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LAYING OUT THE REALITY OF THE UNITED 

STATES POSTAL SERVICE 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

JANUARY 21, 2016 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

PATRICK J. BAILEY, Chief Counsel for Governmental Affairs 

JENNIFER L. SCHEAFFER, Professional Staff Member 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

JOHN A. KANE, Minority Senior Governmental Affairs Advisor 

S. ALEXANDER FISKE, Minority U.S. Postal Service Office of Inspector General Detailee 

LAURA W. KILBRIDE, Chief Clerk 

BENJAMIN C. GRAZDA, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Johnson ............................................................................................... 1 

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

Senator Tester .................................................................................................. 18 

Senator Booker ................................................................................................. 20 

Senator Peters .................................................................................................. 22 

Senator Heitkamp ............................................................................................ 27 

Senator Baldwin ............................................................................................... 29 

Senator McCaskill ............................................................................................ 34 

Prepared statements: 

Senator Johnson ............................................................................................... 57 

Senator Carper ................................................................................................. 58 

WITNESS 

THURSDAY, JANUARY 21, 2016 

Megan J. Brennan, Postmaster General and Chief Executive Officer, U.S. 

Postal Service ....................................................................................................... 5 

Robert G. Taub, Acting Chairman, Postal Regulatory Commission .................... 7 

Lori Rectanus, Director, Physical Infrastructure, U.S. Government Accountability Office ......................................................................................................... 8 

David C. Williams, Inspector General, U.S. Postal Service ................................. 10 

James E. Millstein, Former Chief Restructuring Officer at the U.S. Department of the Treasury, and Founder and Chief Executive Officer, Millstein 

& Co. ..................................................................................................................... 12 

Fredric V. Rolando, President, National Association of Letter Carriers ............. 43 

John ‘‘Chip’’ Hutcheson III, President, National Newspaper Association ........... 46 

Kathy Collins, General Manager, Rothschild Mill, Domtar Paper Company ..... 48 

ALPHABETICAL LIST OF WITNESSES

Brennan, Megan J.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 61 

Collins, Kathy: 

Testimony .......................................................................................................... 48 

Prepared statement .......................................................................................... 188 

Hutcheson, John ‘‘Chip’’ III: 

Testimony .......................................................................................................... 46 

Prepared statement .......................................................................................... 177 

Millstein, James E.: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 133 

Rectanus, Lori: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 110 

Rolando, Fredric V.: 

Testimony .......................................................................................................... 43 

Prepared statement with attachments ........................................................... 152 

Taub, Robert G.: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 78 

Williams David C.: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 128 
Page

IV 

APPENDIX 

Statements submitted for the Record from: 

American Consumer Institute ......................................................................... 193 

Alliance of Nonprofit Mailers .......................................................................... 194 

Alliance of Nonprofit Mailers et al .................................................................. 196 

Amazon et al ..................................................................................................... 199 

American Quarter Horse Association ............................................................. 202 

Americans for Tax Reform ............................................................................... 203 

Association for Postal Commerce .................................................................... 206 

Benedictine Mission House .............................................................................. 208 

Consumer Reports ............................................................................................ 209 

Credit Union National Association ................................................................. 210 

DMA—Direct Marketing Association .............................................................. 212 

Envelope Manufacturers Association .............................................................. 214 

Financial Services Roundtable ........................................................................ 224 

Guideposts ......................................................................................................... 226 

International Warehouse Logistics Association ............................................. 228 

MPA—The Association of Magazine Media .................................................... 235 

National Associaton of Letter Carriers ........................................................... 239 

National Association of Postal Supervisors .................................................... 240 

National Association of Postmasters of the United States ........................... 244 

NARFE—National Active and Retired Federal Employees Association ...... 249 

National Catholic Development Conference ................................................... 255 

National Committee to Preserve Social Security and Medicare ................... 257 

National Taxpayers Union ............................................................................... 258 

Quad/Graphics, Inc. .......................................................................................... 260 

R Street Institute ............................................................................................. 262 

Charles Shelby .................................................................................................. 265 

Steve W. Smith ................................................................................................. 266 

Time Inc. ........................................................................................................... 268 

Taxpayers Protection Alliance ......................................................................... 269 

Responses to post-hearing questions for the Record from: 

Ms. Brennan ..................................................................................................... 270 

Mr. Taub ............................................................................................................ 277 

Ms. Rectanus ..................................................................................................... 282 

Mr. Williams ..................................................................................................... 291 
(1) 

1The prepared statement of Senator Johnson appears in the Appendix on page 57. 

LAYING OUT THE REALITY OF THE UNITED 

STATES POSTAL SERVICE 

THURSDAY, JANUARY 21, 2016 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, 

The Committee met, pursuant to notice, at 9:30 a.m., in room 

342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman 

of the Committee, presiding. 

Present: Senators Johnson, Lankford, Enzi, Carper, McCaskill, 

Tester, Baldwin, Heitkamp, Booker, and Peters. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. This hearing will come to order. 

I want to welcome all of the witnesses. Thank you for your time 

and for your testimony. 

I am going to keep my opening statement incredibly brief because I am going to want to spend more of my time asking questions once we hear from the witnesses. I have an opening statement, which I will ask to be entered into the record.1

My questions will all be about eliciting the reality of the current 

situation and what is going to be happening in the next couple of 

months and why it is so important that we address this issue. So, 

that is what I am hoping that we are going to hear in testimony 

and that will be the thrust of my questions. 

Chairman JOHNSON. With that, I will turn it over to the Ranking 

Member for his opening statement. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thank you, Mr. Chairman. Good morning, everybody. 

[Chorus of responses.] 

This is a chipper looking group. I am glad that we are doing this 

today and not on Saturday. This is pretty good timing. I want to 

thank our Chairman for scheduling this hearing and all of you for 

showing up, giving us your thoughts, and responding to our questions. 

As we are all aware, the United States Postal Service (USPS) 

has been struggling with some serious longstanding financial challenges for a while. One of my top goals since I joined this Committee 400 years ago—— [Laughter.] 
2 

No, 15 years ago—has been to address these challenges and to 

help the Postal Service find a way to thrive in the 21st Century. The Postal Service operates, as we know, as the center of a $1.4 

trillion mailing industry that employs, I am told, about 7.5 million 

people across our country. This industry provides 6 percent of our 

Nation’s jobs, and that puts it on par, when it comes to total jobs 

and revenues, with the airline industry and, I am told, the oil and 

gas industry as well. And businesses, both large and small, depend 

on the Postal Service’s one-of-a-kind retail processing and delivery 

network, a 200-year-old legacy delivery network. 

But, as we sit here today, there are some real questions that continue to be asked about what the future holds for the Postal Service. 

Despite having finished 2015 with an operating profit, the Postal 

Service continues to report billions of dollars of losses. On top of 

that, it has maxed out its $15 billion line of credit with the U.S. 

Treasury. This has left Postal management with no other choice 

but to default on another $5.7 billion health care payment last 

year, the fourth year in a row that the Postal Service has been unable to fulfill that statutory obligation. When the Postal Service 

closed its books on fiscal year (FY) 2015, it announced a $5.1 billion 

loss, its ninth consecutive multi-billion-dollar loss. 

Complicating matters is the fact that the emergency rate surcharge that went into effect in 2014 to compensate the Postal Service for its losses during the recession, is set to expire—I believe in 

late March or early April. And by all accounts, the income being 

generated by this increase is now the biggest thing keeping the 

Postal Service’s head above water. When the surcharge expires, 

rates for the Postal Service’s core products will decline, diminishing 

the Postal Service’s revenues and liquidity as well as erasing the 

small operating profits that it has recently shown. 

But, I think that we can still be optimistic about the future of 

the Postal Service. I am, and I hope that you are, too. And I say 

that because, despite what the Postal Service has been through, we 

have seen some significant growth in an important area, and that 

is package delivery. The Postal Service’s total volume for this line 

of business jumped more than 14 percent—is that right, General?— 

14 percent last year. In addition—this is even more encouraging, 

at least to me—the steady decline of First-Class Mail volume since 

2006 appears to be leveling off, and by some accounts, we may be 

starting to see some new demand for this product, which has always been the biggest money maker for the Postal Service. If that 

happens, then we are off to the races, so we will keep our fingers 

crossed. This past holiday season was much stronger for the Postal 

Service than anticipated, with mail volume related to e-commerce 

reportedly exceeding expectations. 

For the Postal Service, though, to truly be successful in the digital age, Congress must enable—we need to be enablers—the Postal 

Service to take full advantage of the opportunities offered by the 

package boom and other recent successes. I like to say, as they say 

at Home Depot, ‘‘You can do it, we can help.’’ And that is our job, 

to help. 

Nearly 10 years have passed since major Postal reform legislation was last signed into law, although we have made several at-
3 

tempts in recent years without getting the ball into the end zone. 

It is now time for Congress to get off the bench, get into the game, 

and let us score a touchdown. 

Absent legislative intervention, the Postal Service will continue 

twisting in the wind. It will remain unable to fully invest in its future. Its employees and customers will continue to be uncertain 

about what the future holds for them. 

There are a handful of Postal reform provisions that we have debated on this Committee, as some of us know, for years. Taken together, they would set up the Postal Service and its leadership up 

to turn the agency’s finances around further and set it up to succeed in the years to come. 

The most important of these provisions, we know, is to address 

health care costs at the Postal Service. And, in fact, this agency is 

the single largest payer into Medicare, yet it does not receive 

full value from the program for its contributions. I put forward legislation in the last Congress with our former colleague Dr. 

Coburn—many of our colleagues here have supported it—and this 

year, with Senators Moran, McCaskill, and Blunt, that would allow 

the Postal Service to do what private businesses do when they coordinate their health care plans with Medicare. This has the potential to largely eliminate the unfunded liability for the retiree health 

benefits (RHB) and to save the Postal Service some $32 billion over 

the next 10 years. 

Our proposal would also give the Postal Service significant savings when it comes to pension costs, which the Office of Personnel 

Management (OPM) now determines using inaccurate data that 

does not account for the makeup of the Postal Service’s workforce 

and other important factors. Requiring OPM to use the right data 

would also reap more than $2.5 billion in savings over the next 5 

years alone. 

We also freed, in our legislation, the Postal Service to innovate 

and explore new business opportunities by removing dated restrictions, in current law, on the type of products and services that they 

can offer. This part of our bill would let the Postal Service do some 

specific things, like join United Parcel Service (UPS), Federal Express (FedEx), and others in offering and delivering beer, wine, and 

spirits. It would also encourage the Postal Service to test new innovations, much like its existing authority to initiate Sunday package 

delivery, and to experiment with things like grocery delivery in 

other parts of the country. Coupled with our proposal to make permanent the emergency rate increase currently set to expire, this 

part of our bill has the potential to bring in significant revenues 

in the coming years. 

Finally, our bill will also push or prod the Postal Service to do 

what the last Postmaster General often told me was his top goal 

if we are able to get Postal reform done, and that is to put the 

‘‘service’’ back into Postal Service. Since 2002, the Postal Service 

has made great strides to be more efficient, cutting total work 

hours by nearly 30 percent, fueling $17 billion in savings. We have 

also seen the number of mail processing centers cut in half, from 

more than 600 to about 300 today. 

But the solution to the challenge that the Postal Service faces 

today cannot be just about more cuts. Cutting costs was certainly 
4 

necessary. Concern has been raised that further cuts will only degrade service and end up chasing customers away. I share those 

concerns. We may also be seeing service suffer due to deep cuts 

that have been made in some areas. 

In order to thrive in coming years, the Postal Service actually 

needs to invest in a new generation of delivery vehicles—we know 

that—as well as in its processing plants and in its Post Offices 

themselves. It needs to harness and deploy new technology that 

can improve service and contain costs, rather than continue to 

make cuts that will further erode service. 

All right. Coming to the end. That is why our bill, a bipartisan 

bill, would pause further service standard changes for 5 years and 

mail processing closures for 2 years. This will give the Postal Service and the Postal Regulatory Commission (PRC) time to explore 

what the appropriate level of service should be and, hopefully, to 

return service to the levels that were provided to customers until 

last year, when service standards were set at the modified 1-, 

2-, and 3-day delivery standard that many of us supported. 

So, in sum, I believe that our bill, a bipartisan bill, represents 

real and lasting reform that can help the Postal Service be just as 

important for my sons’ generation as it was for my generation—our 

generation—and for my parents’ generation. We have offered legislation that enjoys wide support among the Postal stakeholders, 

whose often widely diverging priorities and goals have made Postal 

reform hard to achieve in recent years. And that is because after 

months of effort to find common ground, the Postal Service, its 

unions, and large contingencies of Postal customers and stakeholders have finally succeeded in coming to an agreement on a 

number of key provisions that they feel—that we feel—need to be 

contained in any Postal bill for the Postal Service to succeed, truly 

succeed. These key provisions are contained in our bill. 

Lastly, while working together, it is important that Congress provides some certainty to both Postal employees and customers and 

that it ensures that taxpayers—along with all of the fiscal challenges that we face—are not saddled with shoring up a failing 

Postal Service. We cannot afford to be here a year from now discussing how we can dig ourselves out of yet another Postal crisis. 

I do not believe any of us want to do that. I sure do not. We do 

not want to kick the can down the road one more time. 

As it turns out, if we are smart enough and creative enough and 

bold enough, we do not have to. We can do what needs to be done 

to actually fix the problem. 

So, Mr. Chairman, thank you again for holding this hearing, 

thank you to everybody for attending and for providing testimony, 

and thank you to my colleagues for being here. I look forward to 

working with our colleagues in the weeks ahead to promptly enact 

Postal reform legislation that will enable the Postal Service and its 

employees to seize the day and provide the services that are needed 

in the 21st Century. 

I think that they really have it right at Home Depot when they 

say, ‘‘You can do it, we can help,’’ and the time has come. Let us 

just do it. Thank you. 

Chairman JOHNSON. Thank you, Senator Carper. 
5 

1The prepared statement of Ms. Brennan appears in the Appendix on page 61. 

We will, I believe, have a vote scheduled at 10:30, at which point 

in time I am going to have to leave and I will be turning the gavel 

over to Senator Carper. You have some experience with this, right, 

so—— 

Senator CARPER. I am pretty new at it. [Laughter.] 

Chairman JOHNSON. It is the tradition of this Committee to 

swear in witnesses, so if you will all rise and raise your right hand. 

Do you swear the testimony you will give before this Committee 

will be the truth, the whole truth, and nothing but the truth, so 

help you, God? 

Ms. BRENNAN. I do. 

Mr. TAUB. I do. 

Ms. RECTANUS. I do. 

Mr. WILLIAMS. I do. 

Mr. MILLSTEIN. I do. 

Chairman JOHNSON. Thank you. Please be seated. 

Our first witness is Ms. Megan J. Brennan. Ms. Brennan is the 

Postmaster General of the United States Postal Service. She began 

this post in February of last year, having served prior to that as 

Chief Operating Officer (COO) and Executive Vice President of the 

Postal Service. Ms. Brennan began her Postal Service career as a 

letter carrier in Lancaster, Pennsylvania. Ms. Brennan. 

TESTIMONY OF MEGAN J. BRENNAN,1 POSTMASTER GENERAL 

AND CHIEF EXECUTIVE OFFICER, U.S. POSTAL SERVICE 

Ms. BRENNAN. Thank you, Mr. Chairman. Good morning. Good 

morning, Ranking Member Carper and Members of the Committee. 

Thank you, Chairman Johnson, for calling this hearing. I am proud 

to be here today on behalf of the dedicated men and women of the 

United States Postal Service, who work hard every day to serve the 

American people. 

The Postal Service currently operates with a business model that 

is unsustainable. In the past decade, total mail volume has declined by 27 percent, and First-Class Mail, our most profitable 

product, has declined by 35 percent. To put this in perspective, the 

annual value of the revenue loss as a result of this volume decline 

is $21 billion per year. 

We continue to make difficult, but necessary, business decisions 

within the constraints of our business model to adapt to a rapidly 

changing marketplace. We have streamlined our operations, restructured our networks, and have improved productivity for six 

consecutive years. As a result of these efforts, we have achieved annual cost savings of nearly $15 billion. We have also been successful in stabilizing marketing mail revenues and growing our package delivery business, which together enable America’s e-commerce. However, all of these actions cannot offset the negative impacts caused by the continuing decline in the use of First-Class 

Mail. 

Since 2012, the Postal Service has been forced to default on more 

than $28 billion in mandated payments to the U.S. Treasury for retiree health benefits. Without these defaults as well as the deferral 

of capital investments and aggressive management actions, we 
6 

would not have been able to pay our employees, our suppliers, or 

to deliver the mail. 

Without legislative reform, our net losses will continue to grow, 

regardless of our continuing efforts to grow revenue and improve 

operational efficiencies. If allowed to continue, this will have a devastating impact on the future of the organization and the customers that we serve. 

Mr. Chairman, we need legislation now. Over the past year, we 

have been working with key stakeholders, including our labor 

unions and a cross-section of the mailing industry, to identify potential key reforms about which there is broad consensus and 

which would return the Postal Service to financial health. As part 

of this process, we have sought to understand the interests and 

concerns of our stakeholders and to educate them about the needs 

of the Postal Service. 

The legislation that we are seeking reflects the results of these 

discussions and includes the following provisions: Requiring Medicare integration for Postal retiree health plans, continuing our exigent price increase for market dominant products, calculating all 

retirement benefit liabilities using Postal-specific salary growth 

and demographic assumptions, and providing some additional product flexibility. 

By enacting legislation that includes these provisions, the Postal 

Service can achieve an estimated $27 billion in combined cost reductions and new revenue over the next 5 years. Together with 

other important initiatives, this would make us financially stable. 

Medicare integration is the most important of these provisions. 

As the second largest contributor to Medicare, our proposal allows 

the Postal Service and our employees to fully utilize the benefits 

for which we have already paid. By requiring Medicare integration 

for Postal Service retirees, we will essentially eliminate the current 

unfunded liability for retiree health benefits. Further, in most 

cases, it will cost less for our employees and retirees while providing them with the same or better health coverage. 

Also significant is the need to make the exigent rate increase a 

part of our rate base. The continuation of the exigent pricing surcharge is critical to the Postal Service’s financial health. An expiration of the surcharge, which is expected to occur this April, will reduce our revenues by approximately $2 billion each year, further 

worsening our already precarious financial condition. 

