U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

63–870 PDF 2011

S. Hrg. 111–1060 

FINDING SOLUTIONS TO THE CHALLENGES 

FACING THE U.S. POSTAL SERVICE 

HEARING 

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

OF THE

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

DECEMBER 2, 2010 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

H605-41331-79W7 with DISTILLER

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

ROLAND W. BURRIS, Illinois 

CHRISTOPHER A. COONS, Delaware 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

LINDSEY GRAHAM, South Carolina 

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

JOYCE WARD, Publications Clerk and GPO Detailee 

SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY 

THOMAS R. CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

MARK L. PRYOR, Arkansas 

CLAIRE MCCASKILL, Missouri 

ROLAND W. BURRIS, Illinois 

JOHN MCCAIN, Arizona 

TOM COBURN, Oklahoma 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

JOHN KILVINGTON, Staff Director 

BRYAN PARKER, Staff Director and General Counsel to the Minority 

DEIRDRE G. ARMSTRONG, Chief Clerk 

H605-41331-79W7 with DISTILLER

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1 

Senator Collins ................................................................................................. 4 

Senator Coburn ................................................................................................. 7 

Prepared statements: 

Senator Carper ................................................................................................. 39 

Senator Collins ................................................................................................. 43 

Senator McCain ................................................................................................ 51 

Senator Akaka .................................................................................................. 53 

WITNESSES 

THURSDAY, DECEMBER 2, 2010 

Patrick R. Donahoe, Deputy Postmaster General and Chief Operating Officer, 

U.S. Postal Service ............................................................................................... 9 

The Honorable Ruth Y. Goldway, Chairman, Postal Regulatory Commission ... 22 

Jonathan Foley, Director of Planning and Policy Analysis, U.S. Office of 

Personnel Management ....................................................................................... 24 

Phillip Herr, Director, Physical Infrastructure Issues, U.S. Government Accountability Office ................................................................................................ 26 

Frederic Rolando, President, National Association of Letter Carriers, AFL– 

CIO ........................................................................................................................ 30 

Robert J. Rapoza, National President, National Association of Postmasters 

of the United States ............................................................................................. 32 

Jerry Cerasale, Senior Vice President Government Affairs, Direct Marketing 

Association, Inc., on behalf of Affordable Mail Alliance ................................... 34 

ALPHABETICAL LIST OF WITNESSES

Cerasale, Jerry: 

Testimony .......................................................................................................... 34 

Prepared statement .......................................................................................... 116 

Donahoe, Patrick R.: 

Testimony .......................................................................................................... 9 

Prepared statement .......................................................................................... 57 

Foley, Jonathan: 

Testimony .......................................................................................................... 24 

Prepared statement .......................................................................................... 71 

Goldway, Hon. Ruth Y.: 

Testimony .......................................................................................................... 22 

Prepared statement .......................................................................................... 66 

Herr, Phillip: 

Testimony .......................................................................................................... 26 

Prepared statement .......................................................................................... 74 

Rapoza, Robert J.: 

Testimony .......................................................................................................... 32 

Prepared statement .......................................................................................... 102 

Rolando, Frederic: 

Testimony .......................................................................................................... 30 

Prepared statement .......................................................................................... 89 

APPENDIX 

Questions and responses for the Record from: 

Mr. Donahoe ...................................................................................................... 122 

H605-41331-79W7 with DISTILLER

Page

IV 

Questions and responses for the Record from—Continued 

Ms. Goldway ...................................................................................................... 147 

Mr. Foley ........................................................................................................... 155 

Mr. Herr ............................................................................................................ 160 

Statement submitted by Mark Strong, President of the National League of 

Postmasters .......................................................................................................... 166 

H605-41331-79W7 with DISTILLER

(1) 

FINDING SOLUTIONS TO THE CHALLENGES 

FACING THE U.S. POSTAL SERVICE 

THURSDAY, DECEMBER 2, 2010 

U.S. SENATE, SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:02 a.m., in 

room SD–342, Dirksen Senate Office Building, Hon. Thomas R. 

Carper, Chairman of the Subcommittee, presiding. 

Present: Senators Carper, Collins, and Coburn. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. I am pleased to call our hearing to order and 

to be here with Senator Collins and, I suspect, a couple of our other 

colleagues as the morning goes on. We want to thank our witnesses, welcome our witnesses and our other guests, for what I 

think is an important hearing. 

We have held, a number of hearings over the years in this Subcommittee, as well as over in the House, to highlight the numerous 

challenges facing the Postal Service. It is my hope that with this 

hearing we will soon get down to the hard work of actually addressing those challenges and clearing the way to enable the Postal 

Service to emerge from the toughest time that it has faced since 

it was created four decades ago. 

At many of these hearings, members and witnesses talk about 

how, despite hard times, the Postal Service is achieving its mission 

and will continue to achieve its mission. The Postal Service has 

done an admirable job in cutting costs and streamlining operations 

and reducing its workforce through attrition. They have managed 

to do all of these things while maintaining and, in some cases, improving service, at least by some measure. And we commend the 

Postal Service employees, the managers, and soon-to-be former 

Postmaster General Jack Potter. But the truth is that we are rapidly approaching a time when we may no longer be able to depend 

on the Postal Service, and that time may come less than a year 

from now. 

The Postal Service, I am told, has lost a record $8.5 billion in fiscal year 2010. Postal management is projecting the loss of a further 

$6.4 billion in the current fiscal year. As a result, by this time next 

year the Postal Service will likely have exhausted all of the $15 bilH605-41331-79W7 with DISTILLER

2 

lion line of credit that it has with Treasury and will not have sufficient cash to meet its obligations. In practical terms, this could 

mean that, during the next year’s holiday shopping and mailing 

season, the Postal Service may not have the resources necessary to 

keep its doors open. 

So much for the bad news. How about the good news? Well, there 

is some good news, and I take some comfort in the fact that the 

vast majority of the Postal Service’s losses in recent years are attributable to the very aggressive retiree health care pre-funding 

schedule that was put in place in 2006. In fiscal year 2010, $5.5 

billion out of the Postal Service’s $8.5 billion loss could be attributed to the retiree health payment it was required to make in September. Only $500 million of the $8.5 billion is actually an operating loss. Only $500 million. That is still a lot of money. 

I take some comfort from the fact that there is a level of consensus here in Congress and amongst postal stakeholders that 

something must be done about the Postal Service’s retiree health 

prepayments, or at least the level of them. But even if we were to 

completely eliminate the remaining payments, we would only be 

dealing with a portion of the Postal Service’s projected long-term 

deficit. This is where the bad news comes back in. 

This past spring, the Postal Service and a group of highly regarded outside consultants conducted a study showing that if nothing changes, the Postal Service would run up more than $230 billion in cumulative deficits between now and the year 2020. Some 

of these losses could be stemmed by the Postal Service today without Congress taking any action at all. I am sure that some steps 

have already been taken since the $230 billion number was first 

announced. But the enormity of the projected losses tells me that 

we need to go beyond just addressing the retiree health payments 

by enabling the Postal Service to make several fundamental 

changes to the way it does business. 

We live in a time when the Postal Service is competing not just 

with the United Parcel Service (UPS), not just with Federal Express (FedEx), but with the Internet, with email, with electronic 

bill pay, with cell phones, and other advances in communication 

and commerce. Simply put, many businesses that in the past had 

to turn to the Postal Service to reach customers or ship their products have far more choices today. To make the Postal Service a viable choice, we need to give postal employees the tools that they 

need in order to thrive in the coming years. 

Coming together at the last minute a few months down the road 

and doing just enough to get the Postal Service through Christmas 

2011 is not a viable option. I am reminded today, reading the headlines in the papers and watching the news on television, that our 

Federal Government faces a sea of red ink as far as the eye can 

see. Adding another $230 billion to our Nation’s debt is not a viable 

option as we seek to replace what I call a culture of spendthrift in 

Washington with a culture of thrift. 

Going forward, the Postal Service cannot remain a part of the 

problem. It must become part of the solution, and if we work together—and that is something that Senator Collins and I and Senator Coburn are pretty good at doing. But if we work together and 

H605-41331-79W7 with DISTILLER

3 

think outside the box, along with a bunch of you, that can happen, 

and it needs to. 

In September, I introduced legislation, the Postal Operations 

Sustainment and Transformation Act (POST), P-O-S-T, as we call 

it, that I believe may be the only proposal out there now that deals 

comprehensively with the problems facing the Postal Service in 

both the short term and the long term. It is not a perfect proposal, 

but we think it is a comprehensive proposal and a bold proposal 

that has elicited a lot of comments—some positive, some not so 

positive, but it has elicited a lot of discussion, and I think that is 

positive. 

The key part of our bill aims to permanently fix the postal pension and retiree health issues that have been debated for quite 

some time now. The legislation does this by requiring the Office of 

Personnel Management (OPM) to revise the dated methodology 

used to determine how much the Postal Service pays into the Civil 

Service Retirement System (CSRS). That change would likely show 

that the Postal Service has overpaid that system by as much as 

$50 billion, some would say even more. 

The POST Act would allow the Postal Service to use that money 

over the years, in the next 6 or 7 or 8 years, to satisfy the Postal 

Service’s retiree health prepayment obligation. This would take 

roughly $5.5 billion or more off the Postal Service’s books each year 

and prevent a catastrophic shutdown in the coming months. 

My bill would also empower postal management to take some additional steps to cut costs over time. The Postal Service has been 

talking for several months now about eliminating $3 billion a year 

out in costs by reducing a day of delivery. I think that $3 billion 

is a net number. They have submitted a proposal to the Postal Regulatory Commission, and the Commission is preparing a report on 

the advisability of this change. 

Unfortunately, each year Congress prevents the Postal Service 

from exercising the authority to change delivery frequency when it 

believes that doing so is necessary, and we do this despite the fact 

that the 2006 postal reform legislation explicitly gave the Postal 

Service the authority to change delivery frequency and other service standards to adjust to customers’ changing needs. 

Now, let me just make it clear. I am not an advocate of eliminating Saturday delivery. I think there are good arguments both 

for and against what the Postal Service would like to do. But I am 

an advocate of giving the Postal Service the freedom to manage, especially when our interfering in management decisions could prevent the achievement of so much in savings at such a critical time. 

The POST Act would ensure that, on this issue, the Postal Service, 

working with its regulator and its customers, will make the critical 

decisions on Saturday delivery without political interference. 

The POST Act also seeks to simplify the postal management decisionmaking process when it comes to transforming its retail network. As many in this room know, the Postal Service has tens of 

thousands of retail locations. Some of these locations are ideally located; some are not. Others operate with significant losses. My bill 

would remove several legislative restrictions that tie the Postal 

Service to an outdated retail network and free them to begin to expand to more cost-effective and more convenient retail outlets that 

H605-41331-79W7 with DISTILLER

4 

I believe could and should ultimately enable the Postal Service to 

better serve its customers. 

But the bill I have introduced is not just about cutting. It also 

recognizes that, while customers may be moving away from hardcopy mail, the Postal Service’s retail and delivery network remains 

extremely valuable. I propose in my legislation that the Postal 

Service be freed to better capitalize on the value of this network 

by experimenting with products and experimenting with services 

not directly related to the mail. 

Among the things the Postal Service could do with this authority 

would be to partner not just with the Federal Government to deliver services to citizens but with State and local governments to 

provide government services such as license renewals or voter registrations in postal facilities. 

And, finally, my bill addresses a flaw in postal labor law by requiring arbitrators to take the Postal Service’s financial condition 

into account when rendering decisions during labor disputes, a proposal embraced by Senator Collins, by Senator Coburn, and other 

Members of our Subcommittee already. 

Let me just close, if I could, by reiterating how critical it is that 

Congress begin to move on a comprehensive postal bill in the near 

future. I do not want us to be sitting here 8 months from now, 9 

months from now, 10 months from now trying to figure out what 

we are going to do. The Postal Service operates at the center of a 

massive mailing industry—Senator Collins probably knows that as 

well as anybody here in this Senate. The Postal Service operates 

at the center of a massive mailing industry that employs millions 

of men and women in every State and congressional district across 

the country, including ours. These people do not just work at the 

Postal Service itself. They work at banks. They work at retail operations. They work at newspapers and in countless different sectors 

of our economy. 

With all the challenges we face as a country today, it would be 

a tragedy to add the loss of these jobs to the list of hardships we 

need to overcome just because we did not allow ourselves to come 

together around some additional common-sense reforms of the 

Postal Service. We are long past the time of fighting the old battles 

that have hindered work on postal issues for so long, including during 2006 when we finished the most recent postal reform efforts, 

in no small part because of the good work that my colleague Senator Collins and her staff and my staff—John Kilvington especially—have done. We are also beyond the point at which we 

should be satisfied with more reports, with more studies, or more 

reforms that create millions in savings when we really need billions. 

I look forward to working with our witnesses, with my colleagues, and with others to enact that meaningful and needed legislation. Senator Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. Let me just start 

my comments this morning by making three points. 

First, I want to welcome our Nation’s incoming Postmaster General, Pat Donahoe, who will take over the reins soon. 

H605-41331-79W7 with DISTILLER

5 

Second, I am a strong supporter of the Postal Service. It plays an absolutely vital role in our economy. It is the linchpin of a $1 

trillion mailing industry that employs approximately 7.5 million 

Americans in fields as diverse as direct mail, printing, paper manufacturing, catalogue companies, and financial services. So that is an 

important premise to keep in mind as we proceed with this hearing. 

