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22–337 PDF 2017

S. Hrg. 114–593 

NOMINATION OF JEFFREY A. ROSEN 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

NOMINATION OF HONORABLE JEFFREY A. ROSEN TO BE A GOVERNOR, 

U.S. POSTAL SERVICE 

APRIL 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 

EN 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 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Deputy Chief Counsel for Governmental Affairs 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

JOHN A. KANE, Minority Senior Governmental Affairs Advisor 

KATHERINE C. SYBENGA, Minority Senior Counsel 

LAURA W. KILBRIDE, Chief Clerk 

BENJAMIN C. GRAZDA, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Lankford .............................................................................................. 1 

Senator Carper ................................................................................................. 2 

Senator Portman .............................................................................................. 3 

Senator Tester .................................................................................................. 8 

Senator McCaskill ............................................................................................ 10 

Prepared statement: 

Senator Lankford .............................................................................................. 17 

Senator Carper ................................................................................................. 18 

WITNESSES 

THURSDAY, APRIL 21, 2016 

Jeffrey A. Rosen to be a Governor, U.S. Postal Service 

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

Prepared statement .......................................................................................... 20 

Biographical and financial information .......................................................... 22 

Letter from the Office of Government Ethics ................................................. 43 

Responses to pre-hearing questions ................................................................ 47 

Responses to post-hearing questions .............................................................. 64 

(1) 

NOMINATION OF JEFFREY A. ROSEN 

THURSDAY, APRIL 21, 2016 

U.S. SENATE,

COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:18 a.m., in room 

342, Dirksen Senate Office Building, Hon. James Lankford, presiding. 

Present: Senators Lankford, Portman, Ernst, Carper, McCaskill, 

Tester, and Peters. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. Good morning. Today, we will consider the 

nomination of Mr. Jeffrey Rosen for the position of Governor, on 

the Board of Governors of the United States Postal Service (USPS). 

The Committee takes the nomination process very seriously. We 

are pleased to have a strong nominee before us today. 

Nine members of the Postal Service Board of Governors serve at 

USPS like a board of directors, controlling expenditures, planning 

for the long term, making policy, and reviewing current practices. 

Jeffrey Rosen is a native of Boston. He received his Bachelor of 

Arts in economics from Northwestern University, and his J.D. from 

Harvard Law School. After graduation, Mr. Rosen worked as a litigator for 25 years at Kirkland and Ellis’s D.C. office, where he is 

currently a partner. Mr. Rosen served as the General Counsel (GC) 

for the Department of Transportation (DOT) and for the Office of 

Management and Budget (OMB). In addition to this impressive resume, Mr. Rosen possesses the necessary experience and legal and 

policy background to serve the Postal Service. 

The Committee staff reached out to a variety of Mr. Rosen’s colleagues and affiliates, who spoke very highly of his judgment and 

abilities. The Committee staff also had the opportunity to interview 

Mr. Rosen on an array of issues, ranging from his years of government service to his legal work in energy, toxic tort, regulatory, and 

antitrust law. He has thoughtfully and competently answered each 

question to our satisfaction. 

To date, the Committee has found you to be qualified for the position you have been nominated. I look forward to speaking with 

you more today about your experience and accomplishments, and 

how you intend to bring them to bear on the Board of Governors 

for the United States Postal Service. 

I would now like to recognize Ranking Member Carper for his 

opening Statement. 
2 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thanks, Mr. Chairman, and thanks for moving 

so quickly to schedule today’s hearing to consider what I believe to 

be a very important nomination, to fill one of the many unfortunate 

vacancies on the Postal Service’s Board of Governors. 

We are considering Mr. Rosen’s nomination at what is a very 

challenging time for the Postal Service, but not a time without opportunity and potential. Albert Einstein once said, in adversity lies 

opportunity, but we need strong leadership on the Postal Service 

Board of Governors in order to take full advantage of the opportunities that are out there for the Postal Service. 

The Postal Service operates, as we know, as the center of a mas- sive $1.4 trillion printing, delivery, and logistics industry that employs nearly 8 million people. And even as First Class Mail is lost 

to other forms of communication, the future is not without promise 

for the Postal Service in a number of other ways. Advertising mail 

is still popular and an effective option for a lot of mailers. Millions 

of people still look forward to receiving a wide range of magazines 

in the mail every week. And e-commerce and package delivery are 

booming, making the Postal Service a vital partner for businesses 

both large and small. 