Mr. Chairman, our financial challenges are serious, but they can 

be solved. While the set of proposals we are advancing today are 

narrower in scope than we previously sought, they are fiscally responsible. They enable the Postal Service to invest in the future 

and to continue to provide affordable, reliable, and secure delivery 

to every business and residential address in America. Importantly, 

we believe that these provisions are capable of gaining broad support among key Postal stakeholders. 

Mr. Chairman, I look forward to working with this Committee to 

restore the financial health of the United States Postal Service. 

This concludes my remarks and I welcome any questions that 

you and the Committee may have. Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, Postmaster General. 
7 

1The prepared statement of Mr. Taub appears in the Appendix on page 78. 

Our next witness is Robert Taub. He is the Acting Chair of the 

Postal Regulatory Commission. He has been on the Commission 

since October 2011 and prior to that was the Special Assistant to 

the Secretary of the Army. Chairman Taub. 

TESTIMONY OF ROBERT G. TAUB,1 ACTING CHAIRMAN, 

POSTAL REGULATORY COMMISSION 

Mr. TAUB. Chairman Johnson, Ranking Member Carper, and 

Members of the Committee, good morning. I will hit on a few key 

points from the Commission’s very detailed written testimony. 

In 2015, the Postal Service had a total net loss of $5.1 billion, 

which is an improvement from 2014. However, this is the ninth 

consecutive net loss since 2007 and has increased the cumulative 

net deficit since then to $56.8 billion. These continuing losses have 

negatively impacted liquidity, requiring the Postal Service to use 

all of its $15 billion statutory borrowing capacity and causing total 

liabilities to far exceed total assets by almost $50 billion. 

In the past 5 years, the Postal Service has not made any of the 

required prefunding payments into its future Retiree Health Benefit Fund. This accruing nonpayment into the fund has skewed the 

Postal Service’s current liabilities in relation to its assets. To reduce its debt ratio to historic averages, the Postal Service would 

have to significantly increase its cash position or investments in 

capital assets as well as reduce its obligations to the Retiree 

Health Benefit Fund. 

Low liquidity levels in recent years have impeded the Postal 

Service’s ability to make capital investments in infrastructure. It 

now operates an aging vehicle fleet, increasing the need and, consequently, the cost for maintenance and repair. Also unmet is the 

need to invest in sorting and handling equipment to fully capitalize 

on business opportunities in the growing package delivery markets. 

Total mail volume in 2015 dropped to levels not seen in more 

than 27 years, and the Postal Service anticipates further reductions in total volumes in 2016. The continuous decline in FirstClass Mail seriously jeopardizes the Postal Service’s ability to cover 

its fixed overhead costs. 

Recent increases in revenues and subsequent higher liquidity are 

largely due to the temporary market dominant product exigent surcharge. The additional revenue from competitive products, which 

are mainly parcels, is not sufficient to offset the future revenue loss 

resulting from the termination of the exigent surcharge when it is 

removed this April. At that point, in order to maintain the operating net income that it is currently achieving, the Postal Service 

would have to make up the loss of that revenue, which is approximately $2.1 billion annually. 

With the growing liability of retiree health benefits, the inability 

to borrow for needed capital investments, and the continued loss of 

high-margin First-Class Mail revenues, the important task of improving the financial condition of the Postal Service is daunting. 

Despite the financial news, there is still strength in the system. 

The Postal Service is the one government agency that touches 

every American on a daily basis. It is an organization that literally 
8 

1The prepared statement of Ms. Rectanus appears in the Appendix on page 110. 

serves 150 million American households and businesses on a typical day. It facilitates trillions of dollars in commerce. The fundamental problem is that the Postal Service cannot currently generate sufficient funds to cover its mandated expenses and also invest in critically deferred capital needs. 

Where can we look for answers? I would argue that the starting 

point is to look at ourselves. What do we, as a Nation, need from 

a Postal and delivery system and what is its cost? What exactly is 

universal mail service in the United States? The Commission has 

determined that, unlike in other countries, the universal service obligation (USO) in the United States is largely undefined. Instead, 

it is comprised of a broad set of policy statements with only a few 

legislative prescriptions. The Commission estimates the cost of providing universal service to be more than $4 billion annually. When 

assessing the current State of the Postal Service, policymakers 

should look at this fundamental issue and decide exactly what we, 

as a Nation, need from the Postal Service, and most importantly, 

how those expectations are to be funded. I note that Senator Carper’s bill would require an assessment of the USO. 

Thank you, Mr. Chairman, for convening this hearing to shine a 

spotlight on this important part of our infrastructure. I know that 

you appreciate deeply the importance of these matters. 

Senator Carper, it has been a long journey, fifteen years ago, 

when we met with then-Congressman McHugh off the Senate floor 

when you were first exploring how to modernize our Postal laws. 

It took us in the House a dozen years to see the 2006 law enacted, 

and we could not have done so without your leadership here in the 

Senate. Thank you for your continued commitment. 

There are no easy answers, but answer, we must. The Commission stands ready to assist in the search for solutions. On behalf 

of all the Commissioners and the hard working agency staff, thank 

you for the opportunity to testify. 

Chairman JOHNSON. Thank you, Chairman Taub. 

Our next witness is Lori Rectanus. Ms. Rectanus is the Director 

of Physical Infrastructure at the U.S. Government Accountability 

Office (GAO), overseeing GAO’s audit portfolio for Postal issues, 

Federal fleet management, currency and coin production, and Federal building security. Ms. Rectanus. 

TESTIMONY OF LORI RECTANUS,1 DIRECTOR, PHYSICAL INFRASTRUCTURE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. RECTANUS. Thank you. Chairman Johnson, Ranking Member 

Carper, and Members of the Committee, I am pleased to be here 

today to discuss the Postal Service’s financial challenges. 

The Postal Service is a critical part of the Nation’s communication system, but its financial situation, as we know, is dire. We 

placed the Postal Service on our ‘‘High-Risk List’’ in 2009, where 

it remains. 

Today, I will discuss the factors affecting the Postal Service’s deteriorating financial condition, the status of its unfunded liabilities, 
9 

and the choices that Congress faces in addressing these financial 

challenges. 

The Postal Service’s financial struggles are well documented. Beginning in 2007, expenses began consistently exceeding revenues 

and it has lost over $56 billion since then. The situation is primarily caused by a decline in mail volume, as we have heard, particularly in profitable First-Class Mail, commensurate with increasing expenses, largely because of salary increases. Increases in compensation and benefits alone will add over a billion dollars in additional costs in fiscal year 2016. The gap between revenue and costs 

continues despite significant efficiency initiatives undertaken by 

the Postal Service. 

Regarding unfunded liabilities and debt, they are a large and 

growing burden on the Postal Service. At the end of fiscal year 

2015, the Postal Service had about $125 billion in unfunded liabilities and outstanding debt, which accounted for about 182 percent 

of its revenues. Retiree health benefits accounted for about $55 billion of the unfunded liability, partly because the Postal Service has 

not made required prefunding health payments for the last 5 years 

and does not expect to make the required 2016 payment. 

Given this history and future events, it is not likely that the 

Postal Service will be able to make its required retiree health and 

pension payments in the near future. Beginning in fiscal year 2017, 

the Postal Service will be required to start making annual payments for health benefits on top of annual pension payments. 

Using available data, we determined that these payments could 

total about $11 billion. Although this is less than what was required in fiscal year 2015, it is about $4.6 billion more than what 

the Postal Service paid. 

The expiration of the temporary rate surcharge and a lack of 

major cost savings initiatives will further stress the Postal Service’s ability to make these payments. 

Having large unfunded liabilities for Postal retiree health and 

pension benefits places taxpayers, employees, retirees, and the 

Postal Service, itself, at risk. Postal retirees participate in the same 

health and pension benefit programs as other Federal retirees, so 

if the Postal Service does not adequately fund these benefits and 

Congress wanted these benefits to continue, the Treasury and, 

hence, the taxpayer may need to step in. Alternatively, unfunded 

benefits could lead to pressure for reductions in benefits or pay. For 

the Postal Service, unfunded benefits endanger its future viability 

by saddling it with bills later, after employees have already retired. 

Postal Service actions alone, under existing authority, will be insufficient to achieve financial solvency. Comprehensive legislation 

is needed. In doing so, Congress faces difficult decisions and tradeoffs in key areas. 

First, what is the level of Postal services needed in the 21st Century and what are we willing to pay for those services? Given how 

communication is changing, Congress could consider what Postal 

services should be provided on a universal basis and how those 

services should be provided. 

Second, what is the appropriate level of compensation and benefits that should be paid in an environment of revenue pressures? 

Congress could consider revising the statutory framework for col-
10 

1The prepared statement of Mr. Williams appears in the Appendix on page 128. 

lective bargaining to ensure that the Postal Service’s financial condition be considered in binding arbitration. 

Third, what is the continued viability of the Postal Service’s dual 

role of providing affordable universal service while remaining selffinancing? In assessing any alternatives to the current structure, 

Congress should consider costs that might be transferred from the 

Postal Service, which is financed by rate payers, to the Federal 

Government, which is funded by taxpayers. 

In conclusion, we must take a hard look at what level of Postal 

services we need and what we can afford. The status quo is not 

sustainable. 

This concludes my prepared statement. Chairman Johnson, 

Ranking Member Carper, and Members of the Committee, I would 

be pleased to answer any questions that you have. 

Chairman JOHNSON. Thank you. 

Our next witness is David Williams. Mr. Williams is the Inspector General (IG) of the United States Postal Service and has been 

Inspector General since 2003. Prior to that, he served as the Deputy Assistant Administrator for Aviation Operations at the Transportation Security Administration (TSA). Mr. Williams. 

TESTIMONY OF DAVID C. WILLIAMS,1 INSPECTOR GENERAL, 

U.S. POSTAL SERVICE 

Mr. WILLIAMS. Thank you, Mr. Chairman, Ranking Member Carper, and Members of the Committee. 

There are two sharply opposing views of the reality facing the 

Postal Service and judgments are difficult to make when viewing 

ongoing financial data through the distorted lens of prefunding expenses. 

The first view is that the financial situation is dire and that the 

Postal Service’s mission is antiquated. The Postal Service is losing 

more than $5 billion every year and has exhausted its borrowing 

limit of $15 billion. First-Class Mail volume, which has always supported the network, is in decline and will never return, and the 

Postal Service owes nearly a billion dollars in unfunded liabilities 

for retiree benefits and workers’ compensation. 

The second view is more elaborate. First, the Postal Service has 

weathered the storm of the digital disruption with much opportunity on its horizon. Technological advances are paradoxically creating new societal needs that the Postal Service’s extensive network is uniquely positioned to fulfill regarding e-commerce, e-Government, and coming smart infrastructure services. For example, 

the Postal Service could provide physical transaction points for industries that have gone partially virtual and offer neighborhood logistics support for emerging smart cities. 

Second, the Postal Service ended 2015 with more cash reserves 

than it has had for many years, $6.6 billion. It has set aside an 

unprecedented $337 billion and possesses significant real estate to 

meet future contingencies. The $15 billion Treasury debt is entirely 

due to required payments for distant and vacillating future retiree 

health obligations. 
11 

Now, it is very difficult to decide exactly what is needed to stabilize the infrastructure when prefunding activities are commingled 

with actual ongoing financial operating data. The arbitrary $5 billion prefunding payments show up as annual losses in financial 

statements, even if no cash is spent at all. Most stakeholders are 

simply lost attempting to understand postal financial reports. The 

Postal Service either made a controllable profit of $1.2 billion last 

year or it lost $5 billion. Since 2007, did the Postal Service make 

a billion dollars or did they lose nearly $57 billion? Decisions are 

extremely difficult with this kind of seemingly conflicting 

data—and these numbers do not include the neglect of infrastructure investments and that some of the savings were achieved 

through service cuts. 

The Postal Service has historically been required to break even. 

So, there was no extra money when the sudden 2006 Postal Accountability and Enhancement Act (PAEA) mandated $5 billion annual payments went into effect. A Consumer Price Index (CPI) 

price cap, and prohibitions against entering new business lines and 

closing certain facilities, barred the Postal Service from attacking 

these problems using normal business strategies, such as price increases, rightsizing, and product diversification, which are available to other world posts and private express carriers. 

The Postal Service’s survival is a tribute to the men and women 

working there, as well as to the American people, who demand 

that, like every nation, we have a Postal Service infrastructure to 

connect the world to our homes and our workplaces. 

Legislative efforts to provide relief for the Postal Service have 

failed for the last 6 years, but recent legislative proposals offer 

some needed solutions. Replacing the arbitrary retiree health funding schedule with actuarially based payments will make prefunding 

retiree health payments more affordable for the Postal Service and 

improve transparency of financial reporting. Proposed Medicare 

changes for postal retirees will likely eliminate much of the remaining unfunded retiree health care liabilities. 

Another useful proposal is to permit the Postal Service to explore 

offering modernized services in response to changing citizen needs 

and also to enable private sector strategies. Collaboration between 

the Postal Service and the private sector has worked well. It is a 

good deal for citizens, and it is a great deal for American business. 

Finally, a more flexible, responsive pricing regime is needed to 

help ensure the Postal Service’s financial stability at a time of 

rapid change. 

In recent years, stakeholders have been starved for clear information, causing confusion about the road ahead for the Postal 

Service. In this age of extraordinary threats and game-changing opportunities, other nations are not confused. Other world posts are 

racing to support innovators, citizens, and businesses. The United 

States cannot afford to stagnate in decisions regarding investments 

for its public infrastructures if we hope to enable citizens and 

maintain our leading position among nations. 

Thank you. 

Chairman JOHNSON. Thank you, Mr. Williams. 

Our final witness is James Millstein. Mr. Millstein is the founder 

and Chief Executive Officer (CEO) at Millstein and Company. Mr. 
12 

1The prepared statement of Mr. Millstein appears in the Appendix on page 133. 

Millstein is the former Chief Restructuring Officer at the U.S. 

Treasury and has an extensive background in the restructuring of 

large private and public entities. Mr. Millstein. 

TESTIMONY OF JAMES E. MILLSTEIN,1 FORMER CHIEF RESTRUCTURING OFFICER AT THE U.S. DEPARTMENT OF THE 

TREASURY, AND FOUNDER AND CHIEF EXECUTIVE OFFICER, 

MILLSTEIN & CO. 

Mr. MILLSTEIN. Thank you, Chairman, Ranking Member Carper, 

and Members of the Committee. 

I am here today because the Postal Service is in trouble—trouble 

that we can fix, but it does require a financial restructuring to restore its ability to meet its ongoing obligations and, frankly, a restructuring of the regulatory regime under which it operates, to enable it to deal with the challenges of a very rapidly changing market for its products and services. Some of these challenges require 

immediate fixes. Others can be handled in a more deliberate fashion after further study and public debate. 

If I can, in the short time that I have for an opening statement, 

I think that I will lay out the four challenges that I see and we 

can discuss the fixes down the road. 

So, Congress intended the Postal Service to be a self-sustaining 

governmental entity. The sale of its postage products and services 

was intended to cover the cost of its operations with no governmental or taxpayer support. Nevertheless, the Postal Service faces 

four significant challenges that have put its ability to sustain itself, 

in that fashion, in jeopardy. 

First, as a result of the growth of e-mail and Internet advertising, physical mail volume is down over 24 percent since the financial crisis. Running a nationwide delivery network with shrinking volumes makes it increasingly difficult for the Service to cover 

its network operating costs. 

The second challenge is the rigid regulation of its pricing. Established under the 2006 Act, Congress presumed that the Service 

would have a monopoly in its First-Class and standard mail products, and so to protect the public against price gouging and to protect competitors in the package space against unfair competition, 

the Service is prohibited from increasing rates on its First-Class 

and standard mail by more than the rate of inflation. Hit by the 

double whammy of a downturn in volumes resulting from the great 

recession and from the rapid growth of e-mail and Internet advertising, this regulatory regime has left the Service with very little 

flexibility to adjust its prices to recapture lost revenue so as to be 

able to cover the operating costs of its network and be self-sustaining. 

Employing the only safety valve in the statute, the Service applied for and received a so-called exigent price increase from the 

PRC, allowing it to cover its costs and make a small operating profit. However, this temporary price increase expires this coming 

April, which will again leave the Service unable to be self-sustaining in covering its operating costs. 
13 

The third challenge is the Postal Service’s legacy liabilities, and 

in particular, the statutory mandate imposed under the 2006 Act, 

in which the Service was required to prefund its post-retirement 

health care plan. The Act required the Service to make 10 annual 

installments of $5 billion each, the last of which would be due next 

year. Not surprisingly, the Service has defaulted on the majority of 

these payments, as it would have had to raise prices well beyond 

what its price regulation permitted—or that the market could 

bear—to generate $5 billion in incremental revenue every year to 

satisfy this mandate. As a result, its Retiree Health Benefit Fund 

remains $55 billion underfunded, based on projected liability of 

$105 billion. 

The fourth challenge is presented by the universal service obligation, an obligation to touch all 155 million delivery points on a regular basis at uniform prices in an era of overall declining volumes 

and limited price flexibility. The cost of this obligation is assumed 

to be offset by the benefit of the mailbox monopoly that the Service 

is alleged to enjoy. But in an era of rapidly growing electronic alternatives, it is unclear, at least to me, that the Service has any 

monopoly at all and, therefore, is being saddled with a financial 

burden it is not being adequately compensated to carry. With competitors skimming the most profitable business away, electronic alternatives reducing its volumes, and rigid price regulation limiting 

its flexibility, the universal service obligation, as currently conceived, is slowly choking the Service to death. 

So, in the short term, in my business, in the financial restructuring business, the first job is to keep the patient alive, and in 

this instance, that means making sure that it has sufficient cash 

revenue to service its operating expenses. 

In the long term—and these are the big questions that this Committee and this Congress has to face—the question is, what do we 

want this Postal Service to be? How are we going to permit it to 

transform itself to meet the challenges—the technological challenges, the market challenges, and the competition—that it faces, 

and at the same time, serve the public interest by keeping this Nation connected—keeping those 155 million delivery points connected with each other? 

Thank you very much. 

Chairman JOHNSON. Thank you, Mr. Millstein. 

Again, I kind of reserved my opening statement so that I can 

spend a little more time asking questions. I do want everybody to 

refer to this basic balance sheet with a number of columns, and 

what I have tried to do is—because we have a financial problem 

and we have to look at numbers—I just want to quickly lay out for 

my colleagues and for the witnesses how this thing is set up. 

