[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
THE ROUTE FORWARD FOR THE U.S. POSTAL
SERVICE: A VIEW FROM STAKEHOLDERS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON GOVERNMENT
OPERATIONS
OF THE
COMMITTEE ON OVERSIGHT AND
GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
JUNE 24, 2025
__________
Serial No. 119-36
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov, oversight.house.gov or docs.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
60-815 PDF WASHINGTON : 2025
-----------------------------------------------------------------------------------
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Robert Garcia, California, Ranking
Mike Turner, Ohio Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Raja Krishnamoorthi, Illinois
Michael Cloud, Texas Ro Khanna, California
Gary Palmer, Alabama Kweisi Mfume, Maryland
Clay Higgins, Louisiana Shontel Brown, Ohio
Pete Sessions, Texas Melanie Stansbury, New Mexico
Andy Biggs, Arizona Maxwell Frost, Florida
Nancy Mace, South Carolina Summer Lee, Pennsylvania
Pat Fallon, Texas Greg Casar, Texas
Byron Donalds, Florida Jasmine Crockett, Texas
Scott Perry, Pennsylvania Emily Randall, Washington
William Timmons, South Carolina Suhas Subramanyam, Virginia
Tim Burchett, Tennessee Yassamin Ansari, Arizona
Marjorie Taylor Greene, Georgia Wesley Bell, Missouri
Lauren Boebert, Colorado Lateefah Simon, California
Anna Paulina Luna, Florida Dave Min, California
Nick Langworthy, New York Ayanna Pressley, Massachusetts
Eric Burlison, Missouri Rashida Tlaib, Michigan
Eli Crane, Arizona Vacancy
Brian Jack, Georgia
John McGuire, Virginia
Brandon Gill, Texas
------
Mark Marin, Staff Director
James Rust, Deputy Staff Director
Mitch Benzine, General Counsel
Bill Womack, Senior Advisor
Lauren Hassett, Professional Staff Member
Mallory Cogar, Deputy Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Jamie Smith, Minority Staff Director
Contact Number: 202-225-5051
------
Subcommittee On Government Operations
Pete Sessions, Texas, Chairman
Virginia Foxx, North Carolina Kweisi Mfume, Maryland, Ranking
Gary Palmer, Alabama Minority Member
Tim Burchett, Tennessee Eleanor Holmes Norton, District of
Brian Jack, Georgia Columbia
Brandon Gill, Texas Maxwell Frost, Florida
Emily Randall, Washington
C O N T E N T S
----------
OPENING STATEMENTS
Page
Hon. Pete Sessions, U.S. Representative, Chairman................ 1
Hon. Kweisi Mfume, U.S. Representative, Ranking Member........... 2
WITNESSES
Mr. Jim Cochrane, CEO, Package Shippers Association
Oral Statement................................................... 5
Mr. Paul Steidler, Senior Fellow, Lexington Institute
Oral Statement................................................... 7
Mr. Mike Plunkett, CEO and President, Association for Postal
Commerce
Oral Statement................................................... 8
Mr. Thomas Schatz, President, Citizens Against Government Waste
Oral Statement................................................... 10
Dr. Elena Spatoulas Patel, Ph.D., Assistant Professor, Marriner
Eccles Institute for Economics and Quantitative Analysis,
University of Utah
Oral Statement................................................... 12
Mr. Brian Renfroe (Minority Witness), President, National
Association of Letter Carriers
Oral Statement................................................... 13
Written opening statements and bios are available on the U.S.
House of Representatives Document Repository at:
docs.house.gov.
INDEX OF DOCUMENTS
* Statement for the Record, NAPM; submitted by Rep. Sessions.
* Statement for the Record, National Association of Postal
Supervisors; submitted by Rep. Sessions.
* Statement for the Record, Coalition for 21st Century Postal
Service; submitted by Rep. Sessions.
* Statement for the Record, USPS; submitted by Rep. Sessions.
* Statement for the Record, Envelope Manufacturers Association;
submitted by Rep. Sessions.
* Statement for the Record, Keep US Posted; submitted by Rep.
Sessions.
* Statement for the Record, National Newspaper Association;
submitted by Rep. Sessions.
The documents listed above are available at: docs.house.gov.
ADDITIONAL DOCUMENTS
* Questions for the Record: Dr. Patel; submitted by Rep.
Sessions.
* Questions for the Record: Mr. Renfroe; submitted by Rep.
Sessions.
THE ROUTE FORWARD FOR THE U.S. POSTAL
SERVICE: A VIEW FROM STAKEHOLDERS
----------
TUESDAY, JUNE 24, 2025
U.S. House of Representatives
Committee on Oversight and Government Reform
Subcommittee On Government Operations
Washington, D.C.
The Subcommittee met, pursuant to notice, at 1:07 p.m.,
Room HVC-210, U.S. Capitol Visitor Center, Hon. Pete Sessions,
[Chairman of the Subcommittee] presiding.
Present: Representatives Sessions, Comer, Foxx, Palmer,
Burchett, Jack, Mfume, Norton, Frost, and Randall.
[Audio malfunction]
OPENING STATEMENT OF CHAIRMAN PETE SESSIONS,
REPRESENTATIVE FROM TEXAS
Mr. Sessions. The United States Postal Service is working
well and properly. The United States Postal Service has a
number of important attributes about it. One of them is it
resides in the Constitution of the United States. Second, it
resides in law that has been provided and taken care of. But
Number three, it has to meet the needs of the American people
on an evolving basis.
For the past few years, we have been dealing with a Postal
Service that, in coming out of COVID, has had a number of facts
and factors that have influenced not only how it looks, but the
service that it provides to people. As I became Chairman of
Government Operations for Government Reform and Oversight
[sic], I became acutely aware of the operations of the Postal
Service that were moving down a pathway which was begun and led
by the then-postmaster.
That postmaster, while he is no longer in service to this
Nation, had a vision and a plan that, in my opinion, was not as
well understood by employees or by the American public. And
yet, he openly was willing to say, trust me, we are going to
get there. And at some point, I believe that it became
important that the American people and the industry, some $40
billion worth of industry behind it, needed to understand not
only where it was headed but how it was going to get where it
was going.
In December, a full year ago, I landed in Houston, Texas,
to take part in an exercise whereby part of what the plan was,
was to move from flat paper or envelopes to boxes that would be
handled by the Postal Service. They were evolving their
business. As it turned out, there was some 4-month delay in the
practice of the Postal Service in the Houston general area. As
I went to Sugar Land, Texas, to look at the operation, there
were essentially some 100 or more 18-wheeler loads of boxes,
letters, envelopes, mail that were stacked up. And the workers
from the Postal Service were taking these off literally one at
a time to go out of a mound that would have completely filled
this room.
That was apparent to me that it was a plan by which a
process that I call ready, fire, aim. And it was taking place
across the country. We engaged the Postal Service. I will admit
they were highly professional. They were very concerned about
their obligation to the customer, and they felt like that they
were doing as best as they could, given the circumstances.
Over the past year, we have continued to engage the Postal
Service and their operations, and now we find ourselves where
this Administration has accepted the resignation of the
Postmaster General. I thank him for his service. He and I were
friends, and we are still friends. But this is an operation
that must find itself moving forward where more than just a few
people understand what might be the direction. And there are
lots of questions that abound in that effort. And those are
things that, while we think we have some ideas about, we will
engage the Administration, the new Postmaster General, on those
ideas.
Today, we have gathered together groups of people that have
specific ideas, ideas about the Postal Service, what they
should look like, how they should operate, and where we might
have ideas before we actually engage what is the new Postmaster
General.
So, I want to thank the panel that is here today. I will
announce who you are in just a minute. But I will tell you that
the gentleman to my immediate right, Mr. Mfume, as the Ranking
Member for this same Subcommittee, he and I work well together.
He and I have attempted across government to look at the
operation of government, the needs of the American people, and
perhaps more importantly, tried to work together on answers
that would lend themself to making, as I say as an Eagle Scout,
making our campsite better than the way we found it. It is
still upon us to listen to experts, to listen to people not
only in the post office and around the post office but also in
what I call the free enterprise system.
So, Mr. Mfume, thank you for being here today. The
gentleman is recognized for any opening statement the gentleman
chooses to make.
OPENING STATEMENT OF RANKING MEMBER KWEISI MFUME,
REPRESENTATIVE FROM MARYLAND
Mr. Mfume. Thank you very much, Mr. Chairman. Good
afternoon. Good afternoon to all of our guests. Thank you for
being here and making time.
I just have a brief statement. I am anxious to hear the
testimony of all the persons before us, and I am anxious also
to explore this topic for as long as we can.
I know that we have got a vote coming up. There is a
privileged motion on the Floor, which I am told will be
overriding the regular business, so we may very well be called
over there in about 15 to 20 minutes, and then, of course,
coming back here.
But I want to thank you for calling this hearing on this
important topic. I appreciate your interest, as always, in
bringing us together for a thoughtful conversation about how
the Postal Service can chart, quite frankly, a better path for
the future under new leadership.
The Postal Service has an immense duty, as we all know,
dating back to its creation because it powers communities and
businesses; it keeps Americans healthy; it reinforces
democracy; and it bridges geographical, economic, and cultural
divides. Importantly, its universal service obligation ensures,
as we all know, that we have equitable access to prompt,
reliable, and efficient mail services, whether you, as some of
my constituents do, live in a county or in the city of
Baltimore. Maryland is like any other state. Our interest here
is just as important.
With Mr. David Steiner starting his tenure next month as
the 76th Postmaster General, this is our first hearing on the
Postal Service since the departure of former Postmaster General
Louis DeJoy, and I hope that Mr. Steiner heeds the call that
comes out of this hearing that many of us continue to echo over
and over again, that his Number one obligation is to protect
the service that millions of Americans rely on to send and
receive critical items, everything from financial statements
and mail-in ballots to lifesaving medicines and personal
letters. In doing so, it is my strong opinion that he must
defend also against any threats to the service's independence
and ensure that the Postal Service remains a public good.
President Trump has repeatedly questioned the independence
of the Postal Service and, in my opinion, wrongly suggested
that its privatization or its merging with the Commerce
Department is a good thing. I think not. And despite the Postal
Service being a self-supporting independent agency, I do not
think it is in our best interest to cripple it any more than it
has been crippled. It has been pulling itself up for several
years now. Some of us agree with the process and some of the
things that are part and parcel of it, some of us have not, but
it is clear that it has got to remain independent in that
regard and, in my opinion, never merged and never made to be a
private entity.
So, to be clear, unilateral restructuring efforts would not
only be, in my opinion, again, illegal, but could jeopardize
the delivery of critical items, especially in rural communities
and hard-to-reach areas where Postal Service serves as a
lifeline to so many Americans. And, by the way, let us not
forget that our Nation's first Postmaster General, Benjamin
Franklin, advocated for the privacy of the mail but never the
privatization of the mail.
So, a commitment to security and privacy that our former
Postmaster General upheld after refusing so many attempts many,
many, many years ago to thwart his efforts are somehow compared
to what we see today by efforts to allow DOGE officials that
have no experience with the Postal Service, no idea, in my
opinion, of its significance to Americans, and no real
willingness to look for a solution. We have got to fight the
efforts by those persons that want to, again, change it in
somehow or another and risk what we have seen so far.
Now, are there problems? There are. I mean, there are
postmen out there who are still being set upon by criminals,
who are being shot at, who have been stabbed, who have been
robbed, who find themselves holding on with dear life to arrow
keys, to protect those keys so that those individuals cannot go
in and rob boxes of mail and hurt people in the process by
stealing.
There are real issues in terms of converting the fleet that
the Postal Service uses. We have debated that back and forth
over and over again. And there are real issues in terms of
delivery. What is going to be the standard delivery time, and
what happens with respect to first-class mail and parcels? And
do we have real goals going forward for the future in terms of
making this service even better? That is what I have been
asking a lot of people, and a lot of people have been asking
me, then why are we paying more money for the same service? And
some cynically say, why are we paying more money for an even
worse service?
