in the future.
In closing, I again want to thank you for considering my
nomination, and I look forward to answering your questions.
Thank you.
Chairman Carper. You used exactly 5 minutes. [Laughter.]
That does not happen every day.
Ms. Kennedy. Thank you.
Chairman Carper. That was good. Thank you.
Thank you all.
Now I will start my questioning with three standard
questions that we ask of all nominees, and I am going to ask if
you would just please answer after each question.
Is there anything that 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?
We will start with Dr. Miller.
Mr. Miller. Nothing, other than what I indicated in
response to the questions to this Committee.
Chairman Carper. All right. Thank you.
Mr. Crawford.
Mr. Crawford. No, nothing.
Chairman Carper. All right. Mr. Bennett.
Mr. Bennett. No, Mr. Chairman.
Chairman Carper. Ms. Kennedy.
Ms. Kennedy. No, Mr. Chairman, I am not aware of anything.
Chairman Carper. All right. No. 2, 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?
Dr. Miller.
Mr. Miller. No, sir.
Chairman Carper. OK.
Mr. Crawford. No, sir, Mr. Chairman.
Chairman Carper. All right.
Mr. Bennett. No, Mr. Chairman.
Chairman Carper. Ms. Kennedy.
Ms. Kennedy. No, Mr. Chairman.
Chairman Carper. All right. And the last one, do you agree,
without reservation, to respond to any reasonable summons to
appear and testify before any duly constituted committee if you
are confirmed?
Dr. Miller.
Mr. Miller. Absolutely.
Chairman Carper. All right.
Mr. Crawford. I do.
Mr. Bennett. Yes, I will.
Ms. Kennedy. Yes, I will.
Chairman Carper. All right. Great. Thank you.
Thanks for your interesting testimony, well prepared, well
presented.
I just want to start off by saying it is interesting what
Mr. Bennett said about he still sends and pays his bills by
mail. He still sends out cards and letters.
So do I.
And you are probably better at technology than I am, but I
am not bad.
And I have two sons, 24 and 25, who coach me. So I could
get even better over time.
But I was reminded of the service in the U.S. Postal
Service that serves on Saturday. I was home for a bit, and the
letter carrier delivered our mail just a little bit before 5
p.m. Sometimes it is later if he has a whole lot to deliver and
sometimes not quite that late. But it was about 95 degrees
outside, and he was delivering mail, cheerful, going about his
work.
And he is there when it is 95 degrees. He is there when it
is 5 degrees.
He is there when the sun is shining, as it was on Saturday,
and he is there when it is raining, sleeting, or snowing.
And we are grateful for his service and those of the
hundreds of thousands of postal employees across the country
who have served us for years, who serve us today, and if we
have anything to do with it, will serve us many years to come.
We had sitting right here--I think, Ms. Kennedy, where you
are sitting--a couple years ago was a fellow from--was it
Wisconsin?
Yes, a fellow, a very successful business person whose name
was Joe Quadracci, and he runs a company called Quad Graphics.
And as he sat before us that day, he talked about his
business, which was--is it a paper business? Or, printing
business?
Paper and printing business, if you will.
And he talked about how they had figured out in a day and
age when a lot of businesses in that industry had closed, had
fallen and eventually been ended, how he talked about his
business sort of did just the opposite. Instead of failing,
faltering, going out of business, they have gotten stronger
over time.
And what has happened is they have taken the legacy
business, the paper or printing business, and figured out how
to be successful in the Digital Age; that is what they have
done.
And what I have been hoping for with respect to the Postal
Service is the ability to do something like that. Find that
intersect between maybe one of the longest living organizations
in our country, and that is our Postal Service, and how to make
an operation like that not just relevant in the Digital Age but
successful in the Digital Age.
And it is not that we are going to make them successful,
but what do we need to do to enable them to be successful?
And I think we can do that.
We have had testimony here before when folks have come in,
from different stakeholders, a lot of smart people like you,
and they said to us in terms of the things we need to do that
one of the things we need to do is to focus on the main thing.
There was an old Methodist minister down in southern
Delaware, in a little town called Seaford, who passed away a
couple of years ago, but a guy who when I was Governor, before
that, Congressman now and then later in the Senate. He had
always given me great advice when I was down in Sussex County.
He even once let me be a lay speaker in his church. It was
a very special treat.
But he used to say this; the main thing is to keep the main
thing the main thing. That is what he said.
The main thing is to keep the main thing the main thing.
And for some of the folks that have testified before us,
they have said in terms of--I do not know if it was a main
thing but a big thing for us to consider is health care costs
of retirees.
When we worked on legislation in 2006-2007, Senator Collins
and I and others, one of the requirements, if you will, from
the Administration of President George W. Bush was to not only
recognize there is a large liability that is owed by the Postal
Service, and the liability is for retiree health care costs.
Some people think that is not really a liability and it is
not something we need to be mindful of.
When I was elected State treasurer at the age of 29, just a
pup, the State of Delaware had the worst credit rating in the
country. We are the best in the country at overestimating
revenues and underestimating spending.
Think about that.
We are the best in the country at overestimating revenues
and underestimating spending. That is how we got the worst
credit rating in the country. We had no cash management system.
We had no pension fund. And we had all our money in State-owned
banks about to go under, and we had the lowest startup of new
businesses of any State in the country.
In fact, we used to sell revenue anticipation notes in
order to have money, taxes and revenue anticipation notes in
order to be able to meet payroll and to pay pension checks. We
were not a model of financial respectability.
And nobody else wanted to run for State treasurer in our
party. I got to run, and we won.
Pete du Pont was elected Governor and did a great job. He
was a great Governor for 8 years, and Mike Castle after him,
and I succeeded Mike Castle.
We started off with the worst credit rating in the country
in 1977, and we ended up in my second term as Governor with
AAAs across the board. AAAs. We are very proud of that.
And I will never forget, though, when we met with the
rating agencies, they told us what they had done and why. They
also said you have a bit liability out there that you have not
recognized and you have not addressed at all.
And we said, what is that?
And they said, you have a lot of pensioners.
And I said, well, we have a strong pension fund. It is
admired for how fully invested and how well invested it is.
And they said, no, that is not it.
They said, your problem is all those pensioners are out
there. They have enormous health care costs attached to each of
them. And you have not recognized that, and you have not
started setting money aside for that.
They still gave us an AAA credit rating, but they flagged
that for us.
In my last year as Governor, we began to address that, not
in a huge way. We acknowledge it was a liability, and we
started to address that.