The first column is the current balance sheet the way that it is 

reported by the government, which is not using Generally Accepted 

Accounting Principles (GAAP). 

The second column puts on the balance sheet the fund balances, 

as well as the unfunded liability, of the retirement system and the 

health care system. 

Then as to the columns A, B, and C, the first scenario, A, simply 

reamortizes the short-term liability back into where it really should 

be classified. It basically reclassifies the long-term liability to 
14 

where it should be. Then you start talking about Medicare integration as well as current debt restructuring. 

Now, I realize that this is relatively complicated, but if you really 

take a look at this, I think that it really lays out and crystalizes 

the main problem here, and that is the point, I think, of this hearing: to let us try and make this as simple as possible. I think, Mr. 

Millstein, that you did a really good job of laying out the four main 

problem areas. 

Let us go to number two. We talked about rigid regulation of 

pricing. I know that in the last go-around here, we compared U.S. 

Postal Service price increases to their competitors, UPS and FedEx. 

Off of the top of my head, I think that over a 6-year period—this 

was a couple of years ago—UPS and FedEx had increased their 

prices about 33 percent. The Postal Service was somewhere between 14 and 16 percent, depending on which service you are looking at. Is that—do you have any information on the current status 

of that, of how far the Postal Service is behind competitively, in 

terms of raising prices? 

Mr. MILLSTEIN. I do not, sir, but in the materials that we provided, there is one interesting statistic. The Postal Service carries, 

in the package business, about the same volume as FedEx, and yet 

it earns half of the revenue of FedEx. The market—the dominant 

market package deliverer is UPS. So, the Postal Service is a real 

competitor and a growing competitor in that package space and it 

is the future, I think, of the business, but it is hamstrung in competing in that package space by the price regulations under which 

it operates. In part—it is not limited in the package space in the 

same way that it is limited in the First-Class Mail and standard 

mail space. 

But, the key here is that the Postal Service must maintain a network that reaches all 155 delivery points, whereas UPS and FedEx 

can pick their spots, can pick dense urban markets, where the cost 

per delivery—per unit of delivery—is much lower than servicing all 

155. So, the issue that we face surrounds giving the Service the 

pricing flexibility to be able to price all of its products in a way that 

will allow it to be able to maintain that network. 

Chairman JOHNSON. OK. Again, I want to go—when the exigent 

price increase is no more, and, basically, they have recovered the 

amount of money they were supposed to recover—it is not about 

timing, it is about how much business they have done—I do want 

to talk about what that would actually do to Postal rates when you 

combine the—I would say the misclassification of the long-term liability, as it was forced to be classified as a short-term liability. 

The combination of those two things—I will go to the Postmaster 

General. Can you talk about what effect that would have in pricing? 

Ms. BRENNAN. Let me say, Mr. Chairman, first, if I may address 

the comment about competitive pricing, we do consistently evaluate 

where we have had room to take price on the competitive side. We 

recently just raised our prices roughly 10 percent, the first time in 

3 years. 

Now, on the market dominant side, the challenge is, those products generate roughly 76 percent of our revenue and they are 

capped. So, that is why the urgency of addressing the exigent sur-
15 

charge and the rollback in April is critical to us, because it will impact us, causing a billion dollar negative hit on our top-line revenue this fiscal year and $2.1 billion going forward. 

Chairman JOHNSON. And it will require legislation to prevent 

that rollback, correct? 

Ms. BRENNAN. Sir, yes. The PRC order requires that once we achieve or collect the $4.6 billion, we need to roll prices back. 

Chairman JOHNSON. As an accountant, I have always been a little bothered by the talk of prefunding the health care plan, because 

we really did not prefund it. We just really reclassified a long-term 

liability into a short-term liability, correct? I mean, it has really 

just been a balance sheet entry, correct? 

Ms. BRENNAN. Yes. 

Chairman JOHNSON. There really was not any funding going on. 

We just borrowed more money. It was short-term borrowing, and 

we have just, I think, improperly reclassified a long-term liability 

into a current liability. Is that basically true? 

Ms. BRENNAN. Yes, sir. 

Chairman JOHNSON. So, in terms of what we must do, I mean, 

from my standpoint, just according to GAAP, we should accurately 

reflect this as a long-term liability, as opposed to a short-term liability. But, you have a four-point plan. Having done this a couple 

of years ago and having the scars on my back for trying to actually 

come to a compromise here, what are the areas of agreement between all of the interested parties—and there are a lot of them— 

what are the areas of agreement? I know that Senator Carper 

wanted a touchdown. Maybe we ought to be thinking about a field 

goal. 

What are the things that we absolutely must do to avoid a real 

calamity in terms of the Postal system or pricing, and what is 

going to be possible to do here in the short term? 

Ms. BRENNAN. Sir, in terms of pricing, it would maintain the exigent, making that part of the rate base. That will generate $2.1 billion annually. In terms of the large—— 

Chairman JOHNSON. Is there any resistance to that? 

Ms. BRENNAN. Yes. Now, I will say that there are many in the 

industry, a broad cross-section, who support that, because part of 

the proposal that we put forth would bake the exigent into the rate 

base and then forego any CPI price increase in calendar year 2016 

or 2017, and then in 2017, we will have the price review that the 

PRC will undertake—and that is critically important. 

Chairman JOHNSON. OK. So, again, in business, you try not to 

roll back prices—— 

Ms. BRENNAN. Right. 

Chairman JOHNSON [continuing]. Particularly when you are already at lower prices than your competition anyway. So, to me, 

that would be somewhat of a no-brainer, but OK. So, that is the 

first thing. We do not have total agreement on that, but I think 

that, if you really have a level head, and you want to see a vibrant, 

viable Postal system, then you have to agree to that. 

What is the next area of agreement? 

Ms. BRENNAN. Sir, cornerstone—and I have heard no one dispute 

the fact that we should ensure that we are fully integrated with 

Medicare for retirees 65 and older. As mentioned, the Postal Serv-
16 

ice has paid $29 billion into that fund and our employees should 

benefit from it. We are asking to be treated like any self-funded entity. 

Chairman JOHNSON. What the game plan there would be, 

though, would be to offload the roughly $100 billion liability of the 

health benefit plan, the pension health benefit plan, onto Medicare, 

but without transferring the assets in that health benefit plan? So, 

you are going to offload about a $100 billion liability into Medicare, 

but the Postal Service is going to maintain the $50 billion of assets 

in their fund? 

Ms. BRENNAN. Well, and I think, as discussed, accounting principles would indicate that that should shift, as well. 

Chairman JOHNSON. But right now, according to the proposal as 

it is being laid out for me, that is not being contemplated and we 

would not integrate it. 

Ms. BRENNAN. I think that is—— 

Chairman JOHNSON. So, the Postal Service holds on to the $50 

billion and offloads a $100 billion liability onto Medicare, the American taxpayer. I would agree that you would probably get some 

credit for the $29 billion, and as we talked about earlier in the 

anteroom, we do not know, out of that $29 billion funding from 

payroll deductions, how much the Postal Service has actually 

used—— 

Ms. BRENNAN. Yes. We do not have access to that information. 

Chairman JOHNSON. They have used some of it, correct? 

Ms. BRENNAN. Correct. 

Chairman JOHNSON. OK. 

Ms. Rectanus, you talked about a $100 billion unfunded liability. 

According to the balance sheet here, it is about $79 billion. Looking 

at the summary figures here, can you tell me where the difference 

comes from? 

Ms. RECTANUS. You mean $100 billion for retiree health benefits? 

Chairman JOHNSON. OK. You are only talking about that. 

But that is not unfunded because they have $50 billion of offsetting assets in their fund. 

Ms. RECTANUS. Yes. According to the Congressional Budget Office (CBO) data that we used, the unfunded obligation left over was 

$101 billion. That was based on the $50 billion that they do have 

in assets. 

Chairman JOHNSON. So, the total liability is $150 billion, offset 

by $50 billion in the asset fund. 

Mr. Millstein, can you address that? 

Mr. MILLSTEIN. I do not think that that is right. I think that the 

CBO liability is $105 billion and the asset offset is around $50 billion. 

Chairman JOHNSON. OK. Well, sure. Let me just say that this 

is—and, again, I am not beating up any witness here—this is the 

problem that I have been having for a number of years. Again, as 

an accountant, I understand numbers and I cannot get them. There 

is just so much confusion on this issue, and yet we are—we passed 

the 2006 law that reclassified a long-term liability into a shortterm liability that created a real pinch on the Postal Service that 

never should have occurred. So, if we are going to pass something, 
17 

we need the information and we need it to be accurate. So, we have 

a long way to go. 

I guess that I will stop at this point in time. I guess that I have 

kind of made my point. I am still not there in terms of understanding the financial condition of the Postal Service, exactly what 

these proposals would do, as well as who is for these proposals and 

who is against them. 

The way that you get results—and we have actually proven this 

in this Committee—is by looking for areas of agreement that unify, 

as opposed to exploiting differences. You can actually get results 

that way. We have actually passed 55 pieces of legislation through 

this Committee. Sixteen have already been signed into law. We 

have to find that sweet spot here, because everybody that I talk to 

says that we have to keep the Postal Service viable—and I agree 

with that—and yet we have not had all of those parties come together and find an agreement. 

So, the first thing you have to agree on, though, is we have to 

have the numbers right and we have to know what we are actually 

doing—and we are not there yet. 

Mr. Williams, you can quickly comment before I turn it over to 

Senator Carper. 

Mr. WILLIAMS. Thank you, Senator. I think that the liability, as 

you said, the $79 billion, that is the mandate. We have additional 

liabilities, though. Workers’ Compensation brings it up to about 

$98 billion. And when you add the Treasury debt, it is $125 billion. 

Those are all of our liabilities. The mandate is to prepay $79 billion. 

Chairman JOHNSON. OK. So, again, I have been after this—I 

have been at this for quite some time, trying to get—so, what we 

need to do is, working with you, let us come up with a relatively 

simplified balance sheet that lays it out so that there are not any 

questions about this, and so that we are not dealing with a bunch 

of different numbers. ‘‘Oh, that is not included here,’’ or ‘‘This is off 

of the balance sheet there.’’ I think that this is a pretty good format 

and I am really just going to ask people, just for my benefit if for 

nobody else’s, to give me the information. OK, work on this, and 

we will talk to you afterwards. Senator Carper. 

Senator CARPER. I am going to yield my time to Senator Tester, 

who needs to leave. But, I do want to say something before I do 

that. 

First of all, your testimony is very good and, I think, very helpful 

and very instructive. But, what we really have been doing with the 

Postal Service is requiring them to maintain this universal network, 150 or 160 million delivery points. They have to do that. And 

while making that the requirement, we limit their ability to increase prices for a number of their products. We limited, in some 

cases, the kind of products that they can offer through their distribution network. 

And we require the Postal Service to do something that I do not 

know if any other business in America does—not only to recognize 

the liability associated with their 65-and-over retirees for health 

care, but to address that and to pay that down—not over 30 or 40 

years—but over 10 years. I am not aware of any company in Amer-
18 

ica that does that. So, that is a pretty good to-do list there for us, 

and our job is to do it. 

I have wrestled with the numbers, as Senator Johnson has alluded to, and I do not pretend to be an expert on this, but if I can 

understand it, I think that most of us can. And one of the things 

that we need from the Postal Service, Postmaster General, is something that we talked about just yesterday, and that is a 10-year financial statement laying out your expected revenues and your expenses. Give us an opportunity to see what happens and where 

that leaves us in a cash position each year, and see if that cash 

position is sufficient to enable us, not just to meet some of these 

liabilities and to pay them down, but also to capitalize—or recapitalize—the Postal Service’s vehicles, modernize their fleet, modernize their package handling facilities, and modernize their Post 

Offices. That is our challenge. And, actually, I think that we can 

do that. Senator Tester. 

OPENING STATEMENT OF SENATOR TESTER 

Senator TESTER. Thank you, Tom, for your generosity. 

I will make this very quick. First of all, I appreciate all of your 

testimonies. I mean that. I think that you pretty much all said the 

same thing in a different way. 

But, I am going to start with you, Mr. Williams. You have been 

around the block in the IG world, and you can answer this, too, 

Jim, if you would like. Is there any other agency in the government 

that has to prepay their benefits? 

Mr. WILLIAMS. There is not. 

Senator TESTER. OK. So, the Postal Service is alone in this. 

Mr. WILLIAMS. Right. 

Senator TESTER. And, I think that you made the point very well 

in your testimony, about getting numbers that make sense, whether the Postal Service made money or lost money, as they move forward. But, I think that the prepayment thing, if we do not get our 

arms around that, along with the Medicare thing—I do not know 

if you guys will ever get to a point where you would be solvent. 

Would you agree with that, Postmaster General? 

Ms. BRENNAN. Senator Tester, if I may, first, to the Chairman, 

the Postal Service will provide certainly the current assets and liabilities to ensure that we have valid numbers. 

Senator Tester, looking ahead, based on our projection—— 

Senator TESTER. Yes. 

Ms. BRENNAN [continuing]. We would be liquid, have manageable 

debt with legislation. We still would have liabilities, and the discussion then would be about how to amortize those liabilities to 

make—— 

Senator TESTER. But without dealing with the prepayment issue, 

would you still be liquid? 

Ms. BRENNAN. Without dealing with the prepayment issue? 

Senator TESTER. Yes. 

Ms. BRENNAN. No, sir. 

Senator TESTER. OK. So, unless we are willing to agree on that 

single issue, we are never going to get you to a point—and then 

be able to deal with the others, also. I would agree with that. 
19 

Did anybody on this panel, and I am not making any accusations, take a look at the contracts between the private carriers in 

the last mile to see if they are appropriate? Go ahead. 

Mr. TAUB. Senator Tester, the contracts that the Postal Service 

has, to the extent that they are negotiated service agreements—— 

Senator TESTER. Yes, that is correct. 

Mr. TAUB [continuing]. That goes before the Postal Regulatory 

Commission. 

Senator TESTER. Yes. 

Mr. TAUB. Under the law, we look at that to ensure that they 

cover their costs and that, collectively, all competitive products 

have to contribute to the overhead. So, that has to go through review through the Commission. 

Senator TESTER. So, is it a zero-based thing or do they make 

profit? 

Mr. TAUB. As long as they are covering their costs, it is in compliance with the law. But, I would note that for competitive products, we require that, collectively, they contribute 5.5 percent to the 

institutional costs. This last year, they contributed over 13 percent. 

Senator TESTER. OK. The universal service obligation was 

brought up several times during the testimonies, and the thought 

occurred to me, who are you going to prune off? I mean, Heidi and 

I have customers that live a long ways apart from one another. If 

we prune those folks off, it would probably save a lot of money, but 

arguably, they may be the folks who most need the service. 

So, Jim, do you have any ideas on how we can deal with this 

issue? 

Mr. MILLSTEIN. Yes. I do not think that we have to invent this 

out of whole cloth. Obviously, you can vary service in terms of how 

often it is done to try to manage the costs. 

But, other countries that have an equal interest in making sure 

that all of these points of contact are maintained on a regular basis 

allow their postal services to do other things to subsidize that universal service obligation. We have tightly restricted the Postal 

Service’s products and services and so it does not have the ability 

to earn revenue and profit from other lines of business that it could 

enter into in order to meet that universal service burden—and it 

is a burden. So, it really is a question of, if the Congress wants to 

keep it up, it could subsidize it—— 

Senator TESTER. OK. 

Mr. MILLSTEIN [continuing]. But you have determined, as a 

group, that you want this thing to be self-sustaining. If you want 

it to be self-sustaining, you have to give it the ability to generate 

the revenue necessary to meet that universal service obligation. 

Senator TESTER. David, do you want to respond? 

Mr. WILLIAMS. I really do not think that we need to begin down 

that trail. 

Senator TESTER. Good. 

Mr. WILLIAMS. But if we do start down that trail, I honestly 

think that it is time to give up. When we cut off that first person—— 

Senator TESTER. Yes. I would agree 100 percent with that, and 

I am glad that you guys clarified that within your statements. I appreciate that. 
20 

I will just say one last thing. Those who think that the Postal 

Service is antiquated need to come to my house, because without 

the Postal Service, I am in a world of hurt—and I have fiber coming into my house. So, it is a big deal. 

And, the last thing that I will say, with OPM breach that this 

Committee has dealt with—I just met with Beth Cobert the other 

day—the most secure way to send information to the folks who 

have been breached is through direct mail, and we need to keep 

that in mind as we go forward. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator Tester. Senator Booker. 

OPENING STATEMENT OF SENATOR BOOKER 

Senator BOOKER. Just for the record, I heard that Senator Tester 

said, ‘‘Those who think that the Postal Service is antiquated should 

come to my house.’’ I am going to take that as an invitation, which 

he has never given me before, to his house. [Laughter.] 

Senator TESTER. I look forward to that, Booker. 

Senator BOOKER. I appreciate that. I am one of those house 

guests that will never leave. [Laughter.] 

I do think that the Post Office is antiquated, but not in the ways 

that have been discussed, and not in the ways that would make my 

friends in rural States annoyed. I am just concerned about some of 

the updates to equipment that could make it more efficient and 

more effective. 

I have introduced legislation, the Postal Innovation Act, which 

stresses the urgent need for the U.S. Postal Service just to modernize, from updating the 190,000 vehicles in the Postal fleet with 

new crash avoidance technologies to investing in innovation. USPS 

has the opportunity to really show leadership in technology and 

safety efforts that could help in some ways, as the government did 

with seat belts, to lead the way into a new era of protecting lives, 

as well as integrating technology. And on top of that it could accrue 

long-term savings, which seems to be one of the buzz words here. 

So, to the Postmaster General, I would just like to ask, how will 

USPS be working to incorporate new safety technology in the Postal fleet to reduce accidents and to lower greenhouse gas emissions? 

Ms. BRENNAN. Thank you, Senator Booker. In terms of the next 

generation delivery fleet, we are working with industry experts and 

we are looking at industry best practices in terms of safety. The requirements assessment, as we move forward in this process, is the 

safety, ergonomics, fuel emissions, fuel efficiency, and also, from an 

operational standpoint, having enough cargo space, given the 

change in the product mix for the vehicles. 

Senator BOOKER. So, when I was the mayor of a city, the challenge that I often had was that, if we made a significant up-front 

investment, then it would cost a lot of money, but the savings 

would accrue over many years. And, do you all have the resources 

to invest in the kind of innovations that would create long-term 

savings, or is that a problem for you? 