So, the Postal Service, I think, clearly has to be
efficient, reliable, and stable. How we get there is not any
one person's fanciful idea. I cannot pull an answer out of the
sky and guarantee its success. But I think in having forums
like this and discussions like this where we recognize
everybody is not on the same page but where we are committed to
making sure that everybody helps push toward a consensus is
probably the best thing that we can do going forward as we try
to remedy those frustrations and make it clear that the Postal
Service in the United States is not for sale and will not be
sidelined and will not be weakened.
So, Mr. Chairman, I thank you for the opportunity again to
join with you as we try to find some answers to so many things
that beset us. And again, I am glad that so many people have
turned out to offer testimony today.
And with that, I yield back.
Mr. Sessions. The gentleman yields back his time. Thank you
very much. Mr. Steiner, I am sure, will want an opportunity, as
a savvy professional who has been in the industry, to hear some
of the ideas that we will hear today.
And with that, I want to welcome the witnesses that we have
today. I would like to give a brief introduction if I can.
Paul Steidler is a Senior Fellow at Lexington Institute.
Mr. Steidler, thank you very much. Jim Cochrane is CEO of the
Package Shippers Association. Mike Plunkett is a CEO and
president of the Association for Postal Commerce. Tom Schatz is
the president of Citizens Against Government Waste. Elena
Spatoulas Patel is an assistant professor at the Marriner
Eccles Institute for Economics and Quantitative Analysis at the
University of Utah. And Brian Renfroe is president of the
National Association of Letter Carriers. We look forward to
hearing from each of you today.
And pursuant to Committee Rule 9(g), each of the witnesses
will please stand and raise their right hand to be sworn.
Do you solemnly swear or affirm that the testimony that you
are about give is the truth, the whole truth, and nothing but
the truth, so help you, God?
[Chorus of ayes.]
Mr. Sessions. Let the record reflect and show that the
witnesses, each of them, have answered in the affirmative.
Thank you very much. You may now take a seat.
Please do recognize that the distinguished gentleman from
Maryland alluded to a vote that is expected to be called in a
few minutes. It is my idea that we will work through each of
these opening statements. We will then head off. We will do, I
think there are three votes, which means you will get a longer
bathroom break, and then we will reappear about 10 minutes that
I will announce after the last vote.
I now would recognize Mr. Cochrane for his opening
statement. The esteemed gentleman is recognized.
STATEMENT OF JIM COCHRANE
CEO, PACKAGE SHIPPERS ASSOCIATION
Mr. Cochrane. Good afternoon, Chairman Sessions, Ranking
Member Mfume, and distinguished Committee Members. It is an
honor to speak with you about the future of the Postal Service.
For 250 years, the Postal Service has been connecting
communities, facilitating commerce, and delivering vital
information. I retired from the Postal Service after 43 years
of service. The last 25, I was focused on the shipping
business. I have an extensive knowledge of the shipping
marketplace, e-commerce trends, ongoing technological advances
in this space, and I leverage the opportunities created by e-
commerce to drive revenue growth and profitability while at the
Post Office.
Currently, I am the CEO of the Package Shippers
Association, a trade association with over 70 years of helping
shippers work with the Postal Service. My members represent a
significant majority of all the packages delivered in the
United States.
The Delivering for America plan, despite its stated goals,
is pushing the Postal Service further away from its core
mission of providing reliable, affordable, universal service.
The current trajectory of the plan is failing to deliver
promised financial results. While acknowledging the good
intentions behind DFA, the plan is failing to meet the needs of
the American people.
One mistake of the Delivering for America plan is this
insourcing of workload, approaching a shipper using the Postal
Service on a private e-commerce platform and moving them to a
postal solution with lower pricing. The Postal Service reducing
prices on existing packages that they deliver is irrational.
Poaching customers from business partners is just bad business.
The Delivering for America plan appears to prioritize
significant upgrades to processing facilities. In the long
term, they are overbuilding processing facilities and in light
of future volume forecasts instead of investing in modernizing
the Postal Service last-mile capabilities. The last-mile
network delivers to 166 million doors six days a week. It is a
national treasure, and it should be protected and cherished.
The Delivering for America plan has created a widespread
degradation of package delivery service performance. The
changes unfortunately disproportionately affect rural
communities and those in remote areas of the country. The
Postal Service is often the only viable option for daily
package delivery. And the delivery of packages six days a week
must be at the center of all strategies for competing in the
future marketplace.
Slower service in rural communities widens the digital and
economic divide and undermines the universal service
obligation. When service deteriorates, customers seek
alternatives, and there are a lot of them out there, leading to
reduced shipping volume and further revenue losses.
The DFA plan to achieve financial solvency is deeply
flawed, resulting in revenue loss, increased operational costs,
and misplaced investments. There remains insufficient
transparency regarding the detailed financial models and
assumptions underpinning the projected savings and revenue
increases from the Delivering for America plan. A new vision
must be implemented to quickly reverse the negative financial
results.
To truly revitalize the Postal Service and ensure long-term
viability, we must acknowledge the limitations of a purely
government approach. A critical component of any new strategy
must include public-private partnerships, particularly in the
area where the private sector excels. The Delivering for
America plan has been focused on middle-mile capabilities,
which is the transportation of mail and packages between
processing facilities. Partnering with established private
carriers for middle-mile transportation could significantly
reduce costs, improve transit times, and enhance overall
network fluidity. This would allow the Postal Service to focus
on its core strength, universal access and last-mile delivery,
while benefiting from the optimized infrastructure and
expertise of the private sector.
The pace of technological innovation in logistics is
relentless. From software to advanced robotics, sophisticated
tracking systems, analytics, private sector logistic firms
invest billions of dollars to deploy cutting-edge technology.
The reality is the Postal Service is struggling to keep pace. A
public-private partnership could facilitate the adoption of
best-in-class private sector technologies, enabling the Postal
Service to modernize, enhance customer experience, and improve
efficiency without the need to independently develop and fund
the necessary technological advances.
It is time to focus efforts on the following. We really
need to reverse the negative changes in delivery standard
created by the Regional Transportation Optimization, a systemic
slowdown of pickup and delivery at post office, especially in
rural communities around the country. Explore new revenue
streams by leveraging its unique network for last-mile
delivery, and return to innovating and partnering with e-
commerce platforms to generate increased revenue. Actively seek
collaboration with the private sector, particularly for middle-
mile logistics, software development, and cutting-edge
technology.
In closing, I would like to welcome Postmaster General,
David Steiner, for his new role. I look forward to working with
him to grow the Postal Service in the shipping industry. I
still bleed postal blue, and I want the Postal Service to
remain a vital part of the American economy. The Postal Service
is not merely a government agency, it is a vital public
service, and the American people deserve a world-class Postal
Service.
Thank you again for the opportunity to speak with you
today, and I will take any questions you might have.
Mr. Sessions. Mr. Cochrane, thank you very much. Mr.
Steidler, we are prepared for your opening statement. The
gentleman is recognized.
STATEMENT OF PAUL STEIDLER
SENIOR FELLOW, LEXINGTON INSTITUTE
Mr. Steidler. Chairman Sessions, Ranking Member Mfume, and
Members of the Subcommittee, thank you for the invitation to
participate in this important hearing. My name is Paul
Steidler, and I am a Senior Fellow with the Lexington
Institute, a conservative public policy thinktank in Arlington,
where I have covered the Postal Service since 2017.
My message today encompasses three points. First, the state
of the U.S. Postal Service is dismal and needs prompt,
dramatic, and holistic reform internally at USPS and from
Congress. By any basic metric, it poorly serves the American
people and has fundamentally declined in recent years.
Second, while the core mission of delivering mail and
packages at USPS remains and will remain important in
perpetuity, USPS needs to be right-sized, that is, become a
smaller and more efficient organization. The push by many to
get USPS into new business lines where the primary motivation
often seems to be to keep and expand government jobs, will do
far more harm than good.
Third, the governance structure of USPS, specifically the
U.S. Postal Service Board of Governors, is broken and cannot be
repaired. It needs to be replaced.
Let me briefly review where things stand. In recent years,
mail delivery times, which were already slower than in the
1970s, have gotten even longer. USPS claimed that within
October 2021, degradation in service standards, allowing 39
percent of mail to be delivered a day later, there would be
greater predictability in mail delivery. USPS never met those
standards, and what has followed is not only gradual delays,
but at times weeklong delays, as the Wall Street Journal and
numerous other media outlets have documented.
Mail price increases have exceeded the rate of inflation,
which hit its highest mark in 40 years. On July 13, the price
of a forever stamp will rise another seven percent to 78 cents.
Financial losses and liabilities at USPS have ballooned. A
notable exception is an accounting blip on USPS' net income
from the 2022 Postal Service Reform Act in which Congress
provided it with $107 billion in financial benefits. Total
direct government assistance to USPS since 2020 is $120
billion. Yet, at the end of Fiscal Year 2024, USPS reported in
its 10-K a negative net worth of $32.6 billion. The Postal
Service Reform Act, signed by President Biden on April 6, 2022,
provided this $107 billion in taxpayer assistance by forgiving
defaults on retiree healthcare payments and transferring some
USPS obligations to the already heavily burdened Medicare
system.
Yet despite all this, USPS will run out of cash sometime
before the 2028 election. USPS assured Congress through its
2021 Delivering for America strategic plan that if it passed
the Postal Service Reform Act and other modest steps were
taken, it would be break-even in Fiscal Year 2023. It never
came close to hitting those numbers. It is disappointing that
the nine outside members of the Board of Governors of the
Postal Service, with the exception of Governor Ron Stroman, did
not speak out or raise concerns about these developments.
Postmaster General DeJoy had a well-intentioned, bold, and
expensive plan that envisioned the Postal Service building out
extensive infrastructure. It simply has not worked and should
be halted. Instead, when Postmaster DeJoy announced his
resignation, the board said it would continue on with this
plan.
Basic reform steps, in addition to changing the governance
structure, reducing staff, and ending the Delivering for
America strategic plan, include investing USPS' $249 billion in
pension assets and its $25 billion in retiree health benefit
funds into a plain vanilla stock-and bond portfolio instead of
strictly in government bonds. USPS employees' funds would be
invested similar to how teachers' and state government workers'
retirement plans work. USPS' Inspector General reported that,
had this done previously, the Postal Service would have $1.2
trillion in additional investment gains.
Systematically assess the use of robotics and AI to improve
operational efficiencies, as logistics and warehouse companies
are widely doing.
Implement defined contribution retirement plans for new
employees to begin reducing long-term liabilities.
Thank you for the opportunity to testify, and I look
forward to your questions.
Mr. Sessions. Thank you.
Mr. Plunkett, we are going to have you give your opening
statement, and then we will move to suspend until we have a
chance to do the votes, then we will be back.
The gentleman, Mr. Plunkett, is recognized.
STATEMENT OF MIKE PLUNKETT
CEO AND PRESIDENT, ASSOCIATION FOR POSTAL COMMERCE
Mr. Plunkett. Chairman Sessions, Ranking Member Mfume, and
Members of the Committee, thank you for the opportunity to
speak with you today about the current state of the postal
system and on ensuring its continued viability.
I will say this is not my first time appearing before this
Committee, but it is the first time since the untimely passing
of Congressman Gerry Connolly, a tireless champion on postal
issues. I was fortunate to have met the former Chairman [sic]
on several occasions outside of the hearing room, and as a 30-
year resident of Fairfax County, have personally benefited from
his service both as my representative and a county executive in
Fairfax. On behalf of our members and the industry that owes
him a debt of gratitude, I want to express my deepest
sympathies to his family and to his colleagues.
Less than a month from today, the Postal Service will
celebrate the 200th anniversary of its origin at the
Continental Congress. Well into its third century, the Postal
Service remains a beloved public institution and a critical
component of the Nation's economic infrastructure. The Postal
Service has thrived for so long not just because the Founders
recognized the value of a universal communications network, but
because it has adjusted as the needs of its customers have
evolved over time.