And, third, the Postal Service is in an abysmal financial crisis. It lost $8.5 billion during the past fiscal year, and significant reductions in mail and revenue over the past several years underscore the urgency of re-engineering the Postal Service business 

model so that it can adapt to the Information Age. Those who think 

that we can somehow ignore the problems of the Postal Service are 

woefully mistaken. It is absolutely essential to our economy and to 

our American society. 

At this defining moment in its history, the Postal Service must 

embrace change and take aggressive steps towards a structural reinvention. It must enhance its service and value to its customers 

rather than looking to drastic cuts in service and sharp increases 

in price that will only further drive away and shrink its customer 

base. At the same time, it needs to continue to scrutinize its internal operations and redouble its efforts to be leaner and more costeffective. 

The Postal Accountability and Enhancement Act (PAEA) of 2006, 

which I co-authored with my colleague Senator Carper, provides 

the foundation for many of those changes. The Postal Service, in 

my view, has been slow to take advantage of the flexibilities afforded by that law. But to be fair, other problems not of the Service’s making, including problems with OPM and the severe recession, have also intruded. 

That is why today I am introducing the U.S. Postal Service Improvements Act of 2010. This bill would help the Postal Service 

achieve financial stability, produce additional cost savings and improve customer services. These are strong fundamentals from 

which the Postal Service must rebuild. Let me describe my bill. 

First, the bill would direct the Office of Personnel Management 

to use its existing authority to allow the Postal Service to access 

the more than $50 billion that independent actuaries hired by the 

Postal Regulatory Commission (PRC) have estimated that the Postal Service has overpaid into the Civil Service Retirement System. 

The bill would also provide OPM the authority to allow the Postal Service to access nearly $3 billion that is overpaid into the Federal Employees Retirement System (FERS) pension fund system. It 

is simply unfair both to the Postal Service and to its customers not 

to refund these overpayments. I would also note that it is not just 

the Postal Service’s Inspector General (IG) that has these overpayments, but also the independent actuary the Postal Regulatory 

Commission hired that identified an overpayment, which was a figure lower than the Postal Service IG’s estimate. 

Second, the bill would improve the Postal Service’s contracting 

practices and help to prevent the kind of waste and ethical violations recently uncovered by the Postal Service Inspector General in 

a report that I requested. Several months ago, I asked the IG to 

review the Postal Service’s contracting policies, and, frankly, the 

H605-41331-79W7 with DISTILLER

6 

findings of this audit were shocking. The IG found stunning evidence of ethical lapses and costly contract mismanagement. So my 

bill includes a number of contracting reforms which are in my full 

statement. They include the establishment of a Competition Advocate, who would improve contract competition, transparency, and 

accountability. The bill would also require the Postal Service to 

post justifications of non-competitive contracts above $150,000 on 

its website. Additionally, the bill would limit procurement officials 

from contracting with closely associated entities. There is a whole 

group of contracting reforms. 

Third, the legislation would require the Postal Service to create 

a comprehensive strategic plan to guide the consolidation of its regional and district offices. The IG has estimated that more than $1 

billion could be saved through consolidation. 

Fourth—and Senator Carper has this provision in his bill as 

well—it would allow the arbitrator, when rendering decisions about 

collective bargaining agreements, to consider the financial health of 

the Postal Service. 

Fifth, it would require the Postal Service and the Postal Regulatory Commission to work together to increase the use of Negotiated Service Agreements (NSA), which reduce costs to mailers 

who agree to help the Postal Service process their mail. There are 

advantages to both sides if those are properly implemented. 

Sixth, it would reduce governmentwide workforce costs by reforming the workers’ compensation system. I tried to do this in 

2006 but was only able to get one of the reforms through. This reform would require that an individual who is on workers’ compensation be shifted to the retirement system upon reaching retirement age. Let me just give you a couple of astonishing facts about 

what is going on now. 

Right now, there are 132 postal employees age 90 or over who 

are receiving workers’ compensation benefits. These individuals are 

not out on workers’ comp for a period of time to recover from their 

injuries and then returning to work. These individuals should be 

switched to the retirement system. They are never going to return 

to work at over age 90. There are, in fact, 8,632 postal employees 

age 55 or older who are still on the workers’ comp system. In most 

States, that could not happen. They would be switched to the retirement system upon reaching retirement age. This is a reform we 

should implement governmentwide, as it would bring real savings 

for the Federal Government and for the Postal Service. 

In fact, the Department of Labor (DOL) indicated that it regularly pays worker’s compensation benefits to employees in their 

70’s, 80’s, 90’s and even 100’s. I first tried to get this change 

through a few years ago. This reform is well overdue. 

Seventh, the bill would require the Postal Service to develop a 

plan to increase its presence in retail facilities, or collocate, to better serve customers. The plan must take into account the impact 

on the community, particularly in rural areas. 

I want the Postal Service to prosper, thrive, and survive. This 

valuable American institution with roots in our Constitution must 

be put back on a steady course. I look forward to working with all 

the stakeholders. I am very pleased that my bill has been endorsed 

by the National Newspaper Association (NNA), the Affordable Mail 

H605-41331-79W7 with DISTILLER

7 

Alliance (AMA), PostCom, the Alliance of Nonprofit Mailers, the 

Association of Magazine Media, the Coalition of the 21st Century 

Postal Service, Conde Nast Publication, the American Catalogue 

Mailers Association, the Direct Marketing Association (DMA). In 

addition, we have worked very closely with the National Association of Postmasters and other stakeholders, as well as the National 

League of Postmasters, the National Postal Policy Council (NPPC), 

and a host of other groups. So I hope that we can get this done, 

Mr. Chairman. 

Mr. Chairman, you have been generous with the time, and I appreciate that. I have to return to an Armed Services Committee 

hearing on ‘‘Don’t Ask, Don’t Tell’’ that Secretary Gates and Admiral Mullen are testifying on, so I am not going to be able to stay, 

which I very much regret. But I hope it is an indication of how 

much I care about this issue that I left that hearing to come to this 

hearing to describe my bill, and I look forward to working with you, 

Senator Coburn, and all the people who are here today, many familiar faces—the Chairman of the Postal Regulatory Commission 

and many others—to put the Postal Service back on a sound financial footing. 

Thank you, Mr. Chairman. 

Senator CARPER. Thanks, and we are delighted that you are here 

and look forward to continuing working with you on these important issues. 

Somebody who has been working on the overall deficit issue facing our country is our Senator from Oklahoma, and I just want to 

say publicly thank you for the time and energy. And I have talked 

to others who serve on that Commission with you and have given 

you good reviews, good reports in terms of the serious nature and 

the really productive approach that you have taken to addressing 

the overall challenge, of which this is one. Welcome and thanks for 

joining us. 

Senator COBURN. Thank you, Mr. Chairman. 

I have a meeting at 10:45, and I would like, after I finish my 

short statement, to ask the first questions, if you would permit me. 

Senator CARPER. That would be fine. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. You will be glad to know I do not have a bill. 

[Laughter.] 

I think it is important—while Senator Collins is here and Senator Carper is here, to point out, there is a difference between cash 

flow and profit and loss. The things we are addressing in terms of 

prepayments have nothing to do with profit and loss. They have to 

do with cash flow. I am supportive of what both of you are wanting 

to do in that regard, but it is important in the long term, if the 

post office is to be successful, it has to run a profit. It cannot just 

run a positive cash flow. While we help the cash flow in the short 

term, we cannot take our eyes off the objective of the long term. 

The Postal Service is in a difficult position because the country 

has changed in terms of electronic mail. Everybody recognizes that. 

My hopes would be that we get realistic forecasting rather than desirous forecasting in the future of revenue estimates. You and I 

had a conversation yesterday. It was a very frank, very open, very 

H605-41331-79W7 with DISTILLER

8 

straightforward. I asked you why in the world you would want this 

job. [Laughter.] 

It is kind of like wanting to go in and get four root canals all at 

the same time with no anesthesia. You have big problems in front 

of you, and I know your background, and I know you have vast experience throughout the entire field of the postal organization. I 

will commit to work with both Senator Collins and Senator Carper 

in trying to solve this problem. I do not want us however, to have 

another postal bill. We ought to fix it. The first question I am going 

to ask our Postmaster General is: How do you fix it now? Because 

he knows how to fix it now. Actually, he has the authority to do 

most of it to fix it now. 

When you look at what the biggest problem is with the operations side, it is that their labor costs as a component of their total 

revenues is too high. With revenues shrinking, the tendency, unless 

the labor costs change, is that will grow. You either have to increase revenues or you have to decrease costs. The largest cost, 80 

percent, is labor. So either we have to become more efficient, more 

effective, or we have to markedly expand revenues. 

I have in my home town Economy Pharmacy. Economy Pharmacy 

has a post office. It costs the post office 5 percent of what it would 

cost if they had a free-standing post office. It is one-twentieth. That 

is because the labor is shared. You have a better utilization of 

labor, better time constraints with the labor, but you also have the 

overhead shared in terms of creating that post office. It also will 

fall very good into the idea of creating new products which the post 

office could potentially market. The Postmaster has that authority 

now. He can do a lot of that. 

Will we politically allow him to do what he knows he has to do 

and has the authority to do now to put the post office not in terms 

of the cash flow position but in terms of profit and loss, because 

we can fix the cash flow over the next 10 years, 5 years. Actually, 

it will be about 5 if we do it. But if we do not fix the profit and 

loss, we come right back here in 5 years with the same problem. 

So we have to have both positive cash flow and no losses. I am 

OK if you do not make a profit. I am not OK if you lose money. 

There is a difference between a balance sheet and a profit and loss 

statement and a cash flow statement, and we have to keep that in 

mind as we try to reform the post office; otherwise, we will miss 

our goal of fixing it and making it viable for the future for all the 

people in this country that depend on it. 

That ends my opening statement, Mr. Chairman. 

Senator CARPER. All right. Thank you for that statement. We 

very much look forward to working with you, Tom. 

I am pleased to welcome Mr. Donahoe. Have you testified before—— 

Mr. DONAHOE. Yes, sir. Mr. Chairman. 

Senator CARPER. Before any Committee other than this one? 

Mr. DONAHOE. I testified back in the 1990’s in front of a couple 

House committees back when we had less than stellar service in 

Washington, D.C., and in the early 2000’s with a couple committees 

around what we were doing after the anthrax attacks. 

Senator CARPER. OK. Good enough. Well, we are happy that you 

are here today. 

H605-41331-79W7 with DISTILLER

9 

1The prepared statement of Mr. Donahoe appears in the appendix on page 57. 

Mr. DONAHOE. Thank you. 

Senator CARPER. And we congratulate you on being named as the 

successor to Jack Potter. 

Mr. DONAHOE. Thank you. 

Senator CARPER. Big shoes to fill, but we—— 

Mr. DONAHOE. He did a great job. Thank you. 

Senator CARPER. And we are looking forward to your leadership 

and to working with you. 

I understand that you are currently, at least for another day or 

so, the Deputy Postmaster General and the Chief Operating Officer 

(COO) of the Postal Service, and you have been in that position, 

a dual position, I think for—what?—5 years or so. 

Mr. DONAHOE. Yes, sir. 

Senator CARPER. And in a few hours—when do you actually assume the leadership mantle? Is it tomorrow? 

Mr. DONAHOE. It will be Saturday, but Jack said when he walks 

out the door, I am in charge, so it might be Friday. We will let him 

go home early. [Laughter.] 

Senator CARPER. All right. As I understand it, I think—I had the 

pleasure of meeting with him recently, but I understand you spent 

pretty much your entire career, entire working career, at the Postal 

Service. You began as a clerk in your home town of Pittsburgh, and 

I think you also told me that you had gone to school at the University of Pittsburgh and are a big Panther fan but also an Eagles fan. 

Mr. DONAHOE. Oh, Steelers fan. [Laughter.] 

Senator CARPER. Well, we will have a good time with that. 

In your current capacity, you are responsible for the day-to-day 

operations at the Postal Service, and those operations, as daunting 

as they are, will be growing significantly, I think, very, very soon. 

I understand you and your wife, Janet, have been married for quite 

a while. How many years did you say? 

Mr. DONAHOE. It will be 34 years this year. 

Senator CARPER. Thirty-four years. And you are blessed with two 

sons, Bobby and Terry, and they are in their 20’s, as are my boys. 

We look forward to getting a chance to meet them somewhere along 

the line as well. 

Your entire testimony will be made a part of the record, and you 

are welcome to proceed. 

TESTIMONY OF PATRICK R. DONAHOE,1 DEPUTY POSTMASTER 

GENERAL AND CHIEF OPERATING OFFICER, U.S. POSTAL 

SERVICE 

Mr. DONAHOE. Thank you. Good morning, Mr. Chairman, and 

Members of the Subcommittee. It is an honor to testify for the first 

time as Postmaster General-designate for the U.S. Postal Service 

(USPS), and I thank you for this opportunity. 

I would like to discuss briefly the current state of the Postal 

Service and our plans for returning to profitability and providing 

even better service and value for the American people. 

I would also like to comment on the legislation under discussion 

here today, which I support wholeheartedly. 

H605-41331-79W7 with DISTILLER

10 

Despite recent headlines, the Postal Service does remain a strong 

and motivated organization. The past several years have certainly 

been challenging, but there has also been a great amount of accomplishment. I would like to publicly thank the employees of the Postal Service for their hard work and their accomplishment. We have achieved spending reductions of $3 billion in fiscal year 2010, bringing our total savings over the last 3 years to over $10 

billion. We now have the smallest career complement since the 

Postal Service was reorganized in 1970. During the past 3 years, 

I am pleased to say service, customer satisfaction, and trust in the 

Postal Service has never been higher. However, we have a lot of 

work to do to get to where we need to be financially and adapt in 

a very changing marketplace. 