The problem from 2006-2007 legislation is we agreed with
George W. Bush. In order to get the President to sign the bill,
we had to agree to, I think, a very aggressive schedule to pay
down that liability for retiree health care costs.
And what we found out in the years since then is that the
Postal Service pays more into Medicare than any employer in the
country.
My wife is retired from DuPont. Hard to believe to look at
her, but she just turned 65.
And when she turned 65, the DuPont Company said to her,
Martha, we love you, but from now on you have to sign up for
Medicare Part A, Part B, maybe Part D, and we will provide a
wraparound coverage for you.
But they expect that for all their employees, or retirees,
rather.
And there are thousands of companies in this country who
say that is what we expect. They will do the wraparound, but
they expect the retiree to sign up for A, B and maybe Part D
under Medicare.
The Postal Service competes with FedEx and with UPS. I
presume they have a similar kind of arrangement with their
retirees when they reach 65.
The Postal Service pays more money into Medicare than
anybody else. They do not get equal value, and it is not fair.
And it is one of the chief provisions in our bill. We call
it Medicare integration. And it enables the Postal Service to
pay down this obligation in a more timely way.
We will start off with Dr. Miller. I do not know if any of
this sounds probably familiar to you. It may or may not sound
familiar to our other nominees.
In terms of the main thing, if we do not do this, if we
somehow do not do this, I think we are going to be very
disappointed in our inability to get anything done, Dr. Miller.
Mr. Miller. Mr. Chairman, actually, I thought maybe Senator
Markey might say a few words on my behalf. [Laughter.]
I need that kind of help.
Mr. Chairman, I am not surprised at your insightful
analysis because I know you have a degree in economics from the
Ohio State.
Chairman Carper. I tell people I studied economics at Ohio
State. My professors would say not nearly enough.
Mr. Miller. But you are spot-on in my judgment.
Chairman Carper. Thank you. Mr. Crawford.
Mr. Crawford. Yes, I wholeheartedly endorse the plan in
S. 1486 to require postal retirees, once they reach 65 and are
eligible for Medicare, to make Medicare their primary coverage.
As you say, it is almost universal in the corporate world.
My understanding is that 10 percent of postal retirees who
are eligible do not take Part A and 24 percent do not take Part
B. And I have not done the numbers to figure out sort of what
the cost implications are, but those are--especially that
second number; that is huge.
Chairman Carper. All right. Thank you. Mr. Bennett.
Mr. Bennett. Senator, I agree. I think that, one, you are
right; the main thing needs to stay the main thing.
In my company and in the previous company I was with,
Northrop Grumman, that is exactly the route that we have gone.
I mean, there is no way that you can continue on this path. The
Postal Service cannot continue on this path. Large companies
have decided to do that a long time ago. So I agree completely.
Chairman Carper. All right. Thank you.
Ms. Kennedy, please, will you react to this?
Ms. Kennedy. Yes, certainly. Obviously, the issue of health
care and health care costs is something that is of great
concern. It is my understanding that there is widespread
support, both with the collective bargaining units and with
management at the Postal Service, for the plan that you
describe. And it is something that I look forward to learning a
lot more about. It seems to make a lot of sense, but I would
like to understand it in more depth as we go forward.
Chairman Carper. Fair enough.
Let's talk a little bit about this intersection between
the--I will use an analog as an example of what we do at the
Postal Service today. We deliver packages, parcels, pieces of
mail. And we do it door-to-door. We do it 5 or 6 days a week
and do it all over the country. And we use old vehicles to do
it.
Meanwhile, you have a lot of folks that are ordering stuff
today as we speak, that they want to have delivered tomorrow,
and they will look for somebody to deliver it. There are some
good business opportunities there, including on Sundays, and
the Postal Service is starting to take advantage of this.
I do not know if it was Ms. Kennedy. Somebody mentioned
innovation.
In our legislation, ironically, one of the provisions in
the legislation that we have is it was legislation really
lifted from Senator Bernie Sanders. Most people would not think
of Bernie as like the chief innovation officer or the guy to be
the most entrepreneurial guy in the Senate.
I see Ed Markey smiling.
But he is right on, spot-on, when it comes to the Postal
Service.
How do we help enable the Postal Service to use this legacy
organization to find new ways to generate revenues and provide
a service that is needed without stepping on the toes in an
inappropriate way of the private sector?
There is a call for, in our legislation, the creation of
what I will call a chief innovation officer.
We call for a summit with all kinds of people, including
people from the digital world, to come in and say to the Postal
Service, have you ever thought of doing this or that or the
other?
And we are going to do something, a similar kind of
approach, with the census. So the next time we do the census,
we will not be doing it with pen and paper; we will be doing it
in a lot smarter way, less expensively and, hopefully, a lot
more effectively.
Talk to us about innovation. Start with talking to us about
innovation and the things that you would like to see the post
office do, that you think might be good ways for them to
provide a service and make some money while they are doing it.
And, again, I will ask Dr. Miller if you would just lead
off with this, please.
Mr. Miller. Mr. Chairman, the movement to the digital
revolution has cost the Postal Service inasmuch as First-Class
Mail has diminished, but on the other hand, it has created
opportunities as well. That is a major reason that you see the
growth in the packaging. Because people ordering through eBay
and other ways, that has generated a great deal of increase in
mail volume.
I think that Mr. Bennett's becoming a member of the Board
would be a very positive thing to stimulate a lot of thinking
at the Postal Service because he has those kinds of
responsibilities at BAE.
And there are other opportunities. I think Steve has talked
about it, and Vicki had talked about it as well.
So I think there are many opportunities there that need to
be explored, that are being explored, frankly, at the Postal
Service under Postmaster General Pat Donahoe's leadership, but
I think there are many opportunities as you have identified.
Chairman Carper. Thank you. Mr. Crawford.
Mr. Crawford. Mr. Chairman, I enjoy reading the white
papers that the inspector general's office produces, and some
of them are simply stimulating. I am not sure that they are
politically or otherwise always going to survive and be
implemented, but I would like to see the Postal Service have
the flexibility to run pilots and experiments and try out.
Let's take non-bank financial services. We see a lot of
foreign postal services make some money on that. Whether it
makes sense for the U.S. Postal Service to get into that is a
huge question.
The issue, though, it seems to me is to have the
opportunity to experiment, whether it is that, whether it is
the implications for
3-D printing. There is just so much in the world of technology
that is unfolding now.
And this cannot be all or nothing; we are now going to
implement this.
Now the Postal Service, to be fair, already does do some
studies and trials. If I were on the Board, that is an area
that I would give special attention to.