As we convene today, the need for the Postal Service to
adapt is as acute as ever. The Postal Service is on track to
lose nearly $10 billion this year with declining package and
mail volume and severe productivity and service challenges. Not
just the national treasure is at risk, the Postal Service is
also the center of a mailing industry that accounts for nearly
$2 trillion in annual revenue and employs more than seven
million Americans providing jobs in every state.
The companies that I represent rely on the Postal Service
to deliver magazines, prescription medications, bills and
statements, catalogs, and essential business communications.
Collectively, they account for billions of dollars in postage
that funds universal postal service in this country. We depend
on reliable, economical mail delivery and are invested in the
long-term preservation and success of the Postal Service.
But under the Delivering for America plan, our members have
suffered unprecedented rate increases and service degradation
as the Postal Service records staggering losses and squanders
mailer-funded capital on excess package processing capacity,
even as Congress has provided billions of dollars in financial
relief.
Fundamentally, the Delivering for America plan has elevated
a narrowly defined measure of financial success for the agency
above the interest of its customers and stakeholders. In a
desperate effort to increase revenues, the Postal Service has
exploited its mail monopolies to fund ill-advised forays into
competitive market spaces where its presence is unnecessary
and, in fact, unwelcome.
We are encouraged by the selection of David Steiner as the
next Postmaster General and hope that his background and
experiences can help revive the Postal Service's fortunes. Our
members are ready to work with Mr. Steiner and his team to
restore what is still a tremendous communication delivery
channel with opportunities to increase the value that it
provides to U.S. residents and businesses.
That is why we are concerned that, under interim
leadership, the Postal Service continues to pursue the failed
Delivering for America agenda. Just last week, the Postal
Service signed a new labor agreement, the second since the
departure of the previous Postmaster General. If the incoming
PMG is to have any chance of success, the Postal Service must
immediately pause implementation of Delivering for America,
including any insourcing efforts and freezing of discretionary
capital spending.
More concerning still, in three weeks, the Postal Service
is poised to increase rates substantially, with many commercial
mail rates increasing by more than ten percent. The volume
losses from such massive rate hikes will be compounded by
reduced work-sharing incentives that will cause some postal
facilities to be inundated with volume for which they are not
prepared.
Expecting that the postal network could be gridlocked by
mid-July, we communicated our concerns to the Postal Service's
Governors, suggesting that rate increases ought to be
postponed. A copy of that letter is attached to my written
statement. We have not received a response, so we urge Congress
to remind the Governors that their duty is not to the
Delivering for America plan, but to the mailing and shipping
public.
As I conclude, I want to make clear the decline of the
Postal Service is neither inevitable nor necessary. Mail
remains an unrivaled channel for businesses to communicate with
key segments of their customer base. My members believe in and
want to grow mail. The Postal Service's last-mile delivery
network is unmatched in its ability to connect all Americans
and to remain an important fixture in American life for decades
to come.
For the incoming PMG to have a chance of righting the ship,
it is important that Congress and the Administration take all
available steps to provide necessary support by, A, impressing
on the Governors the need for a strategic pause in the
Delivering for America plan; B, filling vacancies on the Postal
Service's Board of Governors; and C, advancing legislation to
address long-term structural issues that threaten the health of
the postal system.
The Postal Service and mail can have a long and prosperous
future. For that to happen, Congress, the executive branch, and
postal stakeholders need to work together. I congratulate the
House Oversight Committee for recognizing the need to begin an
essential dialog and commit the resources of our association
and its members to support the Committee's efforts to improve
our Nation's postal system. Thank you.
Mr. Sessions. Mr. Plunkett, thank you very much.
Pursuant to the previous order, the Subcommittee stands in
recess, subject to the call of the Chair. We will convene 10
minutes after the conclusion of the vote series.
[Recess.]
The Subcommittee will come to order, and thank you very
much for allowing us to attend the votes, a first series and
then a second, a third vote, a fourth vote, I guess it was, and
we have been advised that there may be another vote in order.
But Mr. Schatz, I am delighted that you are here, and we
are going to proceed with testimony. The distinguished
gentleman is recognized for 5 minutes.
STATEMENT OF THOMAS SCHATZ
PRESIDENT, CITIZENS AGAINST GOVERNMENT WASTE
Mr. Schatz. Thank you very much, Mr. Chairman, Ranking
Member Mfume. I appreciate the opportunity to testify before
you today on the future of the U.S. Postal Service on behalf of
the more than one million members and supporters of Citizens
Against Government Waste and taxpayers across the country,
consumers, businesses who rely on the Postal Service every day.
Citizens Against Government Waste was founded in 1984 by J.
Peter Grace and Jack Anderson following the release of the
report of President Ronald Reagan's Private Sector Survey on
Cost Control, also known as the Grace Commission, as well as
other waste-cutting proposals. To date, the CAGW has helped
save more than $2.4 trillion through the implementation of
Grace Commission and other waste-cutting recommendations.
The Grace Commission report on boards and commissions and
banking businesses had 39 recommendations on the Postal Service
addressing delivery, excess property labor costs, personnel,
processing, and procurement. CAGW and our lobbying on the
Council for Citizens Against Government Waste have made
recommendations for reform on the Postal Service to the House
and Senate, as well as in numerous blog posts, op-eds, and
press releases.
The CAGW supported H.R. 3076, the Postal Service Reform Act
of 2021, noting in a letter to Congress in February 2022 that,
while the legislation did not address excess facilities, labor
costs, and increased work sharing, it codified an integrated
delivery network of packages and mail together six days a week.
The letter cited the Postal Regulatory Commission's estimated
$15 billion annual cost of separate networks, along with new
vehicles and tens of thousands of new employees, making it far
more likely that the USPS would never become profitable and
there would have to be a taxpayer bailout. The letter also
supported the legislation's very important prohibition against
non-postal commercial businesses, including financial services.
Unfortunately, promised improvements in the Postal
Service's financial condition and core functions have not been
delivered in large part due to the failed Delivering for
America plan, which several witnesses have already discussed.
It has fallen short of its goals, and repeated financial losses
have continued, including $9.5 billion in Fiscal Year 2024.
With the new Postmaster General, David Steiner, coming into
office soon, it is a momentous time as the Postal Service will
celebrate its 250th anniversary in July, but also a perilous
time, given its financial condition. The Government
Accountability Office has had the USPS on its high-risk list
since 2009, which was the last time there was a quarterly
profit of any kind, and called its business model
unsustainable.
In my June 16, 2020, op-ed in The Hill, I made several
suggestions for Mr. Steiner, which I also propose to the
Subcommittee today. First, the USPS should make its top
priority the continued delivery of mail and packages together
six days a week to every address everywhere across America. No
single company or group of companies matches the last-mile
delivery that has always been made by the Postal Service.
Second, the Postal Service should increase its work with
the private sector on processing, logistics, and transportation
of mail and packages close to their final destinations. To
achieve these overriding objectives and get the Postal Service
back on the right track quickly, Mr. Steiner should immediately
pause implementation of the DFA and make the following three
changes.
First, there should be an immediate moratorium on spending
billions of dollars on new processing facilities which are
unaffordable and duplicate existing efficient private sector
operations.
Second, there should be an immediate hiring freeze for all
non-delivery positions, meaning exempting letter carriers,
especially as mail volume continues to decline. Labor
constitutes 80 percent of Postal Service costs, and rather than
trimming the number of employees, Postmaster General DeJoy
converted 195,000 positions from part-time to full-time.
Third, the misnamed Regional Transportation Optimization
Initiative should be terminated. The USPS is cutting in half
the number of times it goes to more than 24,000 post offices,
mostly in rural areas, to pick up mail and packages. In January
2025, the PRC Advisory Opinion determined that the RTO had a
negative impact on service, overstated its savings, and will
fail to create a more efficient network.
For the sake of households and businesses across the
country, the Delivering for America Plan must be halted and
replaced with policies that will allow the Postal Service to
revitalize its sagging fiscal outlook and continuing to connect
communities with affordable and efficient delivery of mail and
packages. That would be something to celebrate on its 250th
anniversary next month, as well as America's anniversary in
July 2026.
Thank you again for the opportunity to testify before you
today. I look forward to answering any questions you may have.
Mr. Sessions. Mr. Schatz, thank you very much, not only for
your testimony, but the specific enumeration that which you
believe.
Dr. Patel, you are recognized.
STATEMENT OF ELENA SPATOULAS PATEL, PH.D.
ASSISTANT PROFESSOR, MARRINER ECCLES INSTITUTE
FOR ECONOMICS AND QUANTITATIVE ANALYSIS,
UNIVERSITY OF UTAH
Dr. Patel. Chairman Sessions, Ranking Member Mfume, and
Members of the Subcommittee, thanks for the opportunity to
testify today, and thank you for your attention on a topic that
affects every household, business, and community in the
country.
I am Elena Patel. I have a Ph.D. in economics from the
University of Michigan, and I am an assistant professor in the
Marriner Eccles Institute for Economics at the University of
Utah.
I have studied postal markets both in the government and
academia for more than a decade. Importantly, this testimony
and these opinions are mine, and they do not reflect the views
or positions of the University of Utah.
At the start, I want to say something quite clearly. I
think the Postal Service serves the American public by
providing universal mail delivery, but its funding model is
broken. Congress can fix this by providing stable funding to
preserve this essential public service for the long run.
Some basic facts are also important. The Postal Service is
the largest mail provider around the world, connecting 166
million addresses across 3.8 million square miles. Its
universal reach is not a convenience. It is a critical
infrastructure. Mail delivery binds the Nation together, much
like our roads and power grids, and by law, the Postal Service
must do so affordably, reliably, and equitably, regardless of
where people live or how much they earn.
This commitment, as we have talked about, is
operationalized through the Universal Service Obligation, which
requires 6-day delivery, uniform pricing, and a vast post
office network that serves every community in the country.
These obligations exist, whether they are profitable or not,
and this is because they are rooted in the belief that
everybody should have access to communication, commerce, and
government services.
Unfortunately, its funding model is antiquated and
insufficient. USPS is expected to operate without taxpayer
funding, relying on mail and package revenue to sustain a
universal delivery network. But first-class mail, the product
that once funded this entire system, has been in long-term
decline for nearly two decades, thanks to the rise of digital
communication. Volumes have fallen 60 percent since 2009 and
are projected to fall another 28 percent over the next decade.
Meanwhile, the cost of fulfilling the USO remain high and
are growing. In just the last year, the Postal Service has
added more than two million delivery points to its network,
thanks to the robust growth of the American economy. Yet, the
Postal Service has persistently struggled financially, losing
nearly $2 billion from its core operations last year. This is
much more a structural problem than a managerial one, and
privatization will not solve it. In fact, it would make things
worse.
Private firms already operate in the most profitable parts
of the market. A private operator would have no incentive to
serve every address, offer uniform pricing, or maintain
unprofitable routes. And countries that have privatized their
postal systems have not been spared the same financial and
operational challenges. In fact, in many ways their problems
have been more severe.
What we need instead is a model that funds the public
obligations that we have asked the Postal Service to meet. The
Postal Regulatory Commission already estimates the cost of the
universal service obligation roughly $6.3 billion in 2024.
Congress could provide a direct appropriation to match that
cost, just as many European governments do.
Importantly, safeguards already exist to ensure that this
public support would be used only for universal service and not
to subsidize package delivery or distort competition. These
safeguards have been in place since the 2006 Postal Enhancement
and Accountability Act, and the Postal Regulatory Commission is
well positioned to continue to uphold these standards.
The Postal Service can and should modernize, but it must do
so in a way that protects universal access. This requires
public investment in infrastructure, in innovation, and in the
work force that makes this system run. The Postal Service has
connected Americans for nearly 250 years. In an increasingly
fragmented and digital world, that connective role is more
important than ever. We should treat it not as a failing
business, but as a public institution, one that delivers value
far beyond what shows up on a balance sheet.
Thank you. I look forward to taking your questions.
Mr. Sessions. Dr. Patel, thank you very much.