Mr. Chairman, we recently issued our fiscal year 2010 financial results. Our total losses for the year were $8.5 billion. This is a 

stunning number in many aspects, and it is unsustainable. That 

$8.5 billion figure reflects two payments that we made. One was 

the $5.5 billion payment for legislatively mandated prepayment for 

retiree health benefits (RHB). Another was $2.5 billion for a noncash adjustment for workers’ compensation future accounting adjustments. If you set aside these two payments, you are left with 

our operating results, results that we control. Although first-class 

mail volume had declined last year 6.6 percent, we lost approximately $500 million on our operations, so it was a significant accomplishment to catch that up. 

If you look at the aspects of the business within our control, we 

have done well in responding to the economic conditions. We have 

an opportunity to turn a corner, though, in the future and to 

produce regular operating profits. 

As Postmaster General, I plan to ensure that we get the most out 

of what we can control. My personal vision is that of a profitable, 

nimble Postal Service that competes for customers and has a welldefined, valued role in an ever increasing digital world. Part of that 

vision is to ensure the Postal Service will always be a resource to 

every American business and we will be valued and trusted in 

every American residence. 

The way people in businesses are using the mail is changing, and 

we are adapting to those changes in some fairly significant ways. 

We will continue to adapt and improve the core business and our 

core offering to the American public. 

Everything we do relates to delivering for our customers. That is 

a powerful platform which drives commerce and complements the 

evolving nature of the way that people communicate and conduct 

business in America today, one that ensures the Postal Service will 

remain at the heart of an industry which employs millions of people and generates hundreds of billions of dollars in revenue. 

Even as technology has changed, the Postal Service will remain 

a powerful conduit for businesses to reach residential customers. 

The mail is going to remain the most effective way of reaching customers, and we need to continue to build our business around that 

concept. New investments in tracking technologies and offerings for 

small businesses will also help keep us strong. 

One of my highest priorities is to improve our customer experience. Every interaction with us, whether it is a carrier, a clerk, at 

H605-41331-79W7 with DISTILLER

11 

a kiosk, on the telephone, online, must be a great experience. We 

are looking at all aspects of the way that we interact with our customer and will make big improvements. Part of that strategy is expanding points of access and moving away from some traditional 

post offices in some locations. We think that there are significant 

opportunities to grow our package business. We have been very 

successful with our Flat Rate Campaign, and there is major growth 

in this area which nicely complements the rise in e-commerce. 

More than anything we do, however, we need to continue to be 

leaner, faster, and smarter as an organization. We must be very 

aggressive in realigning the operations of the Postal Service to 

match the declining mail volumes which are projected in this coming decade. 

We need to continue to optimize our network, realign our workforce, reduce energy use and our physical footprint, and drive costs 

out of every aspect of the Postal Service. We will do all of this with 

motivated and knowledgeable employees and with the support and 

collaboration of our customers in the mailing industry. 

I very much appreciate the efforts of you, Mr. Chairman, and the 

introduction of Senate bill 3831, the POST Act. Enactment of this 

measure would provide the Postal Service the flexibility to implement these business strategies faster and more effectively. The current retiree health benefit provision is especially crucial because we 

will not have sufficient funds by the end of the year to make that 

prepayment. 

I also see the POST Act as an important improvement—— 

Senator CARPER. Excuse me. You said by the end of the year. 

Mr. DONAHOE. By the end of next year. 

Senator CARPER. Next year? End of the current fiscal year? 

Mr. DONAHOE. The end of this current fiscal year. I will not be 

able to make that payment on September 30th. 

Senator CARPER. All right. Thank you. 

Mr. DONAHOE. With an inflexible business model, our challenges 

are significant. We do not want to be a burden to the American 

taxpayers, and the POST Act helps ensure that will not happen. 

Our goal is to remain viable for the long term, and with your help 

and a more flexible business model, we will be able to do just that. 

Thank you for your continued engagement on postal issues, and 

I would be more than happy to answer any questions that you 

might have. 

Senator CARPER. Good. Thank you for that testimony. 

I am going to yield to Dr. Coburn for the first questions. Tom. 

Senator COBURN. Mr. Chairman, thank you for that consideration. 

Mr. Donahoe, we had a visit yesterday, and one of the things 

that you advised me is that you have not come to a contract agreement with the rural letter carriers? Is that correct? 

Mr. DONAHOE. Yes, Doctor. 

Senator COBURN. Is it not true that you have the ability right 

now to contract that business out? 

Mr. DONAHOE. We can contract routes that are vacant. That is 

part of our contracting abilities within our contracts with the rural 

carriers. 

H605-41331-79W7 with DISTILLER

12 

Senator COBURN. If they do not come to an agreement, can you 

contract other routes? 

Mr. DONAHOE. That is something we would have to work 

through. I would have to double-check as far as how we would be 

able to work that process. But the contracting provision if there. 

Senator COBURN. Can you, without violating your negotiations, 

tell us what the hang-up is with the rural carriers? 

Mr. DONAHOE. Right now, we have reached impasse. We have 

been talking to the rural carriers about work rules, flexibility, and 

pay. When I say impasse, we have run to the end of the contracting 

time frame. We have the door open still. We would like to still 

work with them. We think there are some opportunities to sit down 

and come up with some creative aspects going forward. We think 

that we need the flexibility in the workforce. We need flexibility 

around how we employ people and the pay associated, and I think 

that the rural carriers, if they do the responsible thing, step up, 

come back, and we can sit down and talk. 

Senator COBURN. All right. I just have one other question. With 

your labor costs now at—80 percent? 

Mr. DONAHOE. 80 percent. 

Senator COBURN. Where do you have to be right now for 2011 to 

break even at the Postal Service? 

Mr. DONAHOE. Well, let us take a look at the finances. As I mentioned before, we had the $8.5 billion loss this year. The way our 

finances look right now, we are projecting an operating loss of $900 

million. That is strictly our revenues less the operating expense. 

We have to add on to that the $5.5 billion payment. That is more 

than cash flow. That is part of our bottom line. 

Senator COBURN. A portion of that, because—does that truly reflect your level of employment today? 

Mr. DONAHOE. The $5.5 billion? 

Senator COBURN. The $5.5 billion. 

Mr. DONAHOE. No. 

Senator COBURN. It actually overstates—— 

Mr. DONAHOE. The $5.5 billion overstates the number of employees. When the law was written in 2006, it was written with the 

provision that we were funding for 757,000 employees. We have 

580,000 today. 

Senator COBURN. Yes, so that is a big difference in the—— 

Mr. DONAHOE. It is a big difference, and one of the things that 

we would definitely look for some help on is restating that part of 

the law. 

Senator COBURN. Yes, and I think that is something that needs 

to be considered in your bill, Mr. Chairman. 

So at what level of labor costs would you be at break-even today? 

Mr. DONAHOE. Well, if you take a look at it from a percentage 

standpoint, we would have to reduce the percentage through driving down costs. 

Senator COBURN. Well, I mean, would you have to have labor 

costs at 70 percent, 72 percent, 74 percent, 68 percent, to be at 

break-even? 

Mr. DONAHOE. Well, it is a function of total cost. If you take a 

look at our business today, in the service business that we are in 

you are going to have a substantial portion of your costs in labor. 

H605-41331-79W7 with DISTILLER

13 

Senator COBURN. I understand that. All I am saying is—— 

Mr. DONAHOE. It is the total cost that has to be considered. 

Senator COBURN. Let me ask you this, then. Since 80 percent of 

your cost is labor cost, how much of the savings do you, having 

somebody that has been experienced in every aspect of the post office, what percentage savings can you get out of that other 20 percent? 

Mr. DONAHOE. Not a whole lot. 

Senator COBURN. All right. 

Mr. DONAHOE. We have transportation costs and real estate costs 

that we can get some savings from. 

Senator COBURN. Yes, so but how much? 

Mr. DONAHOE. Probably, a couple percentage points. 

Senator COBURN. Nothing to hold you to, but—— 

Mr. DONAHOE. I can probably get a percent or two out of there. 

Senator COBURN. OK. So you can get 2 percent there. 

Mr. DONAHOE. Yes. 

Senator COBURN. So the one thing we can all know here, unless 

revenues increase, for you to get to break-even, labor costs have to 

go down, either through efficiency, attrition, or better contracts. 

Mr. DONAHOE. That is exactly correct. 

Senator COBURN. There are only three ways. 

Mr. DONAHOE. You are still going to have the same percentage 

of cost to a large extent because of the nature of the service. It is 

how much that percent actually costs. So what we are looking for 

is—to put it in context, if you have $60 billion in labor costs, we 

would be looking for closer to, say, $55 billion in labor costs. You 

are still going to have the same percent. 

Senator COBURN. No, I understand that, but I am—— 

Mr. DONAHOE. It is a smaller pot. 

Senator COBURN [continuing]. Saying if you had the numbers 

today, what would you have to take off? 

Mr. DONAHOE. It is a smaller number. 

Senator COBURN. I understand—— 

Mr. DONAHOE. We are on the same page. 

Senator COBURN. But also, as those labor costs go down—— 

Mr. DONAHOE. Yes. 

Senator COBURN [continuing]. Your forward-funded pension costs 

go down. 

Mr. DONAHOE. Yes. 

Senator COBURN. Your health care costs go down. They all go 

down. 

Mr. DONAHOE. Yes. 

Senator COBURN. So the fact is we know the numbers, we know 

where we have to get, he knows where he has to get, and we have 

to have the bargaining units recognize this is where it is going to 

go. Because I will tell you, as a member sitting on the Deficit Commission, this short-term change in the cash flow will help you do 

that. After that, it is over. 

Mr. DONAHOE. Yes, we realize that. 

Senator COBURN. Well, I know you realize it. The bargaining 

groups have to realize it as well. The very fact that we have a different health care costs for postal workers than the rest of Federal 

employees is something that has to be changed in the contracts. 

H605-41331-79W7 with DISTILLER

14 

Mr. DONAHOE. We are addressing that with the unions right 

now. They have taken steps in the last contracts to change that, 

and that is something we will be working with them going forward. 

Senator COBURN. Mr. Chairman, I appreciate it so much. And I 

welcome you to this toothache. 

Mr. DONAHOE. Thank you. [Laughter.] 

It is much appreciated. 

Senator CARPER. It is too bad Dr. Coburn is not a dentist. He 

could serve in other ways. [Laughter.] 

Senator COBURN. You just pull them out, don’t you? That is all 

you do. 

Senator CARPER. All right. Let me just start off, Mr. Donahoe, by 

asking you just to make it clear for the record what will happen 

at the Postal Service if Congress does not act on a financial relief 

proposal in the coming months? The Postal Service, as we have 

heard, lost $8.5 billion in the fiscal year that has just ended, and 

I understand that you are projecting more than $6 billion in losses 

in the current fiscal year. I believe that if these projections do bear 

out, the Postal Service will be out of cash and out of borrowing authority—I call it ‘‘out of running room’’—by this time next year, if 

not sooner. What will happen if this occurs? And will the Postal 

Service have to cease—or will the Postal Service have to cease operations at some point? 

Mr. DONAHOE. Let me answer that in a number of ways. First 

of all, let us set up what the finances look like. This year, we are 

predicting a loss of $900 million in our operating funds. That is 

revenue less expense. In September, we will have to write a check 

for $5.5 billion for the retiree health benefits. We cannot write that 

check because we will put ourselves in a negative cash balance of 

$2.7 billion at that point. The budget we have set up this year is 

like the budgets we have had the past few years. We are planning 

on taking 49 million work hours out again this year, and that is 

on top of over 200 million hours the last 2 years. So people are 

stretched. We are doing everything we can to get the efficiencies 

and savings in the organization. 

Of course, looking at revenue, we want to try to grow the top 

line, but with the situation in the economy today, you cannot take 

that to the bank. 

What we would do September 30th is this: We would decide what 

payment not to make. As the Postmaster General, as a member of 

our Board of Governors, we know we have a responsibility for service to the American public. We would continue with our service. We 

would have to make a decision either to not pay the fund or stop 

paying some of our FERS funds early on because in that situation 

that does give us the cash and the breathing room at the end of 

the year. 

Senator CARPER. All right. Thank you. Talk to us a little bit 

about productivity gains and some gains that you have realized by 

virtue of negotiations with the labor unions which represent your 

employees. Talk to us about some of those productivity gains, because they have to be rather considerable. 

Mr. DONAHOE. They are. We are very, very proud of the fact that 

over the last 10 years we have doubled productivity in the U.S. 

Postal Service, and that includes all of the volume loss that we 

H605-41331-79W7 with DISTILLER

15 

have experienced. So people have not only been productive as we 

grew volume in the middle of this decade, but as volume dropped, 

our managers and our craft employees came together very well and 

took substantial costs out of this organization. We have done it 

through process improvement in our processing plants. We have reduced our network. And we have also worked with the unions. I 

will give you an example. 

The National Association of Letter Carriers (NALC) has worked 

very closely with us over the last couple years. We have taken 

13,000 letter carrier routes out, and it has been a very good process, voluntary, working hand in hand. 

What we are most proud of in that time is the fact that we have 

improved our service, measured service on mailbox to mailbox, 

measured service with commercial mail, whether it is first class, 

standard, or the periodicals, and our package business. I would put 

our package service up against anybody, our scanning performance, 

and that has all been done by the great work of our people during 

a pretty trying time. 