Chairman Carper. Well, let me let you all finish, and then
I will throw out a couple of ideas and let you react to those.
Thank you. Mr. Bennett.
Mr. Bennett. This is really, Chairman, my sweet spot. I
have led a number of innovation initiatives in my company,
particularly from a technology perspective.
I really get excited thinking about the different things
that you can do with this incredible infrastructure that we
have, with all these people, with all this logistics, that we
deal with as a postal service every single day, that nobody
else knows how to do.
Imagine if you start partnering with a company like Sysco
and take the kinds of things that they do from a networking
perspective and connect those to our postal infrastructure.
We have talked about 3-D printing. Imagine being able to
have the companies who produce through these 3-D printers.
At no cost to the Postal Service, put those printers in
various locations in the Postal Service and have opportunities
where they are able to fax, if you will, the model of a shoe
and they want that to get to a particular customer in an hour.
And the Postal Service says, great; we will get there within an
hour, within a 10-mile radius.
There are so many different things, so many opportunities.
The moment I was nominated, I had the Chief Operating
Officer (COO) of Sysco, senior executives at Microsoft, various
people from different technology companies talk to me about
things they would like to consider and to talk to the U.S.
Postal Service about but have not had an opportunity to get in.
I mean, this is just right in the area that I would really
love to have an opportunity to help the Postal Service evolve
and do a number of different innovative things over the course
of the next decade.
Chairman Carper. Did you say fax someone a pair of shoes?
Mr. Bennett. Yes, absolutely. The technology exists. It is
there.
Chairman Carper. Let me just say before you speak, Vicki, I
do not know if the Board of Governors, if they have a committee
or subcommittee on innovation. But, if you get confirmed, Mr.
Bennett, I sure hope they put you on that committee; that would
be good.
Thanks. Ms. Kennedy.
Ms. Kennedy. I understand that there are shoe
manufacturers, athletic shoe manufacturers, that are going to
be taking orders for athletic shoes with your specifications
and doing 3-D printing of those shoes in your exact size and
with your specs, and they are going to want to distribute them.
And the distribution network that exists right now for the
United States Postal Service is an incredible asset, and that
is something that I believe we have to maintain, to be able to
take advantage of that kind of innovation, to be able to reach
people.
When you talk about doing what we do, that is what the
Postal Service does. It knows how to deliver. It has an
infrastructure.
And that is why one of the wonderful things in the last few
months of waiting for this hearing is that we have all gotten
to know each other, all of the nominees here.
Chairman Carper. If you do not mind my asking, how have you
all gotten to know each other?
Ms. Kennedy. We have had lunch. It is a great thing.
Talking. Regular lunch and talking and e-mailing, and so we
have gotten to know each other.
Chairman Carper. Facebook?
Ms. Kennedy. No, not Facebook. [Laughter.]
But it has been a very good thing. Collegiality and sharing
ideas, it has been a very positive thing.
So, if we are confirmed, I think we will hit the ground
running, talking about what is out there in the future and
being able to take advantage of that kind of innovation.
One of the things that Steve Crawford just said in his
opening statement, though, is will the regulatory structure
restrict your being able to take advantage of innovation in
other ways?
There might be some 18-year-old in a garage right now, who
is coming up with some great new innovation. Will the Postal
Service be able to take advantage of that, or will it not?
I believe we need to be nimble and able to take advantage
of innovations that we do not know about as we are sitting at
this table right now and be regulatorily nimble enough to be
able to take advantage of those things for the future while
building on the core strength of the Postal Service.
Chairman Carper. OK. Thanks. Thank you very much. That is
very encouraging testimony.
I want to turn now, if I could here, for a little bit to
the pricing for postage. As you know, the Postal Service's
current inflation-based postal rate structure was set in place
about 7 years and right before the beginning of the drastic
drop in mail volume that continues to this day.
You saw that, Dr. Miller, firsthand.
Late last year, the Postal Regulatory Commission allowed
the Postal Service to temporarily increase its pricing for
postage above that normally allowed to make up for the losses
in mail volume attributable to the Great Recession--an increase
that our Committee's bill would make permanent. It is roughly
about 4 percent. We call it an exigent rate increase.
The PRC said, let's make that; put that in place for an
interim period of time.
And Dr. Coburn and I, in our proposal to our Committee,
said, let's make it the new base and then we will worry about
other increases as we go, or not increases, as we go forward.
In light of the Postal Service's current financial
difficulties, let me just ask. Again, I do not want to pick on
you, Dr. Miller, but let me just start with you--your thoughts
on the postal rate structure as we have it currently and how it
would be under our bill.
Mr. Miller. As I said in my response to a question from the
Committee, I think that the inflation-adjusted cap needs to be
liberalized a great deal, if not eliminated entirely, because
it just means that the Postal Service will start searching for
ways to change or alter the rate structure to try to raise
additional revenue, and that further perverts the structure of
prices.
There is an analogy here with how the railroads performed
under the old Interstate Commerce Act in squeezing additional
revenue here and there.
Give the Postal Service the discretion to make rate
changes. There is a natural limit to how much a postal service
would want to increase certain rates because of the falloff in
volume. So it is not as though it is going to change the stamp
price from 49 cents to--or, 55 cents to $1.80 or something like
that.
It really is an impediment.
And there are other ways in which the Postal Regulatory
Commission, despite having some very good people who work
there, who are just as publically spirited as we are, where it
inevitably slows down the process of introducing innovations
and changes that would--experiments of the sort that Steve was
talking about.
So we need to have that kind of freedom to have the Postal
Regulatory Commission intervene when they see a real danger of
the Postal Service violating the law or about the violate the
law. And you have addressed that in S. 1486, and I hope that
provision prevails in any conference bill.
Chairman Carper. Thank you, sir. Mr. Crawford.
Mr. Crawford. Thank you, Mr. Chairman.
I agree with Dr. Miller's analysis. I think the mail
volume, especially for the standard mail, is so sensitive to
prices that the Postal Service is not about to try to jack up
that price. The notion of a monopoly position is not as much.
It is not as hard a monopoly as some monopolies are. And I
applaud S. 1486 for the reforms in the price cap.
I am on record in previous writings for lifting the price
cap and making adjustments. I think the Postal Service needs
that flexibility.
I think the Postal Regulatory Commission has a role to play
in reviewing the reasonableness of those, but to do it ahead of
time is just--as Vicki Kennedy was saying, we need to be nimble
enough, the Postal Service does, to be able to make
adjustments.