Mr. Renfroe, we are delighted that you are here. The
gentleman is now recognized.
STATEMENT OF BRIAN RENFROE (MINORITY WITNESS)
PRESIDENT, NATIONAL ASSOCIATION OF LETTER CARRIERS
Mr. Renfroe. Thank you, Chairman Sessions and Ranking
Member Mfume, for the opportunity to bring the voice of the
Nation's 295,000 active and retired city letter carriers who
work at the center of our Nation's $1.9 trillion mailing
industry.
Unfortunately, I have to begin with a solemn note. On
Saturday, June 21, Jacob Taylor, a letter carrier in Dallas,
Texas, died while doing his job. And while the circumstances of
his death are still under review, it is of course a
heartbreaking loss that serves once again as another jarring
reminder of the on-the-job hazards that letter carriers face
every day such as crime, assaults, extreme heat, dealing with
problems with infrastructure such as outdated postal vehicles,
and other factors.
If the American people's mail and packages are to be
protected, the people who deliver them must first be better
protected. I urge this Subcommittee and all of Congress to do
everything in their power to work with us to mitigate these
risks by passing the bipartisan Protect Our Letter Carriers
Act, which has been introduced in both the House and the Senate
earlier this year.
One month from now, the Postal Service will celebrate its
250th anniversary. It is older than the country itself.
Chairman Sessions mentioned in his opening, it is also rooted
in the Constitution, and it is as essential as it has ever been
to keep Americans connected.
The Postal Service has a long and successful history of
reinventing itself. We are in the middle of its latest
transformation under the Delivering for America plan. While it
certainly is far from a perfect plan, it includes much-needed
modernization of the processing and delivery network that was
built decades ago for a much different mail mix than we handle
today.
In addition, leadership at the Postal Service throughout
the late 2000s and 2010s slashed mail processing capacity
rather than modifying and modernizing it. Modernization is long
overdue.
One of the primary challenges of such a transformation is
maintaining and improving service while you modify a massive
network. Service delays and disruptions are unacceptable, and
more must be done to address these issues that continue and
persist in some locations. But changes are necessary for the
Postal Service to provide and improve the service that the
people of our country need.
Some will suggest and have suggested radical changes,
downsizing, returning to failed initiatives from the past that
benefited seemingly everyone but the Postal Service, or even
privatization of the services that we provide. As a letter
carrier who knows the Postal Service inside and out, I promise
you none of that is the solution. That mentality does not serve
169 million homes and businesses every single day.
When Congress seeks to make changes or understand the
operations of the Postal Service, I urge you to come to us, the
people who work within the system every day and are invested in
the service that we provide to the American people.
In recent years, Congress has provided some help in our
efforts to stabilize the Postal Service finances through
bipartisan legislation, but two financial changes are still
needed. First, the Administration should do what the Biden
Administration failed to do and address the long overdue
misallocation of pension liabilities between the current self-
sustaining Postal Service and the pre-1971 taxpayer-funded Post
Office Department. This accounting error has placed, by even
conservative estimates, at least $90 billion in unjust
financial obligations on the Postal Service.
Second, Congress should pass legislation to allow the
Postal Service to properly invest the hundreds of billions of
dollars already set aside for retirement costs in higher
yielding financial assets. These changes are practical, and
they are fiscally responsible.
While my union has reservations about the Postal Service
Board of Governors' selection of David Steiner for Postmaster
General, this is larger than one individual or one leader.
Guaranteeing that the Postal Service remains an independent,
non-taxpayer-funded, non-partisan agency is key. We fulfill a
universal service obligation that no other shipper does, could,
or would fulfill.
If Congress wants to help the Postal Service, I urge you to
do everything possible to protect letter carriers and all
postal employees, implement these necessary financial changes,
and guarantee the Postal Service remains an independent, non-
taxpayer-funded, public service as it has for the last 55
years.
Thank you once again for inviting me to testify. I look
forward to answering your questions.
Mr. Sessions. Mr. Renfroe, thank you very much. And to the
panel, thank you for your thoughtful issues and ideas. We felt
like it was important, both Mr. Mfume and myself. We have
opinions also, but we tend to listen a lot to each other and
tend to have not minor discussions. I think there are
discussions that need to go places, but we have been trying to
give unto the Postal Service and this Administration an
opportunity to lead some way by showing that they had a plan,
an opportunity to better it themselves.
At this point, and I would say this, Mr. Plunkett, you
indicated one of the most important things is to pause
Delivering for America, and you have an opinion about that. How
long, if we were to pause, or seemingly, if someone did say we
are going to pause that, what is the effort that then should
take place, and how long should you wait? Because I think it
has been discussed. This is a large industry. There are a lot
of people who just cannot sit around and wait, but need to do
the right thing. So, can you describe that scenario?
Mr. Plunkett. Thank you, Mr. Chairman. We certainly do not
want the Postal Service to stop doing what it does, but we
believe that the Postal Service was performing reasonably well
before Delivering for America. And so, there are specific
aspects of the Delivering for America plan that we think could
be paused while the new leadership team is allowed to come in
and do an assessment of the current state of the agency and
what it needs to go forward.
Specifically, we think there should be a moratorium on rate
increases. We think that discretionary capital spending should
be halted. We do not want to stop any repairs or any necessary
upgrades to postal facilities, but we do not think it is
necessary to invest in massive new structures that may be
redundant.
I also think that we should have a pause on any product
changes, again, while the new leadership has a chance to come
in and assess some of the changes that were made under
Delivering for America plan, whether they have worked, and how
they could be repaired if possible.
Mr. Sessions. Thank you. Anyone on the panel, are you aware
of staffing levels in the country whereby they are, what I
would say, out of configuration, out of whack with what should
be, or are we--and I am talking about overstaffing, not
understaffing because I, too, have been to a post office. I,
too, have waited in line. It is hard to make sure that all the
timeframes equal the time of year when you might be doing it. I
can think about tax time. I can think about Thanksgiving. I can
think about Mother's Day. But do we have an issue, or does
anybody have insight--perhaps, Dr. Patel, you do in your
study--about we have people that are not busy, cannot be
productive, post offices that should move away from their
existence. I do not know the staffing levels. Can anyone talk
to me about your viewpoint of staffing levels on the
overstaffed side, not the understaffed side. I know most places
I go to do not have enough people, at least at the door.
Mr. Steidler. Sir, Congressman, the Postal Service, at the
end of 2024, had 533,724 employees. That is nine percent more
than it had in 2014 of 488,000. This comes at a time when mail
has declined in volume by about 1/3.
Also, a key metric for labor productivity that the Postal
Service provides, or two factors of productivity, are the total
factor of productivity and labor productivity. Those have both
dramatically declined in the past three years. In fact, the
Postal Regulatory Commission said that the decline in total
factor of productivity in 2023 was the biggest since 1965. So,
you have more people delivering less things than you did ten
years ago, and you have labor productivity and total factor of
productivity that are sharply declined on the labor side from a
factor of 62.3 in 2020 to 54.2 last year. Those are big drops,
and the source on that is the Postal Service itself.
Mr. Sessions. Mr. Steidler, thank you very much. Those are
called facts of the case. Those are things that become
apparent.
Yes, anybody else have any response to that? Mr. Renfroe.
Mr. Renfroe. Yes, Mr. Chairman, I cannot speak with any
level of expertise about other crafts within the Postal
Service. I certainly can speak about the members I represent,
and among the 200,000-plus active city letter carriers I
represent in all 50 states, Guam, Puerto Rico, and the Virgin
Islands, I do not know of one single location where we are
overstaffed. I know of many where we are understaffed for
various reasons, but in terms of overstaffing--and should that
result, we have provisions in our collective bargaining
agreement to address that situation. So, we do not have that,
and I represent the largest group of employees at the Postal
Service.
Mr. Sessions. Thank you very much.
Mr. Plunkett. Mr. Chairman, if I may?
Mr. Sessions. Yes, sir.
Mr. Plunkett. I will just reinforce what Mr. Steidler said.
According to my analysis, since 2015, the Postal Service has
lost 28.2 percent of the volume that it handles, yet total
employment is actually up by two percent.
And something I think is not given enough attention, there
has been a shift in the Postal Service's volume. There is more
shipping now than there is mail, or not more in aggregate, but
a greater proportion is shipping, and shipping volume exhibits
a much more pronounced seasonal pattern, and the Postal Service
depends very heavily on full-time career employees, which may
make it more difficult for them to do load balancing of
resources, given the changes in their volume mix over time.
Mr. Sessions. Interesting. Anyone else?
[No response.]
Mr. Sessions. Thank you very much.
Ms. Norton, the gentlewoman, is recognized.
Ms. Norton. Thank you, Mr. Chairman.
Since its founding 250 years ago, the Postal Service has
served as a vital lifeline for Americans providing connections
to our rural and low-income communities and lifesaving
medications to our veterans and seniors. President Trump's
statements about privatizing the Postal Service reflect a
fundamental desire to undermine the ability of our government
institutions to serve the needs of the American people.
Since January, we have witnessed attempt after attempt to
destroy the ability of Federal agencies to deliver services to
the public, and we cannot allow President Trump and the so-
called Department of Government Efficiency to do the same to
the Postal Services.
Dr. Patel, does President Trump have the power to
unilaterally privatize the public service, and what are the
harms of privatizations?
Dr. Patel. I am certainly no expert in the legislative
power versus the executive power over the Postal Service, but
my understanding is, no, that would take an act of Congress to
privatize the Postal Service, and I can say without a doubt
that would be an enormous mistake. It is good economic sense to
have a single provider of the Postal Service in a country as
large and diverse as the United States. Other countries that
have privatized their postal operators, my research has shown
that they are not doing better financially. This has not been--
privatization has not been the path toward stemming the
bleeding, if you will, of first-class mail and letter delivery
falling. That is the fundamental financial problem for the
Postal Service and its funding model right now. And in Europe
and other places where postal services have been privatized,
you still have incredible declines in mail volume, and that is
just because of digitization.
And so, what needs to happen is the Postal Service needs to
modernize its operations, but maintain its network, maintain
its last-mile delivery, maintain its universal service
obligation so that everybody has access to these services in a
public way, which is through a public postal service.
Ms. Norton. I remain very concerned about the agreement
former Postmaster General DeJoy signed with the Department of
Government Efficiency, which is still in effect after his
resignation. After months of being embedded in the Postal
Service to reportedly identify and achieve certain efficiencies
and cut costs, we still have no idea what department officials
have done or recommended. Meanwhile, we have seen the
department recommend major work force cuts across Federal
agencies.
Mr. Renfroe, why is a strong work force critical to
efficient and reliable Postal Service operations?
Mr. Renfroe. Thank you, Congresswoman. You know, the Postal
Service, in its role as a public service, the work that the
people and postal employees do is essentially everything that
it provides. You know, whereas some places operate like
business and produce a product, the product we produce is
service, and that service comes down to the people.
And I think the fact that postal employees, particularly
the letter carriers that I represent, for many years have
worked long careers, they have often worked long careers in the
very same neighborhoods. We take a lot of pride in looking out
for our communities and understanding what is happening and
noticing when things are going wrong. We save lives and serve
them. I think the stability of the work force has gone a long
way toward building and establishing the trust that the
American people have, not just in letter carriers, but in the
Postal Service in general, and it is essential that we maintain
that as we move forward.
Ms. Norton. We have seen the chaos in other agencies as the
Department of Government Efficiency arbitrarily cancels
contracts and fires Federal employees with no regard for the
impact on everyday Americans or employees. I hope that my
colleagues on both sides of the aisle will remain vigilant in
protecting the ability of the Postal Service to provide its
vital services.
And I yield back.
Mr. Sessions. The gentlewoman yields back her time.
We are aware that there have been numerous Members who have
attempted to come here who have had to leave due to other
competitive meetings that they have. So, we are going to go out
of order, and I would next pass the microphone to the gentleman
from Maryland, Mr. Mfume.
Mr. Mfume, you are recognized.
Mr. Mfume. Thank you very much, Mr. Chairman.