Even the Postal Service’s traditional competitors rely on it to 

carry items the last mile, the last five miles, the last 10 miles, to 

rural communities across our Nation. 

I look forward to talking to Mr. Rosen today. It was a pleasure 

to meet you, and I look forward to talking with you a bit more 

about what you think can be done to address the ongoing challenges that face the Postal Service and to hear about the skills that 

you bring, the knowledge you bring, the experience that you bring 

to the Board, if confirmed. 

As a leader in both the Office of Management and Budget and 

the Department of Transportation during the Bush Administration, 

Mr. Rosen will bring unique policy and management perspectives 

to the Board of Governors. 

If reported out of this Committee, Mr. Rosen will join the five 

other Postal Board of Governor nominees pending before the Senate, all of which have been held up for more than a year. Some of 

them have even been waiting for confirmation since the last Congress. As a result, the Postal Service is currently down to one sitting Senate-confirmed Governor overseeing operations. 

This situation is worse than unacceptable. I believe it is shameful. I cannot imagine something like this ever happening in the private sector, because shareholders would demand oversight from a 

strong board to protect their investment. Congress needs to do our 

job to protect Postal customers as well as the investment of the 

American taxpayers by filling these positions. 

I believe we have a real opportunity here to inject some badly 

needed talent into the Postal Service at a time when the agency, 

given the vacancies on the Board, the loss of the most recent Inspector General (IG) to retirement, and the challenges the Postal 

Service is facing, is in grave need of independent oversight and direction. If we confirm all six of the pending nominees, we will make 

significant progress toward stabilizing and strengthening our Postal Service. 
3 

I believe your wife is with you today. 

Mr. ROSEN. That is correct. 

Senator CARPER. Over your left shoulder? Good morning, Kathy. 

Mrs. ROSEN. Yes. 

Senator CARPER. Thank you for joining us today. Thank you for 

your willingness to share this fellow with the rest of us. All right. 

Take care. 

Senator LANKFORD. I would now like to recognize a tireless advocate for good government who has been at this for a while, both 

with OMB and here in the Senate, my friend and colleague, the 

distinguished Senator from Ohio, Rob Portman. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. Thank you, Mr. Chairman, and I echo the 

comments of my two colleagues who are both tireless advocates for 

good government. 

I am glad to be in their company, and I am just honored to be 

here today to introduce a very good friend of mine who happens 

also to be very talented. It is a nice combination when you are able 

to talk about a good friend and say how appropriate it is that he 

has been willing to step forward for this important post. 

I agree with my colleagues that this is a critical time for the 

Postal Service and that we need people who have a broad background of experience, but also good judgment and a level head, and 

that is what Jeff Rosen brings. 

He is, in my view, one of the most respected lawyers here in this 

town. I think that view is shared by a lot of other people. He is 

an accomplished litigator at Kirkland and Ellis, one of the major 

firms in Washington. He has handled a lot of very high stakes, 

complex cases for them. His practice has also focused, importantly 

for this Committee, on administrative law and holding the Federal 

agencies accountable to the laws that Congress has enacted, a topic 

that we address frequently here and that the Chairman is very interested in, as is the Ranking Member. 

But, Jeff is not just an accomplished lawyer in the private sector. 

He has also dedicated himself to public service. He served as General Counsel of the U.S. Department of Transportation. While 

there, he managed hundreds of lawyers and was also asked to take 

on other tasks, including DOT’s regulatory program. Obviously, he 

was involved in all the litigation the Department was engaged in, 

and it was a big job. 

He later served as General Counsel of the Office of Management 

and Budget, and he did that because I asked him to. When I became Director of OMB, I wanted to surround myself with people 

smarter than me. That is not hard to do, but one person I reached 

out to was Jeff Rosen. And, honestly, recruiting him from the Department of Transportation, where he was running a much larger 

team, was a challenge, but he was willing to come to OMB to supervise a much smaller team because he realized that OMB is the 

nerve center for the Federal Government. From my point of view, 

I wanted someone like Jeff to provide me advice and counsel on the 

very complex regulatory matters that come before OMB as well as 

the legal issues and policy questions. He excelled in that role. I de-
4 

pended on his expertise. I trusted his judgment. He was part of our 

senior team. 