Senator CARPER. OK. I probably should have asked this question 

earlier, but you had a number of years to develop your approach 

to management and your approach to managing people in a large 

operation. Why don’t you just take a minute or two and just talk 

to us about how you manage, how you see yourself serving in this 

job. What strengths do you bring to it? And what are some things 

that you will have to learn on the job? 

Mr. DONAHOE. Thank you. I have 35 years in the Postal Service. 

I have been blessed with a great career, nice opportunities. The 

Postal Service is a great place to work because almost anything 

that you want to get involved in you can, and I have had that opportunity. I have been able to move up from a clerk—I was a clerk 

on the work floor in Pittsburgh, Pennsylvania, in 1975 while attending school during the day, and I have had the opportunity to 

come up through the ranks in many different positions, and it has 

really given me a great appreciation for the organization, for our 

customers, and for the entire industry, which I value. 

From a standpoint of my management style, I will tell you I try 

to be as open and engaging as possible. I am very direct. You are 

always going to get a straight direct answer from me. I am, I think, 

a good listener, and that has always helped me to be able to work 

with people to try to resolve problems. I look for win-win situations, and I think even in these trying times that we have right 

now there are win-win situations. And between your help with your 

bill and the work with a lot of people that are in this room today, 

customers and stakeholders, there are some win-wins here. 

Senator CARPER. I like to quote Albert Einstein, who used to say 

a long time ago, ‘‘In adversity lies opportunity.’’ 

Mr. DONAHOE. That is true. 

Senator CARPER. And he was not talking about the Postal Service, but I think it applies here, too. 

This past spring, Postmaster General Potter put forward a plan 

that includes strategies and legislative recommendations for addressing the challenges that the Postal Service faces. What are 

some of the goals, your goals? And how are they similar and maybe 

in some cases different to those laid out by General Potter? 

H605-41331-79W7 with DISTILLER

16 

Mr. DONAHOE. Well, one of the things that I think is critical, and 

I cannot say this enough: The Postal Service is still a very viable 

and important part of the American economy and American society. 

We will deliver 171 billion pieces of mail this year, so it is not 

something that is going to go away tomorrow or the next day. We 

still present more bills than anyone, including the Internet, and 

more people still pay bills through the mail than they pay on the 

Internet. So even though there have been some changes, the American economy still depends on the Postal Service. 

We also do a great job in that same vein from a package perspective. People can come to us, mail packages, and have access to 

37,000 locations across the country. So we are still viable, we are 

still important. 

That said, we did put a plan out last March. I think it was a very 

good plan. It was a balanced plan. And what that plan did, it was 

two things. It said there are some things that we are going to be 

responsible for in the Postal Service. It is growing revenue, and at 

the same time improving the process and taking cost out. And we 

are committed to those, and we are not only on track, we are ahead 

of that last year and this year. And we will stay focused on that. 

The other side of that plan, of course, is the help that we need— 

the help that we need from Congress and the stakeholders around 

some of these issues, like the retiree health benefit, delivery flexibility, and also some retail flexibility. And your bill addresses 

those, and again I want to say thank you for that. 

My own management style ties in very directly with the plan. My 

focus is going to be on four things. 

First, improving the business to customer channel, that is, growing mail. We have to grow revenue. We have to grow the top line 

in this organization. It is critically important. Like Dr. Coburn 

said, when you get involved in taking a look ahead, you either can 

cut costs or grow the revenue. We know we need to grow that revenue. So the focus will be there. We think big business, there are 

opportunities with NSAs and contracts. We will be working closely 

with the Commission on that. We think from a small business perspective there are plenty of opportunities out there. When I look at 

TV, I look at newspaper ads, I will see small businesses advertising 

there on the Internet, and the Postal Service is still the most direct 

way to get in front of a customer’s eyes. So working with small 

business, giving them opportunities for products and services to 

grow their business is one of my focuses. 

The second focus is growing the package business. We have some 

great products out there with the Flat Rate box, and we are introducing some new offers. We have been working with the Commission on that. We are rolling these out. 

The other thing that we are focusing on is scanning visibility 

that will be second to none in the industry. At the end of this calendar year 2011 coming up, we will be there, and that will really 

enhance our package business. We also think that we should be in 

the prime position to handle return packages. With e-commerce 

today, a lot of people buy two things and send one back because 

they are not sure of the size that they have. So we are in right in 

that position because we are going to people’s houses every day to 

pick that mail up. 

H605-41331-79W7 with DISTILLER

17 

The third thing you will see a lot more focus on for me is improving the customer experience. I said that in my opening testimony, 

and I strongly believe that. We do a great job. Our people do a 

great job every day delivering mail. You asked whether I testified 

here before. In 1994, I testified with then-Postmaster General 

Marvin Runyon. Our service in Washington, D.C., was about 50 

percent on time. Service in Washington, D.C., today is 97 percent 

on time. They have done a great job, and we keep our eye on that 

service. 

Now, there are other areas of service than what you see in the 

post office. Is every experience good? No. But we want to get to the 

point where every experience is good, and the same with when you 

pick up the phone or go online with us, every experience has to be 

great, because we know satisfied customers bring us revenue and 

also refer us to other people from a revenue standpoint. 

Finally, the fourth area, ‘‘Leaner, Smarter, Faster.’’ I mentioned 

that in my testimony. We have done a great job from a productivity 

standpoint. There are still opportunities looking at what we do in 

our networks, what we do with our retail. We can continue to take 

costs out by improving our process. 

Smarter, being able to listen to the customers and deliver what 

they need is critical, and that is critical for us to be able to grow. 

And faster means being able to deliver on what we promise. I 

would like to be in a situation, and we are working with our people 

internally and working with the Commission that if one of our people goes out for a package sale, they have a computer. Right there 

they negotiate a price, push a button, sign the contract, done. That 

fast. The process takes way too long now, but moving forward with 

some of the work we can do with the Commission, we want to 

shrink that team and be leaner, smarter, and faster. 

Senator CARPER. Good. When you say ‘‘leaner, smarter, faster,’’ 

do you know what it reminds me of? 

Mr. DONAHOE. What? 

Senator CARPER. What our brand in Delaware has been for some 

years. We are the First State, the first State that ratified the Constitution. In fact, Pennsylvania used to be part of Delaware. 

[Laughter.] 

But our brand is not leaner, smarter, faster, but for years it has 

been smaller, faster, smarter. 

Mr. DONAHOE. Aha. There you go. We are just like Delaware. 

[Laughter.] 

That will be our second line. 

Senator CARPER. You could not pick a better State to emulate. 

It is actually a State that works. 

The bill that I have introduced and described earlier removes the 

legislative restrictions that prevent the Postal Service from exercising its authority to reduce delivery frequency, an authority that 

we provided you in the 2006 legislation. This would allow the Postal Service to carry out its proposal, when deemed necessary, to 

eliminate or modify delivery of mail on Saturdays. This proposal 

has been greeted with some skepticism. What has the Postal Service done to address the concerns that have been raised in recent 

months by those who want to maintain Saturday delivery just as 

it is? What would you say to those out there who argue that the 

H605-41331-79W7 with DISTILLER

18 

enactment of my language that would give the Postal Service the 

authority to go beyond its current proposal and move to 4- or 3- or 

2-day delivery? 

Mr. DONAHOE. Well, first of all, let me echo your comments from 

the statement you made at the beginning of the hearing. We do not 

really want to go to anything less than 6 days. We are, to a large 

extent, forced into that from what we find economically. We have 

lost 20 percent of our volume, and as I said, people have done a 

real nice job picking up the cost. But what you have and what we 

are faced with is a declining revenue per delivery. Every year we 

add a million deliveries on, and if our revenue continues to go 

down, as we have projected, based on a relatively flat mail volume 

but a much more problematic mix, more standard, less first class, 

each year that happens it becomes more and more burdensome to 

deliver 6 days a week to all addresses in America. So we realize 

it is a financial issue that we have to take a look at. 

Now, from a standpoint of the work that we have done around 

6-day to 5-day, I think that we have been very, very thorough. We 

have tried to vet this issue with customers, at all levels, large business, small business, residential. We have done a lot of focus work. 

We have done a lot of survey work. What has come back to us is 

this: 6-day to 5-day delivery is more appealing when you compare 

it to a couple choices. The choices are substantial raises in postage 

rates, 10, 15 percent, when you give a customer those choices. The 

other is closing post offices. 

So what we did, we went back, took all that survey information, 

and we have a proposal out there right now, and our proposal is 

this: We would like to move from 6-day to 5-day in terms of delivering mail, collecting mail, and processing outgoing mail. We would 

maintain a 7-day-a-week network so that remittance volume and 

the rest of the mail that comes through our channels maintains 

service standards. We would also keep post offices open and deliver 

to post office boxes on Saturday so that if you needed to get mail 

on Saturday, you could get a post office box. We would continue to 

deliver Express Mail so if there was something critical, it would get 

delivered. 

Now, as we work through that, there has been a lot of discussion. 

We have talked to the Government Accountability Office (GAO) 

about that and asked them to go through and work with us. And 

we are also open, again, to talking with any other customers going 

forward with concerns that they have. 

We want to make sure that we keep the Postal Service strong 

and that we keep our networks strong and that we are meeting 

customers’ needs. We do not want to do something that would 

hinder business nor hurt those customers. 

Now, as far as looking ahead, revenue per delivery is an issue. 

We think that 6-day to 5-day along with other issues or other remedies that you propose in your bill—the retiree health benefit and 

also giving us some other flexibilities in some cost areas—I think 

that we would be OK with that for a number of years. Eventually, 

if we had to cross the line and go to, say, 3-day delivery, I do not 

think, just looking at our future volumes and what we think we 

can do financially going forward, I do not think we would have to 

cross that threshold for a number of years. But the one thing that 

H605-41331-79W7 with DISTILLER

19 

I do appreciate in your bill, I think it is important that you would 

give the Postal Service, our Board of Governors, the ability to make 

those decisions. 

Senator CARPER. All right. 

Mr. DONAHOE. Thank you. 

Senator CARPER. You mentioned post offices themselves. The 

next question I have may be my last one, but the bill that I have 

introduced would give the Postal Service more freedom to close post 

offices, including post offices that are operating at a deficit. It is 

my goal with this language to give you the ability to close outdated 

facilities that may not be in the best locations and replace them 

with retail outlets that might be less expensive but more convenient for your customers. I think Senator Coburn referred to one of 

those back in Oklahoma, I think in his home town. 

You talked about win-win situations. I look for a lot of those as 

well. The ideal outcome, in my view, would be more not less access 

to postal retail outlets. There is some concern, however, that this 

language could lead to the Postal Service completely abandoning 

some communities, especially rural communities. I just want to ask 

you to take a minute or two to discuss how the Postal Service 

would use the post office language in the POST Act that I have introduced and dispel, if you can, some or most of those concerns that 

have been raised about particularly rural access and other potential problems. 

Mr. DONAHOE. Thank you. We think access to our customers is 

paramount, and that is exactly what we would be focused on. The 

interesting thing about what has happened in the last few years 

from a Postal Service perspective with the introduction of things 

like Click-N-Ship and, of course, more access to stamps and postal 

services in stores like Costco, right now about 35 percent of revenues, retail revenues—stamp sales and postage services—are available and are conducted outside the door of the Postal Service. So 

America is already changing. What we are trying to do is make 

sure that we not only catch up but are also ahead of what their 

needs are. 

I understand your concerns and I understand the concerns that 

we have had from constituents around the country about how do 

you deal with small post offices in rural areas. One of the things 

we are looking at is this: You have to look at where your locations 

are, the viability, and the need. Then also from a standpoint of access you have to come up with some creative solutions going forward, I think, in order to keep us healthy financially. 

I am from western Pennsylvania. In western Pennsylvania, there 

are a lot of small towns and in a lot of these small towns you have 

a post office, a store, and a gasoline station. And one of the things 

we are looking at is should we take some of the postal services and 

contract some of that work out to the local stores that are open in 

many cases almost double the hours we are, and do that at a fraction of the cost that it takes for us to provide those services today. 

It does two things: It provides access to customers; it in some cases 

may keep that store open just because the contract cash flow, as 

Dr. Coburn mentioned, keeps the doors open, and at the same time 

it gives us the opportunity to move away from some expensive real 

estate and some additional costs. We have always worked with our 

H605-41331-79W7 with DISTILLER

20 

employees and I have assured our postmasters as we work through 

this that we would find landing spots for people. We are pretty 

proud of the fact that over the years we have eliminated 200,000 

people in this organization. We have not laid people off. We always 

find landing spots, and we will continue to do that as we shrink 

these networks down. 

Senator CARPER. The last question I want to ask, and I am not 

going to ask you to respond, but I will ask you to respond for the 

record. This Deficit Commission that Senator Coburn and some of 

our other colleagues, other people, a Commission led by Erskine 

Bowles and former Senator Alan Simpson, have submitted a proposal that has caused a fair amount of gnashing of teeth from a 

lot of different sectors. Some people say it has too much taxes. 

Some people say it has way too much cuts in spending. And I think 

the theme that pervades, permeates their proposal is actually a 

sharing of sacrifice that is being asked. And to the extent they are 

asking Federal employees to forgo increases in pay, we need to 

make sure that all of us are being asked to do something, to give 

up a little bit. 

On the issue of benefits, you are going to be looking at the level 

of benefits that postal employees have and what they pay and what 

is provided for them. I would just ask that we keep in mind as 

leaders that we have to lead by example. And that is true for me 

here and for my colleagues, and it is also true for you and our senior management. I will have a question for the record for you to 

respond to in that regard. I would just ask you to keep that in 

mind. 