Ms. BRENNAN. Well, Senator, legislation will give us some additional capital moneys that we can invest in the infrastructure, because, as mentioned, we have deferred capital investments in the 

past due to not having money available. We will continue to 
21 

prioritize the available capital moneys that we have. But we need 

to be in a position where we are able to invest in the infrastructures, repairs, and alterations of our more than 30,000 buildings, 

as well as the new vehicle fleet. Roughly 212,000 vehicles are on 

the road 6 days a week, and increasingly 7 days a week, traveling 

nearly four million miles. So, we have to invest in our infrastructure to enable us to continue to compete in this critical marketplace. 

Senator BOOKER. I completely agree. I appreciate that. 

I also believe that, in order to maintain the robust delivery service and continue to reap the benefits of a thriving connected country, we must take action toward forming a comprehensive Postal 

bill, which you all seem to be calling for and some of my colleagues 

seem to be calling for. I am really happy that Senators Carper, 

McCaskill, Moran, and Blunt have put forth what I think is a very 

balanced, bipartisan proposal that could keep the USPS afloat, although I am hoping that some other innovations will be included 

in it as well. 

And, so I just want to ask the panel real quick before I conclude, 

do you agree that there is this need? What is the urgency, in terms 

of the timeline for this legislation? How urgent is it to act? I would 

like to sort of highlight that. 

Ms. BRENNAN. Senator Booker, the time is now. 

Senator BOOKER. And the consequences of delay? 

Ms. BRENNAN. The consequence is that it would necessitate us 

making decisions around defaulting on additional obligations and 

potentially put our core mission, delivering the mail to every American, at risk. 

Senator BOOKER. So, this is not something that should wait until 

after a Presidential election or until the next Congress? This is 

something that really needs to be done right now? 

Ms. BRENNAN. The time is now, sir. 

Senator BOOKER. Thank you very much. 

Mr. Chairman, I appreciate the time. 

Chairman JOHNSON. Thank you, Senator Booker. 

There is a vote called at 10:30 and I really do have to leave, so 

I will turn it over to the capable hands of Senator Carper. You are 

going to have to figure out how to—if you want to recess to have 

everybody vote or whatever, that is fine and that will be up to you. 

Again, I want to thank the witnesses. This is an issue, as Senator Booker’s question elicited, that we have to address. Literally, 

failure is not an option. So, I wanted to hold this hearing, and 

Madam Postmaster General, I will definitely be sitting down with 

you—— 

Ms. BRENNAN. Thank you. 

Chairman JOHNSON [continuing]. And I think you understand my 

passion to get the actual facts and figures straight—— 

Ms. BRENNAN. Yes, sir. 

Chairman JOHNSON [continuing]. So that I know exactly what we 

are dealing with when we head to some kind of markup, in terms 

of the areas of agreement that we need to get resolved. OK? 

Ms. BRENNAN. Thank you, Mr. Chairman. 

Chairman JOHNSON. So, again, that is my commitment. We will 

definitely jump into this. 
22 

And with that, I will turn it over to Senator Carper. Thank you. 

Senator CARPER [Presiding.] What I would like to do is to play 

tag team here. Is there someone who would like to go vote and 

then come right back and I will continue to—OK. That would be 

great. Gary, I think that you are next. Thank you, Heidi. 

OPENING STATEMENT OF SENATOR PETERS 

Senator PETERS. Thank you, Senator Carper, and thank you to 

the panel for your testimony. We definitely have a significant issue 

here, one that is going to take a lot of effort to work through. 

And I have some questions, but before I do that, I actually want 

to begin by reading an e-mail that I received from a constituent, 

someone who is very agitated about mail service. I promised that 

I would read this beacuse I was going to be with the panel. I think 

that it highlights the challenges that we have with the service and 

how we need to be part of the solution to help you. 

But, this is a quote from the gentleman’s e-mail, ‘‘I am on the 

Martin Luther King Holiday Commission and we proudly give 

$15,000 in scholarships each year. The students apply to the Commission via mail and were informed to provide their applications 

this year postmarked by December 4, with the actual judging to be 

held on December 12. 

I went to the Post Office every day between December 4 and December 12 to be sure to get every application. They seemed to trickle in this year, but for some odd reason, they only came from the 

Lansing schools and there was an unusually small number of them. 

I even went to the Clerk’s desk on the morning of December 12, 

asked them if there was any other way that our mail could have 

been misplaced. They checked the sorting room and said that everything had been received. I continued to get our mail the following week and did not receive any other applications, and aside 

from the normal checks, receipts, ads, et cetera. 

On Tuesday, December 22, one of our Commissioners in my absence went to the Post Office to check the mailbox and [oh my 

goodness] there were found 40 applications all postmarked December 4 and routed through Grand Rapids. Forty young people within 

a stone’s throw of Lansing were denied a chance at up to a $5,000 

scholarship because our government has made the Postal system 

inept.’’ 

We certainly do not want the government to make the Postal 

Service inept and allow for something like this to happen. If you 

do the math here, it took 18 days for applications that were postmarked on the day that they were supposed to be to actually get 

into the hands of this Commission. 

So, I hear these types of comments frequently in Michigan and 

I guess I feel like we are in somewhat of a death spiral. I understand the impact on First-Class Mail and revenues and the financial stress that that puts on the Service, but as service degrades, 

then people figure, ‘‘I am not going to use the Service anymore. I 

am going to have these students just do it electronically going forward.’’ And I know that there have been a number of closures related to that. 
23 

Postmaster, it looks like you want to respond to this. I was not 

going to ask for a response to this, but I would love to hear your 

thoughts. 

Ms. BRENNAN. No, Senator Peters, I just would like to say that 

service is foundational and it is key to growth for the Postal Service. It is in our name. So, we are working day in and day out to 

improve service reliability. This particular example is certainly unacceptable and not indicative of the caliber of service we typically 

provide. But, know that we are committed to improving service. 

Senator PETERS. Well, I know that you are and I did not mean 

to suggest that you were not. I meant that, as a situation, this 

shows that we have a problem here. And I know that the folks, the 

men and women who work in the Postal Service are hard working 

and dedicated individuals. But, also, as you cut costs and close facilities and do these types of things, it is going to have an impact 

on service, and we have to figure out a way so that that does not 

happen, so that we are not in this death spiral. 

And, I think, Mr. Millstein, that your testimony was particularly 

interesting. The comment that you made was that the Congress 

and the government treat the Postal Service as a monopoly—when 

it clearly is not a monopoly, and yet we saddle USPS with the regulations that you would expect from an electric utility—perhaps 

even more than an electric utility, which we know is a monopoly 

since it is only that one line into the household. There is no monopoly occuring in this space—and it is not happening, particularly, 

when taking into account the universal service obligation. 

I want to pick up on the universal service obligation, as well, because I also represent—Michigan has a number of very rural areas, 

as well, and I am concerned about that universal obligation. And 

your comments to Senator Tester, that we should not end that, I 

agree with. We have to continue that service. 

You mentioned that other countries have flexibility, but are there 

any countries that do not subsidize that type of thing? And, I look 

at subsidies—Congress currently subsidizes because we want airline service to extend to rural areas. We subsidize airlines to fly 

airplanes to those areas. We are expecting the Postal Service to 

make a profit in very rural areas. Are there countries that do not 

subsidize, or is that only related to flexibility, or is there more to 

it? 

Mr. MILLSTEIN. Yes. There are a number of countries. Japan, 

Italy, Britain, and Australia have privatized their postal services, 

and in the context—having privatized them—require them to still 

meet a universal service obligation. And you do not have to go 

down the full road to privatization in order to do this, but what you 

do have to do is permit what privatization permitted in these countries, which is to allow those postal services to engage in other 

lines of business and to use the profits made in those other lines 

of business to subsidize their ability to meet the universal service 

obligation. 

So, you can do this in a couple of different ways. The Congress, 

itself, could do it by direct appropriation in order to ensure that 

rural communities are served and those 155 million points of delivery have regular service. Or, you can expand the kinds of businesses that the Postal Service is permitted to be in so as to gen-
24 

erate incremental revenues to foot that bill. But, either way, it 

costs something to maintain this network, and clearly, the price 

constraints under which the Service is currently operating, do not 

permit it to do this very well for very much longer without incremental price increases or incremental revenues. 

Senator PETERS. Mr. Williams. 

Mr. WILLIAMS. Thank you, sir. Actually, the hallmark—the world 

posts are doing much better now, but the hallmark of their success 

has been pricing flexibility as well as the ability to diversify. World 

posts now make—last year, they began making more money on 

non-mail than on mail. 

As far as privatization, it has some intriguing aspects to it, but 

when you talk about privatization, there are posts that are moving 

in that direction. The only ones that are privatized so far are in 

tiny places, and we would be really foolhardy to try to extrapolate 

from what the city-State of Singapore is doing—they are 

privatized—or Belgium, the size of Maryland, and others. The larger countries, in terms of geography, have not privatized—or else 

they have only partially privatized. The Postal Service is partially 

privatized. The work share discounts and the partnerships that 

they have constitute probably around 25 to 28 percent privatization. We have just done it in a different way, and we have done 

it in a way that preserves our promises to our people. 

Senator PETERS. Mr. Millstein. 

Mr. MILLSTEIN. Yes, but I think that there are some larger industrial nations that have begun the process of privatizing their 

postal services. They are not fully done. They still own a substantial majority of the equity, but they are in the process of selling 

that equity into the public markets. 

That said, that is a big step. You do not have to go there to fix 

the short-term problems that the Postal Service faces. But what 

you do have to do is find a way to give the Postal Service flexibility 

to raise prices and increase revenues to maintain this universal 

service obligation. They cannot do it—it costs money to do it. They 

have to be able to generate the revenues to cover the burden. 

Mr. WILLIAMS. There is a reason that the large countries are not 

finished privatizing. It is because they stopped. They started forward, they began to sag, and they have halted the effort. 

Senator PETERS. Yes. 

Mr. WILLIAMS. The only one that is a little bit larger is England. 

When England privatized, they took over all of the liabilities. Not 

only is that not on the table, to take over our liabilities, but, in the 

past legislation, you asked that we prefund them. I know that you 

are trying to do some really interesting, clever things in the proposed legislation, but as far as large countries that have 

privatized—there are not any. They started and they stopped. 

Senator PETERS. Yes. Well, I appreciate that. Certainly, I am a 

big proponent of maintaining universal service. I think that it is a 

critical part of the Postal Service. I appreciated the comment that 

you lose your soul if you end that feature of the Postal Service. But 

understand that you are also being cannibalized, your business, by 

very aggressive private companies that are out there taking the 

real profitable parts of your business. 
25 

So, I just want to say, my time has ended, but I am here for you 

in figuring out a solution to this. I look forward to working with 

you. Sorry about the time constraints on this panel, but I know 

that all of you are committed to finding a solution, and I am, as 

well. I look forward to working with you in the—it will have to be 

in the months ahead—not years. Too many years have already 

gone by. We have to figure this out and we have to figure it out 

as soon as possible. 

Ms. BRENNAN. Thank you, Senator Peters. 

Senator CARPER. I like that sense of urgency. That is a sense of 

urgency that all of us on this panel need to feel—all of us. Thank 

you, Senator Peters. 

I joined Senator Peters and Senator Stabenow about 10 days ago 

in Detroit for the opening of the Detroit Auto Show, and before I 

left, I stopped by one of the restrooms there, Gary, and as I was 

coming out, there was a janitor waiting to go in. And, as you know, 

there were tons of people, the place was just packed with thousands and thousands of people there for the opening day. 

And, I said to the janitor, ‘‘The restrooms here are really clean. 

I mean, this is amazing, all of these people and they look so presentable and they are clean.’’ And, I said, ‘‘Who does this? ’’ And, 

he thought for a second and he said, ‘‘Well, I do.’’ And, I said, 

‘‘Well, you are doing a good job.’’ He said to me, I will never forget—he said, ‘‘That is my job and I am proud to do it.’’ And, I said, 

‘‘Terrific.’’ And, he said, ‘‘We all have our jobs. We need to do our 

jobs well.’’ 

He was right. And our job here is to be an enabler. We cannot 

fix this problem by ourselves, but we can certainly enable the Postal Service to do a lot of what others have suggested that they need 

to do. So, we are going to do our job. 

Part of our job is to unleash innovation and creativity within the 

Postal Service. General, you and I have talked a bit about some of 

the innovations that are being pursued, that could be pursued, and 

I would just like for you to share with us some of what you are 

doing now that you think is promising, in terms of generating additional revenues. I am not interested in the Postal Service owning 

a bank. In some countries, the postal services own banks. I do not 

know, could we lease space for bank branches like we do in supermarkets? That might make sense. I am not interested in the Postal 

Service owning an insurance company. 

But, those things notwithstanding, there are some innovations 

that can be made and we can do a number of things. The Postal 

Service can do a number of things if you want to and if we let you. 

So, go ahead and just give us—and then I am going to ask the 

other panelists to react to those ideas and maybe give us some of 

your own. Please, General. 

Ms. BRENNAN. Thank you, Ranking Member. If you consider our 

infrastructure, it is important that we innovate at the core, which 

we have been doing when you consider the growth in market share 

of our package volume, looking at customized delivery solutions 

with this exponential growth in e-commerce. 

When we look beyond the current statute—and fundamentally, 

we are looking for more flexibility in pricing and product. One example that we should consider is that, if we have more than 
26 

200,000 vehicles, as I mentioned, traversing more than four million 

miles on any given day—Inspector General Williams mentioned 

smart cities—is there an opportunity for us to partner with these 

local municipalities and apply sensors to our delivery vehicles that 

could capture air quality samples, that could consider road conditions, traffic patterns, and the like? That is just one example. 

Also, we are currently partnering with the Census Bureau on 

onboarding Census employees, similar to our passport operation 

that we have in our retail offices, where you come in, we validate 

your information, and we authenticate your identity. Something 

that we are currently doing with another Federal agency, but 

maybe there is application there, as well, that we can pursue. So, 

these are just two examples. 

I think that we have been very innovative with the mail, in 

terms of bridging hard copy and digital and working with the industry to look at promotional pricing to say, ‘‘How do you enhance 

the value of hard copy communication?’’ So, I think that there are 

a number of opportunities—certainly within our current constraints 

and then with some additional flexibility—that we can pursue. 

Senator CARPER. Can you talk about what is going on with respect to delivering groceries in a couple of metropolitan areas. 

Ms. BRENNAN. Yes, sir. We actually started grocery delivery in 

San Francisco roughly 2 years ago and we have since expanded to 

other markets. And we look at that, again, as an opportunity to innovate at the core, leveraging our infrastructure and looking for 

other ways to generate revenue. So, we are talking with a number 

of potential customers about expanding that type of service, and 

also looking at other physical goods that we could deliver. 

Mr. TAUB. Senator Carper, I have a few observations. 

Senator CARPER. Chairman Taub. 

Mr. TAUB. First and foremost, as you have heard, I think, 

throughout all of the witness testimonies this morning and certainly the Commission’s testimonies, there is a financial balance 

sheet mess and that has real world implications in terms of very 

low liquidity, very little working capital to invest, and critically deferred capital investments, whether it is vehicles or package 

sortation equipment. So, we can think of great ideas, but unless 

you have that capital to invest, there are some costs there and I 

think that the Postmaster General outlined some of these. While 

we think about broadening the aperture, I do not think that we 

should lose sight of the core of the Postal Service and innovating 

the products that they have today. 

The other aspect that I observe also goes to this issue that I 

mentioned—and the Commission’s testimony outlines this aspect of 

universal service. We had some discussion here earlier today. I 

would point out, though, that in the United States, unlike most 

other countries around the planet, we have not specifically defined 

the various features—except for the 33 years of the annual appropriation bill mandating 6-day delivery—in law. That has served the 

Postal Service and our Nation well for 240 years, the flexibility to 

balance those needs. But now, when you are in the financial situation that we are, a better understanding of the costs of what we 

expect of the Postal Service helps us to determine—if we are looking to broaden that aperture—the costs of getting in an area, the 
27 

potential benefits of getting in an area, and if getting in that area 

will still allow the Postal Service to be self-sustaining. 

Senator CARPER. All right. Thank you for those thoughts. 

I am going to ask the rest of our panel just to keep in mind a 

response to my question, responding to what the General has said. 

I am going to pass the gavel to Senator Heitkamp and run to vote. 

I will be back shortly. Thank you, Heidi. Thank you all. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP [Presiding.] It will be a fleeting moment of 

fame, I am quite certain. [Laughter.] 

I want to follow up on what Senator Tester was talking about. 

No big surprise there, Megan, but I obviously continue to be very 

concerned about rural Postal delivery. I just want to give you some 

statistics, and I want to thank you all for once again appearing. I 

ran into several of my colleagues as I was rushing back here, telling them that we are working on Postal reform. This has been an 

issue that so many people have spent so many hours on, and I 

thank both Jim and Dave. 

You basically nailed it. There is not any idea out there that we 

have not vetted, that we have not figured out, or that we have left 

behind. There is no magic bullet. We just have to do the work that 

a board of directors should do for an entity that runs very much 

like a business. 

And, certainly, I think that there has been a lot of effort on this 

Committee—it has not been successful, I mean, let us be honest. 

I watched, in my location here in D.C., the mail being delivered at 

Christmastime with U-Hauls. We even saw it in North Dakota, so 

we know that we have some issues that we have to confront in 

terms of mail delivery. 

And, I certainly share the sentiment that once we start telling 

someone, ‘‘We are not going to deliver the mail at the end of the 

mile,’’ then we are not the United States Postal Service. We are not 

meeting our constitutional obligation. 

And, so, my focus has been mostly on what this means for rural 

America. And, so, I want to kind of give you some statistics, just 

so that you understand what Senator Tester is talking about, in 

terms of the prominence and importance of mail delivery in rural 

America. 

The Inspector General of the United States Postal Service 

released a report in April 2015 about the variance in originating First-Class Mail single piece volume declines throughout the 

United States. From 1995 to 2013, the originating First-Class Mail 

volume in North Dakota only decreased by 37 percent. That is the 

lowest rate of volume decline of any State in the country. It is significantly lower than the 61 percent national average First-Class 

Mail volume decline for this same period. And I want to point out 

that other rural States, such as South Dakota, Montana, and 

Vermont followed a similar pattern. If you want to know where you 

have not seen this same rapid rate of decline, it is in rural States. 

It is in rural communities. So, that just impresses upon people how 

important rural delivery is. 