He left government in 2009, but his dedication to public service 

did not end there. He has remained active. He is a member of the 

Administrative Conference of the United States. He has been a 

leader in the American Bar Association (ABA). By the way, Mr. 

Chairman, he is current Chair of the Administrative Law Section, 

again, something very important to this Committee and to the Subcommittee that you chair. He has been a great resource to me. He 

has been an expert resource to a lot of us on regulatory reform, and 

specifically me on the Regulatory Accountability Act. I have really 

valued his judgment there. 

I think he has exactly the skills and aptitude we want right now 

to be a Governor of the U.S. Postal Service. He is vigilant about 

protecting the taxpayers’ investment. He has the experience necessary to deal with what is an increasingly difficult challenge facing the Post Office. Senator Carper has talked about some of the 

opportunities, as well. They are there but someone needs to understand how to take advantage of the changing marketplace and 

those opportunities. And, I am just confident that with his background and expertise, the Board will be greatly benefiting from his 

involvement. 

So, I do want to mention Kathy for a moment, if I might, because 

I attribute most of Jeff’s successes to the fact that Kathy is his 

much better half, and also with regard to Kathy, because of her upbringing in the State of Ohio. Just as Senator Carper took a little 

detour to Ohio to sharpen his skills at the Ohio State University, 

so Kathy has brought that Ohio work ethic and those Buckeye 

roots those common sense Buckeye roots, into Jeff’s life and has 

played a key role in his ability to achieve what he has. 

So, seriously, I thank you both for being here. Thank you for 

your willingness to serve, to answer the call of public service once 

again, and I look forward to strongly supporting your confirmation. 

Senator LANKFORD. It is the custom of the Committee to swear 

in all witnesses before they appear. Would you please stand, Mr. 

Rosen, and raise your right hand. 

Do you swear the testimony you will give before this Committee 

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

help you, God? 

Mr. ROSEN. I do. 

Senator LANKFORD. You may be seated. Let the record reflect the 

witness answered in the affirmative. 

Mr. Rosen, I now recognize you for your opening statement, if 

you would push the ‘‘talk’’ button there in front of you so we can 

hear you clearly. We will be honored to receive your testimony at 

this time. 
5 

1The prepared statement of Mr. Rosen appears in the Appendix on page 20. 

TESTIMONY OF JEFFREY A. ROSEN,1 NOMINATED TO BE A 

GOVERNOR, U.S. POSTAL SERVICE 

Mr. ROSEN. Thank you, Mr. Chairman. 

Chairman Lankford, Ranking Member Carper, and Senator 

Portman and Members of the Committee, I want to begin, of 

course, by thanking you for the honor of appearing today and for 

the privilege of having my nomination considered for appointment 

to the United States Postal Service’s Board of Governors. 

I also want to express my deep appreciation to my friend, Senator Portman, for that extraordinarily kind introduction, which I 

very much appreciate. 

I was going to take a second to introduce my wife, but you have 

all already done that, so I will move on, but I am very appreciative 

that Kathy is here with me today. 

In the course of my career—— 

Senator CARPER. How long has she been by your side? 

Mr. ROSEN. In May, it will be 34 years. 

Senator CARPER. Kathy, for you, no purgatory, straight to heaven. That is what people say of my wife, too. [Laughter.] 

Mr. ROSEN. So, let me start by just saying, in the course of my 

career, I have had the great fortune to have had experiences with 

a number of different types of organizations that I think would 

prove helpful to the Postal Service Board of Governors. All of you 

have some familiarity with them, so I am not going to do this in 

detail, but I just wanted to quickly mention, first, my 28 years with 

my law firm, Kirkland and Ellis, where in addition to my roles as 

a litigator and regulatory lawyer, I have served in a management 

capacity, including several years on the firm’s Management Committee and some years as co-head of its Washington, D.C. office. 

Second, with regard to my time at the U.S. Department of Transportation, obviously, you know that is a large cabinet agency. At 

the time, it had a budget of approximately $60 billion and a little 

bit more than 50,000 employees, and I was very fortunate to work 

for Secretary Norman Mineta and assist him in a variety of roles, 

including things like the DOT Credit Counsel as the regulatory policy officer, a number of roles that did involve intersecting with the 

big parts of the agency. 