Mr. DONAHOE. I can respond to this point right now, if you would 

like. 

Senator CARPER. Go ahead. 

Mr. DONAHOE. We have already frozen executive levels going forward this year. Officer pay for 2011 is frozen at 2010 levels. For 

executives in the organization, we have frozen what is called the 

pay band, so you might have somebody that can make a little bit, 

but they cannot make any higher than the pay bands that existed 

in 2010. We agree 100 percent. If you take a look at the Postal 

Service, we are a reflection of what is going on in the U.S. today 

from a cost standpoint. You have to make some decisions, and 

choices have to get made. Your bill puts the opportunity out there 

for the Postal Service and the stakeholders in this organization to 

sit down and make some tough choices. 

The key thing is a healthy Postal Service, a financially healthy 

Postal Service for this industry. We have all got to sit down, management, our Board of Governors, our leaders, postmasters and 

managers, our craft employees, all the customers and all the stakeholders, along with Congress, and make this happen. 

Again, I appreciate your support. We think the bill is great. We 

are looking forward to working with you in the future. 

Senator CARPER. Thanks, Mr. Donahoe. I will close with this 

thought: I mentioned earlier the need for us as a country to move 

away from a culture of spendthrift in the Federal Government to 

a culture of thrift. And we are endeavoring to try to do that, and 

I think it is clear that you are as well. 

H605-41331-79W7 with DISTILLER

21 

One of the things we are trying to endeavor to do in the Federal 

Government is to collect several hundreds of billions of dollars of 

taxes that are owed but are not being collected. We call it the tax 

gap, and the last time we counted, it was about $300 billion a year. 

And so we need to grow our Federal revenues in part by collecting 

taxes that are owed but in some cases not being paid. 

One of the real challenges for the Postal Service—and I think 

you all have done a very good job in raising productivity—working 

with your unions and your employees, a real good job in raising 

productivity and reducing the workforce through attrition, trying to 

be humane about it. The real challenge is to grow revenues, especially in a down economy, which I think is actually starting to get 

better. 

I do not know who you have at the Postal Service whose job or 

jobs it is to think outside of the box, to come up with ways for raising revenues. And we have an obligation to give you a reasonable 

amount of flexibility to do that. But you need to have really, really 

good people on your payroll, and in some cases not on your payroll, 

who can help you think through all the advantages that are out 

there. 

I know that somewhere along the line somebody is going to say, 

‘‘Gosh, why didn’t we think of that years ago? That is such a good 

idea.’’ And I know there are ideas like that, and we just need people out there generating them and, when they are generated, to 

make sure that you can separate out the good from the bad and 

then implement the ones that are most promising, and to talk to 

us if we need to do something to allow you to move forward. 

Well, we have enjoyed this visit. We appreciate your being here, 

and we hope that you will give Jack Potter our best and our 

thanks. 

Mr. DONAHOE. I will. 

Senator CARPER. I will use this in closing. I am a baseball fan. 

I know you are a big fan of the Pittsburgh Panthers. I am a big 

Ohio State Buckeye fan and a Delaware Fighting Blue Hens fan. 

But my favorite baseball team is the Tigers. Ever since I was about 

8 years old. One of the best players who played for the Tigers for 

the last 20, 30 years is a guy named Kirk Gibson, some of you will 

recall. He played for the Tigers for a number of years. He also 

played for several years with the Los Angeles Dodgers. He was a 

guy who played hurt, and one particular season he was badly injured. He was playing with the Dodgers at the time. He suited up 

to play, but he could not play. But he played anyway. And they put 

him in the game. It was the first game in the series, and he came 

up with runners on base, and literally he could barely walk up to 

the plate. And he hit a home run. He could then barely walk 

around the base paths, but he did. And they took him out of the 

game after that. The Dodgers went on to win the World Series, I 

think in four games. And he was the spark that helped them do 

that. 

A couple years later, he went back to the Tigers. Several years 

after that he retired—not at the beginning of the season and not 

at the end of the season, but in the middle of the season. In the 

middle of the season. Kind of unusual. And he held a press conference in the dugout, invited all the press to come in, and he anH605-41331-79W7 with DISTILLER

22 

1The prepared statement of Ms. Goldway appears in the appendix on page 66. 

nounced to them, he said, ‘‘I have been traded’’—and then he said 

‘‘traded back to my family.’’ So you can tell Jack Potter that he is 

being traded back to his family. 

Mr. DONAHOE. I will do that. 

Senator CARPER. With our thanks. All right. Thank you so much. 

Mr. DONAHOE. Thank you. 

Senator CARPER. And we will ask our witnesses to come forward 

for our second panel: Ms. Goldway, Mr. Foley, and Mr. Herr. 

[Pause.] 

Welcome one and all. Our next panel is Ruth Goldway, Chairperson of the Postal Regulatory Commission. Ms. Goldway was elevated to her position in August 2009. She has been a member of 

the Commission since 1998. Welcome. Nice to see you. 

Next we have Jonathan Foley. Mr. Foley is the Director of Policy 

and Planning at the Office of Personnel Management. He has over 

55 years of experience—no, I am just kidding. Twenty-five. Twentyfive years of experience in health policy and management. Mr. 

Foley, very nice of you to come. 

And, finally, we have Phillip Herr, also known as Phil Herr. It 

is interesting. Your name is spelled P-H-I-L-L. Is that the way you 

spell it? 

Mr. HERR. No, sir. But it is close enough. 

Senator CARPER. Well, you can never have too many ‘‘L’s’’ in your 

name, I suppose. But, Mr. Herr, we are delighted you are back, and 

you serve still as, I think, Director of Physical Infrastructure Issues 

at the Government Accountability Office. We are trying to get you 

guys a new permanent Comptroller General over there. We had a 

hearing, I think in this room. 

Mr. HERR. Yes. 

Senator CARPER. With Gene Dodaro a couple days ago. He did a 

nice job. He never uses notes. He has testified any number of 

times. I have never seen him use a note either for his testimony 

or for responding to questions. The only other person I have ever 

seen do that was Chief Justice John Roberts who in his hearings 

never used a note. You are all welcome to use notes, by the way. 

Mr. Herr has been with GAO since 1989 and manages a broad 

range of issues there, including postal issues. So you have plenty 

to do. 

We are grateful to all of you for being here. Your entire testimonies will be made part of the record, and, Ms. Goldway, why 

don’t you proceed first. 

TESTIMONY OF THE HON. RUTH Y. GOLDWAY,1 CHAIRMAN, 

POSTAL REGULATORY COMMISSION 

Ms. GOLDWAY. Thank you, Senator Carper. Good morning, Chairman Carper, and I want to acknowledge the Subcommittee Members who have attended but had to leave. Thank you for the opportunity to present the Commission’s comments on the POST Act. We 

also want to gratefully acknowledge Postmaster General Potter’s 

long record of service and warmly welcome Postmaster General 

designee Pat Donahoe. 

H605-41331-79W7 with DISTILLER

23 

The 2006 PAEA’s price cap and service standard provisions successfully forced cost reductions and quality improvements. The Act 

also wisely included the opportunity for future reform. In fact, a 

key provision of the POST Act is based on a pension cost study authorized by the PAEA and completed by the Commission. Using the 

best actuarial practices identified in our study, the POST Act directs OPM to recalculate the allocation of postal pension costs. The 

actuarial analysis we conducted indicates that this could benefit 

the Postal Service by as much as $55 billion. Further, the POST 

Act would allow these funds to be used to defray the Postal Service’s liability for future retiree health benefits. 

In the Commission’s recent exigent rate decision, we identified the $5.5 billion annual payment to this fund as the single biggest 

cause of the Postal Service’s financial difficulty. In an earlier 

PAEA-directed study, the Commission determination that the Postal Service’s Retiree Health Benefit Fund Liability might be reduced 

by nearly $35 billion is calculated on its current workforce using 

dynamic, long-term medical inflation rates. The Postal Service’s annual payments could then be reduced by $2 billion while meeting 

the obligations of the original law. Continuing postal workforce reductions seem inevitable. Therefore, it may be prudent to require 

adjustments of this liability in new legislation. 

The POST Act proposes to provide the Postal Service with increased operational and competitive flexibilities. The Commission 

supports further reform. However, we have questions about how 

provisions in this bill might negatively affect service, access, and 

the competitive marketplace. We believe that appropriate safeguards and oversight are needed where new flexibilities are authorized. 

The bill would allow the Postal Service to furnish property and 

services for compensation to state and local governments, as it now 

does successfully with Federal agencies. Appropriately applied, this 

promises to be beneficial to both the State and local level and for 

the Postal Service. The Commission is less sure of language in the 

bill to allow unregulated use of Postal Service mail networks and 

technologies to provide new non-postal services. The authority is 

very broadly defined, and it is difficult to assess how it will be 

used. 

In reviewing non-postal services under the PAEA, the Commission is directed to consider ‘‘the public need for the service and the 

ability of the private sector to meet the public need for that service.’’ Would this kind of public interest standard apply to non-postal services authorized by the POST Act? 

Current law also authorizes the Commission to oversee and regulate Postal Service market tests, both to protect the public interest 

and to promote positive outcomes for the Postal Service. Would this 

be affected as well? The Commission strongly believes that prior 

regulatory review has been effective under the PAEA and should 

be required if the Postal Service’s competitive flexibility is expanded. 

The POST Act would also allow the Postal Service to reduce the 

frequency of mail delivery service and to more easily close post offices. The Commission expects to issue its advisory opinion later 

this month on the Postal Service’s 5-day delivery plan. We have 

H605-41331-79W7 with DISTILLER

24 

1The prepared statement of Mr. Foley appears in the appendix on page 71. 

held a dozen public hearings on this issue and developed a substantive evidentiary record that we are now reviewing. I will reserve comment until the opinion is issued later this month. However, I would ask whether the POST Act would allow the Postal 

Service to reduce delivery service to 4 days or 3 days without prior 

review. This possibility was not a focus of our hearings. 

Earlier this year, the Commission issued an advisory opinion on 

a Postal Service proposal for station and branch closings. We acknowledged the Postal Service’s discretion in adjusting its retail access as long as universal service is maintained. However, in the decision we recommended that a standardized review process be developed and consistently applied to all post offices, stations and 

branches if closures are to occur. The 10-day notice now given to 

stations and branches is inadequate. 

Since 1976, the Postal Service has been required to give post office customers at least a 60-day notice of its intention to close a 

post office, and affected customers have 30 days to appeal to the 

Commission. We found that such notice and due process should be 

available to all customers. To customers, a post office by any name 

is a post office. The Commission’s longstanding practice does not 

recognize the difference either. A legislative clarification on this 

issue would assist the Commission and, more importantly, assist 

citizens in addressing their concerns. 

In closing, I would like to thank Senator Carper and Senator Collins for putting forward possible reforms to the PAEA and thank 

all the Subcommittee Members for their thoughtful oversight and 

support of the Postal Service. I must emphasize that a resolution 

of the pension and retiree health benefit issues is the key to real 

reform. The Postal Service must have manageable financial obligations if it is going to effectively manage its operations, serve its 

customers, and improve for the future. 

Thank you. 

Senator CARPER. Thank you, Madam Chairman. 

Mr. Foley, please proceed. 

TESTIMONY OF JONATHAN FOLEY,1 DIRECTOR OF PLANNING 

AND POLICY ANALYSIS, U.S. OFFICE OF PERSONNEL MANAGEMENT 

Mr. FOLEY. Chairman Carper, I am pleased to be here today on 

behalf of Office of Personnel Management Director John Berry. 

OPM commends you in your efforts to help the Postal Service stay 

financially viable, and we share in your commitment to do so while 

maintaining our fiduciary responsibility to the Civil Service Retirement and Disability Trust Fund. 

Senate bill 3831 readdresses the issue of how responsibility for 

the retirement costs of pre-1971 postal employment should be apportioned. The underlying question is whether the Treasury or the 

Postal Service should be responsible for the effects of postal pay increases on the value of that service in computing CSRS annuities. 

Given prior discussions, I will only provide a brief outline of relevant history. 

H605-41331-79W7 with DISTILLER

25 

In 1973, Congress enacted Public Law 93–349 which established 

the policy, then supported by the Postal Service, that it would accept responsibility for the effects of pay increases on annuities. In 

2003, the Postal Service first suggested that OPM transfer responsibility for the effects of postal pay increases to the Treasury. After 

careful consideration by OPM and it’s Board of Actuaries, OPM determined that the original apportionment method complied with 

the law. This past January, the Postal Inspector General issued a 

report again raising the apportionment issue and asserting a $75 

billion overpayment. 

In June, the Postal Regulatory Commission issued the results of 

a Segal Company study on the apportionment methodology. The 

Segal report only addressed one aspect of the complicated funding 

arrangement and did not discuss the historical context of the issue. 

Segal acknowledges this by stating that its ‘‘recommendation is, in 

essence, a 2010 fresh look, and does not attempt to deal with the 

history accumulated over [40] years since the [Postal Reform Act] 

was enacted.’’ 

The Segal-proposed methodology was a slight variation on the Postal IG’s proposal and suggested a $50 to $55 billion overfunding. The PRC also suggested that the PAEA gave OPM authority to reapportion responsibility for pre-1971 service as part of the 

redetermination process. Enacted in 2006, the PAEA’s primary purpose was for the Treasury to take responsibility for the cost of military service credit in the computation of Postal Service annuities, 

leading to a savings of $28 billion to the Postal Service. 