And, we recently, and I do not know—Megan, I am sure your 

staff has briefed you about the situation that we have in Fargo—— 
28 

Ms. BRENNAN. Yes—— 

Senator HEITKAMP. It is a subdivision in Fargo, basically, but it 

is rural delivery. And we have talked several times about this, 

about the contracting for rural Postal carriers and the difficulty 

that we have when old deliverers, basically, are edged out monetarily by somebody who wants the contract. 

I am going to talk a little bit about what is happening in this 

neighborhood in South Fargo. The residents recently formed a 

Facebook group, and everybody in the subdivision is on this 

Facebook group. Do you know why? So that they can swap mail, 

because the mail is not getting delivered to the right Post Office 

(P.O.) box. 

Now, think about the time of year that we are in and what is 

being delivered. Senator Tester has explained that the safest way 

to protect your personal data and your personal information is the 

U.S. Postal Service, right? So, what is being delivered to your 

neighbors right now? Your W–2s, right? Confidential information— 

1099s, tax data, and information that contains some of the most 

private information, other than your medical information: your financial information. 

And when we followed up on this, and the Postmaster in Fargo 

is busy working on this, but when we followed up on this, we 

asked, ‘‘What is the training for somebody who gets a new contract? ’’ They said, ‘‘24 hours.’’ 24 hours to try and figure out how 

to deliver the mail. 

And, I do not mean to say that this one incident proves the point 

of what is happening in rural delivery, but you know and I know, 

from the portal we opened up called #fixmymail, that this is not 

an isolated circumstance. It is unique, because it is occuring in 

rural Fargo, as opposed to Dunn County or one of the more rural 

counties. 

So, how are we going to reestablish that trust and faith, Postmaster General, in rural delivery, when in rural America they just 

think that they have lost a whole lot of quality in the delivery of 

Postal services? 

Ms. BRENNAN. Senator Heitkamp, we are committed to rural 

America and I, personally, am as well. And in terms of training, 

that is an investment in our employees and that is something that 

we have addressed this year and—— 

Senator HEITKAMP. Well, they are not really your employees, 

though. They are your contractors, right? 

Ms. BRENNAN. But they represent the Postal Service, so—— 

Senator HEITKAMP. They sure do. 

Ms. BRENNAN. We need to train them. Whether it is a contract 

employee or a career Postal employee, they need to be trained. 

In terms of improvements in rural America, we have been working to establish hubs, entry points specifically for our county newspapers, by working with the National Newspaper Association. In 

many rural areas, we have adjusted transportation and also added 

additional capacity where it is needed. But, please know, we are 

committed to rural America. 

And, as you know, we are also looking to enhance service measurement, working with the regulator, so that we can have more 

granular data and that we can identify pinch points or any sys-
29 

temic issues, if we have them, and so that we can address it 

quicker and ensure that we are providing consistent and reliable 

service. That is our commitment. 

Senator HEITKAMP. And I have no doubt that your words are 

heartfelt. I mean, we have had these conversations and I have been 

grateful for all of the meetings and the work that we did on our 

rural Postal bill, many provisions of which have been included in 

this bill. But, service standards are not what they were. They just 

are not, and they are not acceptable. Even in the old days, when 

I was a kid—and I think that I have told you this story, where I 

challenged my law school classmates in Portland, Oregon to send 

me a letter that said ‘‘Heidi’’ and the zip code—and I got that letter. I got their letters. I mean, they took up the challenge. And I 

got them in 2 days. That does not happen anymore. 

And, so, we recognize the challenges and the financial challenges 

facing the Postal Service, but I do not want this just to be about 

spreadsheets. I want this to be about service and about once again 

reestablishing, especially in rural communities—we desperately 

need to have a fair balance between cost cutting and economy 

measures and continuing the mandate that we believe the writers 

of the Constitution gave us, which is to have a Postal system that 

works for the entire country. 

And, so, I just want to make sure of that, and we will have follow-up questions, Megan. I know that you are heartfelt, but we just 

do not see it in rural America. We do not see that concern being 

translated into improvements. 

Ms. BRENNAN. And I would say, Senator Heitkamp, that financial stability does support those service efforts. We are committed 

and we look forward to continuing to work with you on these 

issues. 

Senator HEITKAMP. I have used up all of my time, and I see that 

Senator Baldwin is back. I am going to yield and give her time, and 

if they do not show up, then we will have it all to ourselves, 

Tammy. 

Senator BALDWIN. Great. [Laughter.] 

Thank you, Chairman Heitkamp. 

Senator HEITKAMP. The inmates are in charge of the asylum. 

[Laughter.] 

OPENING STATEMENT OF SENATOR BALDWIN 

Senator BALDWIN. I appreciate it, and in their absence, I want 

to recognize the Chairman and Ranking Member Carper for this 

hearing. Everybody has commented on the fact that the Postal 

Service touches each one of our constituents, each one of our communities, and I am appreciative of the work of all of the stakeholders in getting us to have this conversation. And, I will talk to 

him directly when he returns, but I appreciate Senator Carper’s 

work and look forward to continuing to work with him on the rate 

provisions, in particular, in the legislation. 

So, everyone has acknowledged the significant changes to dealing 

with printed mail in the era of e-commerce and in the wake of our 

recession. The Postal Service affects our communities in different 

ways, and I think that last session, many of my colleagues heard 

me talk about some of the unique ways in which it impacts Wis-
30 

consin, because we have this incredible workforce of loyal Postal 

Service workers, but we are also a State that is forested in the 

north of the State and is the number one producer of paper in the 

country. Because of that, we have a vibrant graphics and printing 

industry and we have many mailhouses in the State. Fully a third 

of the communication papers printed in the State of Wisconsin are 

delivered through the Postal Service. So, the health, vibrancy, and 

future of the Post Office, I think, has a disproportionate impact on 

the State of Wisconsin. 

As a consequence of that, I not only hear from Postal customers, 

but also from my constituents who work in the mailing industry. 

From them, I hear about the challenges associated with the 

changes in mail volume. One of the things that I have heard about 

is the importance of having consistent rates and predictable pricing, so that businesses can plan and budget accordingly. 

Chairman Taub, one of the purposes of the current rate structure 

and the upcoming rate review is to ensure pricing stability, yet it 

appears that the effect of the exigency surcharge may have exactly 

the opposite effect. For example, it seems like, if we do not take 

action, rates are likely to go down in April and will potentially go 

back up at some point—either through legislation or after the PRC 

review. 

So, I have a couple of questions, but I want to start with this 

one: Can you speak to the importance of pricing predictability and 

how the constant changing of rates, or this yo-yo effect that we see, 

affects consumers and the mailing industry? 

Mr. TAUB. Certainly, Senator. First and foremost, I would like to 

point out that in 2017—or actually starting December 20 of this 

year—by law, the Commission will begin a proceeding to look at 

the decade of experience that we have with this price-cap system 

and the market-dominant rate system that is in place. I certainly 

would not and could not prejudge what the Commission will do at 

that time, but as the law mandates, that will be conducted in a 

very open and public way, with notice and an opportunity for public comment. And the key mandate of that study is for the Commission to look at this decade of experience, look at the nine objectives 

in law and the 14 factors we take into effect, and assess how it has 

been working. 

I would say, certainly, the law has been clear that there is a CPI 

cap. The law also included a provision for, in an extraordinary and 

exceptional circumstance, an opportunity to recover losses due to 

that event. That has occurred here, all done in an open and public 

way with advance notice. But, we certainly will be looking at that. 

Of the nine objectives, number two is to create predictability and 

stability in rates, and as I said, that is one of nine. Our most recent 

annual report observed that some of these can sometimes seem in 

conflict with one another, but the bean will be on our nose, starting 

December 20 of this year, to look at that. But, clearly, whatever we 

look at, objective number two goes to your point, which is the need 

to create predictability and stability in rates—and that will have 

to be applied equally with the other eight objectives. 

Senator BALDWIN. Well, in your testimony, you talked about the 

balancing of certain objectives and factors, and you have repeated 

that now. Talk a little bit more about the balancing issue, because, 
31 

I mean, I think that that is clearly what is most critically important to constituents who have such interactions with the U.S. Postal Service in the State of Wisconsin and elsewhere. How do you 

make sure that it is both fair and equitable to consumers, while at 

the same time ensuring that it sustains the Postal Service? 

Mr. TAUB. Indeed, that is the challenge that the 2006 law, in its 

wisdom, put on for the Commission. The Commission promulgated 

regulations shortly after that law was enacted to create this new 

system. In essence, what it did was say that we are going to take 

this current CPI limitation, that is very clearly delineated in statute, and then we will look to make sure that, whenever the Postal 

Service makes changes, they are balancing those nine objectives 

and factors. It is going to shift December 20 of this year when we 

start that review, because now the bean is back on our nose to look 

at those nine objectives and ask, ‘‘In the 10 years of experience, 

have they achieved that? ’’ 

And maybe just to highlight a few for the record, not only are 

you creating predictability and stability in rates, but number 5 is 

to assure adequate revenues, including retained earnings, to maintain financial stability. Number 4 is to allow the Postal Service 

pricing flexibility. Number 8 speaks of just and reasonable rates. 

Sometimes, certainly, I think that even describing that can be in 

conflict, and so it is going to be our challenge to make sure that 

when we look at this—whatever system is the outcome—we hit 

that sweet spot. 

If I could just add to that, looking ahead to 2017, there is a large 

spectrum, it seems to me, just reading the law and having been involved in it, of what the Commission may or may not do. And as 

I said, I do not know what the Commission will do. It will have to 

look at this. But, the outcome could be everything from looking at 

it and saying that the status quo is where we are at, to, as the law 

says, devise such modifications or an alternative system to set 

rates to meet those objectives. That is a broad spectrum. I do not 

know where the Commission will set in, but please know that, first, 

we are planning right now for that study so that we can hit the 

ground running. There is going to be a lot of focus on that, understandably, and the stakes are high and we want to do it right. We 

do not want to end up with a study that raises more questions than 

it answers. 

Senator BALDWIN. Mr. Chairman, I have gone over my time, so 

I yield back. 

Senator CARPER. [Presiding.] Did you ask what you wanted to 

ask? 

Senator BALDWIN. I did. 

Senator CARPER. OK, good. Heidi? 

Senator HEITKAMP. I have just a couple more questions, if that 

is OK. 

Senator CARPER. Yes. Go ahead. 

Senator HEITKAMP. Thank you. 

Going back to the statistics that I cited, Megan, can we just get 

a commitment that you actually will look at geographic needs in 

rural America, that we can get a greater sense of where meeting 

those needs fits within the Postal Service’s priorities? 

Ms. BRENNAN. Yes, Senator Heitkamp. Yes. Absolutely. 
32 

Senator HEITKAMP. OK. Thank you. 

And a question for the Inspector General, Mr. Williams. Thank 

you for all of your great work. And in your testimony, you state 

that the Postal Service’s survival is a tribute—and I am sure that 

the Postmaster General would agree with this—to the men and 

women who work there. I have met with Postal workers who are 

incredibly dedicated, walking in this kind of ice, delivering mail. 

This is hard work and they do it every day because they love their 

customers, they love their route, and they are so committed and 

dedicated. 

But, we see morale going down and down and down. And, I commissioned a report that you guys were very generous in helping 

with, providing some great data regarding challenges in the 

Bakken with overtime and taking a look at how we could continue 

to address morale concerns. Are you currently working on any additional morale or workforce studies that really highlight some of 

the needs that we have to continue to recognize and appreciate the 

people who work for the Postal Service? 

Mr. WILLIAMS. The proposed legislation, the Improving Postal 

Operations, Service and Transparency Act of 2015 (iPOST), contains a provision whereby we would conduct a comprehensive 

study. So, we have begun the process of trying to imagine what 

that would be like and structuring for it. We are looking at that. 

Intuitively, you do worry. We are into the sixth or seventh year 

where postal workers are being told that their performance is poor 

and that we are facing bankruptcy and insolvency. That has affected morale. I have not counted it yet, but you can feel it. You 

can feel it everywhere. 

So, I would say that we do have a problem. There are results 

coming out of a recent employee survey that the Postal Service conducted called ‘‘Postal Pulse’’ by Gallup. That will be coming out. 

That will tell us some. 

I do know that the Postal Service is struggling with that. They 

have created a program called ‘‘Postal Proud,’’ which is an effort to 

try to instill in workers a sense of pride, to express to them a sense 

of appreciation, and to remind them of the importance of their mission. 

Senator HEITKAMP. Yes. Not to belabor this point, but my husband, who is a family physician, takes care of a number of postal 

workers. He came home and told me that we were very bad employers. And, I take that to heart. I mean, again, one story does 

not make the case, but certainly we know that we have an issue. 

We included a morale component in the rural bill that I developed, 

but we need to find better ways to say thank you—and I want to 

make that point. 

Thank you, Mr. Chairman, for giving me the extra time. 

Mr. WILLIAMS. If I may, Senator, I am sorry, but—— 

Senator CARPER. No, go ahead. 

Mr. WILLIAMS. I think—well, we were asked, when is the time 

to pass legislation? In some ways, we are already beginning to see 

casualties from that legislation not having been passed. The vehicles that we are planning for the future are probably not exactly 

the vehicles that we would have. The build-down, which has caused 

some disruption—we hope temporarily—partially caused that be-
33 

cause it had to be rushed. There was not enough money to have 

a coherent, gentle glide into it. And, I would say, morale is another 

casualty. The time to pass legislation has passed and we are beginning now to unscrew lightbulbs from the tree. 

Senator CARPER. I am going to yield to Senator McCaskill in just 

a second, but would the rest of you just react to what the Inspector 

General has just said about a sense of urgency? Mr. Millstein. 

Mr. MILLSTEIN. Yes. As I said in my opening remarks, the first 

thing you need to do is stabilize the patient—and this patient is 

soon to be bleeding cash, not making revenue. And as it bleeds 

cash, it has really no choice but to cut back on service standards 

and cut back on the network, in order to be a self-sustaining entity. 

So, the first order of business here is to find ways to increase its 

revenue so that it can cover its costs. 

Senator CARPER. All right. Thank you. Ms. Rectanus. 

Ms. RECTANUS. Thank you—— 

Senator CARPER. Your reaction to what Mr. Williams just said? 

Ms. RECTANUS. Yes. Thank you. Well, as you know, the Postal 

Service’s financial position has been on our ‘‘High-Risk List’’ for 

many years, and we have been saying words like ‘‘urgent’’ and 

‘‘dire’’ also for many years. 

While we definitely support providing the Postal Service the resources it needs to do its job—because we know right now that expecting it to provide universal service while being self-sustaining is 

not working—we would caution that there is a downside to only 

looking at rates and revenue generation without an equal expectation of and the flexibility for the Postal Service to also do what it 

can to reduce its excess capacity and better align costs with revenues. This is something that we had talked about for comprehensive reform. So, we would also say that that is urgent. 

Senator CARPER. Good. Thank you. Mr. Taub, Mr. Commissioner? 

Mr. TAUB. Senator, I think that I simply concur with what you 

have heard already. Frankly, the time to pass, as the Inspector 

General indicated, has passed. We are late on this and the Postal 

Service needs that financial breathing room, and I would suggest 

that that should be the real primary focus. If they can get some 

of that breathing room, frankly, I think that there is a lot in the 

2006 law that is working well. The tools are there for the Postal 

Service, if they just have that financial breathing room to move forward. 

Senator CARPER. All right. Thank you. 

General, sense of urgency? 

Ms. BRENNAN. Mr. Chairman, as mentioned earlier, the time is 

now. 

If you would indulge me, please, may I respond to Senator 

Heitkamp’s comments about employee morale? 

Senator CARPER. Go ahead. 

Ms. BRENNAN. Morale is critically important, because we are a 

human organization—and I take that responsibility very seriously. 

In fact, one of my core objectives is employee engagement at all levels of the organization. And Inspector Williams mentioned a new 

initiative called ‘‘Postal Proud.’’ That is intended to leverage the 

pride and the commitment that Postal employees have to serve 

their customers. 
34 

And if I may, also, Mr. Chairman—just to respond to Ms. 

Rectanus’ comment about cost reductions—I think that the Postal 

Service has demonstrated—by taking out nearly $15 billion from 

our annual cost base and also by projecting out another $5 billion 

reduction through 2020—that we recognize that there are two sides 

of a financial ledger. We have to grow the business and we also 

need to continue to drive operating efficiency. Thank you. 

Senator HEITKAMP. Mr. Chairman. 

Senator CARPER. Yes? 

Senator HEITKAMP. Can I just follow up and say that I want to 

applaud you personally, because I do not think that when I came 

to the Senate that was true—that there was an attempt to reach 

out to and to work with the employees. I think that that is a great 

improvement that we have seen since you have taken over the 

helm. And, so, I want to personally acknowledge the hard work 

that you have engaged in and the outreach that you have done. 

Ms. BRENNAN. Thank you, Senator Heitkamp. 

Senator CARPER. General, are you going to sit there and take 

that? [Laughter.] 

Ms. BRENNAN. I welcome that. Thank you. 

Senator CARPER. Senator McCaskill. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Thank you. 

Last year at a hearing, I expressed concern about the blurring 

of the line between customer and competitor for last mile agreements. We all know that the last mile is one of the most important 

drivers of costs in our Postal infrastructure. It is that last mile that 

is very expensive. And, so, the notion that we are doing business 

with our competitors for the last mile, to me, deserves a great deal 

of scrutiny. 

And after that hearing, I was really concerned that that scrutiny 

was not occurring, and so we asked GAO to take a look at it, as 

Ms. Rectanus knows, and it is not good, folks. Our competitors do 

an analysis on every single load as to weight and whether they can 

make more money by using the Postal Service or delivering it 

themselves. 

Meanwhile, we do not even know what our costs are based on 

weight. We do not even collect information on the size of the packages that we are delivering under those agreements. The Postal 

Service does not know the impact of package size and weight on 

its delivery costs in those agreements. 

Now, I do not get that. These are the competitors, who we have 

to beat to be successful as a Postal Service—and they are fleecing 

us. They are analyzing every instance to see whether they are 

going to push these off on us because they can make more money, 

or whether they are going to keep them, themselves, because they 

can make more money. 

Meanwhile, we have in these contracts an agreement that there 

must be a minimum volume—and we are not collecting those payments when they do not meet their minimum volume. Sales officials told GAO that they decided not to require payment for business reasons, including maintaining this mailer as a source of 

package volume. We look like suckers. We need the volume. We do 
35 

not care if you are making money off of us. We will do the expensive part because we do not even realize that we should turn you 

down for this unless you pay us more. There should never be an 

instance when our competitors are making money off of us for the 

last mile, ever. 