And then, third, I just wanted to touch on the fact that people 

are familiar with OMB, and I had the good fortune, of course, to 

work with Senator Portman there. But people do not always remember that the Federal budget, even at that time, was just short 

of $3 trillion and four million employees. So, we are talking about 

very complex budget, management, legislative, and regulatory 

issues, and I would say I was fortunate to learn from Senator 

Portman as to a number of those complex challenges. 

I see the Postal Service largely as a transportation, logistics, and 

delivery operation, so I anticipate that some of my experiences 

would prove helpful to the Board of Governors. And, I strongly appreciate and welcome that the Board’s top priority must be, as Congress has set out, to represent the public interest generally. 

At the same time, I, of course, understand that the U.S. Postal 

Service is confronting very substantial challenges, both near term 
6 

and over a longer term. I have begun the process of studying and 

analyzing these issues more closely and will look forward to doing 

so in much greater detail if I am approved by the Committee and 

confirmed by the Senate. 

I would aim to bring a problem solving outlook to the Board, but 

also vigorous oversight and accountability by the Board with regard to Postal management’s plans to address the key challenges 

that are facing the Postal Service. 

If I am confirmed by the Senate, I can assure you I will do everything I can to fulfill the responsibility that would be entrusted to 

me by both the Congress and the President. I would look forward 

to trying to help address these issues facing an organization that 

I regard of being of such importance to both our national economy 

and to our fellow Americans throughout the country. 

In closing, I want to thank you for considering my nomination 

and I look forward to answering your questions. 

Senator LANKFORD. Thank you, Mr. Rosen. 

I am going to defer my questions to the end and recognize the 

Ranking Member for some questions. He has another Committee 

hearing that he is going to be heading toward quickly, so I want 

to make sure he has plenty of time for that. Mr. Ranking Member. 

Senator CARPER. Mr. Chairman, thank you. Thank you so much. 

Thank you for your testimony, Mr. Rosen. I was inclined to support your nomination until I heard that this guy to my left [referring to Senator Portman] is such a strong advocate. I will have to 

reserve judgment now. No, seriously, it is helpful that he has this 

high regard for you. 

I want to talk a little bit about Postal reform legislation. The 

800-pound gorilla in the room concerns the Postal Service being 

able to deal with the prepayment for the health care of their retirees. As you may know, the Postal Service and its employees pay 

more, in terms of FICA, into Medicare for retiree health care costs 

than any other employer in the country. Nobody pays more for 

Medicare coverage for their employees. The Postal Service does not 

get full value. 

My wife is retired from DuPont. When she reached the age of 65, 

the DuPont Company said to her, and everybody else who reached 

the age of 65 and retired, we expect you to sign up for Medicare 

Part A, Part B, Part D, and we will provide wrap-around coverage 

to fill in the gaps. All kinds of employers, large and small, do that 

when their employees or their retirees reach the age of 65, as you 

probably know. 

For the Postal Service, almost all employees and retirees, take 

advantage of Medicare Part A, the lion’s share Part B, nobody Part 

D. The Postal Service, in fact, by overpaying into Medicare subsidizes other employers in this country, including their competitors. 

It is not right. It is not fair. It is not equitable. 

Is this an issue that you are familiar with? Do you have any 

views on this? 

Mr. ROSEN. Thank you, Senator Carper. I am generally familiar 

with the issue and I think there are really two parts to it. The first 

part is the prefunding obligation that was in the 2007 bill, and I 

do not think there is any need to second-guess or revisit whether 

that made sense at the time. There are probably pros and cons. 
7 

But as we sit here today, nearly 10 years later, the circumstances are different in a number of ways, including the fact 

some of those payments were made and, therefore, have prefunded 

some of the obligations, and it seems to me that we are now at a 

point where something has to be done about that legislatively. It 

is a big problem that we have such a large obligation for the Postal 

Service to pay and that it is unable to do so and last year did not 

pay it. So, we know we have a very serious problem that has to 

be addressed, it seems to me. 

The second part of that is, so, how should it be addressed, and 

that is where I know less about what were the options that have 

been analyzed or considered by the Postal Service or others in potential legislation, because I can envision there being multiple approaches to trying to get at that and I have not had the opportunity yet to be informed enough as to say, here is the right solution. I can think of a range of solutions. 

Senator CARPER. You can just stop right there. Thank you. 

Thank you very much. 

Some people say this is not a real liability for the Postal Service. 