I am going to withhold my questions until we wrap up. The
gentleman from Florida, Mr. Frost, and the gentlewoman from the
state of Washington, Ms. Randall, have been waiting, and we
will find a way to get back to my questions.
I do want to--a couple of quick things. Although, on a
point of personal privilege, he is not a member of the panel, I
do want to recognize the presence of Bob Levi, who is the
Director of Legislative and Political Affairs at the National
Association of Postal Supervisors.
And I also want to thank Mr. Plunkett for calling the name
of Gerry Connolly, who chaired this Committee with great
distinction and who clearly represented you and others well in
Fairfax, Virginia. He is dearly missed. It almost seems like it
did not happen.
Mr. Chairman, I have got a couple of unanimous consent
requests for the record. I would ask unanimous consent to
submit for the record the statement of the United Postmasters
and Managers of America.
Mr. Sessions. Without objection.
Mr. Mfume. I would ask unanimous consent to submit to the
record the statement of the executive vice president of the
National Association of Postal Supervisors.
Mr. Sessions. Without objection.
Mr. Mfume. I would ask unanimous consent to submit to the
record a statement by the National Newspaper Association.
Mr. Sessions. Without objection.
Mr. Mfume. And last, I would like to submit with unanimous
consent into the record the official statement of the National
Postal Mail Handlers Union.
Mr. Sessions. Without objection, all of these will be
entered into the record.
We thank the gentleman. Does the gentleman seek further
time at this point?
Mr. Mfume. No, no, please.
Mr. Sessions. The gentleman does not seek time.
Once again remembering that we do have Members who have
expressed interest in coming, we will, however, now, through
the designation by the Chairman, the gentleman, Mr. Frost, who
is from Florida, will be recognized.
Mr. Frost. Thank you, Mr. Chairman. Thank you to the
witnesses for being here.
The United States Postal Service is a core function of the
Federal Government, the only government agency spelled out in
the Constitution. Our U.S. Postal Service has a legal duty to
deliver to every address in the United States, leaving none of
our constituents, none of our people behind.
In the service of all Americans, the United States Postal
Office processes 23.5 million packages a day. A day.
Mr. Renfroe, just a quick question. Who are the top clients
of the U.S. Postal Service?
Mr. Renfroe. The Postal Service has customers across all
spectrums, from individuals to small businesses, large
businesses. Some of their larger, over the years, their larger
businesses come from many of, ironically, their competitors,
large retail outlets. So, one, I think, one of the strengths of
the Postal Service and its network is its ability to provide
shipping services that allows businesses of all sizes to
compete. That does include many large ones, yes.
Mr. Frost. Yes, exactly. And to be even more specific, you
know, the top clients of the U.S. Postal Service are people who
you consider competitors, FedEx, UPS, Amazon, et cetera. A lot
of these private shipping companies want to reap the profits of
that mail without having to worry about the duty to serve all
Americans like the Postal Service does. And I am very concerned
about the rhetoric and conversation we are hearing from the
White House and many of my colleagues here in Congress around
privatizing the U.S. Post Office and Postal Service. This year,
Wells Fargo put out a report on what privatizing the Postal
Service would mean. This report states that the Postal Service
would have to raise their package rates between 30 to 140
percent, more than double, to equal the prices people pay for
private shipping.
Another question, Mr. Renfroe--and before I continue, I
also have to give a shoutout to my local letter carriers,
Branch 1091, just throwing that in there, in Orlando, Florida.
In the hot sun, doing a lot of good work.
Which Americans would pay the most when it comes to
privatizing the Postal Service?
Mr. Renfroe. Yes, a privatized model of the Postal Service
would disproportionately affect those that live in rural areas,
which in many cases are the people that rely on us the most.
And private business, as it should, exists to make profit. So--
--
Mr. Frost. Yes.
Mr. Renfroe [continuing]. It is very natural they would be
interested in delivering to locations where it is profitable,
but not to locations where it is not profitable.
Mr. Frost. Yes.
Ms. Renfroe. That would likely be mostly rural areas.
Mr. Frost. Exactly. That is the difference. I always have
an objection when people say we need to run the country like a
company because, I do not know about you, but if I were a part
of a company, my top concern would be making money, right, the
bottom line.
But the U.S. Postal Service, the top concern is not making
money, it is service, service to all Americans. And so, private
companies like UPS and FedEx, if you live in rural America,
they are going to go ahead and contract with and use the
services of the Postal Service. Why? Because no matter what and
no matter how far, if an American lives there, they are going
to get their mail every damn day from your guys, right? And
that is the difference between a private company and service.
And I am not trying to demonize all companies or anything like
that, but I have to spell it out this way because I think most
people do not fully understand.
Of course, there are issues with the Postal Service that we
want to fix. There is probably no one in this room that knows
that more than you and the members you represent that are out
there on a day-to-day delivering the packages. But the solution
to this is not to turn it into a company where it is more of a
profit motive than a service motive. And like you said, it will
impact our people in rural communities the most.
That same report states that in 2024, 75 percent, 3/4, of
all mail routes are losing money because the Postal Service is
not a business, it is a service. How concerned should we be
that if they privatize the Postal Service that there will be
mail routes that are closed, or people would not receive their
mail on a daily basis?
Mr. Renfroe. Yes, I think any privatized model, even a
partially privatized model, would erode the universal service
obligation and would almost certainly result in Americans that
today have access to postal services, including mail, including
the shipping of packages, that under any privatized model, A--
--
Mr. Frost. Yes.
Mr. Renfroe [continuing]. Would either not have access or
more than likely they would pay higher costs for whatever
shipping they did have access to.
Mr. Frost. Thank you. And I just have a few seconds left if
you will indulge me, Mr. Chair. I just want to ask a quick
question relating to our veterans. Among those millions of
packages handled by the Postal Service each day, a huge portion
of that are Americans' vital medications. The Postal Service
delivers 1.2 billion medical prescriptions a year. This
includes 80 percent of all VA outpatient prescriptions, and
every day about 330,000 U.S. veterans receive a box of
medication from the Postal Service. For seniors, people with
disabilities, people too ill to get their medication
physically, the Postal Service is a medical lifeline.
Dr. Patel, my last question, what could privatizing the
Postal Service mean for the cost and access to medication for
people unable to regularly make the trip to and from the
pharmacy, especially our Nation's veterans?
Dr. Patel. Yes, I think you highlighted maybe one of my
biggest concerns, which is that in rural America there are
folks that rely on the Postal Service to deliver critical goods
like medicine, and we just know that those are not profitable
routes, and that those would be cut by a private operator. That
is part of why the Postal Service is such an important public
institution, to make sure we maintain that access.
Mr. Frost. Thank you. I appreciate it. And thank you, Mr.
Chair, for putting this hearing together. I think as long as
this conversation is in the ether from the highest levels of
government, any opportunity I can get to talk about it, I will.
Thank you. I yield back.
Mr. Sessions. Thank you very much.
Mr. Mfume, I want to state that I am proud of all of the
Members who have chosen to keep their comments not just on a
positive basis but on a basis that would draw better ideas out.
And Mr. Frost, thank you for, once again, doing that here today
and your entire Committee Members on your side, Mr. Mfume.
You also mentioned distinguished visitors. We had Bob Levi.
I also see Chuck Mulidore, who is the vice president of the
National Association of Postal Supervisors, and you submitted
his comments, and so I want to thank you.
We will move now to the distinguished gentlewoman, the
Chairwoman of the Rules Committee, for her 5 minutes. The
gentlewoman is recognized.
Ms. Foxx. Thank you very much, Mr. Chairman, and I thank
our witnesses for being here.
Mr. Cochrane, the Postal Service's package business is the
most profitable and perhaps most valuable part of the Postal
Service's business. This package business not only covers its
costs but helps subsidize the rest of the Postal Service's
operations. And I understand that while you were with the
Postal Service, you helped create public-private partnerships
to grow the package business. Do you believe the private sector
could do more to process mail and packages for the Postal
Service and thereby increase the efficiency and reduce the cost
of the overall postal system?
Mr. Cochrane. Well, thank you for the question. I think
that the Postal Service is a unique company, and the last mile,
I said it in my opening statement, but the fact that they are
running down five million miles a day going to all those
addresses, 168 million addresses, and unfortunately, in some
cases, the trucks are not full. So, we have heard a lot about
filling the trucks up.
But, you know, the real opportunity here is that--I do
not--whether it is UPS, FedEx, Amazon, they are all looking for
a delivery solution, and the Postal Service has got by far the
best delivery solution in the United States.
Ms. Foxx. So, do you think we can maximize the opportunity
for private carriers to hand over their packages to the Postal
Service close to the destination for the final mile delivery to
homes and businesses?
Mr. Cochrane. That is the best solution that is in the
marketplace, and we absolutely should be doing more of that.
Ms. Foxx. Thank you. Is it important to preserve affordable
pricing for destination delivery unit or DDU entry?
Mr. Cochrane. Of course. I mean, price is a component of
the transaction, the retail sale, but the Postal Service has
got to--you know, they have to approach the marketplace. There
is competition, and so they got to be always cautious about how
heavy the price is, I will say, but they have a unique ability
to deliver something that other companies cannot do, and that
is the big ones we talked about, but it is also a lot of
regional carriers. There is a lot of people out there
delivering stuff nowadays, but no one does it better than the
Postal Service.
Ms. Foxx. Well, I want to pick up on what Mr. Frost had
said and Dr. Patel. So, if the Postal Service were to spin off
its package business, scale back package delivery to three days
a week, or dramatically increase prices, what do you anticipate
the impact would be on Americans in rural areas like those in
my district? And I do have more questions to ask of other
members. So, at what point do increases in postage rates start
destroying demand and decrease the volume?
Dr. Patel. So, I think that what you started by asking
about was if they spin off packages or otherwise reduce
universal service, and I just think that that erodes the value
of the Postal Service. And so, anything that you do to reduce
profitability is ultimately going to harm everybody by making
it harder to maintain universal service.
Ms. Foxx. This question would go to Mr. Steidler, Mr.
Schatz, and Mr. Cochrane. So, I will ask the question, and if
all of you would give me a fairly quick answer. The Postal
Service exists to ``provide the Nation with a reliable,
affordable, universal mail service.'' That means Congress must
preserve its ability to operate so constituents in some of the
most rural and remote areas in the Nation can get their mail.
It should be easy for all of us to agree taxpayers should not
have to continually bail out and prop up the Postal Service.
But it recently had the Delivering for America plan with the
goal of breaking even by 2023, but losses continue to mount.
What changes should the new Postmaster General make to the
Delivering for America plan so the Postal Service can finally
break even? And you can give me written comments in addition to
your quick responses verbally. Thank you.
Mr. Steidler. Sure. Congresswoman, I would begin by saying
there has to be an increased focus on cost reductions, on
better cost efficiencies. The Delivering for America plan
should be tabled. I would cite the reasons that Mr. Plunkett
gave.
Ms. Foxx. Okay. Mr. Schatz.
Mr. Schatz. Yes. The answers are in my--at least our
answers are in my testimony, but moratorium on the new
processing facilities, freezing non-delivery positions,
exempting letter carriers, and terminating the Regional
Transportation Optimization initiative. There is more, and
again, happy to give you further details.
Ms. Foxx. Mr. Cochrane.
Mr. Cochrane. I think the answer is in public-private
partnership for the Postal Service. And there are a lot of
people out there that have boxes that need to be delivered, and
the Postal Service has, in some cases, backed off of partnering
with people. And I think that the real solution is for the
Postal Service to partner with the e-commerce platforms, to
partner with traditional competitors and the biggest retailers
in the United States. They should be looking to deliver
everywhere, every day.
Ms. Foxx. Well, I like the fact that you are saying we need
to reduce costs. That is obviously very important. I think that
is where you always start. That is where an individual starts
when you do not have enough money to spend for the things that
you need is you look for ways to cut costs.