So, who is responsible for enforcing these contracts and who is 

making this decision to give our competitors a free ride when they 

do not even meet the minimums on the contract? 

Ms. BRENNAN. May I address that, Senator McCaskill? 

Senator MCCASKILL. Yes, please. I think that you are in charge. 

Ms. BRENNAN. The negotiated service agreements are profitable, 

and given the commercial sensitivity—— 

Senator MCCASKILL. How do you know that? 

Ms. BRENNAN. Given the commercial sensitivity, I would be 

happy to talk with you in more detail in a closed session. But, suffice it to say that negotiated service agreements are reviewed by 

the regulator. The negotiated service agreements that you are commenting on have grown revenue and contribution year after year. 

It is a high contribution product, Parcel Select, because it is entered at the destination facility, at the local Post Office, and it 

eliminates all of that upstream cost of transportation and distribution. 

Senator MCCASKILL. If you are not analyzing these packages on 

the same basis as your competitor, how do you know that they are 

profitable? 

Ms. BRENNAN. Senator McCaskill, in response to your inquiry 

and the GAO study, we did go back and look at cube and weight, 

and I have that information and I would be happy to share that 

with you. 

Senator MCCASKILL. That is terrific. So, why are we not enforcing the provisions of the contract on minimum volume? 

Ms. BRENNAN. I am not sure which contract you are referring to, 

but I would—I would welcome the opportunity to discuss that with 

you—— 

Senator MCCASKILL. Well, it is in the GAO report—— 

Ms. BRENNAN. Right. 

Senator MCCASKILL [continuing]. Which I am sure you know by 

now, right? 

Ms. BRENNAN. I am familiar with it. 

Senator MCCASKILL. So, in the GAO report, it says that you do 

not collect the payments on the volume targets that they are required to be, and GAO—am I correct that GAO was told that this 

was due to business reasons and wanting to maintain the customer—and therefore, it was decided not to enforce the provisions 

of the contract? 

Ms. RECTANUS. Yes. What we were told was that there were circumstances where there were broader business reasons for them to 

want to maintain the contract, including anticipating additional 

volume in the future. So, they did it with a reasonable basis, but 

it had not been documented, which is what we were talking about, 

in terms of improving the procedure, so that when you make decisions like that, it is clear as to why those decisions are being made. 

Senator MCCASKILL. I just think that this needs a lot more attention, Postmaster. First of all, I think that you have done a much 
36 

better job of marketing since we began examining the challenges 

that the Postal Service faces. I think that you are doing some positive things and that a lot of the blame for the problems needs to 

be pointed in our direction—not in your direction. This Congress 

has been incapable, despite this guy who works on this, I think, 24/ 

7, and we all get to the point where we see him coming down the 

hall and we go, ‘‘Oh, Post Office.’’ [Laughter.] 

We know he is going to be on us about this. 

You are in a death struggle with your competitors, and I just do 

not want them to have any advantage over us, because we have no 

choice about that last mile. They do. And I want to make sure that 

choice is profitable for us, because they are making a choice sometimes to say, no, we will carry it ourselves. So, that is what I am 

really worried about. 

Ms. BRENNAN. Yes. And if I may, Senator McCaskill, there is 

such competition in that space—not just with our traditional competitors, but also with what I will describe as the ‘‘Uberization’’ of 

package delivery, the crowdsourcing of package delivery, the leisure carriers, or the regional carriers. So, we have to be pretty deliberate, in terms of how we price, because it is a very competitive 

landscape. But, do know that we are very conscious of the need to 

increase yield per package. 

Senator McCaskill. That is great. 

Mr. Taub, how close is the Postal Service to being able to break 

down delivery times for rural and urban areas? 

Mr. TAUB. We have been working closely as a result of the request that we received from the Senate. As you know, we started 

out, at that point, with no rural-delivery information being able to 

be reported. The Postmaster General may be able to echo some 

more, but between working with the Senate staff and the Postal 

Service, my understanding is that the Postal Service may be able 

to start reporting to us something this spring, which would be a 

big step forward. 

Senator MCCASKILL. I look forward to that. I think that it is really important that we get a handle on this. For those of us who are 

really pushing to protect rural delivery, I think that it is important 

that we know what we are working with from a data-driven perspective. 

Thank you all very much. Thank you, Mr. Chairman. 

Senator CARPER. Thank you, Senator McCaskill. 

Just before I ran off to vote, I asked for good ideas—innovative 

ideas—and the General and the Chairman were kind enough to respond. Lori, David, and Jim, I would love to hear from you all as 

well. 

Before I do, I just will say to the Inspector General, we have 

been the beneficiaries, in this Committee, of a couple of folks who 

have served as detailees. One is still with us. He is over my left 

shoulder. It is Alex Fiske—and earlier it was Bruce Marsh—and 

they have just done terrific work, not just for the Senate, but, I 

think, for our country as well. So, we thank you very much for 

sharing them with us. 

Mr. WILLIAMS. Thank you, Senator, for recognizing that. 

Senator CARPER. You bet. 

OK. Lori. 
37 

Ms. RECTANUS. I would like to echo something Mr. Taub said 

about the flexibility to engage in additional activities. Given what 

has brought us to this point—about costing the Postal Service more 

to deliver the services than they are paying for the services—they 

do not have a lot of places where they can take a risk. And, also, 

given their current structure, where they have monopolies in some 

areas and in other areas they may be disadvantaged, I think that 

it would be very difficult to find the appropriate venue. 

So, I do not have any ideas on my own, but I guess that what 

I would say is that we would want to be very cautious about making sure that, in any area that they would go into, they would not 

be unfairly disadvantaged or unfairly advantaged because of their 

unique situation. 

Senator CARPER. Thank you. Mr. Williams. 

Mr. WILLIAMS. The 21st Century is going to see the proliferation 

of mega-cities of over 10 million each. Today, we have mega-cities. 

Almost exactly half of those are heaven and half of those are hell. 

What is coming at us is an enormously heavy lift. 

The Postal Service is in every neighborhood of America, and the 

difference between a bad mega-city and a good mega-city is a smart 

city. And we can play a very important role in, as Megan mentioned, collecting essential data, Wi-Fi strength, gas leaks, and all 

sorts of things as we pass through every single neighborhood. 

Post Offices can become the front offices for a number of industries that are partially going virtual. I do not think that we want 

to live in an all-virtual world. We are atomic structures and cannot 

do that. So, that will require that, at the end of the day, there be 

contact points for humans with all of these industries—and we 

could be that contact point. 

In the neighborhoods, the delivery people can do more with regards to logistics management. So, there is enormous challenge and 

promise ahead of us. It is going to, eventually, become a question 

of not what can the Postal Service do, but what must the Postal 

Service do, in a number of these topical areas. 

Senator CARPER. Well, those are very thoughtful ideas. Thank 

you. 

Under our legislation, we call for a real focus on innovation and 

the establishment of positions—essentially a Chief Innovation Officer (CIO)—and you may be one of our first nominees for that because that was pretty good. [Laughter.] Mr. Millstein. 

Mr. MILLSTEIN. Well, I actually join in those remarks. But, I 

come at it from a financial perspective. So, maintaining a network 

such as the Postal Service’s is an expensive proposition, and the 

key to keeping costs—rather, prices—down is having more unit volume running through that network. So, the best way to moderate 

the increases that would otherwise be visited upon existing users 

is to add more users, so as to spread the fixed costs of that network 

across a greater number of units. 

As everyone has said here, that last mile is critical, and driving 

more unit volume through that last mile is critical to maintaining 

the integrity of the network and to keeping prices down. So, I think 

that you have to open them up to allow not just beer, wine, and 

other product deliveries, but to also let them innovate around part-
38 

nerships with other businesses in these local environments that deliver goods to their customers. That is one way. 

Second, the Post Offices themselves are part of that network, 

which in the small community I came from, before I came to Washington, was a social center. But, with declining volumes of real 

mail, this is less and less so. So, the second way is to turn those 

Post Offices into, as Mr. Williams was saying, the front end of a 

variety of businesses. You may resist banking and insurance done 

by the Postal Service, itself, but it should be able to joint venture 

in that space with banks and insurance companies in the sale of 

products without—there are issues about putting the United States 

Postal Service imprimatur around any private business and avoiding any implication that it is government-backed, but nonetheless, 

I think that you have to drive traffic into the Post Offices, themselves. Otherwise, it is an underutilized asset. It is a key part of 

the network, and so this solution, to me, is all about driving incremental revenues through that network in order to moderate the 

price increase that would otherwise occur to offset declining volumes. 

Senator CARPER. Those are all very helpful comments. 

I have one more quick one and then I am going to yield to Senator Heitkamp and to Senator Baldwin for any last questions that 

we have for this panel. 

General, I understand that this plummet, this deep drop that we 

have seen in First-Class Mail volume, really since—in part since 

the advent of the Internet, but really since the Great Recession— 

that it may be leveling off and the—in a sense, Senator Tester 

talked about the security aspects and we spend a whole lot of time 

in this Committee focusing on how to enhance cybersecurity. But, 

what are the prospects for First-Class Mail going forward? As you 

look down the road to a couple of years from now, what does it look 

like? 

Ms. BRENNAN. Yes. Senator Carper, in fiscal year 2015, the single piece First-Class Mail, the ‘‘Aunt Minnie’’ stamped mail, declined roughly 5.5 percent. The commercial mail, or the presort volume, was fairly stable. 

When we look out, though, to 2020, we are expecting to see, 

roughly, a 17 percent decline in First-Class Mail. So, that will put 

tremendous pressure on the organization. 

Senator CARPER. All right. Thank you very much. 

Senator Heitkamp, I want to thank you for joining us in crafting 

this legislation that I have been talking about. And I want to thank 

you and your staff for all of the input that you have provided to 

us. It is much appreciated and I think that it is going to bear great 

fruit. 

Senator HEITKAMP. Thank you, Mr. Chairman, and I want to 

thank you for being so doggedly determined that we, as the board 

of directors for the United States Postal Service, do our duty and 

do our responsibility. Thank you for this hearing. 

I have no further comments, other than to say that I really appreciate the inclusion of a number of provisions that really focus 

on rural delivery and service performance standards. And, so, we 

will continue to work with the Chairman and continue to be com-
39 

mitted to doing our responsible duty here on this Committee and 

in the U.S. Congress. 

Senator CARPER. Thank you so much. 

Senator Baldwin, please. 

Senator BALDWIN. Thank you. While you were casting your vote 

on the Senate floor, I had an opportunity to discuss rate predictability and stability, but I also had the opportunity to commend 

you, in your absence, on your work and look forward to continuing 

to work with you, especially on those rate provisions in the bill. 

And, we have had them before us for quite a while. This panel 

has been well grilled, and I am looking forward also to hearing 

from our second panel. 

Senator CARPER. Thank you. Thank you so much. And, we just 

look forward to working with you as we go forward, and I hope 

with a sense of urgency. 

Maybe one last question. This will actually be for you, General. 

The Postal Service admittedly struggled to provide high quality, 

on-time delivery service in 2015, and your annual compliance reports show that no First-Class Mail products met their expected 

service targets for the year. I would just ask, what steps have you 

all taken, thus far, to improve delivery performance nationwide? 

Ms. BRENNAN. Yes, Senator. There have been a number of activities. One, looking particularly for volume that moves via air, we 

made some adjustments to our air transportation network, as well 

as to our surface network. Also, in select markets, we adjusted 

staffing and scheduling, as well as made adjustments to the operating window—primarily process improvements to ensure that we 

eliminate the variability of that service performance that you cited. 

Also, in terms of stabilizing the network, last spring we made a 

decision to defer any additional consolidations, recognizing that 

service is the Governor and that that is the commitment that we 

made. 

Senator CARPER. All right. Thank you. 

One of the things that I love to do with panels, and especially 

with this panel—and I will do it probably with the next panel as 

well—is just to ask each of you—you gave your opening statements, 

five or so minutes, and did a great job of staying in the time limit. 

Just take a minute each—no more than a minute—and just give 

us a closing thought. It could be something that you have heard, 

thought about, something other people have said, questions, or 

whatever may pop up, just something else that you think is important to leave with us. It could be repetitious. I do not care. Just 

an important, valuable thought that you would like to leave with 

us before you leave. Thank you. General. 

Ms. BRENNAN. Senator Carper, first, thank you for your tireless 

advocacy on behalf of, not just the Postal Service, but the mailing 

industry—because it is a supply chain. And, I would like to thank 

you, on behalf of our employees, because the long-term viability of 

this organization is vital, and it is vital to the American economy. 

Our commitment is that we will continue to change and improve 

to better serve the American public. While we are challenged, these 

challenges are not insurmountable. With your help, we will preserve the United States Postal Service well into the future and 
40 

maintain that universal service obligation. But, thank you very 

much for the opportunity to be here. 

Senator CARPER. Thank you for those kind words. You can do it, 

we can help. 

Ms. BRENNAN. Thank you, sir. 

Senator CARPER. Mr. Chairman. 

Mr. TAUB. Senator, thank you, as well. I echo the Postmaster 

General’s comments, as well as Senator Baldwin’s and Senator 

Heitkamp’s. All of you have legislation pending to deal with these 

fundamental issues and that is critical. 

I think the point that I would hit upon is one that we have 

talked a lot about, which is universal service. I think that it is important to underscore that, unlike in other countries, it is not defined. So, when each of us talk about what is expected of the 

United States Postal Service, each of us may have a different idea 

of what they are supposed to do and each of us will have a different 

price tag. 

Your legislation does require us at the Commission to repeat 

what we did in 2008, which was to undertake a study on universal 

service. I think that your proposal is crafted in a way to try to 

drive that definition a little further. But, frankly, until we go to 

first principles in the United States and really understand what it 

is that this 100 percent government agency rooted in the Constitution, going back before the Republic to Ben Franklin in 1775, what 

it is that we expect of them in 2016, we all may not be happy with 

the results of what they may or may not do going forward. 

Senator CARPER. Thank you. Thank you, sir. Ms. Rectanus. 

Ms. RECTANUS. Thank you again. I was pleased to be here today. 

As GAO has said in its High-Risk Series, for us, we do still believe that comprehensive reform is needed, but we would also encourage you to think about comprehensive reform along three 

tracks. We have talked a lot today about ratepayer potential effects. We have talked a little bit about taxpayer potential effects. 

I think that what we would also want to see is support for the 

Postal Service’s continued efforts to align costs with revenue, which 

does get at some of the level of services that we think are worthy 

of providing and that we are willing to pay for. 

We also would reiterate the importance of restructuring benefits, 

which we have talked a lot about. 

And the final thing to consider is putting in statute an allowance 

to take into account the Postal Service’s financial position in binding arbitration. 

Senator CARPER. All right. Good. Thank you, ma’am. Mr. Williams. 

Mr. WILLIAMS. Thank you, Senator. Two quick points. 

Senator Johnson’s very useful balance sheet statement has a line 

for other Postal assets. It is our property. It is at $16.1 billion. 

That is exactly how you would put it on a financial statement and 

it is exactly wrong with regard to how we ought to be viewing these 

assets. That is the depreciated value, which is what you use on a 

balance sheet, not the fair market value if we sell that property. 

I am not sure what the fair market value is. Down and dirty estimates can go up to $80 billion. 
41 

The second point—so, I think that we need to—that would be a 

consideration that this great worksheet has lit up. 

Senator CARPER. OK. Thank you. 

Mr. WILLIAMS. The second thing is it—I think that a case could 

be made that it is time to declare victory on prefunding. I think 

that we are—the risk of overfunding is as great or greater than not 

having been fully funded at this point and we would love to do a 

report on that. 

Senator CARPER. Great. Thank you. Thank you so much. 

Mr. Millstein, I also want to thank you for your earlier work at 

Treasury—— 

Mr. MILLSTEIN. Thank you, sir. 

Senator CARPER [continuing]. And at a very tough time for our 

country—— 

Mr. MILLSTEIN. Thank you, sir. 

Senator CARPER [continuing]. And to you and some others who 

did great work. 

Mr. MILLSTEIN. This is a considerably friendlier hearing than the 

ones that I was subjected to. [Laughter.] 

Senator CARPER. I was in some of those and I know what you 

mean. 

Mr. MILLSTEIN. I appreciate how difficult it is to assemble legislative coalitions, but I do think that—and I do not want to be 

Donny Downer—but I do think that the Service is facing trends 

that are really working against it in the long term. And, so, I think 

that there is an immediate need to improve its cash-flow position 

and its balance sheet by restructuring the health care liability, in 

particular. 

But, for the long term, I think that if this Committee wants to 

avoid having a repeat of this hearing every year and a repeat of 

the need for an exigent rate increase, I think that we really have 

to, as a country, look at the network and what we are willing to 

let the Service do with it in order to preserve it. And, I do not think 

that that can be done overnight. I think that that really does require the Service to do some long-term projecting of what the impact of electronic communications is going to be on its business 

mail and the allegedly market dominant products and the impact 

of competition, as the Postmaster General said, a variety of competition in the last mile now. The Service needs to take a sober and 

realistic view, in terms of what the impact of those trends on its 

revenues will be, and try to come up with a plan that allows the 

Service to continue to fulfill its important mission all over America. 

Senator CARPER. All right. Thank you. 

Before you all leave, you said some very kind words about the 

work that I and my colleagues have done, and I would just say that 

we appreciate that, but our staffs have worked so much harder 

than we have. We especially want to say thank you to those sitting 

behind me: John Kane, John Kilvington before that, and Jennifer, 

my Ohio State University (OSU) buddy. I also want to thank the 

other folks on Senator Johnson’s team and certainly on Senator 

McCaskill’s staff as well. We are just very grateful to them. We 

have a couple of other cosponsors. I think that Senator Moran may 

be stopping by. He is a Senator from Kansas. He and his staff have 
42 

been terrific to work with and Senator Blunt and his staff have 

been as well. 

So, for everybody that has been a part of this, we are looking forward to keeping it going with a greater sense of urgency and we 

are going to be calling on each of you for some more help as we 

move forward. So, thank you all and we will look forward to seeing 

you again soon and talking with you. Thank you. 

Ms. BRENNAN. Thank you. 

Mr. TAUB. Thank you. 

Ms. RECTANUS. Thank you, sir. 

[Pause.] 