The law further provided for a review process initiated at the request of the PRC for OPM to reconsider any determination or redetermination made by the Office of Personnel Management under 

this section. The PRC asserted that this reconsideration authority 

permitted OPM to make the reallocation. We believe the assertion 

that OPM has the discretion to make basic changes in the allocation method between the Postal Service and the Treasury goes beyond the intent of and the authority provided to OPM in PAEA. 

The reconsideration process provided for in section 802(c) of the 

PAEA allows for the appeal and review of OPM’s specific calculations of the annual supplemental liability determination according 

to the established fund allocation methodology. For example, 802(c) 

allows reconsideration of the population or accounting data underlying the annual liability determination but not of the allocation 

methodology. Thus, the question of whether there should be a 

change in the apportionment of responsibility is one that is appropriate for consideration by Congress. 

Our comments on Senate bill 3831 are limited to section 2, which 

would transfer responsibility to the Treasury for the effects of postal pay increases on the value of pre-1971 Postal employment in 

computing CSRS annuities, a change estimated to be $50 to $55 

billion. It would also permit the resulting Postal Service surplus to 

be used at the discretion of the Postal Board of Governors to satisfy 

the $5.5 to $5.8 billion annual payments to the Postal Retiree 

Health Benefits Fund (RHBF) for fiscal years 2010 through 2016. 

OPM’s principal roles in this matter are those of program administrator and trust fund fiduciary. As such, our primary concerns are 

with the efficient operation and reliable funding of the retirement 

H605-41331-79W7 with DISTILLER

26 

1The prepared statement of Mr. Herr appears in the appendix on page 74. 

and insurance programs. As a fiduciary, our main concern is with 

the adequate funding of the program and not with the source of 

that funding. Since Senate bill 3831 will not change funding levels 

for CSRS but only the source of those funds, OPM takes no position 

at this time as to the substance of section 2. However, we do have 

concerns regarding certain technical aspects of that section. We 

previously provided technical assistance on the draft bill and would 

be pleased to work further with the Subcommittee on this matter. 

I appreciate the opportunity to appear before you today and 

would be pleased to answer any questions you may have. 

Senator CARPER. Thank you. Thank you very much for that testimony, sir. We look forward to continuing to work with you. 

Mr. Herr, you are on. Thanks. 

TESTIMONY OF PHILLIP HERR, DIRECTOR,1 PHYSICAL INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY 

OFFICE 

Mr. HERR. Chairman Carper, I am pleased to be here today to 

participate in this hearing on proposed legislation to address the 

Postal Service’s challenges. 

Just 4 years after postal reform legislation was passed, Congress 

is again faced with an array of pressing issues that must be addressed to put the Postal Service on sound financial footing. Today 

I will first discuss the Postal Service’s financial condition and outlook; second, why the Postal Service needs to continue to modernize 

and restructure; and, third, key issues that need to be addressed 

by postal legislation. 

In fiscal year 2010, mail volume decreased about 6 billion pieces 

from the previous fiscal year to 171 billion pieces, about 20 percent 

below the peak in 2006. Most of the volume declines were in profitable first-class mail. Revenue declined $1 billion to $67 billion. 

Total expenses, as has been discussed, increased to nearly $76 billion, resulting in a loss of $8.5 billion. Outstanding debt also increased to $12 billion. Projections for the current fiscal year call for 

outstanding debt to reach $15 billion, the statutory limit, with a 

$2.7 billion cash shortfall. 

Given this financial picture, the Postal Service must continue to 

modernize and restructure to become more efficient and control 

costs. Key challenges include declining mail volume, stagnating 

revenues, realigning processing and retail facilities, and addressing 

compensation and benefit costs of about $60 billion, close to 80 percent of total costs. 

Proposed postal legislation provides a starting point for decisions 

that will involve difficult trade-offs. S. 3831 would require OPM to 

recalculate the Postal Service’s pension obligation and authorize its 

transfers to the Retiree Health Benefits Fund. These changes could 

increase the government’s pension obligations by the amount transferred and raise the deficit. 

With regard to postal retiree health care, we agree that Congress 

should consider modifying the cost structure of this program in a 

fiscally responsible manner, with the Postal Service funding its obligations to the maximum extent possible. In addition, we also conH605-41331-79W7 with DISTILLER

27 

tinue to favor a requirement that arbitrators consider the Postal 

Service’s financial condition if the Service and its unions go to 

binding arbitration. Action is also needed to right-size postal networks and its workforce, as S. 3831 recognizes. In this area, we 

agree that Congress needs to address the constraints and legal requirements that have limited progress in this area. The Postal 

Service continues to move its retail services to more convenient locations which facilitates both improving service and right-sizing its 

retail network. 

S. 3831 would also loosen current law to permit the Postal Service to introduce new non-postal products. This raises several questions. In what areas should the Postal Service be allowed to compete with the private sector and how would fair competition be assured? Would the Postal Service be subject to the same regulatory 

entities as its competitors? And would losses, if any, be borne by 

postal ratepayers or taxpayers? 

Just this past March, the Postal Service reported that if it entered banking or sold consumer goods, its opportunities would be 

limited by its high cost structure and relatively light customer traffic. Only about 600 customers obtained window service at a post office in an average week. The Postal Service also said that entering 

a number of non-postal areas would not be viable because of its net 

losses and limited access to cash to support investment. 

In closing, the need for additional postal reform has arrived as 

the use of mail continues to change. Congress and the Postal Service need to reach agreement on a comprehensive package of actions 

to enable such changes, and GAO is happy to work with your Committee going forward on this. 

This concludes my statement, and I would be happy to answer 

any questions. 

Senator CARPER. Good. Again, thanks for working with us and 

for all the good that you do. We appreciate very much your willingness to help us as we move forward from this day. 

Let me ask a question of—this is not a question I anticipated 

asking, but it has, I think, become an important question to ask 

in light of some comments that Pat Donahoe made and maybe one 

or two of you have in your testimony. 

Earlier in the hearing, you may recall Mr. Donahoe suggested 

that the retiree health payment or prepayment schedule in law 

today may be even more aggressive than we thought if you take 

into account the significant reductions in the postal service’s employees head count over the last 7, 8 years. And I think he indicated that some further reductions are likely give improvements in 

productivity and just doing things smarter, but some further reductions are planned in that regard. 

Let me just ask, what are your thoughts—I think at least one of 

you mentioned this in your testimony, but what are your thoughts 

on the size of the payments or prepayments for health benefits for 

retirees in light of these developments? ‘‘These developments’’ 

being specifically reductions of several hundred thousand people in 

head count in anticipation of some further reductions going forward. 

I do not care who goes first. Mr. Herr, do you want to go first? 

H605-41331-79W7 with DISTILLER

28 

Mr. HERR. Senator Carper, last spring we completed a report 

looking at the Postal Service’s business model, and as part of that, 

we worked with OPM’s actuaries and the Postal Service to get updated staffing projections. We did two things in that report: One, 

we talked about what the pay-as-you-go cost might be, and then 

also looked at an actuarial estimate of reamortizing those costs. So 

in a sense, we did try to provide some updated figures in that report, and we lay out some of the context for that. 

Ms. GOLDWAY. And I would add that the work that we did on 

this in 2009, which included both a reduction in employees, and an 

adjustment in the actuarial process, estimated that at the end of 

the payment period you would have paid 80 percent of the liability 

by paying $2 billion less per year. If you then, after 2016 factor in 

further employee reductions, you might be able to justify an even 

lower annual payment that would get to the goal of assuring that 

the Postal Service has paid at least 80 percent of its health care 

retiree benefit liability. 

Senator CARPER. OK. Thank you. 

Mr. Foley, your thoughts, please? You have probably thought 

more about this than anybody. 

Mr. FOLEY. Well, we would be happy to continue to provide technical assistance, as Mr. Herr referenced, on this matter. We do not 

have a specific level or recommendation for you, but we would be 

pleased to continue to provide assistance to the Postal Service and 

GAO and the Congress on the exact level. 

Senator CARPER. OK. Thanks. 

A question, if I could, for Mr. Herr and Ms. Goldway. Another 

provision in the bill that I introduced would loosen the restrictions 

and allow the Postal Service to engage in certain non-postal activities that might take advantage of the Postal Service’s retail, processing and transportation network. There is some fear, however, 

that this might lead to the kinds of failure that were seen in years 

past when the Postal Service dabbled in e-commerce activities, and 

there is also some concern about the impact this might have on private businesses. 

How might we modify the language in the POST Act on non-postal products to address the concerns that you and others might 

have? Ms. Goldway, do you want to go first on that? And then Mr. 

Herr. 

Ms. GOLDWAY. Well, I think in my testimony I suggested that 

some of the language that is in the PAEA now that gives standards 

or benchmarks for what a non-postal product should be might be 

included in new legislation so that it is better defined. And then 

I do think that some sort of prior review, at least on broad categories of non-postal services, would be necessary. 

We have seen examples of where non-postal activities have lost 

ratepayers money, and we had some issues in which it appeared 

that the Postal Service was engaged in a contract for a non-postal 

product in direct competition with the private sector, and the private sector was very concerned about that. The Postal Service’s 

vast network, its monopoly status, gives it, in some ways, a preferred status to work with non-postal products. So I think some 

form of regulation in your bill is necessary. 

H605-41331-79W7 with DISTILLER

29 

But I would agree that diversification is essential if the Postal 

Service is going to survive into the future. In principle, I certainly 

support that effort. 

Senator CARPER. OK. Thanks. Mr. Herr. 

Mr. HERR. As Chairman Goldway referenced, there is a provision 

in PAEA that would permit a review at the PRC. I think given the 

uncertainty about what some of these changes are, continuing to 

have that oversight mechanism in place to ensure that there is not 

cross-subsidization occurring is important. I also think it would be 

an important venue for the public and for Congress to understand 

the kinds of things the Postal Service is interested in entering into. 

It is hard now to get a firm idea on what that is, what niche of 

the market is underserved now, where might they be able to move 

in and add value, what is the potential for profitability and really 

adding to the bottom line, which has been discussed here today, 

but to help people understand and work through what some of 

those issues are. I think that venue would be a potential place to 

do that. 

Senator CARPER. I will close this part of the hearing with this 

comment. I am reminded—there are no silver bullets when it 

comes to helping meet the fiscal challenges of the Postal Service. 

But there are a lot of BBs, big BBs, that can be helpful. I am reminded, as we heard first from Mr. Donahoe and now from each 

of you, that collocation can work both ways. It can be locating a 

post office in an existing retail outlet which would actually provide 

better service, could provide better service if we are smart about 

it, and collocation where other services that might reasonably be 

provided in a post office could be provided and, again, serve as a 

benefit to the folks in that community. So hopefully we can, if we 

are looking for ways to think outside the box, we can do that. 

Ms. GOLDWAY. That is a great idea. 

Senator CARPER. All right. At 11:30, another meeting has begun, 

and it is a meeting, a briefing on the report, the recommendations 

of this Deficit Reduction Commission that Erskine Bowles and Alan 

Simpson have led. I want to go to that meeting, but I am going to 

excuse this panel, and I want to invite our next panel to come forward to present their testimony. I have other questions for this 

panel that I would like to submit for the record, and I would just 

appreciate it if you would respond to those. 

Ms. GOLDWAY. Thank you. 

Senator CARPER. Yes, thank you all. 

All right. As our second panel takes their leave, I will ask our 

guests to lower their voices please, and I will now have the pleasure of introducing our third and final panel. 

The first witness on panel three is no stranger. We are happy to 

see you again and thank you for your leadership and thank you for 

your thoughtful leadership. Thank you for being here with us 

today. It is Fred Rolando, who is the President of the National Association of Letter Carriers. Being president today is a tough job, 

whether it happens to be President of the United States or President of the National Association of Letter Carriers. But we are 

happy that you are and that you are here today. We look forward 

to your testimony. 

H605-41331-79W7 with DISTILLER

30 

1The prepared statement of Mr. Rolando appears in the appendix on page 89. 

Another president, Bob Rapoza, President of the National Association of Postmasters of the United States. Bob, welcome. We are 

delighted you could be with us today. 

Finally, Jerry—I will probably butcher your name. Is it Cerasale? 

Mr. CERASALE. Close. 

Senator CARPER. Cerasale. I am sorry. Jerry Cerasale is the Senior Vice President for government affairs at the Direct Marketing 

Association and is testifying today on behalf of the Affordable Mail 

Alliance. It is nice to see you. Thank you so much for coming. 

Again, as I said with previous witnesses, your entire testimony 

will be made part of the record, and you are welcome to summarize 

that. I would ask you to try to keep it to about 5 minutes so I will 

have time to ask you some questions. Again, thank you. 

Mr. Rolando, please proceed. 

TESTIMONY OF FREDRIC ROLANDO,1 PRESIDENT, NATIONAL 

ASSOCIATION OF LETTER CARRIERS, AFL–CIO 

Mr. ROLANDO. Thank you. Good morning, Chairman Carper. On 

behalf of the nearly 290,000 members of the National Association 

of Letter Carriers, I thank you for allowing me the opportunity to 

summarize my written testimony on the Chairman’s proposed 

POST Act of 2010. 

The past 4 years of recession have been the most difficult in postal history with the Postal Service reporting losses of more than $20 

billion. But these figures are misleading, and I will explain why. 

The three main causes for the Postal Service’s losses are, by importance, the $20.9 billion cost since 2007 of pre-funding future retiree health benefits, declining mail volume caused by the recession, and the Internet diversion. Conventional wisdom often flips 

the order of these factors, but absent the pre-funding congressional 

mandate of 2006, which no other institution in America faces, the 

Postal Service would have had a net surplus of $611 million in the 

past 4 years despite the worst recession in 80 years and despite the 

Internet. 