I am a person who loves the Postal Service. I use it a lot,
always have. I would like to have us be at a time--when I was a
student at Appalachian State University and somebody wrote me a
letter, I was in Boone, North Carolina, and they sent a letter
to my name, Boone, North Carolina, and the Postal Service
delivered it to me. I use that as an example, Mr. Chairman, all
the time of how the Postal Service used to work.
I will tell you, I went for a period of time recently--not
real recently, a year ago--when I was afraid to put mail in my
mailbox to be picked up by the post office because I did not
trust the people in the post office not to destroy my mail
because I complained so much about the bad service. And so,
that is where we are. I mean, that is the difference between
what it was some years ago in terms of how the Postal Service
worked and how it is now. I want to bring the Postal Service
back to the way the American people expect it to be, and I hope
we will be able to do that with the emphasis from this
Committee.
Thank you, Mr. Chairman, for indulging my going over time.
And thanks, all of you, for your efforts.
Mr. Sessions. Yes, ma'am. Thank you very much.
Ms. Randall, you are now recognized.
Ms. Randall. Thank you, Mr. Chair.
I think we can all agree on this Committee, as you have
heard today, that despite the decline in mail volume, the
Postal Service remains a vital link to information, goods, and
services, and connection for Americans. And this is even more
true for rural districts, like many of ours, like mine,
certainly. More than 1/4 of the U.S. population live in rural
areas, and they deserve to get their mail on time too.
I am concerned that some of the cost-cutting proposals for
the Postal Service will disproportionately disrupt rural
communities and could jeopardize the timely delivery of
lifesaving medications, mail-in ballots, personal letters,
cards, and financial documents. In particular, the Postal
Service is in the process of implementing its Regional
Transportation Optimization initiative, which reduces end-of-
day collection at post offices more than 50 miles from regional
hubs, effectively slowing delivery time for people living in
hard-to-reach areas.
The closest regional hub or regional processing and
distribution center to my district is in Seattle. That is more
than 100 miles away from 17,000 constituents in Aberdeen and
150 miles away from 3,500 constituents living in Forks, meaning
that constituents could expect a degradation of services under
this RTO initiative.
And my constituents are concerned, and I am not surprised.
They have every right to be. One of my constituents wrote to me
concerned that these changes may compromise the ability of the
Postal Service to carry out even essential functions, and they
are particularly concerned about delivering ballots safely.
And in a community where we are seeing small pharmacies,
rural pharmacies close down, it is even more important that we
preserve this last-mile delivery of medication to rural
communities like mine. ``The Postal Service is the lifeblood of
rural America,'' my constituent wrote, ``where people rely on
USPS to deliver goods and transmit information.''
The Postal Regulatory Commission, the regulatory body
overseeing the Postal Service, has found that the RTO
initiative will have significant negative impacts on delivery
in rural communities and not produce significant savings. Mr.
Renfroe, in your view, is it reasonable to degrade service for
rural communities for such modest, if any, savings?
Mr. Renfroe. The short answer is no. If I could quickly, I
will not speak to either support or condemn this particular
program, as a whole. I would, however, like to say we
absolutely should, at minimum, preserve service, while at the
same time, if there are things the Postal Service can do to
improve efficiencies without degrading that service, you know,
that is the type of thing that we engage with them on in this
modernization effort, but it certainly starts with maintaining
and improving service.
Ms. Randall. Definitely, I agree. The Postal Service is, in
fact, required by law to provide prompt, reliable, and
efficient services to patrons in all areas and shall render
Postal Services to all communities. I think maintaining rural
access is incredibly important, and this universal service
obligation must always be our north star for the Postal Service
and for us as Congress Members and oversight body.
Despite this, we have seen continued proposals for
privatization for parts or in whole of the Postal Service and
slashing the postal work force. I also agree that we should be
looking for efficiencies and modernizations wherever possible,
but I think cutting the rural jobs, the rural delivery
mechanisms that reach people in far-off areas like Forks on the
coast of Washington State with one road that washes out every
year like clockwork is incredibly important.
Ms. Patel, how would privatization or other aggressive
cost-cutting efforts interfere with the Postal Service's
universal service obligations?
Dr. Patel. I mean, quite simply, privatization exists kind
of orthogonally to universal service. They are not compatible.
So, if we wanted a private operator to adhere to what is
required by law in terms of affordable, equitable, and
universal service, it would need taxpayer funding because the
current model would not support that even for a private
operator. So, you cannot avoid that by going to a private
market, and the private operator would confront all of the same
problems that the current Postal Service faces, which is just a
decline in first-class mail that has historically been the most
important leg of the stool in Postal Service funding.
Ms. Randall. Thank you so much, Mr. Chair. I yield back.
Mr. Sessions. The gentlewoman yields back her time. Thank
you very much.
I am now going to move what actually would be, Mr. Mfume,
to a second round and would be extending that to you and any
other Member that decided that they would come to attend.
There has been discussion--I do not remember exactly who
said it, perhaps Dr. Patel, you did, or perhaps Mr. Plunkett--
about the pension issue and that if pensions were allowed to be
out into a marketplace, that they would yield a greater amount
of money. Could someone address that issue perhaps again? I
have got a trusty pencil now.
Mr. Steidler. Yes, Congressman, the U.S. Treasury reported
that for May 31, there was $25.1 billion in the Postal
Service's Retiree Health Benefits Fund. At the end of Fiscal
Year 2024, the Postal Service reported having $249 billion in
pension assets. Those by law can only be invested in government
bonds, which traditionally yield much less than a diversified
portfolio of stocks and bonds. Think about it this way. If you
were starting to save for retirement, there is no way you would
put all your assets into bonds.
I would call to your attention a report from the Postal
Service's Office of Inspector General that came out April 26,
2023. It assumed that if 60 percent of the Postal Service's
retirement assets were in stocks, that there would be a $1.2
trillion improvement in its financial position. That is
assuming that this would have started with the CSRS assets in
1972, the FERS assets in 1988, and the Postal Service Retiree
Health Benefits Fund in 2007. Over a 50-year period, this $1.2
trillion comes to about $20 billion a year in extra cash that
would be there.
And what we are talking about is just investing these
assets the same way that teachers' assets are invested,
firefighters, government workers at the state and local level.
So, it is a huge amount of money that is being left on the
table and should be a no-brainer from a bipartisan standpoint
to go forward with making this change. And I would encourage
you to look at it and would be glad to discuss this further.
Mr. Sessions. Thank you very much. Dr. Patel, there has
been a word that has been used here many, many, many times, and
that is privatization. And I have heard this same term,
although not exactly sure the real intent of privatization of
Social Security, privatization. Does that mean anything that
competed against it, even if you kept the Postal Service there,
but you put some operations or looked at different ways to do
things? What does privatization mean to you?
Dr. Patel. Yes, thanks for the question. And actually, I
think it is really good to clarify because there is a couple of
things that can go on in postal in general. There is something
called liberalization, which is opening postal markets up to
competition, which was done broadly in Europe beginning in the
early 2000s, and also exists in the United States. There is
substantial competition in middle-mile delivery services. There
is competition for parcels and packages.
Privatization is about the sale of some or all of the
Postal Service's assets, so a fully privatized USPS would sell
all of its assets to a private operator and would cease to be a
public operation. You could also partially privatize it by
issuing stocks that the Federal Government held the majority
share in and introduced shareholders. That is a form of partial
privatization that, again, in Europe, you see a mix of all of
these sort of organizational structures, depending on the
country that you are talking about.
Mr. Sessions. Do you believe that such an ability exists to
take and privatize the Postal Service to where someone would
either want this opportunity or be able to pay for that
opportunity or that there would be enough Members of Congress
who would put a demand together to do that?
Dr. Patel. I do not. I know there is a lot of rhetoric
around it, but I cannot imagine there is actual public will to
get that done.
Mr. Sessions. So, if you were, let us say, trying to keep
the ball in the middle of the field--and I alluded to this
earlier when I actually did believe what I said when I said
about not just Mr. Frost, but Mr. Mfume's leadership of
discussion within his Members. Does it do us any good to throw
that word out there if we really know that following what you
have said, which I believe is a good definition, we are not
going to privatize the Postal Service? We need to, however,
have certain goals. We need to understand what we are trying to
do, and we can get closer to those.
I spent 16 years at AT&T and moved that structure about as
much as anybody during my years there, and I think there are
ideas that I have about the Postal Service. They are having
problems getting enough carriers. They are having enough
problems to where they, as what was said, deliver maybe with
un-full trucks. They have a reduced amount of mail that they
deliver. All these things come into play that indicate that a
wise manager of this, whether it be our young Chairman, James
Comer, or Mr. Mfume, or myself.
Mr. Chairman, I see you over there, and I am delighted that
you are here. Mr. Jack, I see you here too.
My point is, is that I think that there has to be a
structure without called privatization. You are going to kill
something because right now we are not exactly the goose that
lays golden eggs, but rather move ourselves with agreement,
with knowledge, with a plan, and with our employees. I think
that this is important, and I think that I am hoping to give
some confidence that we can talk about these without an
assertion that you are trying to get rid of it or you are
trying to privatize it because we are not.
Mr. Mfume, do you seek time?
Mr. Mfume. Mr. Chairman, I would yield right now for the
Chairman of the overall Committee, the distinguished gentleman
from Kentucky, and then reclaim my time later.
Mr. Sessions. Oh, trying to do a little suck-up business
here today. Yes. So, the distinguished gentleman, the gentleman
from Kentucky, is not seeking time. The gentleman from Georgia
is. The gentleman, Mr. Jack, is recognized for 5 minutes.
Mr. Jack. Thank you, Mr. Chairman, and thank you to our
witnesses.
The title of the hearing alone, I think, is helpful as we
look to deliver solutions for the many customers of the Postal
Service. Hearing from all stakeholders is very helpful.
Specifically, I would just like to, on the record, note I
represent Georgia's 3rd Congressional District, which is just
southwest of Atlanta, stretches down to Columbus. Most of my
district is serviced by the Palmetto Mail Facility, which has
experienced a lot of trouble in recent years, recent months,
recent years.
But specifically, if I could start, Mr. Plunkett, again,
thank you for your testimony. Curious for your insights. The
Delivering for America plan includes, I think, over $40 billion
in investments for new capabilities and facilities, almost
exclusively in package sortation and distribution. However, as
I have just noted, we have seen significant disruptions at some
of those facilities, particularly in Atlanta, Indianapolis, and
Richmond. From your perspective, have these massive investments
in package capacity improved services for packages? Have the
investments degraded, perhaps, the Postal Service's core
mission of delivering mail should these investments in
competitive products continue?
Mr. Plunkett. I apologize. From my perspective, there is no
evidence indicating any kind of improvement whatsoever, quite
the contrary. As you point out, Atlanta and many other
facilities around the country have suffered severe gridlock at
various stages over the last few years.
My concern about the capital investments in the Postal
Service's package business, they are allowed by law from the
2006 PAEA to operate in competitive markets. That law, though,
also included a price cap that protected mailers from having to
backstop questionable or speculative investments in trying to
compete with the private sector.
My concern today is if the Postal Service is allowed to
continue to funnel tens of billions of dollars into excess
processing capacity, at the end of all this, it is the mailers
that are going to have to pay those bills because the
protection of the price cap has been eviscerated by the
regulator. But clearly, there is no evidence whatsoever that
those investments are paying off in any way yet.
Mr. Jack. And what other distractions can be cut out of
USPS so they can focus on their core mission?
Mr. Plunkett. Well, we strongly believe the Postal Service
has a critical opportunity to focus on its last-mile delivery
network, which is unparalleled, and on first-mile access to its
services. Beyond that, we believe the Postal Service and its
customers would be much better served through development of
private-public partnerships to allow for mailers and shippers
to enter their product as close to destination as possible.
That would reduce postal costs, it would increase overall
efficiency, and most importantly, perhaps, improve service. We
know that the longer the Postal Service holds on to a letter, a
package, or a flat, that the worse the service gets. So, we
believe for every product category, the Postal Service should
be maximizing downstream entry to increase efficiency and
improve service.