Senator CARPER. I am going to ask our next panel of witnesses 

to go ahead and find your seats, please. 

[Pause.] 

As we welcome our second panel of witnesses and as you take 

your seats, I am just going to ask, my first question of our witnesses is are any of you from Wisconsin? Are any of you from Wisconsin? OK. We happen to have a Senator here from Wisconsin and 

we would be delighted if she chose to introduce you, Kathy. 

Senator BALDWIN. I would be delighted to, and thank you to all 

of our panelists. 

I want to take a moment to introduce Kathy Collins from my 

home State of Wisconsin. Kathy grew up on a dairy farm and attended the University of Wisconsin-Madison (UW–Madison). At 

UW-Madison, she earned a degree in chemical engineering. Ms. 

Collins joined Domtar in 2013 in the role of Environmental Health 

and Safety Manager and then was promoted to General Manager 

of the Rothschild Mill, which I had the pleasure of touring back in 

October 2014 and once before then. 

I do want to note that the mills in Rothschild and Nekoosa have 

approximately 800 employees and are incredibly important to their 

communities and to our State’s economy. 

Ms. Collins has more than 25 years of experience in the pulp and 

paper industry and we are just very lucky to have you here as a 

witness, especially to speak on the importance of the health and vibrancy of the U.S. Postal Service to the postal and forestry industry. 

Kathy, welcome. 

Senator CARPER. Senator Baldwin, thank you very much for introducing Kathy. It is very nice to see you. We look forward to 

hearing from you here. 

I am going to be very brief in our introductions, but Fred 

Rolando has been the President—I want to say since 2009, is that 

right, Fred?—of the National Association of Letter Carriers 

(NALC), the union that represents, I think, over a quarter of a million active and retired letter carrier employees. 

I just want to say, for the record, what a joy it has been to have 

the chance to work with you and the members of your team as we 

try to fashion a path forward, not just for the Postal Service to survive or to get along, but actually to thrive and to better provide 

services going forward and to provide additional services—to enable additional services that maybe we have not even thought 

about. And, I am encouraged that those ideas are out there. We 
43 

1The prepared statement of Mr. Rolando appears in the Appendix on page 152. 

had some good ideas here earlier and I look forward to hearing 

from you at this time. 

So, go ahead, and then I will introduce Chip when it is his turn 

in the batter’s box. Thank you. 

TESTIMONY OF FREDRIC V. ROLANDO,1 PRESIDENT, 

NATIONAL ASSOCIATION OF LETTER CARRIERS 

Mr. ROLANDO. Thank you, Senator. Likewise. I want to thank 

you—— 

Senator CARPER. I like it when witnesses say, ‘‘Likewise.’’ 

Mr. ROLANDO. Likewise, yes. 

Senator CARPER. You do not hear that every day. 

Mr. ROLANDO. You do not. We say it quite a bit, so that was easier. I want to thank you, Ranking Member Carper, and please 

thank Chairman Johnson for inviting me to testify, and I want to 

thank the rest of the Committee members, also, for also serving as 

our board of directors. As you know, you are about the only board 

that we have now, so we appreciate that. 

You have asked me to focus today on the impact of legislative 

and regulatory burdens that are placed on the Postal Service, including the mandate to prefund retiree health benefits. But before 

I do so, I would like to comment on the broader theme of the hearing, the reality facing the Postal Service. 

In recent years, that reality has changed dramatically for the 

better. We are not in 2009 any more, when the Great Recession 

sent mail volume plummeting, and along with the prefunding mandate, crushed the Postal Service’s finances and raised doubts about 

the viability of the Postal Service. 

In fact, in more recent years, we have returned to operational 

profitability, earning $2.6 billion over the past 2 years. Our pension 

funds are healthy and better funded—at 92 percent—than most 

private sector pensions. And, we have set aside some $50 billion, 

more than two decades of future retiree health care premiums, 

when most large private companies have not set aside a dime. 

Postal employees never doubted the viability of the Postal Service, despite seeing the loss of 200,000 Postal jobs since 2006. Postal 

productivity has increased dramatically, and we have consistently 

advocated for sensible reforms. Thanks to solid direct mail growth 

and booming e-commerce, total volume has stabilized in 2015 and 

total revenue has increased to $69 billion. 

As we continue to balance the challenges and the opportunities 

posed by technological change in the decades ahead, the Postal 

Service is going to remain a vital part of the Nation’s infrastructure. With an approval rating of 83 percent from the American people, we believe that it can thrive in the 21st Century with the right 

public policies. 

That said, there are three significant legislative regulatory burdens placed on the Postal Service under current law that should be 

addressed by this Congress. 

First, there is the legal requirement to massively fund future retiree health premiums decades in advance, regardless of the financial conditions facing the agency or facing the country. All told, 86 
44 

percent of the Service’s $57 billion in reported losses since 2007 

stemmed from this inflexible mandate. 

Over the years, NALC has suggested a variety of legislative 

measures to address the prefunding mandate. Fortunately, this 

Committee has reached bipartisan consensus on an approach to address the burden during the last Congress. Reforms to the Federal 

Employees Health Benefit Program (FEHBP) to maximize participation in Medicare among eligible Postal retirees would all but 

eliminate the remaining $50 billion unfunded liability for future retiree health, while raising Medicare spending by less than twotenths of 1 percent annually. Given that the Postal Service and its 

employees have contributed billions to Medicare, we urge you to 

adopt this approach again. 

Second, Congress should reconsider the policy that requires 100 

percent of Postal retirement funds be invested in low-yielding 

Treasury bonds. Together, the Civil Service Retirement System 

(CSRS) and the Federal Employees Retirement System (FERS) 

System, those pension accounts, and the Postal Retiree Health 

Fund hold nearly $340 billion in Treasury securities. That makes 

the Postal Service and its employees the third largest creditor of 

the United States Federal Government, just behind China and 

Japan. 

No private company in America would invest its retirement assets in such an unsophisticated way, especially during a period 

when Treasuries are yielding 2 to 4 percent returns and, of course, 

health care costs are growing between 5 and 7 percent annually. 

At least with the Retiree Health Fund, Congress should adopt private sector best practice, which is to invest long-term retirement 

funds in well diversified portfolios of private stocks, bonds, and real 

estate, as well as government bonds. The current policy forces the 

mailing industry to basically give Uncle Sam a low-cost loan instead of sensibly investing to cover future health care liabilities. 

My submitted testimony makes the case for prudent investment 

change and also addresses common objections to it and explains 

how several independent agencies invest successfully in private securities. 

By changing the Retiree Health Fund’s investment policy, Congress could raise the long-term rate of return on the fund’s assets, 

achieve our prefunding goals, offset the cost of Postal Medicare integration, relieve upward pressure on postage rates, and reduce the 

misguided impulse to cut services. 

Third, in my full testimony, I address the postage rate making 

process, which the Postal Regulatory Commission will formally review in 2017. In the meantime, Congress should reverse the scheduled expiration of the 4.3 percent exigent rate enacted during the 

recession and suspend any CPI-based rate increases until the PRC 

review is complete. This will preserve the financial stability of the 

Postal Service as the PRC does its work. 

Let me conclude by noting that there is a remarkable degree of 

consensus among Postal stakeholders about the principles of successful reform. All four unions, the Postal Service, and a wide 

range of companies providing financial services, prescription drugs, 

newspapers, direct mail products, and e-commerce sales have 
45 

agreed on a set of principles for your consideration. I have attached 

a copy to my written testimony. 

In brief, our industry coalition urges you to first stabilize the 

Postal finances by making the exigent increase permanent and 

freezing capped postage rates until the PRC review is complete. 

And, second, we urge you to resolve the prefunding burden by 

maximizing Medicare integration among Postal participants in the 

Federal Employees Benefit Association (FEBA) and by sensibly 

changing the way that we invest the Retiree Health Fund. 

Our coalition’s recommendations are grounded in best private 

sector practice and are drawn from the consensus provisions of 

your bill, Senator Carper. They represent the measures on which 

the coalition could agree while remaining confident that they would 

stabilize the Postal Service for years to come, which will allow the 

Service to adapt to meet the evolving needs of the Nation. 

Senator Carper, you and former Senator Tom Coburn, along with 

Senator Johnson’s support, deserve a lot of credit for your determined and patient work in helping to build this consensus during 

the last Congress. So, now, let us finish the job, and in doing so, 

the NALC is ready and willing to engage Committee members and 

all stakeholders on any other issues of interest, such as changes to 

the Federal Insurance Contributions Act (FICA), service standard 

issues, etc. 

Thank you, Senator Carper and Members of the Committee for 

inviting me to testify today. 

Senator CARPER. Mr. President, thank you so much for joining us 

and thank you for your testimony and for your kind words. We 

very much look forward to working on this and getting this job 

done. 

I failed to administer the oath to our witnesses, something that 

I did not do as Chairman. Senator Johnson does it and I think that 

it is a fine policy to have. But you have testified—and not under 

oath—so I am going to administer the oath, and I will not ask you 

to give your testimony again—— 

Mr. ROLANDO. Is this retroactive? [Laughter.] 

Senator CARPER. But, I am going to ask you to each stand and 

to go ahead and swear for us that—do you swear that the testimony you will give before this Committee will be the truth, the 

whole truth, and nothing but the truth, so help you, God? 

Mr. ROLANDO. I do. 

Mr. HUTCHESON. I do. 

Ms. COLLINS. I do. 

Senator CARPER. Very well. Thank you. 

And, President Rolando, now that you are under oath, is there 

anything that you want to change, or are you going to stick to that 

story? 

Mr. ROLANDO. Good morning. [Laughter.] 

Senator CARPER. All right. John, also known as Chip, Hutcheson 

the third, right? 

Mr. HUTCHESON. That is correct. 

Senator CARPER. All right. Mr. Hutcheson is the President of the 

National Newspaper Association (NNA), a 130-year-old organization of community newspapers. He has been a community newspaper publisher since 1976, and could I just ask, where do you live? 
46 

1The prepared statement of Mr. Hutcheson appears in the Appendix on page 177. 

Mr. HUTCHESON. I live in Princeton, Kentucky. 

Senator CARPER. Princeton, Kentucky. My sister is in Winchester, just east of Lexington. My mom used to live in Ashland. 

Mr. HUTCHESON. I am 210 miles west of Lexington. 

Senator CARPER. OK. Well, you are out there. 

Mr. HUTCHESON. I am. 

Senator CARPER. You are out there. OK. Good. Alright well, 

thank you for joining us today and we look forward to your testimony very much. Thank you. Please proceed. 

TESTIMONY OF JOHN ‘‘CHIP’’ HUTCHESON III,1 PRESIDENT, 

NATIONAL NEWSPAPER ASSOCIATION 

Mr. HUTCHESON. Thank you, Senator Carper and Members of the 

Committee. I would like to express my thanks to you and to Chairman Johnson for inviting me to appear today. I do represent the 

National Newspaper Association. We have been in existence for 130 

years, lobbying and working for community newspapers—especially 

related to Postal issues. I do publish a twice-weekly newspaper in 

Princeton, Kentucky. 

I am here to impress upon this Committee the need for urgency. 

We have heard that mentioned in the previous panel. Without immediate action, the Postal Service will deteriorate further. On behalf of the American people, and particularly those in rural America, I believe that we cannot allow services to be cut further. 

Senator Carper, NNA appreciates the work that you have done 

on S. 2051, the iPOST Act, and we believe that that can provide 

a vehicle for consensus in this Congress. NNA joins a number of 

other mailers, the Postmaster General, the employee groups, and 

others to support urgent action, hopefully by using your bill as a 

vehicle to reach agreement with all stakeholders. 

A package of reforms, including integration of Medicare benefits 

for Postal retirees, can form the basis for legislation. We want to 

emphasize, however, that our members need to be assured that the 

provisions in a final bill will guard against further service deterioration and that USPS will continue to work toward sustainability 

and efficiency. 

NNA’s member newspapers are primarily weeklies. We aim to 

reach rural audiences in rural and small-town America in time for 

weekend shopping and activities. We must have the mail in order 

to reach those readers. 

Surveys by NNA, the Pew Research Center, and others show how 

crucial the printed newspaper is today, even with the growth of 

digital technology. The heaviest dependence on printed newspapers 

occurs in rural areas and among minorities, senior citizens, low-income earners, and those who have not attended college. The younger, more urban, or better educated demographics may not realize 

that their digital avenues are paved with newspaper revenues. 

Without a printed and delivered newspaper, there would be no digital newspapers. 

In communities like Princeton, Kentucky, the newspaper holds 

together community life, democracy, and civic engagement. In a 
47 

year of a landmark national election, getting the newspaper delivered is important to everyone. 

We have had extreme problems in many markets, like mine, 

since the Postal Service began closing mail processing centers. In 

a survey of publishers, I learned this: 92 percent have experienced 

problems reaching readers on time with their periodical newspapers. 40 percent report delivery problems, even with First Class 

or priority mail. Nearly 50 percent attribute the problem to a 

closed or a downsized plant. Many others report problems, but they 

are not sure where the snag occurs. 

People simply give up when the newspaper arrives late time and 

time again. Lost subscribers and late newspapers damage our 

newspapers. They damage the businesses in our towns, which, in 

turn, damages the commerce in our towns. It damages our residents’ incomes. 

I do want to give credit where credit is due to the Postal Service. 

At our request, the Postal Service has begun to implement a measurement system to determine the on-time delivery of rural mail. 

This measurement has not yet included newspapers, but it is a 

great start. 

Postmaster General Megan Brennan, her management team, and 

the dedicated people who deliver the mail have helped us to find 

patches for service cuts. For example, we now have transfer hubs 

in some locations where plant operations were closed. These help 

us to move a portion of our mail more directly to its destination. 

While these patches help, they cannot take the place of an efficient 

mail processing operation. 

We do not want to see more plants closed. For that reason, NNA 

members are prepared to swallow a bitter pill. We opposed the 

Postal Service’s exigency rate increase 2 years ago because it delivered a postage increase three times inflation or more to our members. But today, we are willing to allow that increase to remain in 

the Postal Service rate base, provided that the money is used to 

sustain and improve service. 

We asked our members their views on giving up a rollback of 

postage rates that is scheduled to occur this April unless Congress 

intervenes. We asked, ‘‘Which is the priority for your newspaper, 

lower the rates or maintain improved service? ’’ The response from 

77 percent was to let the Postal Service keep the money, but to not 

do such a big increase again and definitely, definitely to improve 

the service. 

There are few issues more important to community newspapers 

than this one. We are urging our members to emphasize the need 

for action to sustain universal service. Newspapers will be asking 

candidates on the campaign trail what they intend to do about this 

critical issue. We stand ready to assist, to help this Committee and 

the Senate leadership, to enact legislation now. 

I would be happy to answer any questions that you may have. 

Senator CARPER. Mr. Hutcheson, thank you for what you have 

just said, and I would just add to that, God bless you and those 

77 percent of the respondents. 

Mr. HUTCHESON. Thank you. 

Senator CARPER. That is very much welcomed. 
48 

1The prepared statement of Ms. Collins appears in the Appendix on page 188. 

Kathy, I am just about to get a quick phone call. Senator 

Heitkamp is here and I think we will be rejoined by Senator Baldwin, but I will be right back to hear most of your comments, so 

please proceed and thank you. 

TESTIMONY OF KATHY COLLINS,1 GENERAL MANAGER, 

ROTHSCHILD MILL, DOMTAR PAPER COMPANY 

Ms. COLLINS. Thank you, Ranking Member Carper and Members 

of the Committee. My name is Kathy Collins and I am the Mill Operations Manager at Domtar’s Rothschild Paper Mill in central 

Wisconsin. My written statement is submitted for the record and 

thank you for allowing me the opportunity to bring highlights of 

my testimony to the Committee’s attention. 

I manage 400 hardworking Wisconsin men and women who manufacture approximately 136,000 tons of printing paper each year, 

most of which is delivered to our end users through the U.S. Postal 

Service. I speak on behalf of the American Forest and Paper Association (AF&PA) on the business realities and future viability of 

the U.S. Postal Service. 

The paper industry has a large stake in the success of the Postal 

Service, which delivers over one third, or $6 billion, of the communication papers manufactured by this industry. The packaging sector of our industry is also an increasingly important part of the 

Postal Service—and it drives their growth strategy, which has been 

driven by the surge in e-commerce. 

The Postal Service is an essential component of our Nation’s economic engine. The Postal Service has the infrastructure to enable 

our customers, from multinational to small mom-and-pop companies, to connect with every household in this country through 

paper. 

A few points about the U.S. forest products industry. It makes 

up 4.5 percent of the U.S. manufacturing gross domestic product 

(GDP). We produce $200 billion in products annually. We employ 

nearly 900,000 men and women. We deliver a payroll of $50 billion 

annually and we are a top 10 manufacturing sector employer in 47 

States. We are an integral part of the fabric and the economy in 

our host regions, many of which are rural areas where similar job 

and economic opportunities do not exist. 

The Postal Service is facing unprecedented challenges to adapt to 

new market realities that are also faced by Domtar and the entire 

paper industry and are caused by shifts in the way people communicate with one another and conduct business. 

Our industry has focused productivity efforts on the most efficient manufacturing processes. In the past 10 years, the average 

output per worker in U.S. pulp and paper mills has increased by 

nearly 13 percent. We must do more with less. 

Domtar and industry survivors have repurposed facilities, enabling us to take advantage of opportunities to produce new and 

value-added products that serve adjacent markets. Adapting to 

changing markets and continuing to meet the needs of our customers remains crucial. Developing new revenue streams is impor-
49 

tant, but so is keeping loyal customers in our mature business, a 

lesson that the Postal Service must follow. 

As we have heard today, the Postal Service has had nine consecutive years in the red. The losses stem, primarily, from the requirement to prefund its Retiree Health Benefits Fund and its 

workers’ compensation expenses, both of which are beyond the 

Postal Service’s control. We commend the Postal Service for its aggressive cost cutting measures by consolidating facilities, changing 

window hours, changing delivery routes, and reducing its workforce 

size. However, there is a limit to how much they can cut without 

degrading service. A look at current performance may suggest that 

they have cut too deeply. 

Domtar and the paper industry support legislative reform measures that will align labor costs, benefits, and future obligations 

with market competition. Congress must remove the handcuffs and 

unreasonable burdens that are the largest contributor to Postal 

Service financial losses. Postal facilities must adapt to the times. 