Pre-funding is optional in the private sector. No other company 

comes close to allocating 8 percent of its operating revenues to prefund future retiree health as the post did in the year 2010. For example, AT&T allocated just 2 percent of its revenues to pre-funding. 

I want to thank Senator Carper for taking the lead by introducing S. 3831. Though we cannot support all of its provisions as 

drafted, we believe it gets the two most important policy issues exactly right. 

First, to help stabilize the Postal Service’s finances, the POST 

Act would relieve the burden of pre-funding future retiree health 

benefits by letting the Postal Service use the $50 to $75 billion surplus in its civil service pension account to cover the pre-funding 

payments. This is a responsible approach supported by the entire 

postal industry—management, labor, and the mailers. I would also 

like to thank Senator Collins for her tireless work on OPM’s authority to transfer our surplus pension funds. 

H605-41331-79W7 with DISTILLER

31 

Second, we think section 3(b) of S. 3831 will spur innovation that 

is needed to preserve universal mail service by permitting the Postal Service to partner with companies, nonprofits, and State and 

local governments to use its retail, its processing, and its delivery 

networks to offer new services. NALC believes that such innovation 

can help spur economic growth and it can create jobs inside and 

outside the Postal Service. In May, we will sponsor an international conference on postal innovation in Washington, D.C., in an 

era of rapid change where communications are a key for economic 

and national security purposes. We should strengthen, not weaken, 

our universal communications networks. 

However, we strongly oppose both section 3(e) regarding the arbitration of labor disputes and section 3(g) on the frequency of mail 

delivery, and I will address each in turn. 

Under the current interest arbitration process, an arbitration 

board must give labor and management a full and fair hearing, and 

arbitrators are bound to consider all the evidence presented by the 

parties when rendering their decisions. This is in section 1207(c)(2) 

of Title 39. The proposed changes to this section of the law would 

prioritize three managerial objectives. That would needlessly disrupt the balance and fairness of the existing process for resolving 

collective bargaining impasses in the Postal Service, a process 

which has assured peace for four decades and served the parties 

and the public very well. 

The Postal Service’s so-called fact sheet on arbitration says that 

arbitrators are not required to take the fiscal health of the Postal 

Service into account. This is flatly untrue. Arbitrators must consider all evidence that is given to them by the parties, and in reality, evidence and testimony on the financial condition of the Postal Service has been provided to every arbitration board that has 

been established. Therefore, giving this issue special status along 

with the other managerial objectives such as the comparability 

standard in compliance with rate-setting rules is unwarranted. 

Sadly, we believe that this misleading information has been accepted as fact by this Subcommittee. 

At the markup of S. 1507 in July 2009, Senator Coburn introduced the language requiring arbitration boards to consider the 

Postal Service’s financial condition when rendering a decision. He 

argued that current law prohibits arbitrators from considering the 

financial impact of the competing contract proposals. This is, as 

noted, completely inaccurate. Let us not fix what is not broken. 

The other major provision we oppose would give the Postal Service, free of congressional oversight, the power to reduce the frequency of delivery from the current mandated 6 days per week. 

Doing away with Saturday delivery would save little money while 

risking the loss of much more revenue over time by driving customers away, and it would eliminate 80,000 decent jobs during a 

recession. Congress would essentially be outsourcing a key public 

policy decision to whoever occupies the position of Postmaster General at any given time. There would be no way to prevent the Postal Service from dropping 2 or even 3 days of delivery per week to 

meet short-term cost-cutting targets. This would destroy the Postal 

Service. 

H605-41331-79W7 with DISTILLER

32 

1The prepared statement of Mr. Rapoza appears in the appendix on page 102. 

Both the Obama administration and a bipartisan majority of the 

House of Representatives that has cosponsored House Resolution 

173 oppose eliminating Saturday delivery, and we urge you to reject this proposal as well. 

Let me conclude by thanking Senator Carper and Senator Collins 

for your years of diligent work on postal issues. Fortunately, the 

challenges that are facing the Postal Service are not partisan in 

nature, and we are convinced that, working together, we can resolve them. NALC has demonstrated repeatedly in recent years it 

is willing to do its part to help preserve the long-term viability of 

the Postal Service. We are prepared to work with this Subcommittee to craft legislation that will maintain the integrity of the 

Postal Service while serving the American people and helping businesses that rely on universal service prosper. 

Thanks again for inviting me to testify, and I am ready for any 

questions. Thank you. 

Senator CARPER. Thank you, President Rolando, and thank you 

not just for your testimony but for the spirit in which it was prepared and delivered. Mr. Donahoe already spoke to the terrific cooperation and sense of team that has existed for years, and I think 

he specifically mentioned the NALC. So we appreciate the fact that 

is there and it is going to continue. We need that. Thank you. 

Mr. ROLANDO. Thank you. 

Senator CARPER. Mr. Rapoza, please proceed. Your whole testimony will be made part of the record. 

TESTIMONY OF ROBERT J. RAPOZA,1 NATIONAL PRESIDENT, 

NATIONAL ASSOCIATION OF POSTMASTERS OF THE UNITED 

STATES 

Mr. RAPOZA. Thank you, Chairman Carper and Members of the 

Subcommittee. I am Robert Rapoza, President of the 38,000-member National Association of Postmasters of the United States 

(NAPUS). NAPUS represents the managers in charge of post offices. Postmasters guarantee your constituents accessibility to essential postal services. 

The Constitution established post offices as a Government responsibility. Aggressive congressional oversight acknowledges this 

congressional obligation, and postmasters thank you for the attention that this Committee provides. 

NAPUS strongly supports legislative efforts to revitalize the 

Postal Service through accurately recalculating the agency’s CSRS 

pension obligations. The present formula is inequitable and unfairly saddles the Postal Service with at least $50 billion more than 

is justified. 

NAPUS commends the Chairman and Senator Collins for their 

bills which seek to legislatively shoehorn the PRC-recommended 

methodology into law. These provisions would determine the Postal 

Service’s true pension obligation. Moreover, NAPUS supports the 

provisions that enable the Postal Service to use its pension surplus 

to reduce its retiree health care liability. 

In addition, NAPUS supports efforts to provide the Postal Service with access to surplus pension payments to FERS. We believe 

H605-41331-79W7 with DISTILLER

33 

that Congress should enact these provisions as soon as possible. 

Furthermore, NAPUS urges Congress to enact a pension liability 

recalculation provision independently of any other postal legislation. We believe inclusion of controversial provisions may delay essential postal relief. 

NAPUS acknowledges and has actively participated in the past, 

and are currently participating in the development of strategies to 

streamline operations and reduce costs. However, we are deeply 

concerned about the elimination of the prohibition against the closing of post offices solely for being unprofitable. 

We are also concerned about striking the requirement that the 

Postal Service provide a ‘‘maximum degree of service’’ to rural 

areas. We consider these two provisions essential to universal service. 

Just yesterday, the so-called Deficit Reduction Commission performed a terrible disservice by incorrectly suggesting that closing 

post offices or reducing delivery frequency has an impact on the 

Federal deficit, and that the 1-year deferral of the USPS transferring a sum of its own postage revenue from one account to another 

as a bailout. Quite to the contrary. In fact, the Postal Service has 

unfairly subsidizing the Federal budget for years. However, having 

said that, NAPUS strongly believes that the Postal Service should 

cut expenses that do not impact postal services. 

For example, the postal IG identified postal area and district offices as ripe for aggressive pruning, and NAPUS agrees. According 

to the IG, the cost of maintaining area and district infrastructure 

totals $1.5 billion. That is about three times greater than the cost 

of providing convenient postal access to small-town and rural communities through the post offices. 

My 44 years of postal experience convinces me that trimming the 

postal bureaucracy would advance postal efficiency. NAPUS recognizes that the proper deployment of convenient access points may 

generate new revenue. However, we are concerned that the Postal 

Service may exploit this effort as a pretext to close post offices. 

Postal contractors are not accountable to the community. They do 

not offer the full menu of postal products and services, and can be 

closed for no reason whatsoever, thereby denying the communities 

access to essential postal products and a postal facility. Consequently, NAPUS supports the preservation of current law relating to post office closings, which do not place unreasonable obstacles before the Postal Service. 

It is crucial to note that the post office is the community’s 

‘‘touchpoint’’ to the Federal Government and to universal service. 

Rural and small-town post offices provide the essential access point 

for citizen mailers who are the customers most reliant on a universal service. NAPUS feels that the Postal Service is not fully 

maximizing its retail network. Consequently, NAPUS supports the 

provision in S. 3831 to provide expanded opportunities for the 

agency to raise revenue. 

As I testified in June, NAPUS believes that the wide distribution 

of post offices is an asset, not a liability. It offers tremendous opportunities to partner with State and local governments as well as 

commercial interests to provide identity verification and licensing 

and permitting services. 

H605-41331-79W7 with DISTILLER

34 

1The prepared statement of Mr. Cerasale appears in the appendix on page 116. 

Mr. Chairman, the Postal Service has entered a new phase in its 

evolution. The only way that it will remain viable is to be treated 

equitably and to offer the American public and business community 

accessibility and the products they desire. We must be careful of 

using Band-aid fixes as we search for lifelong changes that will enhance our postal assets. NAPUS looks forward to working with 

you, and we continue this journey together. Thank you. 

Senator CARPER. Yes, we do. Thank you, Mr. President. Mr. 

Cerasale. Cerasale, is that correct? 

Mr. CERASALE. That is correct. 

Senator CARPER. Has your name ever been mispronounced? 

Mr. CERASALE. No. [Laughter.] 

Senator CARPER. I bet it has. 

Mr. CERASALE. You are the first. 

Senator CARPER. I bet it has. 

Mr. CERASALE. I answer to anything close usually. 

Senator CARPER. Mr. Cerasale, please proceed. Thank you. 

TESTIMONY OF JERRY CERASALE,1 SENIOR VICE PRESIDENT, 

GOVERNMENT AFFAIRS, DIRECT MARKETING ASSOCIATION, 

INC., ON BEHALF OF AFFORDABLE MAIL ALLIANCE 

Mr. CERASALE. Thank you very much, Senator Carper. I am testifying today on behalf of the Affordable Mail Alliance, and I am 

happy to report that I am also authorized to say that the Coalition 

for a 21st Century Postal Service also endorses this testimony as 

we mailers work together to present one voice to Congress for you. 

We want to particularly thank this Subcommittee for all it has 

done on behalf of the Postal Service and, therefore, on behalf of our 

postal customers. But we want to particularly thank you and Senator Collins for all your efforts in the past, in the present, and we 

know in the future to help create a strong, viable postal system 

and postal community. 

It is interesting and it is great that both the POST Act and the 

Postal Service Improvement Act of 2010 of Senator Collins begin 

with postal pensions and retiree health benefits. As mailers, 

through postage we have been paying for retiree benefits of postal 

employees since July 1971, and the IG and the PRC have come up 

with a $50 to $75 billion overpayment from the postage that we 

have been paying to the Postal Service. Those payments increased 

postage; they reduced mail volume; they reduced the number of 

jobs that we had within our community, within our membership. 

We also have to contribute to the unfunded retiree health benefits, and there is an aggressive payment schedule in the 2006 act. 

We approve of your legislation and that of Senator Collins to use 

the customer overpayment for postal pensions to fund retiree 

health benefits. We do ask, however, that you should require the 

Board of Governors to so use and transfer those funds to get rid 

of the legacy costs of the Postal Service and not give them the opportunity to use those funds elsewhere. If we can get rid of these 

legacy costs and put us on a better footing, that is just so much 

better. 

H605-41331-79W7 with DISTILLER

35 

Senator Collins has also included in her act a review of FERS 

payments. We understand that it is a potential $6.8 billion overpayment as well to the FERS account. Now, I am not sure—I am 

not the actuary on that and how it works, but we would ask that 

you take a look and add that in any legislation or review of that 

so that we do not create a new overpayment for postal pensions. 

As we look to collective bargaining, we are not at the table. We 

do not want to be at the table. But we want to just point out that 

on July 1, 1971, 80 percent of postal costs were employee compensation. Today it remains 80 percent of postal costs. After great 

improvement in productivity, billions of dollars in capital investments, work sharing, a significant drop in worker complement, all 

of that compensation still remains at 80 percent. We urge Congress 

to look at every single idea to try and improve the collective bargaining process which does not allow for strikes, to try and create—help the Postal Service survive in the 21st Century. 

Looking at facilities, the Postal Service could probably deliver 

300 billion pieces of mail a year. They are looking to deliver in 

2020 150 billion pieces of mail a year. It has to downsize, and we 

have to downsize relatively quickly. And so we cannot afford that 

excess capacity. 

Looking at co-location, however, we think that is phenomenal 

idea, both from working with local and State governments within 

postal facilities and having retail facilities within communities provide postal services. That would even potentially expand hours, so 

that is a good—we support that. 

Looking at delivery days, the Postal Service has to provide services that customers need. A Saturday delivery drop would cause all 

mailers to adjust. Some can adjust more readily than others. But 

the Postal Service has to ensure that they meet the needs of customers; otherwise, a 17-percent drop in service could dramatically 

hurt mail volume. 

Looking at new products, I think the onus is on us, the mailers, 

as well as the Postal Service to come in and look at what do we 

need, what new products can we offer. But with an $8.5 billion loss 

this past year, you cannot revenue your way out of this problem. 

It is not the silver bullet, as you say. 