I think it is. It is a real liability for all employers, for State and 

local governments, as well, and for the most part, we do, across the 

board, a not very good job of meeting that liability, not even acknowledging it for a lot of State and local governments and for private sector employees. So, it is a real liability. 

The question is, over what period of time should it be addressed, 

and legislation, bipartisan legislation for which we held a hearing 

here several months ago basically says, this is a real obligation. 

Some money has been set aside already to meet that obligation. 

For the remainder of the obligation, the remainder of that liability, 

let us have a requirement to address about 80 percent of it over 

the next 40 years. And, even that is a far more conservative approach taken by most public employers, governments, and private 

sector employers. 

The real key is, are we going to allow the Postal Service to get 

full value for the money that they pay in, overpay into Medicare, 

and that has huge implications for the financial viability going forward. You will hear a lot more about this if you are confirmed, and 

maybe until you are confirmed. 

The other thing I want to ask is I have quoted Einstein—I quote 

him a lot—in adversity lies opportunity. Plenty of adversity for the 

Postal Service. A lot of the adversity is brought to us by the Internet, but there is a real opportunity there, as well. Talk to us about 

some of the opportunities that you would like to see the Postal 

Service pursue if you are confirmed. 

Mr. ROSEN. Well, I think the challenge there is to think about 

what is the role of the Board and what is the role of the management, and there is a real need for more innovation, and I suspect 

use of technology, as well, to improve both the revenues and to 

manage the cost by doing things more efficiently. 

And I think for the Board, the challenge is to really push management to be considering a wider range of opportunities, to be 

more thorough in exploring what opportunities exist, to bring urgency to that, and to see what practices are in place and whether 

there is a staleness. I mean, sometimes, organizations, one of the 
8 

biggest challenges is they want to keep doing it the way it was 

done. And, so, I think part of the challenge for the Board is to try 

to break through to get more creativity, more innovation, more best 

practices learned from others. 

I do not actually think the Board should try to substitute for 

management as to do more of this or less of that, except in response to management educating the Board about options. 

So, I think my view is that there is a need for a lot more innovation and to take advantage of opportunities, some of which I think 

you were starting to identify. 

Senator CARPER. The only other thing I would say is—this is 

more to my colleagues than to you—among the President’s nominees to the Postal Board of Governors are folks who have private 

sector experience running companies, pretty big companies, and 

some of their experience involves the use of technology and creativity in that regard. I think the potential for having some of the 

nominees to serve on the Board is they have done this kind of stuff 

before. 

Mr. ROSEN. Yes. 

Senator CARPER. They have actually, as people running companies and serving on the boards themselves, they have thought 

about this, not just thought about it, but actually done some of 

these things, and I think they would bring great value to the, not 

just to the Postal Board of Governors, but to the Postal Service as 

we try to seize the opportunity, seize the day. 

Thanks so much. Welcome, and good luck. 

Mr. ROSEN. Thank you very much, Senator. 

Senator CARPER. And thank you very much, Mr. Chairman. 

Senator LANKFORD. Thank you. Senator Portman. 

Senator PORTMAN. Thank you, Mr. Chairman. 

Again, I have strong support of Mr. Rosen based on his management experience he talked about, but also the judgment he brings. 

And, I think it is interesting, in his response to Senator Carper, 

he talked about thinking outside the box and having the Board be 

in a position to bring innovation and best practices. The Postal 

Service issues that we talked about earlier, some of the challenges 

they face require that, and we have made some progress here in 

Congress in dealing with some of these issues on a short term 

basis, but over the mid and long term, we have big challenges. 

So, I am just glad that you are willing to step up and to help 

with the reforms that are necessary and appreciate you bringing 

that judgment and that experience and I wish you the best of luck. 

Mr. ROSEN. Thank you very much, Senator. 

Senator LANKFORD. Senator Tester. 

OPENING STATEMENT OF SENATOR TESTER 

Senator TESTER. Thank you, Mr. Chairman. 

I want to echo Senator Portman’s comments about your willingness to serve. I do not know as much about your management 

style, obviously, as Senator Portman does, but I do think it is important we have good people that are willing to serve in these positions, so thank you for that. 

And thank you, Mr. Chairman, for being so courteous. I very 

much appreciate that. 
9 

I could ask you a lot of questions about the intricacies of the Post 

Office, but I think that would be patently unfair, so I think we will 

get to just something that is fairly fundamental with the Postal 

Service. 