Fuel costs can go up very quickly if there is a crisis
abroad. We saw surcharges put on FedEx and UPS when there was a
spike in gasoline prices. The Postal Service does not have that
flexibility. I think they need it. I think it is fine to review
it after the fact, and I think the new legislation has that
exactly right.
Chairman Carper. Thank you, sir. Mr. Bennett.
Mr. Bennett. I will not repeat what my colleagues have
said, but I do agree with the provision in S. 1486 relative to
rates.
One of the things that came up in the session with your
staff on last Thursday was that there was a comment that in the
private sector that you do not have any caps on pricing. Well,
that is really not true, I mean, because if you price yourself
out of the market and you do not sell anything, then you are
out of business.
And I think the Postal Service needs the same level of
flexibility that you have in the private sector--the kind of
flexibility that will allow us to be market-driven. In fact,
when that happens, I think oftentimes prices end up going down
because you end up driving volume up and you end up driving
prices down and you increase value in that institution and, in
this case, increasing value for the American public.
So I agree with that particular section completely and
agree with my colleagues relative to having more flexibility.
Chairman Carper. At the urging of Dr. Coburn, whose
airplane, I think, is--what do you think, Chris? On the ground?
[Pause.]
Yes, it is on the ground.
Dr. Coburn has had an incredible career. He was a very
successful business person. He did that for a number of years.
And then he decided, well, I would like to be a doctor, and
so he became an OB-GYN and was very successful there and
delivered thousands of babies, probably tens of thousands of
babies. And then he did that for a number of years.
Then he said, I think I would like to be a Congressman, and
so he became a Congressman from Oklahoma and did that for a
while. Then he said, no, maybe I would like to be a Senator. So
he has done that now for 10 years.
And he has signaled he is going to step down 2 years early,
before the end of his term this year, and God only knows what
he will do next.
Maybe he is going to land the plane. So we will find out
when he gets here, but he should be here before too much
longer.
Ms. Kennedy, staying on the line of thought we have----
Ms. Kennedy. Mr. Chairman----
Chairman Carper. Let me just say before you answer; one of
the things that Dr. Coburn really insisted on and pushed for
when we introduced our initial bill this past August--and he
basically said: The Postal Service is not foolish, not stupid.
They are not deaf to the marketplace. Let's give them the
flexibility to set rates, and if they charge too much,
customers will stop using them. They will eventually find a
sweet spot.
In the end, we did not do that. There was huge push-back to
that original proposal, as you can imagine, from the mailing
industry and the printers and so forth.
And we thought we had found a pretty good medium here with
the exigent rate increase becoming the baseline and then having
the consumer price index (CPI) cap going forward and then, in
2017, the opportunity to essentially revisit this. And if you
all are on the Board of Governors then you will have an
opportunity to participate in that. Ms. Kennedy.
Ms. Kennedy. Mr. Chairman, thank you.
As a general rule, as I have said, I believe in flexibility
and being able to be nimble.
On the specific issue of rates, I also believe in being
cautious and not answering something that I am not as deeply
familiar with as my colleagues here. So it is something that I
would like to understand in a deeper and fuller way. So it
sounds great. I think what they have said makes a lot of sense
to me, but I would like to understand it more.
Chairman Carper. I understand. Just a little bit of
background--what we have done with the exigent rate case, what
it essentially does for folks at, we will say, your nonprofit.
Before the exigent rate case, I think the cost of mailing
an envelope was about 10 cents. And with the exigent rate case,
it goes up, I think, a penny to 11 cents. For folks that are
mailing magazines, I think the price is about 27 cents, and
with the exigent rate case becoming the baseline, it goes up to
28 cents.
And I think I might be wrong, but I think for catalogs the
price is somewhere at 45, 46 cents, and it would go up by about
2 cents.
So those are not outrageous increases, especially in a
strengthening economy, but I know there are people who disagree
with this.
Ms. Kennedy. I just want to say that I am familiar with
what the provisions are. That was not the issue. It is just the
whole underlying philosophy and theory behind them being set
that I wanted to be----
Chairman Carper. OK. Good enough.
Dr. Miller, do you want to say something else? No?
Mr. Miller. No, Senator.
Chairman Carper. All right. I think I mentioned in my
opening statement today that the Board of Governors and the
Postmaster General announced a week or so that if we do not do
something, if we do not do our job here in the Senate and in
the House to pass, hopefully, thoughtful, effective postal
reform legislation this year and put it in place, signed by the
President, then they will feel compelled to go ahead and take a
next step in closing mail processing plants.
It was not that long ago we had 600, a few more than 600.
We are down today. In 6 or 7 years, as I recall, we are down
today to about 325.
And the Postal Service is saying unless we do our job that
they may be compelled, no help from the Congress and the
President, to close another 80 or so starting at the beginning
of the next calendar year.
From our point of view, in our legislation, we have a
stipulation that says 2 years after the enactment the Postal
Service may move forward to reduce the number of mail
processing centers. We actually had a similar provision in our
legislation from 2 years ago that 62 Senators, mostly
Democrats, voted for, some Republicans.
I would like each of you to give your thoughts to closing
additional plants.
What Dr. Coburn and I have tried to do with our legislation
is to lay the groundwork so the Postal Service can pay off its
obligations, recognize its liabilities, pay them down and
become profitable, have money for capital investment, have
money for pay raises and have money in the bank when all is
said and done, 10 years from now.
But I am not interested in seeing a lot of additional
plants or any additional plants close. I just want to make sure
that the Postal Service is profitable and viable.
And, Dr. Miller, if you would just lead us off on this, I
would appreciate it, please.
Mr. Miller. Mr. Chairman, first, let me say that I have not
done an analysis of these 82 and these specifics. There are
some that may apply here to the points I am making and some
not.
My impression, based on my work on the Board of Governors
ending 2 years ago, or 3 years ago, is that a number of mail
processing facilities are there and have not--that are under
ordinary market circumstances would have been relocated, would
have been changed, but for the fact that there would be the
impediments from Congress, displeasure from Members of
Congress, restraints put in appropriations bills, not-in-my-
backyard (NIMBY) provisions, and have not been changed.
That leads, interestingly, to a perverted outcome because
when you think that there is going to be a change you want to
make as many changes as you can on all in one fell swoop.
So it is just an inefficient system. Unless you give the
Postal Service some freedom to streamline and rationalize its
logistical network, you are going to get this back and forth
and, I think, inefficient decisionmaking about these
installations.
Chairman Carper. OK. Thank you. Mr. Crawford.
Mr. Crawford. Mr. Chairman, I largely agree with Jim's
points.