Mr. Jack. So, just to help me understand in layman's terms,
would, you know, a package being sent, let us say, to Peachtree
City, where I reside, would it be handled by perhaps a private
carrier up until that last mile and then Postal Service takes
over from there?
Mr. Plunkett. And until very recently, that was the working
model. Consolidators used to collect shipments from small
businesses, consolidate them into larger shipments, and then
enter those generally at a destination delivery unit, close to
the destination. In recent years, the Postal Service has been
restricting access to its delivery units for entry and forcing
more packages further upstream into its own processing network,
thus justifying those tens of billions of dollars in capital
investments that you asked about initially.
Mr. Jack. Wonderful. Thank you for your testimony there.
Mr. Schatz, welcome back. You were at, I think, our first
hearing, one of the first hearings of this Committee, and I
always welcome and appreciate your testimony. I would love, in
the closing minute that we have, for you just to highlight any
other instances of waste, fraud, and abuse within the USPS that
we and our Committee can work to solve and cut out.
Mr. Schatz. Well, I think the discussion about public-
private partnerships is critical because it works across many
of the Federal Government's functions. I think it is something
that should be reviewed not just at the Postal Service but in
other agencies.
However, it is particularly pertinent in the Postal Service
because the private sector has developed systems over time with
new technology that the companies themselves have invested in
that the Postal Service is a little bit of trying to catch up
to in its processing facilities, but it is duplicative. It
overlaps. And as we have said, we think it's something that
should be immediately ceased. Tens of billions of dollars could
be saved or not spent. The other area, of course, is this
optimization initiative, which has led to a reduction in
service in rural areas.
And having worked on Capitol Hill many years ago, I know
that there is a great deal of comments. There were many
comments from people about USPS. That has not changed. People
like getting the service. They need the service. And to the
extent that it can be made more efficient and the universal
service obligation continues with that last-mile delivery by
the letter carriers, that would help avoid a lot of the waste
and abuse and allow the Postal Service to operate more
efficiently.
Mr. Jack. Thank you. And with that, Mr. Chairman, I yield.
Mr. Sessions. The distinguished gentleman yields back his
time. Thank you very much.
Would our young Chairman wish to be recognized?
Chairman Comer. I appreciate that. I appreciate the young
comment too.
Mr. Sessions. The gentleman is recognized for 5 minutes.
Chairman Comer. All right. Well, thank you. And thank our
witnesses for being here today.
I think everyone knows this Subcommittee, and for the most
part this full Committee, strongly supports the Postal Service.
We have, as you know, legislative jurisdiction. And we
recognize--and I am sure you all do--that there are problems
with the Postal Service. The performance is a problem, but the
massive losses are a problem as well. The Postal Service was
designed to be self-sufficient, and it is not self-sufficient
by a long shot.
My first question, Mr. Schatz, what are the top two or
three things the Postal Service could do to reduce its costs to
try to get closer to breaking even?
Mr. Schatz. Well, it has to match its labor costs with its
revenues. The labor costs are 80 percent of costs. And when the
Postmaster moved 195,000 part-time jobs to full-time, that was
clearly not helpful.
Chairman Comer. Yes, no, I agree with that, and I was real
disappointed when that happened. That was not a part of the
postal reform business model that I strongly supported and this
Committee led, so that was a huge disappointment. I agree.
Mr. Schatz. Yes, and I also, as I have said numerous times,
you know, processing, logistics, transportation of mail, as Mr.
Plunkett and others have said, really needs to be made closer
to the destination and allow the systems that have been
developed over years--and it is a lot like other areas in the
Federal Government. They do not have the technology or
investment in innovation.
Chairman Comer. Right. Was it a bad idea to consolidate the
sorting facilities or was that a good idea? The idea, as I was
explained, was to reduce costs and to be more efficient. Has
that helped the bottom line? It has not helped the
performance----
Mr. Schatz. No.
Chairman Comer [continuing]. I can assure you.
Mr. Schatz. No, it has degraded performance and it
certainly is not helping the bottom line. And it does--as I
have said, the new Postmaster General to come in and halt that
effort and come back and talk to the Committee about what
should be done.
Chairman Comer. Okay. Mr. Plunkett, across the country,
mail volume has declined, we have talked about that, with the
rise of digital media. The Postal Service now handles half the
mail volume it did 20 years ago, but it has significantly more
employees, in fact, 40,000 more postal employees. And as Mr.
Schatz said, the labor is your biggest expense in just about
any government agency. So, it is particularly concerning to me
because 80 percent of the Postal Service costs are labor. How
can public-private partnerships help deal with this high labor
cost?
Mr. Plunkett. One way, as Mr. Schatz rightly points out,
much of what the Postal Service does in the middle mile--
transportation, sortation, and logistical distribution of mail
or packages--can easily be replicated outside of the Postal
Service and could be done much more efficiently and much more
effectively.
Now, you mentioned the fact that we have a mismatch between
the size of the labor force and what has happened with volume
over time. You know, the Postal Service unfortunately does have
a lot of opportunities for attrition. I think no one wants to
see any layoffs. We certainly do not. But over time, if the
Postal Service were to concentrate on last-mile delivery and
first-mile access and restructure its products and its
incentives, it could do a lot to move mail further downstream,
move packages further downstream, and create billions of
dollars in cost savings opportunities in the middle mile parts
of its network.
Chairman Comer. Okay. Mr. Cochrane, the mail continues to
get slower. The performance continues to decline, despite
having more employees than ever. When I look at the Postal
Service and I talk to postal employees, I try to communicate
regularly with the unions, communicate regularly with the
stakeholders, the people in the package coalition and all the
groups that utilize the Postal Service at the largest levels,
it seems to me that the problem is in the mail sorting, Okay? I
do not think there is a problem with the mail carriers. I do
not think there is a problem with the post offices. You could
make an argument that there are too many post offices, and that
could be consolidated.
But at the end of the day, it looks to me, as someone who
strongly supports the Postal Service and someone who has, you
know, worked closely with Mr. Sessions and Mr. Mfume and the
previous Chairman, the Democrat Chairwoman Maloney, of this
Committee to try to help the Postal Service, that the problem
is in the sorting. Do you think there could be a private sector
solution to the sorting, just the sorting?
And I have always encouraged Mr. DeJoy to do a pilot
project, one pilot project to privatize the sorting of the mail
to see if we could do that more efficiently and quicker. Do you
think that is an option, a viable option?
Mr. Cochrane. Well, yes, because it worked with packages. I
mean, packages used to be brought--you know, until last year,
two billion parcels were being brought all the way to a local
post office. And once again, very nominal work once it gets to
the post office. They just separate it into one of 30 routes
and load the truck up. That was brought back into the network,
and now it runs across sorters, and it has got to incur
transportation costs and incur processing costs. The
profitability goes down when you do that.
And it is the same with mail. I mean, once again, there is
catalogs and magazines. Eighty percent of them are already
entered at a plant, a processing center. With slight financial
incentives, 80 percent of those same pieces could go right to a
post office. So, I think there is absolutely an opportunity to
do that. And the mailing industry actually does it already. I
mean, once again, marketing mail, 85 percent of it is bypassed
by the entire network and is brought to a destinating sort, so
we just got to do more of that and do it better.
Chairman Comer. Well, Mr. Chairman, I just want to say
publicly that this Subcommittee is serious about trying to save
the Postal Service, but it is going to have to be more
efficient. I mean, they are losing customers every day. I am
not blaming the postal employees. I am not blaming the
Postmaster General. But at the end of the day, it is broken,
and we have to fix it because the Congress is not going to
continue to funnel money in there. And this is one of the very
few bipartisan issues in Congress. We want to support the
Postal Service.
So, Mr. Chairman and Ranking Member, I appreciate you
holding this hearing, appreciate your commitment. Hopefully, we
will get some more direction from the White House as to what
their plans are for the future of the Postal Service. But I
think one thing is for certain from my standpoint. I want to
see a Postal Service into the future, but it is not going to
happen until we make some needed changes.
So, with that, Mr. Chairman, I yield back.
Mr. Sessions. Chairman, thank you very much. I think you
hit at least the nail on the head that Mr. Mfume and I are
after, and that is to seek other people's opinions also. We
think our opinions matter. We know that others do matter, but I
think that people who are engaged in the day-to-day operation,
business, and other matters do matter.
We have now been joined by Mr. Burchett. Mr. Burchett is a
member of this Subcommittee. The distinguished gentleman is
recognized.
Mr. Burchett. Thank you, Mr. Chairman.
How many unions operate within the Postal Service? Can
anybody tell me that?
Mr. Schatz. Four.
Mr. Burchett. Four. Okay. What are the top two or three
things--I mean, Mr. Schatz, have I got that name right?
Mr. Schatz. Yes, sir.
Mr. Burchett. All right. I am Burchett, so mine is never--
--
Mr. Schatz. I know that.
Mr. Burchett. Yes, I never get that right, so we are good.
What are the top two or three things that the Postal Service
could do to reduce its costs?
Mr. Schatz. Well, as I have mentioned----
Mr. Burchett. And I want to apologize to you.
Mr. Schatz. That is fine.
Mr. Burchett. Mr. Burchett. As the 435th most powerful
Member of Congress, I am always the last person to ask the
questions.
Mr. Schatz. That is Okay.
Mr. Burchett. So, everyone knows this. When I ask the
question, it is already been asked 15 times. You are supposed
to immediately respond and say that is an incredible question.
I will try to answer that for you, sir.
Mr. Schatz. And I have great answers. Well, as I think we
have said this, we have been working on postal issues since the
Grace Commission issued its report under President Reagan, and
we have been very consistent over the years. Increase the
number of public-private partnerships, and, given some of the
changes made in the Delivering for America plan, we think there
should be an immediate halt to that plan, reassess what is
working and not working, mostly not working.
And, you know, it is important to keep the Postal Service
moving forward. We do not support privatization. It has been
mentioned several times, but I will throw that in since I was
not asked directly. And I think that the changes that can be
made, particularly in increasing the ability of the private
sector to help and improve efficiency, is probably the best
thing that can be done.
Mr. Burchett. Okay. Mr. Plunkett, with the rate increases,
what are you hearing from the business community? Are they
pitching a fit, are they jumping ship, or what are they doing?
Mr. Plunkett. Let me first say what an excellent question
that is.
Mr. Burchett. I concur.
Mr. Plunkett. So, I do not know if people realize the size
of the increase that it is going to hit commercial mailers in
July. Many large categories of mail are getting an 11.4 percent
rate increase in July. They were not budgeting for that. They
were expecting about seven percent. But the Postal Service,
when they filed their change, it was much higher than we
expected. It is very difficult to plan in an environment like
that. And so, it is not just the magnitude of the increases
that is going to drive away substantial volume, but it is the
surprise that was provided when that was announced.
And another thing I will mention is it is not just the
overall size. The Postal Service is diminishing incentives to
do the exact same things that Mr. Schatz is talking about. They
are taking away incentives to move mail closer to its
destination, to move it back up into their own processing
network. And I can tell you that in several postal facilities
around the country that happen to be located close to large
mail manufacturers, there is the real possibility of gridlock
in the middle of July when those incentives are taken away and
all of a sudden mailers just dump all of their mail at the
point of origin. That is something our members are bracing for.
We wrote to the Board of Governors suggesting that they should
hold off for a few months to reassess this. We have not gotten
a response to that request, but I can tell you the mailing
community is on the verge of being terrified of what is going
to happen in July.
Mr. Burchett. Okay. Mr. Cochrane, can the private sector do
more to process mail and packages for the Postal Service, maybe
increase the efficiency of the overall postal system?
Mr. Cochrane. Yes, they could. I think they--one of the
first things they need to do is open up last mile again. And
last mile is bringing stuff all the way to a post office. A
year and a half ago, they decided to move that and cut that off
and move it back into the processing network. The processing
network got gridlocked, and it took them a while to restore
service. It charged more. But if they just open back up into
the last mile where they have facilities, they have automation,
they have, you know, where the carriers are located, you bring
it there, you bypass a whole lot of costs. And it is the most
efficient way of doing it. It is the lowest price and service,
the key service issue. So, it is an easy thing for them to turn
back on. It was just a decision that was made not to allow
access into the post office.