I come from Montana, which is a pretty rural State, and I will 

tip my hand by telling you that I think the Postal Service is pretty 

important, especially for rural areas. There are some that think the 

Postal Service has gone the way of the Pony Express and that it 

is time to turn this operation over to the United Parcel Service 

(UPS) and Federal Express (FedEx) and others in the private sector to run it as they would, as a business. 

You well know, I am sure, that the Postal Service is running 

deficits at this point in time. We have not done much to help them 

solve that problem. But, nonetheless, we are where we are, and it 

is, in my opinion, if the Postal Service is going to continue, it is 

going to take some good work done by this Committee and Congress, and it is also going to take some appropriations to keep them 

afloat, taxpayer dollars. 

So, the question I have for you, from a very fundamental standpoint, if it takes taxpayers’ dollars to keep the Postal Service afloat 

over a fairly long period of time, more than just a one-time expenditure, which camp do you fall into? Do you fall into the camp that 

says, go ahead and spend the taxpayer dollars, keep it going, because it is that important, or do you fall into the camp that says, 

you know what, maybe it is time—we are in the 21st Century—to 

turn this over to the private sector and erase the Post Office? 

Mr. ROSEN. Well, Senator, let me say as to what is sometimes 

referred to as privatization, that is not my position. I am aware 

that for decades now, Congress determined that the Postal Service 

should be a public entity within the Federal Government with the 

unique charter to operate as a self-sustaining commercial enterprise, including service to areas that might not be served by a private company, or minimally served, and that includes, I am sure, 

your concern about rural areas. 

So, my own feeling is that at this juncture, it still makes sense 

that the Postal Service should remain a Federal entity that should 

function like a private business, but not actually become one. 

Senator TESTER. I appreciate that answer. So, let me flesh it out 

just a little bit further, because self-sustaining, that is a key term. 

Mr. ROSEN. Yes. 

Senator TESTER. So, we can continue to raise rates. There will 

be folks in front of this Committee that say, do not do that, it will 

put us out of business, and they may be correct. Or, we can subsidize. What is going to be the determining factor for you that 

pushes you one way or the other? 

And, so, I do not want to be too cryptic about this. There are 

some—and I am not saying they are wrong, either, they may be 

right—that say that this should be self-sustaining and it is not, 

and the fact is that if it cannot be, we ought to eliminate it. So, 

I am trying to get a feel from you—— 

Mr. ROSEN. Yes. 

Senator TESTER [continuing]. Where you are at on taxpayer subsidies of the Postal Service over the long haul. 
10 

Mr. ROSEN. So, here is the thing. The Post Office has been selfsustaining for most of the period since it was created in its current 

form and it seems to me that is a very good thing and that is what 

we should want. And I think what needs to happen next is to truly 

push and explore for all the options as to how to continue that, because that is in everyone’s best interest. 

And, I am new to the issues, so I will have to qualify that, but 

my sense is that not every option has been fully pushed, explored, 

analyzed, not enough creativity brought to bear, and so is there 

need for more revenues? Yes. I thought it was somewhat encouraging that over the last quarter the Post Office had an increase in 

revenues. It looks like it was on the order of half-a-billion dollars 

for the quarter. Has that been exhausted in terms of revenue opportunities? I doubt it. 

On the cost side, what you really want is efficiency, right, not 

just slash, grow yourself into the ground. That does not work. 

And then on innovation, which is what I think Senator Carper 

was interested in, can you bring something new to this because we 

are in the Internet era and First Class Mail is declining, although 

I query whether that is as inevitable as some people think it is. I 

am not as sure they are right about that. 

So, I think the next step is to preserve the self-sustaining model. 

That is in the taxpayers’ interest. That is in the public’s interest, 

if it is doable. I am inclined to think it is, but I have to acknowledge that I am relatively new to studying the issues and experience 

over the next, 2 to 5 years or some relatively short period in the 

future, is probably going to tell us a lot about that. 

Your question in some sense is hypothetical, which is, well, what 

if everything appropriate is tried? Then what? And, I hate to go 

there in a sense because it sounds like then we do not have to try 

as hard as we should. It seems like the Board should be—its mission is to deliver what the public needs, the level of service, the expectations that are set out by Congress, in a self-sustaining way. 