I think that the devil is in the details here. And it is
not for the Board to dig into them; it is for the Board to set
criteria and policy. But I think, in general, the Postal
Service has been right. It needed to consolidate some of its
facilities. It has already done a great deal. Whether it needs
to do more or not, I am not capable of sitting here and saying,
yes or no. And each time they do, that is painful for somebody
somewhere.
But, as Jim says, you are just pushing these problems to
the future. Automation has made it easier to do a lot of this
high-volume mail processing.
So, on balance, without trying to avoid a commitment, I
would just say this; it would be premature for me, given my
level of understanding of the issue, to say anything about the
next round of closings and consolidations of processing centers
or plants, but I do think that it was appropriate to make some
moves along those directions over the last 2 years.
Chairman Carper. All right. Thank you. Mr. Bennett, please.
Mr. Bennett. Mr. Chairman, I am very familiar with the
issue. I am not familiar with the details as to whether or not
these specific plants should or should not be closed.
However, what I would say, though, is that I think in this
environment where we do have this incredible infrastructure
that is in place, whether or not that facility is operationally
efficient or not--the facilities that you are talking about--I
think you have to be very careful when you start taking away
some of your assets, to make sure that those assets could not
drive future revenue.
One of the things that I think that a lot of major
corporations make a mistake, particularly very large ones, is
when you start trying to cut costs, because you are so big, you
start looking at your costs in silos and you do not think about
how those costs impact revenue someplace else. And so you
really have to be careful to make sure that you consider the
whole, prior to doing these individual silo cuts.
So I do not have an answer to your question other than if I
were looking at this more carefully that is what I would do. I
would consider, how does it impact the whole enterprise versus
just the silos that we oftentimes look at in budget cuts?
Chairman Carper. All right. Thank you. Ms. Kennedy.
Ms. Kennedy. I echo the concerns that Michael Bennett just
set forth. I do not think you can cut your way to prosperity. I
think you have to look at what the long-term implications are
of closing these facilities. I do not know what those
particular facilities are. I also worry about the impact on the
universal service obligation. I do not know what it means for
rural communities. I believe that universal service does not
mean universal service someday. It means timely universal
service.
So what delays will happen by that many consolidations and
closings--I think that matters because the Postal Service is a
lifeline for so many communities, and I think that is something
that needs to be looked at.
And I think you also have to be poised to take advantage
with this terrific infrastructure that is in existence for
innovation, poised to take advantage of the next great
opportunity, and I think all those issues need to be
considered.
Chairman Carper. I will probably ask you to answer this
next question for the record, but I might ask you to comment
very briefly, and it relates to the potential closure of
additional mail processing centers.
The question that I would have us think about out loud for
just a minute, each maybe, is the service delivery standards.
As some of you will recall, it was not that long ago that the
Postal Service had delivery standards to deliver the mail in
one day.
In sort of like the same metropolitan region or
geographical region, it was feasible in one day. Outside, if
you could not do that, the Postal Service was expected to
deliver in 2 days. At the very least, if the mailer and the
mailee are in the lower 48 States, contiguous States, there was
3-day business day delivery. So it was one-two-three.
I think at our encouragement the Postal Service, while they
have cut mail processing centers, they changed the standard, if
you will, the standard of delivery, and they have gone from a
one-two-three-day to a modified-one.
So, if you are in the same metropolitan area--let's say I
live on one side of Washington, DC, I do not; I live in
Delaware. One side of Washington, DC, and you lived on another
side of this metropolitan area, if I mail to you today, you
should get it tomorrow. That is modified-one. If we are outside
of the metropolitan area, you might get it, but you may not.
And this was modified-one-two-three.
I think the Postal Service would like to go to two-three--a
2-day even in the same metropolitan area. It could be in one,
but two would be the expectation, and then three.
In terms of what is appropriate for us, I am not
comfortable with the Postal Service saying this is how many
mail processing centers we should have.
Some people have said the more appropriate thing for us to
do, maybe with the involvement of the Postal Regulatory
Commission and certainly the Board of Governors in the Postal
Service, is to consider whether modified-one-two-3 days of
service is appropriate or one-two-three is better or two-three
is just fine.
And I would welcome any comments that you all have in this
regard. Ms. Kennedy, I picked on Dr. Miller all afternoon.
Maybe I should come to you.
Ms. Kennedy. My first thought about that is if we have
declining First-Class Mail volume to have more delayed First-
Class Mail delivery does not make sense. I mean, if possible, I
personally would like to see us have the faster standard of
delivery. That concerns me. I think those two things would be
inversely related.
Chairman Carper. Thank you.
Ms. Kennedy. You would have fewer people mailing letters.
Chairman Carper. Thank you. Mr. Bennett.
Mr. Bennett. Just off the cuff, I think the faster standard
of delivery would be better primarily because of customer
service. I mean, it is the Postal Service. This is a service
organization. Every company in this country that has focused on
service is focused on how to provide a better service to this
customer than somebody else. And having deliveries 2 or 3 days
after you put it in the post is probably not a good way to make
sure that your customers are happy. And if you have customers
happy on one end, then they are going to want to use you for
something else. So I would focus on how do I make my customers
most happy, and I would think that would be more of a faster
service, to help my business.
Chairman Carper. OK. Thanks. Mr. Crawford.
Mr. Crawford. What strikes me when I think about this
question, Mr. Chairman, is my daughter, who is 14 and lives on
her iPhone when she is not at camp. And she finds e-mail to be
slow and cumbersome. Instant messaging is so much quicker, she
tells me. To me, e-mail is just so rapid; it is incredible. But
the new generation is accustomed and expects what they want to
arrive on the door, within minutes and instant sort of
gratification. And we worry about that in some respects, but in
other respects it is a tribute to the new communications and
transportation capabilities that we have developed.
And given that shifting culture and those expectations for
speed and on-time delivery, I am reluctant. You have to look at
the economics of all this and the tradeoffs and costs, but I
hate to see the Postal Service give up one-two-three.
Chairman Carper. All right. Thank you. Dr. Miller.
Mr. Miller. Mr. Chairman, two things.
One, as I recollect, the rationale for this change in
service standards was developed after I left. So I do not know
the details of it, and I hesitate to answer because without
having time to analyze the data. Second, there is a tradeoff,
obviously. You cannot do all things for all people, and you
have to make some choices here. The service standards should be
an input into the question of plant and logistical
rationalization, it seems to me, but I just do not have my
hands on the information necessary.
Chairman Carper. I understand.