Mr. Burchett. Have your delivery standards impacted your
customers?
Mr. Cochrane. Absolutely. When it moved back into the
processing center, I think some of the stories we heard today
about what happened in Georgia and then Louisville and then
down in Houston, it is, you know, the processing centers are
where you are going to find delays with mail sorting. The
processing centers are where you are going to find--you
literally lose a trailer or lose volume.
So, the post offices--the beauty of a post office, it has
got nowhere to hide anything. They are small. What you see when
you walk into the lobby, there is like equal space in the back.
Mr. Burchett. Yes.
Mr. Cochrane. So, there is no lost trailers, no packages
lined up on the, you know, containers lined up on the wall,
pallets full of things. When you go to the post office, it is
clean, it is great service, and the best price in the
marketplace.
Mr. Burchett. I am out of time, but I would like to say I
did--somebody mentioned earlier something about the former
Postmaster, and I had a lot of problems with the former
Postmaster. I think I maybe exhibited a little bit of my east
Tennessee anger toward him multiple times, and it was well
deserved. But I would like to say--I know I am over time--but
back in the day I had a burgeoning eBay business, and I loved
going to the post office. Some of the best memories I have, my
old daddy would go with me. My dad was a World War II veteran,
and they would see Mr. Burchett come in there and they would
bring a chair out for him and he could watch my packages while
I was running back and forth to the truck, bringing them in.
And Daddy would usually take a nap, but everybody was really
kind to him. And I dig that about the post office.
I miss the so-called professionalism. You know, we get all
this highfalutin stuff, and we forget that a lot of the postmen
back in the day, they checked on people. And if packages were
stacking up in front of their dadgum house, they were knocking
on the door, checking on the family. And I think that was a
good thing, and we are missing out on a lot when we lose that.
So, sorry I went over, Mr. Chairman. Thank you. And Ranking
Member as well, sorry.
Mr. Sessions. Mr. Burchett, thank you very much. If you
would like, we will give you more time.
Mr. Burchett. I could just indulge on my current state
where I am trying to sell my baseball card and comic book
collection. Because my daughter likes horses, apparently, that
is a priority right now.
Mr. Sessions. It would be to me.
Mr. Burchett. Yes, well, I wish she had stuck with
motorcycles. They were safer and cheaper. But I will leave that
as it is. But anyway----
Mr. Sessions. Good gosh.
Mr. Burchett [continuing]. No, it is a pleasure being on
this Committee. And as I said, the Ranking Member and the
Chairman are, I consider, two of my closest friends up here.
So, thank you all.
Mr. Sessions. Mr. Burchett, thank you very much.
I think that this panel has heard from a lot of people
today. I would like to go to Mr. Mfume for any final words that
he may have and closing remarks. The distinguished gentleman,
my friend, is recognized.
Mr. Mfume. Thank you, Mr. Chairman. I want to thank the
gentleman from Tennessee, who is my friend also and who keeps
it real all the time here in the House of Representatives. Take
care, Tim.
A couple of quick things, Mr. Chairman. Obviously, I want
to thank you for working to put this hearing together. It is
something that both you and I wanted to do and that we are
going to follow up on.
You were correct. I was kind of cozying up to the Chairman
of the Committee earlier by giving him my time. So, since I was
doing that, it occurred to me I would not be out of order to
brown nose and to recognize Chuck Mulidore, who you did
earlier. Chuck, good to see you. Sometimes, we are both
overtaken by the radiance of Bill Levi, so that is why I only
saw him beaming through there. Yes, Bob Levi, excuse me. That
is why I saw him beam through there.
Mr. Chairman, the question is where do we go from here? And
there are a lot of directions. I have got a couple of quick
questions, and then I want to get with you and try to figure
out all this for the follow-up to this hearing.
Mr. Cochrane, you talked about systemic slowdowns. Can you
just take a second or two to give me an idea of what you mean
there and why we have them?
Mr. Cochrane. Well, it is the optimization, the Regional
Transportation Optimization. And it does have an effect that,
you know, the previous Congressman talked about being an eBay
seller. If you are an eBay seller in a rural area that is
caught up in the changes that took place in Regional
Transportation Optimization, you are judged by when that
purchase takes place, you are measured from that time to when
it gets delivered, and you get a score. And unfortunately, if
you are living in a rural area, you lose. You are already a day
behind because you sold it on Monday, and it did not even leave
until Tuesday. So, you have got to catch up, and it will affect
how you are rated on a platform. And that is not just eBay.
That is a lot of the platforms that are out there.
So, you know, once again, slowing down service in rural
America is not necessary. And actually, I would think it is one
of the big growth areas. The population was growing. We heard
that before. Twenty-five percent of the U.S. population now in
rural areas. And frankly, it is not all rural areas. And it is
just--it is a 100-mile zone issue, which is a problem.
So, I live in Delaware, and there is a lot of beaches down
there, but there is 100,000, 200,000 people living there. But
they decided my regional building was in New Jersey, so my mail
does not get picked up----
Mr. Mfume. I got it.
Mr. Cochrane [continuing]. At the end of the day, so.
Mr. Mfume. I got it.
Mr. Cochrane. Yes.
Mr. Mfume. Thank you. Mr. Steidler, let me ask you a quick
question. You talked about robotics and AI as being avenues
that could increase significantly our efficiencies. Can you
talk some more about that? And does that mean--is that a threat
to the work force? That is the other issue.
Mr. Steidler. The short answer is it is not a threat to the
work force. In fact, it will empower the work force by enabling
them to focus on more efficient things going forward here.
Robotics are already being used widely in warehouses and
other places to transport things, and that is something that
USPS should look at. I would add to that, that is going to be
difficult in the current situation because that involves
capital expenditures. But those are expenditures, much like on
the vehicles, that will pay for themselves in greater
efficiencies and reduction in maintenance costs.
The other thing is, the Postal Service is a repository of a
huge amount of data on its different products, on what works
well in different areas, what practices are best, and what the
pricing should be. And the opportunity to use AI is there to
identify the best practices in the best areas and to help
replicate them on a national basis.
Mr. Mfume. Is any of that being used now, utilized at all?
Mr. Steidler. I believe it is being used very sparingly at
the Postal Service that they are really, from an IT standpoint,
they have higher priorities in terms of preventing cyber
threats and things along those lines. But this is something
that the private sector is looking at. It is something that the
Postal Service should certainly be looking at as well.
Given its cash constraints, I would--and they are not that
public with this information. I would imagine they are not
looking at it nearly to the extent that they should.
Mr. Mfume. Okay. And the other thing you mentioned in your
testimony was that the Board of Governors should be done away
with.
Mr. Steidler. Yes.
Mr. Mfume. Let us say we do that. What do you envision as
replacing that, if you think it needs to be replaced at all?
And what should some of its priorities be?
Mr. Steidler. I think it should be a smaller commission
type or Board of Governors type entity. Right now, you have
nine individuals who are paid $30,000 a year to look at a
variety of issues in the Postal Service. The simple reality is
that is not enough money to attract and retain bright people
who are going to focus in on those areas.
And I think we also have to take a step back and realize
that those who should have been keeping an eye on the finances
of the Postal Service have not been as rigorous as they should
have been. The Postal Service, for example, has had the same
auditing firm that it has had for 54 years. Best corporate
governance practices would say that you should swap them out or
at least competitively bid them every year.
So, we need a small contained outside board with resources
that can focus on these issues, that can demand to look at
contracts, that can look at------
Mr. Mfume. Thank you. I am going to have to reclaim my
time.
Mr. Steidler. Sure.
Mr. Mfume. Dr. Patel and Mr. Schatz, your thoughts also on
the Board of Governors and where you think any reform is needed
outside of your written testimony. By the way, there will be
follow-up questions as a result of the testimony that we all
have. We just do not have enough time right now. But if you
could both take a stab at that, that would be great.
Dr. Patel. Yes, I would just answer really quickly. I think
the Board of Governors is important. I think the reforms that
have been talked about are also important. And I think a
regulator, because the Postal Service operates a legal
monopoly, is a really important part of the puzzle. So, I just
think empowering these bodies to do more and do better is the
step forward.
Mr. Mfume. Mr. Schatz.
Mr. Schatz. Yes, I agree there has to be oversight, and I
think there should be more transparency, and that can be done
with a stronger board.
Mr. Mfume. Okay. I am just trying to get to where we are.
This board now--you want a board that is appointed by the
Administration? Is this a board that ought to be elected in
some other kind of way? I am just trying to get a sense of what
you see a new board being and looking like.
Mr. Schatz. I do not know that we have reached that issue
yet. I think it is a good question. I think it is something we
would consider as an organization, but I do not have a direct
answer at this point.
Mr. Mfume. Okay. That is fine.
Mr. Chairman, I do not have any other questions right now.
I will be happy to yield back, and thank you again for your
work on this.
Mr. Sessions. Thank you very much.
Before I go to my final closing remarks, I do want to make
sure that we entered into the record at least three additional
pieces of correspondence that we have been asked to. The
National Paper Association; ``Keep US Posted'' by the
gentleman, the Honorable Kevin Yoder; and Envelope
Manufacturers Association, Marie Clark, has asked that that be
entered in the record.
I also want to do two other things I think are important,
and that is to thank members of the Postal Service. I, too,
have friends in the Postal Service. I have friends and know
that over my 27 years of working as a Member of Congress, I
have developed friendships, people who have talked with me
about their hopes, aspirations, and desires about that.
I, from time to time, do well enough to get invited to
conventions that the Postal Service has in their different
operations. But I think that it is important that we recognize
that they still live up to the postman's creed, and they are
out there working every day. And today, I went up to vote and
walked right by the open door and went, it is hot out there.
And there are thousands of people who work for the Postal
Service who are out in the heat today and in the cold when it
is cold too.
Secondly, I would like to thank the gentleman who runs this
Subcommittee from a staff perspective. Bill, I want to thank
you for not only putting this together but remembering the same
viewpoint that we have tried to take, and that is we go
together with Mr. Mfume and our friends. But Bill, thank you
very, very much for bringing this together. I think that this
panel showed itself for what it is, and that is good ideas and
an opportunity to openly discuss it.
Lastly, in my closing statement, I am approached from time
to time, from people who want us to speed up. And I will tell
you, I do feel a sense of urgency in the things that each of
you have brought forward today. Our young Chairman, as you
heard tonight, he looks to me to move a lot of ideas related to
this. Both he and I are not frustrated but have not fully been
able to move forward with decisionmakers. I think that that is
ending now with the new Postmaster being named. We intend, Mr.
Mfume and I, intend to meet with the new Postmaster. I have met
with the Board of Governors, certain members of the Board of
Governors.
There has got to be a plan. You cannot have something as
big and as important that has value across the country without
giving better direction, answers to people. I learned a long
time ago when I worked at AT&T, when you raise prices, there is
a corresponding value of people who quit using your services.
And this is something that I have known for a long, long time
and thus feel that the mathematics that are related to spending
is just as important as the service because, at some point,
people voluntarily quit using your service.
Bill just passed me something here. Oh, yes, Morgan is a
Democratic counterpart, and she is great to work with. Yes, I
will tell you that we have this demand on us, Mr. Mfume does, I
do, where we try and work together. We try and see things that
are the same way, but so did you in your conversation that you
had with us today.
And so, with that said, Morgan and Bill Womack, without
objection, all Members have five legislative days within which
to submit materials and additional written questions for the
witnesses, which will be forwarded to the witnesses as they
become apparent.
If there is any further business, I have not seen it. So,
without objection, the Subcommittee will stand adjourned as
soon as I bang the gavel. But I want you to know that Mr. Mfume
and I intend to come down and shake your hand and thank each of
you for being here today.
With no further business, we now stand adjourned.
[Whereupon, at 4:19 p.m., the Subcommittee was adjourned.]
[all]