Rate stability and predictability are needed for mailers to stay with 

mail. Congress and the Postal Service must recognize that raising 

prices while reducing service is not a successful strategy to address 

declining demand. Mail must be cost-competitive, but we need price 

predictability for mailers and cost control incentives for the Postal 

Service. Reliable service is absolutely essential to compete with 

other communication options. And the Postal Service should have 

the flexibility to innovate and develop new revenue sources. 

Congress can help by passing legislation addressing the basic 

issues that stand in the way of the Postal Service adapting to the 

changing world and doing so profitably. We specifically cite 

prefunding of retiree health care benefits and reform of the Federal 

Employees Compensation Act (FECA) relative to workers’ compensation claims as areas that need prompt attention. 

We greatly appreciate the Chairman, Senator Carper, and the 

rest of the Committee for making reform of the Postal Service a 

priority. We need to work together to enact comprehensive plans 

that will put the Postal Service on a path to long-term sustainability. 

Thank you. 

Senator CARPER. Thank you. 

Senator Heitkamp, why do you not lead us off? Thank you. 

Thank you very much, Ms. Collins. 

Senator HEITKAMP. Thank you so much, Ranking Member Carper. 

It is absolutely essential to the rural economy that we get this 

right. I share your concern, Mr. Hutcheson, about what happens 

when my mother-in-law or grandmother cannot get your newspaper, which connects her to her community. And I think that if 

you are from a rural State, there is no other way that you can look 

at this other than as the lifeline of a community. And so, thank you 

for your efforts. Thank you for your political push on this. We have 

to make this issue a higher priority in the halls of Congress, and 

so I really applaud you. 

Ms. Collins, I think that what we are going to see is a resurgence 

of mailers, actually. I think that there is this idea that you can 

simply run an algorithm and know who your audience is. The sur-
50 

est way to know your audience is to mail directly to that audience, 

where you know who is on the other end of that. So, good luck as 

we approach the political season. It should be good for you as we 

see more and more targeting. 

Fred, I want to talk a little bit about morale and about how 

grateful we are for the employees of the U.S. Postal Service. And, 

I know and you know that I so much appreciate the Postal unions’ 

hard work in trying to bring about the needed Postal reforms. I do 

not think that there is anyone who is a stakeholder who does not 

look at this and know that we cannot ignore this. We need to get 

something done. But, as stakeholders, we all need to have a voice 

in the challenges ahead. 

And so, I would say that the Postal Service has been working to 

come up with reforms, and certainly Senator Carper has been leading that effort—herding the cats, so to speak—making sure that everybody is on the same page. But, I want to again emphasize that 

we cannot ignore the fourth stakeholder, the American customer. 

Improving service must be part of any Postal reform package. 

And, I want to ask you, can the rural Senators have your continued commitment to work to incorporate those customers that you 

see every day, that your people have the connection with, and 

make sure that they are represented at the table? 

Mr. ROLANDO. Oh, absolutely, Senator. We are on the front lines 

with the customers. We hear about it every day. We know that our 

customers depend on us. We know that we depend on our customers. The Postal Service is the one secure delivery method for 

our customers’ communications. This is the strength of the Postal 

Service. I guess that it is the basis of our 83 percent approval communication rating and, of course, that trust and that service level 

is essential to the growth of the Postal Service as we continue to 

grow our current products and any future products. So, absolutely, 

you have our commitment. 

Senator HEITKAMP. I think that maybe we forget how hard the 

work is, and anyone who—I think that it would be really smart for 

every one of us to just walk along with the delivery folks—or drive 

along with the delivery folks—and certainly a day like this reminds 

us of the commitment that your people—and all of the employees 

of the Postal Service—have made to continue to keep the American 

economy working. 

Mr. ROLANDO. Well, and I will tell you, it is an honor for letter 

carriers to walk around and provide that service, because as you 

know, at the same time, they have the distinct opportunity on a 

daily basis—because of where they are day in and day out—to 

serve the American people in so many other ways, in terms of 

watching out for the elderly, stopping crimes, putting out fires, and 

just all of the other things that go along with knowing your community and knowing the families. 

And speaking to the morale, I just want to mention, that is a big 

piece of what we need to accomplish with the legislation. You have 

a workforce that knows that they are the most trusted agency in 

the Federal Government. They know that we lost 200,000 jobs and 

still the productivity is at an all-time high. Yet, all that they hear 

about in the media is how the Postal Service is going broke and 

is irrelevant and how we had to, in the past, fight the legislation 
51 

of certain legislators and leaders of the Postal Service, who have 

bought into this strategy of attacking the networks and the services that we need to grow, rather than addressing the elephant in 

the room. It is really nice to see now that we have some discussion 

and consensus going on to address the real problem, the manufactured crisis, rather than attacking the networks, and that that particular leadership of the Postal Service is no longer—— 

Senator HEITKAMP. I think that it was particularly rewarding 

when we look at what we would traditionally see as a bean 

counter, the Inspector General, recognizing the importance of that 

morale, recognizing the importance of maintaining the workforce, 

and really expressing to us his concern that we are almost too late, 

given where we are. 

Finally, it is an issue for me. As you know, I am a strong advocate for 6-day delivery and an even stronger advocate for service 

performance. Fred, why is it so important that we have reliable delivery and service? 

Mr. ROLANDO. Well, again, it is the one secure method for delivering communications. Our customers depend on it. They know 

that it is secure. They know that it is timely. They trust the person 

who is bringing the mail. 

You mentioned the 6-day delivery, which is such an important 

part of the network. We can barely do it in 6 days. I cannot imagine doing it in less. We need to expand to 7 or 8 days. 

Senator HEITKAMP. I want to make this point, because I think 

that way too often the attitude is that 6-day delivery is just a jobs 

program. 

Mr. ROLANDO. Right. 

Senator HEITKAMP. And, I want to applaud you for your response, which really immediately looked at what the customers’ 

needs are. I think that that is an easy dodge for some people when 

they are talking about 6-day delivery, to say, ‘‘Oh, that is just kind 

of people trying to protect their jobs.’’ No, it is people trying to do 

their jobs and do what is best for American consumers. 

And so, I appreciate that perspective and really look forward to 

working with the customer groups and the Postal unions as we 

move forward. 

Mr. ROLANDO. As do we. Thank you, Senator. 

Senator CARPER. Senator Heitkamp, my wife seems, lately, to be 

interested in me working with her to update our will. I say, ‘‘Martha, I am fine. I feel perfectly healthy. I ran this morning. I work 

out every day.’’ She says, ‘‘No, we should do that.’’ 

We were coming home from church a couple of weeks ago and 

stopped at a stoplight at an intersection. Off to the right was a 

graveyard, a cemetery, and my wife said—she was already talking 

about updating our will and other things, and she said, ‘‘By the 

way, what do you want your tombstone to say?’’ I said, ‘‘Martha, 

I am fine. I feel great. What is this? ’’ And, she said, ‘‘No, really, 

what do you want to have put on your tombstone?’’ And I said, 

‘‘Well, OK. All right. Here. ‘Return to Sender’.’’ [Laughter.] 

When I heard you and Fred going back and forth on days of the 

week—six, seven, and he actually mentioned 8 days a week—I was 

thinking, well, maybe for your tombstone, knowing how strongly 

you have pushed on this, your tombstone epitaph could be, like, 
52 

‘‘Eight Days a Week.’’ That would be pretty good. Apologies to 

Lennon and McCartney. 

Senator HEITKAMP. Ranking Member, I will take it. 

Senator CARPER. All right. 

Senator HEITKAMP. ‘‘Eight Days a Week.’’ 

Senator CARPER. Good. All right. I will ask a couple of questions 

and then I may have to slip out. I need to be someplace at 12:30, 

so I would like to ask a couple of questions and then yield to Senator Baldwin to close it out. All right. 

First of all, I want to go back to the morale thing for just a second. Some of my staff heard me mention this before, but I can go 

home at night to Delaware and come back and forth on the train. 

I usually listen to National Public Radio (NPR) on my way to the 

train station in the morning from my house. It is not too far away. 

And, about a year or two ago, they were reporting on an international study that had been done. They had asked thousands of 

people all over the world, ‘‘What is it that makes you like your job? 

What enhances your morale in the work that you do? ’’ Some people 

like getting paid. Some people said that they like the folks who 

they work with and the environment in which they work. Some 

people said that they liked having a pension, they liked having 

health benefits, or they liked vacation time. But, do you know what 

most people said that they liked? They said that the thing that 

they liked the most about their job was that they knew that the 

work that they were doing was important and that they felt that 

they were making progress. They knew that the work that they 

were doing was important and they felt that they were making 

progress. 

So, the work that the Postal Service does, with all of their partners and for all of us, is important—in some places, incredibly important. And what we have to do is do the enabling work, in this 

Committee and in this body in which we serve, to enable the Postal 

Service, your members or your customers, to do the important work 

of our country. 

The question that I would have, if I could—a question for President Rolando. Let us go back to Medicare integration. My own feeling is—I have always said that this is a liability. The question is, 

why do we have to address it in 10 years, when a lot of businesses 

never address it, do not even think much about it? And, I think 

that it is a liability that needs to be addressed. But, what we have 

proposed in our legislation is to do it over 40—to amortize over 40 

and up to 80 percent of the liability. Does that seem like a reasonable approach to you? 

Mr. ROLANDO. Yes. I think that we are pretty much on the same 

page when it comes to Medicare integration. The issue, just from 

listening to the first panel, is the whole idea that we are shifting 

a liability to Medicare off of a balance sheet when, in fact, all we 

are looking to do is reduce the liability by allowing Postal employees to participate in a program. And it seems the question is how 

much have Postal employees put in versus how much came out. 

And I do not think that Postal employees should be treated differently in that way. This is not an Employee Retirement Income 

Security Act of 1974 (ERISA) plan. It is a social insurance program. If there is something wrong with the Medicare program, that 
53 

is a discussion for a different day and a different hearing. But, we 

just want to participate—like everybody else does—in Medicare because we pay in like everybody else does. So, I do not see it as a 

shift in that liability in any way, shape, or form, as was characterized earlier today. 

Senator CARPER. Yes. I fully concur. 

Dr. Coburn and I, when we first discussed this issue 3 years ago, 

came to the conclusion that there is an equity question—equity 

fairness question—because how can you say that the retirees of the 

number 2 employer in the country, which pays more into Medicare 

maybe than almost anybody else, cannot derive the full benefit of 

those payments. It is just not fair. It is not right. 

Mr. Hutcheson, if I could ask a question? In October, I guess that 

it was last year, a GAO report found that because Postal Service 

delivery performance is tied to a national standard, their reported 

on-time mail delivery performance results were not entirely complete and may not give an accurate assessment of service for many 

communities across the country. Are there measures that can be 

taken to ensure better delivery performance in all areas as well as 

on a national level? I think that you spoke to this a little bit in 

your testimony, but we would love to hear more. 

Mr. HUTCHESON. Yes, sir. Thank you. I am certainly not an expert on service measurements and I know that the Postal Service 

has begun the process of attempting to measure the mail. I think 

that our concern is that the urban mail is commingled, and those 

figures are commingled, and I would question—and I do not believe 

that we have an accurate figure for rural mail. I think that it is 

difficult to determine. For newspapers, it is impossible, because we 

do not go through the machines where they can measure that. We 

cannot be seen in their mail flow. But, I think that rural mail figures are probably obscured when you mix the urban mail in with 

it. 

I do think that the Postmaster General has tools to deal with 

this situation. We know that the plants that have gone away are 

not going to come back. We do know that those are gone. But, I 

do hope that the Postal Service is—in the previous panel they 

talked about innovation. How can they follow the example of the 

steel industry of some 20 years ago, and look at smaller and—for 

lack of a better word—more boutique type of operations, where you 

can get more mail access points that can deliver the mail and can 

keep it flowing, rather than keeping rural mail, as we have discussed, flowing to these huge processing centers and there being 

delayed, like the example that the Senator gave earlier in Fargo. 

I think that that is what happens. Mail gets stuck in these large 

centers and it is—we always wish that it could go back to the way 

that it used to be, when you could mail a First-Class letter in your 

community. It had your community’s postmark and they would get 

it no later than the next day. But with all of these plant closings, 

I think that, for rural mail specifically, if we could get some of 

these smaller operations that do not impose large expenditures to 

get started, I think that it could be a real help for the Postal Service. The greater the distance is, the greater the problems that we 

have. 

Senator CARPER. OK. 
54 

Mr. HUTCHESON. And if we could do that, I think that it would 

help. 

Senator CARPER. All right. Thank you. 

A quick question for you, Ms. Collins, and then I will yield to 

Senator Baldwin. In your written testimony—I did not hear all of 

your oral testimony, I apologize—you compared the Postal Service’s 

efforts to cut costs to right-size the enterprise and become more efficient with the actions that your company has taken—had to 

take—in recent years to remain viable in the paper industry. 

When it comes to the Postal Service, and from your perspective 

as a Postal customer, can you talk with us a little bit about how 

far cuts can go before they begin to erode the quality of service and 

reliability? 

Ms. COLLINS. The infrastructure of the Postal Service really is 

the foundation of the Postal Service. As we put products out and 

provide those to our customers, who then turn around and get 

those products working through the Postal system to deliver that 

communication to the end user, you cannot back away from service. 

If you back away from service, the foundation of the Postal Service, 

what more is there? That is what the Postal Service is about. 

If people start questioning the predictability and if people start 

questioning the reliability of the Postal Service, you start losing 

those customers. And what I can tell you is that, from a manufacturing perspective, when you lose a customer, it is extremely difficult to get a customer back. So, predictability, stability, service, 

quality—whether you are making paper or you are delivering 

mail—it is about the level of service and the level of quality. Whatever you put out there—again, it is tough to get it back. 

Senator CARPER. Thank you so much. 

Senator Baldwin, we will ask you at the end of the hearing to 

adjourn us, and also there is a short script, as you know, to read. 

Do you have it? 

Senator BALDWIN. I have just been handed that script. I am all 

ready. Thank you so much—— 

Senator CARPER. Thank you so much for doing this. And again, 

our thanks to each of you for not just—— 

Senator BALDWIN. Do I get the gavel while—— 

Senator CARPER. You do. You get it all. [Laughter.] 

I will even pour your water. 

But, again, to all of you, thank you so much for working with us 

and for providing, I think, very helpful and valuable testimony 

today. Thank you. God bless. 

Senator BALDWIN. [Presiding.] And, I am going to be brief, too, 

because I, likewise, have to get to a 12:30 meeting, but thank you 

for all of the time that you have spent with us this morning. 

I want to actually start where Senator Carper left off with you, 

Ms. Collins. You were just asked about predictability and stability, 

in terms of level of service and quality of service. You were just addressing that. Can you just add in the impact of price fluctuations 

on the industry, if you have anything further that you would want 

to add about that stability? 

Ms. COLLINS. Again, as we consider which are the important 

parts of keeping the Postal Service viable and continuing to keep 

the mail volume up, one of the things that we have to be careful 
55 

of—and Mr. Hutcheson referred to that—is the yo-yo effect—as you 

indicated, as well, Senator Baldwin—the yo-yo effect of rates. 

So, if the exigent rate increase is taken away in April and the 

rates drop, and then we look at a bill that potentially raises the 

rates again, and then we look at the PRC in 2017 evaluating the 

rates one more time, I just have a lot of concern about the rates 

bouncing around. And, again, what does that do to the predictability of the Postal Service? If you are a mailer trying to decide 

what method of communication to use, predictability is one of the 

factors that you would look at to decide which method to use. So, 

I worry about dropping rates, then putting rates back in play 

again, and then having the PRC review the rates one more time. 

Senator BALDWIN. Mr. Rolando, I would like to have you talk a 

little bit more about the proposal that you have worked on with the 

Postal Service that would require actuarially based payments and 

allow the Postal Service to conservatively invest a reasonable portion of the Retiree Health Benefit Fund. And, could you agree that 

Congress—would you agree that Congress should move on areas 

that we have reached some level of significant agreement on, such 

as requiring actuarially based payments? 

Mr. ROLANDO. Yes. The points that the coalition put together— 

yes, I think that we should move forward on those. As you know, 

there have been a lot of issues discussed over the years in different 

sessions and none of those pieces of legislation went anywhere because of the objections by many different parties at many different 

levels. So, the idea of putting the coalition together was to find out 

what we could agree on and if the body of what we could agree on 

would be enough to stabilize the Postal Service and posture it for 

what it needs to do in the future. Those were the basic points of 

that, the Medicare integration and certainly the investment piece. 

You cannot continue to provide, again, a low-interest loan to the 

government, earning 2 to 3 percent, when just the cost of health 

care is going up 5 to 7 percent. No matter what you have in there, 

you are going to deplete it by doing that. It just does not make good 

business sense. 

Senator BALDWIN. President Rolando, I also wanted to hear some 

of your thoughts on service standard changes and consolidations. I 

am concerned about service. Our Nation’s letter carriers work extremely hard to deliver mail to every community, every delivery 

point, and so thank you for your service and for that service. 

As I mentioned during the first panel before the Committee, I 

heard a great deal of concern from my constituents when the Network Rationalization Plan was implemented. Can you discuss what 

letter carriers and other unions have experienced with respect to 

the recent consolidations and changes to service standards? 

Mr. ROLANDO. Yes. I think that I can speak for probably the 

other unions in saying that we are all extremely concerned about 

the changes that came at the beginning of 2015. As you know, they 

were put in place with a plan to close more plants, because under 

the current standards, they could not do that. Fortunately, Postmaster General Brennan has stopped the closings, but the changes 

did go into effect. 

We certainly favor restoring the old service standards. The reason that you do not see that, of course, in the consensus bill is be-
56 

cause we could not come to an agreement for the core pieces of this 

bill. But, we are going to—we will continue to pursue, in other 

venues, restoration of the service standards. And of course, if the 

Committee wants to address that, I know that all of the stakeholders will get together and discuss with the Committee what 

could be done, if that becomes an issue. 

We are willing, like I said before, to discuss any other issues. 

These are the ones that we did have the common ground on to 

move forward. 

Senator BALDWIN. Great. Well, I want to thank the panel of witnesses for your time, your expertise, and your input. It is extremely 

valuable. 

And with that, I have a text to read. The hearing record will remain open for 15 days, until February 5 at 5 p.m., for the submission of statements and questions for the record. 

This hearing is adjourned. Thank you again. 

Mr. HUTCHESON. Thank you. 

Mr. ROLANDO. Thank you. 

[Whereupon, at 12:27 p.m., the Committee was adjourned.] 
(57) 

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