Mr. Miller. Everything else equal, I think there is
something nice about having, as you characterize it, a one-two-
three kind of standard. And you would deviate that only for a
good reason, but I do not--whether there is a good reason there
or not, I just simply cannot say at this time.
Chairman Carper. All right. Thank you.
I think I mentioned earlier on Saturday I was home for a
little bit at about 5 in the afternoon and our letter carrier
came and delivered our mail on Saturday. And it turned out
there were some things in the mail that we actually very much
wanted to receive. It is not always the case, but it sort of
was on that Saturday.
Part of the debate that surrounds postal reform these days
is, should we continue to have 6-day-a-week service except when
we have like a holiday that mixes in, like July 4th if it is on
a Friday maybe, or should we allow the Postal Service at some
point in time to go from 6 to 5-day-a-week service?
When we passed our legislation 2 years ago, 62 Senators
voted for it. In that bill, you may recall, there is a version
that said the Postal Service could eventually go from 6 to 5-
day service if they chose to, but you have to wait for at least
2 years after enactment of that legislation, or that
legislation if it had been enacted.
That means the Postal Service would have been free this
year to go from 6 to 5-day-a-week service in 2014 and to do the
same thing in terms of closing additional mail processing
centers, in 2014.
Well, the bill did not get enacted. It is 2014. And now we
are grappling with the same issues--mail processing centers,
standards for delivery and 6 or 5-day-a-week service.
We have taken a little different approach, as you may know,
this year with respect to our legislation from six to five.
For years, I have sat here with our labor friends from the
postal unions, especially to the letter carriers, and urged
them to work with the Postal Service to find a way to continue
to deliver mail on Saturday and with a wage benefit structure/
compensation structure that makes the Postal Service more
competitive and that does not lose as much money.
We were told a couple years ago that going from 6 to 5-day-
a-week service for the Postal Service would save $3 billion a
year for every year going forward.
And we are told now that because of those changes in the
wage benefit structure that have been negotiated between the
Postal Service and the letter carriers, and maybe the rural
route letter carriers as well, that that is no longer $3
billion savings. It is somewhere between 1.5 and maybe $2
billion a year, which makes it more--the Postal Service may
lose money, but there is a tradeoff there maybe between service
and service delivery and labor cost.
We took a different approach in the legislation that Dr.
Coburn and I have brought to the Committee and the Committee
has reported out. And our legislation says we are not going to
say to the Postal Service, for 2 years, you are forbidden to go
to 5-day-a-week service.
What we say with our legislation is let's look at a volume
trigger. And the Postal Service last year, I think, delivered
about 158 billion pieces of mail, give or take.
And what we put it in is a volume trigger that says, if
that number drops below 140 billion pieces of mail, then the
Postal Service would be free to go from 6 to 5-day-a-week
delivery. It does not have to if they are losing money. If they
are making money hand over fist, maybe they would not want to;
maybe they are continuing to find ways to use that Internet
digital connection and to make money.
But the reason why we decided to take this approach, to use
a volume trigger instead of somebody saying, well you can go to
5-day-a-week service in 2 years, is because we want to realign
the incentives. We want to incentivize postal employees to work
harder, to sell harder, sell products, whether you happen to be
on a rural route or you happen to be in a post office in a
town, a city, or a community. But we want them to be
incentivized to sell more.
We want to incentivize the mailers, whatever they happen to
be mailing. Whether they happen to be nonprofits, whether that
be catalogs folks or magazines, we want to incentivize them to
want to mail more in order to avoid the volume trigger, to keep
6-day-a-week if that is what they want.
I just want you to react to the different approaches--what
we put in our bill 2 years ago on 5-day-a-week, where we said
you cannot do that for at least 2 years after enactment, as
opposed to some kind of volume trigger today, and what you like
about it or not.
Please, Dr. Miller.
Mr. Miller. Mr. Chairman, as I said in my response to
questions from the Committee, I think the Postal Service made a
mistake in trying to obtain permission, or first stated it
would accomplish this without Congressional acquiescence but
then tried to obtain permission, to do 5-day--go from 6-day to
5-day delivery. I think they should have asked for delivery
flexibility.
There are a lot of places in America where 6-day delivery
makes eminently good sense. Some places, 7-day delivery makes
good sense; other places, 5-day delivery; other places still, 2
or 3-day delivery, per week.
The Postal Service needs to have that kind of flexibility.
I think the Postal Service can provide what any reasonable
person would say is universal service to some places in America
at 2 days or 3 days, where the costs are just extraordinary of
doing 6 days a week.
The Postal Service did couple its proposal with a provision
that the post office would remain open on Saturdays. If someone
were expecting a water bill or payment or box of medicine or
something like that, they could come to the post office and get
it.
I live on a lane. I have to go a third or half a mile every
day to pick up my mail at my mail box. A lot of people go pick
up their mail at the post office.
And I know a lot of people are in very remote locations, et
cetera, especially in rural communities, more rural than mine.
But I think with some flexibility the Postal Service could
inconvenience a few people somewhat but save a lot of money--
money that is being provided by other postal rate payers.
For the most part, what we are talking about in terms of
the Postal Service's revenue base is not money from the
taxpayer; it is money from other postal patrons. They are
paying for the losses that are ascribed to service that is just
economically prohibitive.
Chairman Carper. All right. Thank you very much for that
insight. Mr. Crawford, please.
Mr. Crawford. Just to add to those very thoughtful
comments, Jim, I see it as a last resort.
When I was on the transition team, the volume in 2008 was
203 billion pieces; 158 billion this year. From second quarter
results, it will be 151 billion pieces or so in 2014.
That 140--we are approaching some of the thresholds that
are in the bill.
But what has struck me since I was here 2 years ago--and I
learned this from the reform legislation that you and Dr.
Coburn have introduced--is the potential savings in retirement
and health care expenses, which exceed even what I imagined
when I had done earlier examinations.
And I think in light of the really large possibilities
there, that it may not be necessary to go to 5-day delivery. I
think Jim makes a good point about it depends on where you are
and what makes sense. And I do believe the Postal Service
should have the flexibility. It would be better if it were not
just legislated that they had that capability.
But at the same time, as a Governor, I view any reduction
in service--it is a little like one-two-three--and service
standards, highly regrettable and should only be taken as a
last resort--and I think the numbers show--that there would be
some savings. As you say, 2 or 3 billion a year, that is not
chicken feed.
But next to what we are talking about in the health care
and our time and expenses, it just may not be necessary.
And for a lot of people who deliver catalogs--I get my
Economist most weeks on Saturday. That would be a loss, to have
to wait until Monday or Tuesday on a holiday week.