What happens then? I do not really know, but as I have said, I 

would not be in favor of, well, we just get rid of the Post Office. 

Senator TESTER. OK. I appreciate that, and I will tell you that 

I agree with you. You should never quit trying, and I appreciate 

that. I can tell you their deficits are significant, and not this Postmaster General but the previous one’s solution was cutting service, 

which is a business model that I am not familiar with, cut service 

to your customers, expect to become more profitable, and where 

they are cutting that service is rural America and I prefaced that 

is where I was from. And, so, you certainly noted that. 

Thank you for your service. Thank you for being available for 

this job. And thank you, Mr. Chairman. 

Senator LANKFORD. Senator McCaskill. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Senator Tester, Senator Heitkamp, and I 

have all worked very hard on rural Post Offices, because being 

born in a very small town and growing up for part of my childhood 

in a small community, I know that the Post Office is more important than the brick and mortar in terms of that community in the 
11 

sense of community. So, we are adamant about a model at the 

Postal Service that does not shortchange rural. 

I have been on a harangue about giving deals to our competitors, 

and I preface my comments today by saying that the last time I 

went on this harangue in this Committee, people from our competitors came out and stopped me in the hall and said I was right. We 

are giving a really good deal to our competitors. I have never seen 

another business entity who says, because we are so starving for 

volume, we are going to take the most expensive part of our architecture, which is the last mile, and we are going to give our competitors a deal on that last mile. And, I have yet to have anyone 

give me the analysis that shows me that they have, in fact, at the 

Postal Service considered what price they are giving to UPS and 

FedEx for that last mile of delivery as it relates to our costs. 

Now, call me silly, but it seems like to me we should charge 

them extra for the most expensive part of our architecture, right? 

We are competing with them. I mean, either FedEx is going to 

carry the last mile or UPS is going to carry the last mile or we are 

going to carry the last mile. And if they can get a good deal from 

us for carrying the last mile, well, why would they under any scenario ever invest in the architecture in the last mile like we have 

to? 

So, I would like your sense of that, Mr. Rosen, and if you could, 

I would just like someone to show me the business data that supports the prices that we are giving UPS and FedEx to do that last 

mile of carry. 

Mr. ROSEN. Thank you, Senator McCaskill. I think you raise a 

very interesting point. I am not informed at the level of detail of 

what the Post Office is charging, so that is now going to be added 

to my ‘‘to do’’ list, and I appreciate that. 

But, I think you raise an interesting point, because Postal delivery is a network business, and we have other network businesses 

that we know a lot about. You allude to the last mile as the crucial 

thing, in telecommunications, energy delivery, transportation. And, 

so, I have wondered—and that is the way I will put it at this 

stage—whether the Postal Service is maximizing its revenue opportunities from two things, at least. That was one of them, the last 

mile, that it has the final access into homes and businesses for delivery. 

And the other is its extraordinary real estate portfolio that covers the entire country and some places that people might think of 

as remote. I think there needs to be some scrutiny of that. 

I think one of the functions of the Board, I alluded to this with 

Senator Carper—is to really be pushing management. We cannot 

just do what we did, or say this is how we always did it, so we will 

just keep doing it. There has to be, where are the revenue opportunities? Are we capturing the advantages we have as a network? 

Are we being creative in terms of being responsive to the marketplace? 

And, I think we know from the financial results it is not satisfactory and something is going to have to be done better. So, I think 

the Board has to really push, demand plans, strategic thinking as 

to opportunities, and, obviously, close scrutiny of the financial aspects. 
12 

So, I am not well versed enough today to speak to how much are 

they charging FedEx or UPS, but I think you raise on the last mile 

an extremely important issue. 

Senator MCCASKILL. Yes. Well, I think we are getting taken, and 

I think this happened because there was a panic about the drop in 

First Class Mail and there was a sense, we have to make it up with 

volume in packages. So, let us give them a good volume discount, 

our two competitors. Well, I do not think they should get a discount 

at all. I think they should pay the same as I pay for the last mile. 

And then what is going to happen is they are going to have to 

raise—either they are going to pay us or they are going to have to 

pay the price of their delivery, which means we will get more customers. 

So, I will look forward to circling back with you after you have 

had time on the Board, assuming that your confirmation goes well, 

which I am sure it will. 

Thank you, Mr. Rosen. Thank you, Mr. Chairman. 