The one thing that we really want to be careful of, however, is 

we do not want to have expertise of the Postal Service pulled out 

to offer new products and ignore the core functions of transporting 

and delivering the mail. So that is important for us. 

The Postal Service should also re-evaluate its requirements that 

it has placed on mailers, increasing costs to enter the mail stream 

which is driving mail away. I think that is something that should 

be totally re-examined. And Senator Collins also has in her bill 

that she mentioned looking at NSAs, and we think that the Postal 

Service should more aggressively use Negotiated Service Agreements in market-dominant products, but also should look at doing 

it in combination of market-dominant and competitive products. 

Thank you very much for this opportunity. 

Senator CARPER. Thank you, Mr. Cerasale. 

I have a couple of questions, and let me direct the first one to 

President Rapoza. In talking about collocation, my preference—and 

I suspect your preference, too—would be as we want to maintain 

H605-41331-79W7 with DISTILLER

36 

a postal presence in communities across the country that we think 

outside the box and we are really smart and diligent about identifying other kinds of activities that could be collocated in a post office. And today in a number of post offices across the country, folks 

can get help with passports. We allow the Federal Government to 

collocate services in the Postal Service, not State and local governments. And we suggest in our legislation we ought to change that. 

But I would ask you, if you want to say for the record here, what 

are some ideas that the postmasters have of the kinds of services 

that could be offered in post offices so that they would not have to 

close. 

Mr. RAPOZA. Thank you, Chairman. First of all, we should look 

at what the needs of the community should be considered and what 

types of services we render to them. But it could be potential services. It could be hunting and fishing licenses, motor vehicle transactions, public utility transactions, State and local applications for 

service that require identity verification, other things that would 

assist Government agencies. And certainly we would like to get a 

return on our investment. 

Just for the record, NAPUS does not object to the Postal Service 

expanding retail services, and we heard here today from you, Senator Carper, was that the Postal Service should better serve our 

customers. In addition, the incoming Postmaster General says it 

should improve customer experience. But he also said our customer 

satisfaction is already at 97 percent, so we are looking to improve 

that other 3 percent, it makes more sense to bring the businesses 

to the facilities we have than to take it somewhere else. 

Senator CARPER. And I think this is pretty self-evident, but to 

the extent that we can better identify services that logically could 

be provided at post offices in order to add to the bottom line at the 

Postal Service, that would be our preference. And so I would just 

ask you to work with us to help—not just you but postmasters 

across the country and others, help us to identify those opportunities, and to not just identify them but to seize them. As we say in 

Delaware, carpe diem. Seize the day. 

If I could, for President Rolando, you and I have had this conversation before, but I want to revisit it because I think it may be 

even more timely today. In previous labor negotiations, as I recall, 

there has been significant discussion between labor and management, particularly with the letter carriers, to try to come up with 

a way to continue to have 6-day service, to continue to have Saturday service, but in a way that actually saves money, and not just 

millions of dollars but a lot more. If the Postal Service would go 

to 5-day service, they expect after a loss of revenue they would save 

about $3 billion a year, which is not small. And in your negotiations with the Postal Service on behalf of your members, to the extent that you can identify ways to achieve not $3 billion in savings 

but a considerable amount of that, I would urge you to do that. I 

would urge you to do that. I know you have tried to do that before, 

you and your predecessors have tried to do that before. And I 

would just urge you to take another run at it. I have certainly had 

that discussion before with Postmaster General Potter, and I will 

have that conversation with his successor. 

But any reaction to that comment? 

H605-41331-79W7 with DISTILLER

37 

Mr. ROLANDO. Well, the $3 billion projected savings is no small 

amount, but I doubt if it is accurate either. But we are certainly 

looking forward to the negotiations and resuming those talks. We 

have informally had those discussions, but we are totally open to 

what we tried to do before. 

Senator CARPER. Good. OK. I think I am going to close it up 

today. If I leave now, I might be able to get to the tail end of this 

other meeting that I am missing. 

We very much appreciate your being here. We appreciate the 

chance to have worked with you in the past, and we just need to 

continue to do that, use our best thinking or best thoughts, and I 

think we can figure this out. Actually, I come out of this hearing 

encouraged rather than discouraged. And every now and then 

when I am trying to address or help address a big problem, I reach 

a point in time where the path ahead becomes a little more clear. 

And for me, some of the fog has gone away, and I am able to start 

seeing the pieces come together and give us a path forward that 

comes pretty close to doing the job for all of us. So I am encouraged 

by that, and I appreciate each of you for being here to help provide 

some of that additional clarity. 

With that, this hearing is over, and those who were not here 

have an opportunity, my colleagues have an opportunity to submit 

questions for, I think, another 2 weeks, and if you could respond 

promptly to them, we would be most grateful. 

Thank you so much. With that, this hearing is adjourned. 

[Whereupon, at 12:05 p.m., the Subcommittee was adjourned.] 

H605-41331-79W7 with DISTILLER

H605-41331-79W7 with DISTILLER

(39) 

A P P E N D I X 

H605-41331-79W7 with DISTILLER


63870.001
40 

H605-41331-79W7 with DISTILLER


63870.002
41 

H605-41331-79W7 with DISTILLER


63870.003
42 

H605-41331-79W7 with DISTILLER


63870.004
43 

H605-41331-79W7 with DISTILLER


63870.005
44 

H605-41331-79W7 with DISTILLER


63870.006
45 

H605-41331-79W7 with DISTILLER


63870.007
46 

H605-41331-79W7 with DISTILLER


63870.008
47 

H605-41331-79W7 with DISTILLER


63870.009
48 

H605-41331-79W7 with DISTILLER


63870.010
49 

H605-41331-79W7 with DISTILLER


63870.011
50 

H605-41331-79W7 with DISTILLER


63870.012
51 

H605-41331-79W7 with DISTILLER


63870.013
52 

H605-41331-79W7 with DISTILLER


63870.014
53 

H605-41331-79W7 with DISTILLER


63870.015
54 

H605-41331-79W7 with DISTILLER


63870.016
55 

H605-41331-79W7 with DISTILLER


63870.017
56 

H605-41331-79W7 with DISTILLER


63870.018
57 

H605-41331-79W7 with DISTILLER


63870.019
58 

H605-41331-79W7 with DISTILLER


63870.020
59 

H605-41331-79W7 with DISTILLER


63870.021
60 

H605-41331-79W7 with DISTILLER


63870.022
61 

H605-41331-79W7 with DISTILLER


63870.023
62 

H605-41331-79W7 with DISTILLER


63870.024
63 

H605-41331-79W7 with DISTILLER


63870.025
64 

H605-41331-79W7 with DISTILLER


63870.026
65 

H605-41331-79W7 with DISTILLER


63870.027
66 

H605-41331-79W7 with DISTILLER


63870.028
67 

H605-41331-79W7 with DISTILLER


63870.029
68 

H605-41331-79W7 with DISTILLER


63870.030
69 

H605-41331-79W7 with DISTILLER


63870.031
70 

H605-41331-79W7 with DISTILLER


63870.032
71 

H605-41331-79W7 with DISTILLER


63870.033
72 

H605-41331-79W7 with DISTILLER


63870.034
73 

H605-41331-79W7 with DISTILLER


63870.035
74 

H605-41331-79W7 with DISTILLER


63870.036
75 

H605-41331-79W7 with DISTILLER


63870.037
76 

H605-41331-79W7 with DISTILLER


63870.038
77 

H605-41331-79W7 with DISTILLER


63870.039
78 

H605-41331-79W7 with DISTILLER


63870.040
79 

H605-41331-79W7 with DISTILLER


63870.041
80 

H605-41331-79W7 with DISTILLER


63870.042
81 

H605-41331-79W7 with DISTILLER


63870.043
82 

H605-41331-79W7 with DISTILLER


63870.044
83 

H605-41331-79W7 with DISTILLER


63870.045
84 

H605-41331-79W7 with DISTILLER


63870.046
85 

H605-41331-79W7 with DISTILLER


63870.047
86 

H605-41331-79W7 with DISTILLER


63870.048
87 

H605-41331-79W7 with DISTILLER


63870.049
88 

H605-41331-79W7 with DISTILLER


63870.050
89 

H605-41331-79W7 with DISTILLER


63870.051
90 

H605-41331-79W7 with DISTILLER


63870.052
91 

H605-41331-79W7 with DISTILLER


63870.053
92 

H605-41331-79W7 with DISTILLER


63870.054
93 

H605-41331-79W7 with DISTILLER


63870.055
94 

H605-41331-79W7 with DISTILLER


63870.056
95 

H605-41331-79W7 with DISTILLER


63870.057
96 

H605-41331-79W7 with DISTILLER


63870.058
97 

H605-41331-79W7 with DISTILLER


63870.059
98 

H605-41331-79W7 with DISTILLER


63870.060
99 

H605-41331-79W7 with DISTILLER


63870.061
100 

H605-41331-79W7 with DISTILLER


63870.062
101 

H605-41331-79W7 with DISTILLER


63870.063
102 

H605-41331-79W7 with DISTILLER


63870.064
103 

H605-41331-79W7 with DISTILLER


63870.065
104 

H605-41331-79W7 with DISTILLER


63870.066
105 

H605-41331-79W7 with DISTILLER


63870.067
106 

H605-41331-79W7 with DISTILLER


63870.068
107 

H605-41331-79W7 with DISTILLER


63870.069
108 

H605-41331-79W7 with DISTILLER


63870.070
109 

H605-41331-79W7 with DISTILLER


63870.071
110 

H605-41331-79W7 with DISTILLER


63870.072
111 

H605-41331-79W7 with DISTILLER


63870.073
112 

H605-41331-79W7 with DISTILLER


63870.074
113 

H605-41331-79W7 with DISTILLER


63870.075
114 

H605-41331-79W7 with DISTILLER


63870.076
115 

H605-41331-79W7 with DISTILLER


63870.077
116 

H605-41331-79W7 with DISTILLER


63870.078
117 

H605-41331-79W7 with DISTILLER


63870.079
118 

H605-41331-79W7 with DISTILLER


63870.080
119 

H605-41331-79W7 with DISTILLER


63870.081
120 

H605-41331-79W7 with DISTILLER


63870.082
121 

H605-41331-79W7 with DISTILLER


63870.083
122 

H605-41331-79W7 with DISTILLER


63870.084
123 

H605-41331-79W7 with DISTILLER


63870.085
124 

H605-41331-79W7 with DISTILLER


63870.086
125 

H605-41331-79W7 with DISTILLER


63870.087
126 

H605-41331-79W7 with DISTILLER


63870.088
127 

H605-41331-79W7 with DISTILLER


63870.089
128 

H605-41331-79W7 with DISTILLER


63870.090
129 

H605-41331-79W7 with DISTILLER


63870.091
130 

H605-41331-79W7 with DISTILLER


63870.092
131 

H605-41331-79W7 with DISTILLER


63870.093
132 

H605-41331-79W7 with DISTILLER


63870.094
133 

H605-41331-79W7 with DISTILLER


63870.095
134 

H605-41331-79W7 with DISTILLER


63870.096
135 

H605-41331-79W7 with DISTILLER


63870.097
136 

H605-41331-79W7 with DISTILLER


63870.098
137 

H605-41331-79W7 with DISTILLER


63870.099
138 

H605-41331-79W7 with DISTILLER


63870.100
139 

H605-41331-79W7 with DISTILLER


63870.101
140 

H605-41331-79W7 with DISTILLER


63870.102
141 

H605-41331-79W7 with DISTILLER


63870.103
142 

H605-41331-79W7 with DISTILLER


63870.104
143 

H605-41331-79W7 with DISTILLER


63870.105
144 

H605-41331-79W7 with DISTILLER


63870.106
145 

H605-41331-79W7 with DISTILLER


63870.107
146 

H605-41331-79W7 with DISTILLER


63870.108
147 

H605-41331-79W7 with DISTILLER


63870.109
148 

H605-41331-79W7 with DISTILLER


63870.110
149 

H605-41331-79W7 with DISTILLER


63870.111
150 

H605-41331-79W7 with DISTILLER


63870.112
151 

H605-41331-79W7 with DISTILLER


63870.113
152 

H605-41331-79W7 with DISTILLER


63870.114
153 

H605-41331-79W7 with DISTILLER


63870.115
154 

H605-41331-79W7 with DISTILLER


63870.116
155 

H605-41331-79W7 with DISTILLER


63870.117
156 

H605-41331-79W7 with DISTILLER


63870.118
157 

H605-41331-79W7 with DISTILLER


63870.119
158 

H605-41331-79W7 with DISTILLER


63870.120
159 

H605-41331-79W7 with DISTILLER


63870.121
160 

H605-41331-79W7 with DISTILLER


63870.122
161 

H605-41331-79W7 with DISTILLER


63870.123
162 

H605-41331-79W7 with DISTILLER


63870.124
163 

H605-41331-79W7 with DISTILLER


63870.125
164 

H605-41331-79W7 with DISTILLER


63870.126
165 

H605-41331-79W7 with DISTILLER


63870.127
166 

H605-41331-79W7 with DISTILLER


63870.128
167 

H605-41331-79W7 with DISTILLER


63870.129
168 

H605-41331-79W7 with DISTILLER


63870.130
169 

H605-41331-79W7 with DISTILLER


63870.131
170 

H605-41331-79W7 with DISTILLER


63870.132
171 

H605-41331-79W7 with DISTILLER


63870.133
172 

H605-41331-79W7 with DISTILLER


63870.134
173 

H605-41331-79W7 with DISTILLER


63870.135
174 

Æ 

H605-41331-79W7 with DISTILLER


63870.136