So I would like to see us keep 6-day delivery but to have
the flexibility to reduce if we need to.
Chairman Carper. All right. Thanks. Thank you very much.
Mr. Bennett, please.
Mr. Bennett. Yes, I think that 6-day delivery is something
that is kind of a foundation at the post office in that people
expect that, and I think it would--that customer service would
probably almost demand it in most cases.
However, that said, I think we have to be careful to try
and have a one-size-fits-all fix for all the various problems
and, as Jim pointed out, that sometimes there may be some areas
where 5-day delivery is just fine and some areas where 7-day
delivery is most important.
But, at the end of the day, I think that we have to be very
careful not to try and fix the--have a one-size-fits-all kind
of solution to the various challenges.
If this is just about the financial issues, I think, as
Stephen Crawford said, that there are other ways that you have
included in the bill to address the major financial issues. So
just to make that change for the purpose of financials, as big
of a savings as it would have, I am not sure that that is the
right thing.
And, again, if you go back and think about the model I
talked about where you have these various silos of cost. If you
start driving cost out of one area, you may end up driving cost
up in some other areas.
Ending Saturday delivery while we have this trigger of 140
billion pieces of mail before you can actually drop Saturday
delivery, if you drop it, all of a sudden your pieces of mail
start to fall further. So the savings impact could end up
causing revenue losses in other areas that we have not thought
about.
So I think that there needs to be a careful analysis in
that area, to look at what the impact is across the enterprise.
Chairman Carper. Thank you. Ms. Kennedy.
Ms. Kennedy. I really support what my colleagues said, and
I really do not need to repeat it, only to say that I think
that we need to project a Postal Service that is working and
that is available for people to want to use.
And I really reiterate strongly what Steve Crawford said.
Any time you have a cutback in service in any way, whether it
is delivery standards, whether it is daily delivery, 6 days a
week, I think it is a black eye. I think it hurts us.
And we want people to feel that the Postal Service is
excellent in every way, that the mail, when they drop that
letter in the mailbox, when it is picked up by their postal
carrier, that it is going to get where they want it to go, that
it is going to get there in a timely fashion, that they can
rely on the United States Postal Service. That is the image we
want to project. That is what we want to have happen.
So I would love to see us find other ways to keep our
finances robust and to maintain the Postal Service.
Chairman Carper. Thank you.
I just want to reflect on this for a moment. The
legislation that was reported out of this Committee a couple of
months ago allows the Postal Service to consider whether or not
to reduce service from six to five with a number of caveats,
including the post office has to be open on weekends. People
have access to their mailboxes and that kind of thing. Certain
kinds of items still have to be delivered, I think, including
pharmaceuticals and medications and that kind of thing.
But at the encouragement of Senator Levin, we did not just
use a straight trigger, a 140 billion volume trigger, to say,
when the mail volume drops under 140 billion, even if that is
next year, you can go to 5-day-a-week delivery. We did not do
that.
We have a provision that says you cannot do it before 2007.
And, effectively, the Postal Board of Governors, even if they
were to see the volume plummet, I do not think we are going to
with the economy coming back, God willing.
But the effect of what we put in our legislation is at the
earliest we could go to from 6 to 5 in the first part of 2018.
So we will see how it works out. I think the challenge for us
here, the challenge to the Postal Service, is for employees to
figure out how to get more people to use the service.
How do we make Saturday delivery--how does the Postal
Service make Saturday delivery not something that loses $1.8
billion a year but actually make it even profitable? That is
the key. How do we do that?
As we figure out how to better get this digital
intersection--so, figure it out.
And, Mr. Bennett, if you get on this Board of Governors, I
know you are going to help us do that. But I think that is the
challenge for us. How do we use this? How do we take this
legacy organization and make money with it and do so without
encroaching in inappropriate ways on the private sector?
We are still hoping Dr. Coburn is going to join us. He is
flying in from Tulsa. And you know the old song, the Gene
Pitney song, Only 24 Hours from Tulsa. It does not take quite
that long to get here from Tulsa, but Dr. Coburn's flight has
been delayed somewhat. Chris, do you have any updates for us?
[Pause.]
All right. I have some bad news for you, and that is that
Dr. Coburn's flight has been apparently delayed further and he
is not going to be able to be here until 8. So we will have
dinner, and you guys can get to know each other even better.
[Laughter.]
No, I think we are going to wrap it up. Knowing Dr. Coburn,
he will have plenty of questions for the record. And, if he has
not had a chance to meet with you, my guess is he will want to
do that, and I would urge you to try to make time to do that.
He is a very thoughtful, creative person. [Laughter.]
He is blessed with good staff and so am I. They keep us out
of trouble most of the time.
A lot of times what I will do with a hearing, if we have an
opportunity--you were invited to make an opening statement, and
I thought you had very good ones. Sometimes when we have time,
I like to give our witnesses a chance to give a closing
statement, not 5 minutes, just to reflect on what you have
heard, what you said and what others have said and some
questions that were asked.
But if you would just take a moment and give us a closing
statement, just to take maybe a minute or so to do that. And I
will make a couple of comments, and then we will call it a day.
Ms. Kennedy, would you like to lead off?
Ms. Kennedy. Sure. Thank you so much, Mr. Chairman.
Thank you for giving us the opportunity to be here today,
and thank you for your very thoughtful questions. I think the
challenges are there, but I think there are great
opportunities. The United States Postal Service is a
tremendously vital asset for this Nation.
And I look forward to having the opportunity to serve, and
if confirmed, I look forward to serving with these magnificent
gentlemen here to my right and having a great continuing
conversation with you and with Dr. Coburn and the rest of the
Members of the Committee. Thank you very much.
Chairman Carper. Thank you, ma'am. David Michael Bennett.
Mr. Bennett. All right.
Chairman Carper. From Charlotte, North Carolina.
Mr. Bennett. Absolutely. This is a really neat process.
Thank you so much for the opportunity to be here and to go
through it.
Chairman Carper. Confirmation hearings are not normally
this much fun.
Mr. Bennett. Well, I have had a good time.
Chairman Carper. Sometimes they can be downright--as Dr.
Miller knows, sometimes they can be pretty terrible.
Mr. Bennett. Well, I have had a great time.
Chairman Carper. It has been a good one.
Mr. Bennett. Maybe that is more of a comment on my
personality than anything else, but this is a real opportunity
I look forward to having the chance to tackle.
I mean, the problems that the Postal Service has and that
we have talked about today and that we have talked about at our
lunches are really challenging, but they are the same kinds of
problems that other businesses have faced for the last decade.
IBM transformed themselves. Sysco is having to transform
themselves now. Company after company have had to transform
themselves, and they have come out on the other side, better
than they were before.
I think we have an opportunity to take this 200-plus-year-
old organization and make it better than it was before, do some
things that are different.
I mean, maybe in a year we are not even talking about the
number of pieces of mail that we have delivered. Maybe we are
talking about the number of shoes or the number of other items
that have been faxed that we have had a chance to delivery.
The world is changing, and we have an opportunity. I think
now, at this critical juncture, we have an opportunity to take
the most unique organization in the world, in terms of
logistics and moving things around, and make it something
really special for the American people.
I look forward to the opportunity, and I hope I get the
opportunity to serve on the Board of Governors and help make
that happen.
Chairman Carper. Thank you. And I hope you will, too. Thank
you.
Mr. Crawford. For the closing statement, I want to
recognize Dr. Crawford.
Mr. Crawford. I appreciate that.
Chairman Carper. I kept asking myself, is he a Mister or is
he a Doctor? Finally, they told me you are a Doctor.
Mr. Crawford. Well, I was sort of----
Chairman Carper. All those times I called you Mister, I
apologize, Dr. Crawford.
Mr. Crawford. I will just take this opportunity to say, I
was here 2 years ago almost to the day for my hearing the first
time around, and S. 1789 was then--it had actually passed in
the Senate.
Since then, my wife has said to me this classic question
that we have all been asked: Why do you want to do this? The
Board cannot fix what is wrong with the Postal Service.
Congress seems to be reluctant to act.
And, to be perfectly frank, I had to ask myself, does this
make good sense?
And it has been so gratifying to come back this time
because
S. 1486 has been reported out of the Committee and I am just so
impressed by the changes that it holds forth and am hopeful
enough that something like those will be enacted, that I find
myself almost sharing Michael David Bennett's enthusiasm.
And the fact that there are four of us together here now,
with such an interesting background, I have to confess that I,
too--and it is not like a cynical old professor, an Army
officer. But I, too, am enormously enthusiastic about this
opportunity because of the legislation that is underway and
because of the team that is here together. So, thank you for
the opportunity.
Chairman Carper. You are welcome, and Dr. Crawford, thank
you for your willingness to take this on yet again and try to
get it done this time. OK?
Thank you. Dr. Miller, please.
Mr. Miller. Thank you, Mr. Chairman. I appreciate the
opportunity of being here today, and I appreciate also the
opportunity or the prospect of serving with these three
individuals whom, as I say, I have gotten to know and respect.
I think great things could come from the Postal Service's being
led by them as well as the current Governors.
I concur with what Dr. Crawford has just said about the two
legislative vehicles. I think the current one is much improved
over the former one--a matter which gave rise, I think, to some
lack of cohesion 2 years ago.
I think Mr. Bennett, summarized things well and made the
case for something I have been saying all along, and that is I
think the Postal Service really needs the freedom, the
flexibility, to operate like a business.
Those businesses that have remade themselves have been able
to do that because they had the freedom to experiment and to do
things of a sort that Stephen mentioned earlier. All along, we
have to be cognizant of the public service mandate the Postal
Service has, as articulated by Ms. Kennedy. I think we can do
that.
I think working with Congress, both houses. As you know,
the other body has not come with a proposal that is quite
similar to the one that you have. There is more work to be
done. I think, though, that the prospects are reasonably good
because the situation of the Postal Service is so dire.
And I congratulate you on the progress that this Committee
has made, and I urge your prompt attention to the nominations
and to the prospect of a full board operating in high gear.
Thank you, Mr. Chairman.
Chairman Carper. Thank you.
Thank you all. Those are wonderful closing statements.
Let me add a couple of things--one, sort of humorous, and
the other more serious. Not long ago my wife and I happen to be
driving by a cemetery. And she is always after me to update our
wills. And I said, Martha, I have no intention of dying anytime
soon. She said, oh, we need to update our wills. Then one day,
she said to me while we were driving by a cemetery; she said,
ever think about what you would like to have on your tombstone?
And I thought about it for a moment.
I said, I think I would like to have these words: Return to
Sender. [Laughter.]
Return to Sender. It is not just a great song but a pretty
good something to put on a tombstone. It fits nicely, too, I
think.
The leaders are many things. You all have been leaders
throughout your lives. I think leaders are humble, not haughty.
We lead by example. It is not do as I say, but do as I do.
I like to think leaders are those who have the courage to
keep out of step when everyone is marching to the wrong tune.
Leaders are also purveyors of hope. Those are not my words.
That is Camus. Leaders are purveyors of hope. And this is not a
hopeless situation. It is actually quite a hopeful situation.
I have been up here drinking water. Sometimes I have to be
careful not to drink too much in these hearings when I am by
myself. But this is a glass half-full situation.
And, if we can get our act together here in this body, on
Capitol Hill, working with the President and all the key
stakeholders, this can turn out a whole lot better than some
were willing to believe just a few years ago.
Part of the key to this is having the right folks on the
Board of Governors.
And when people say to me, what is your all-time favorite
job, I tell them my best job I ever had was at Ohio State
University, where I was a pots and pans man at the Delta Gamma
sorority house. That was a great job. A close second would be
Governor of Delaware. I loved being Governor. Please to serve
here, but I loved being Governor, and I tell people I am a
recovering Governor when they ask what I do.
To people who really do not know me, I say, I am a
recovering Governor. And some day I hope you will have the
chance to say that you are recovering Governors, too.
I think, Dr. Miller, you have already been able to say this
for a while. But I think you will be a great addition to the
Board of Governors.
Dr. Coburn and I will have a chance to talk tomorrow and
talk about how he would like to move forward and do it in a
timely way.
With that, let me just say that, again, we are deeply
grateful to each of you for your time and preparation today,
for meeting with our staffs.
All four of our nominees have filed responses to their
respective biographical and financial questionnaires, answering
pre-hearing questions submitted by our Committee.
You have had your financial statements reviewed by the
Office of Government Ethics.
Without objection, this information will be made a part of
the hearing record with the exception of the financial data,
which are on file and available for public inspection in the
Committee offices.
Without objection, the record will be kept open until 5
p.m. tomorrow for the submission of any written questions or
statements for the record.
I am sure Dr. Coburn will have some additional questions,
and my guess is that some of our colleagues will, too.
And, with that, it is a wrap, and we will adjourn this
hearing today. Thank you, again, so much.
[Whereupon, at 4:56 p.m., the Committee was adjourned.]
A P P E N D I X
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