Mr. ROSEN. Thank you, Senator. I appreciate it. 

Senator LANKFORD. Thank you. 

Mr. Rosen, there are three questions that we ask every person 

that comes before this Committee that I need to ask you, as well, 

to be able to get a clear answer for the record, so I am going to 

run through these three and then I will have some followup questions for you. 

Is there anything that you are aware of in your background that 

might present a conflict of interest with the duties of the office to 

which you have been nominated? 

Mr. ROSEN. No, not that I am aware. 

Senator LANKFORD. Do you know of anything personal, or otherwise, that would in any way prevent you from fully and honorably 

discharging the responsibilities of the office to which you have been 

nominated? 

Mr. ROSEN. No, sir. 

Senator LANKFORD. Do you agree, without reservation, to comply 

with any request or summons to appear and testify before any duly 

constituted Committee of Congress if you are confirmed? 

Mr. ROSEN. Yes, I do. 

Senator LANKFORD. Great. Thank you. 

I need to ask you a couple more followup questions, as well, just 

get some additional detail just for me on this. 

You once made a statement before a Congressional Committee 

dealing with transportation issues, talking about Amtrak in particular. You made the statement, in no other functioning service 

market would rising costs and declining revenues be defined as 

success if this produced a small increase in customers. It was an 

interesting statement to make dealing with Amtrak in particular. 

What I am interested in is, what have you learned from the experience in transportation and Amtrak and the problems with Amtrak that is transferrable to the Postal Service in trying to deal 

with some of the issues there? 

Mr. ROSEN. Well, there are things that are germane and things 

that are not, because there are some aspects of Amtrak that are 

very different. I think that one of the things that is germane is 

holding management accountable. Amtrak—I cannot speak to it 
13 

today, but during the period when I was at DOT, Amtrak was losing a great deal of money but declaring success, and there were 

routes, for example, cross-country routes where passengers were 

being subsidized something on the order of $500 per ticket. And yet 

there were other places there was an urgent need for service and 

that were being underserved. 

And so the board required the management to come up with a 

strategic plan and then begin to execute it, and I think there are 

two components of that that perhaps have relevance. One is requiring management to present the board with plans that include options so the board can say, that is not going to work or this is. But, 

forced the process to produce better results with some guidance. I 

think both places, the board members have obligations to the public interest. 

The other is accountability. If you are not getting the results, 

then you have to do something about it, and at Amtrak, we actually wound up having to replace the chief executive officer (CEO). 

So, I would say those are perhaps a couple of observations. I 

have made the point that in other ways, Amtrak and the Postal 

Service are very different, because Amtrak grew out of the rail 

bankruptcies in the late 1960s, early 1970s, and so Amtrak was actually set up as a private company incorporated under State law, 

but as a private company that gets a Federal appropriation. The 

Postal Service is almost the opposite. It is a Federal establishment 

that does not get an appropriation. 

And, so, I think there are things that transfer, as I say, strategic 

thinking, accountability, facing reality of certain economic aspects, 

that you should not be subsidizing passengers $500 a ticket when 

they can get an airplane for less in the Amtrak context. But, I 

think there are other aspects that are very different and have to 

be thought of on their own. 

Senator LANKFORD. Let me followup with you, as well, on some 

of the conversations that happened here, both rural-urban packages, first class, magazines. There is this wide variety of pieces 

that USPS carries, and there has been an ongoing lingering question about Saturday mail delivery. I am not going to ask you specifically where that is. You are not on the Board of Governors at 

this point. But, when we start to take in some of these issues that 

become pretty dramatic in the way that the Postal Service currently functions, how do you address those, and if you would like 

to address the Saturday delivery option, if you have clear information on that already, you are welcome to be able to address that, 

as well. 

Mr. ROSEN. Well, I will offer what I will call a tentative thought 

about the Saturday delivery issue, which is I look at that really as 

a consumer, because I do not have the benefit of the analysis and 

thinking of the USPS management at this point. As a consumer, 

I look at it and I say Saturday delivery seems pretty desirable and 

is a valuable service both to the people that get the mail, like me, 

and the people that are sending it. So, I start with a disposition 

to think that sounds like it could be a competitive advantage. 

At the same time, as I said, I am not familiar with the business 

case and what are the tradeoffs and compromises, so I do not want 

to be closed minded at all about it in the sense that, ultimately, 
14 

as I have said and others have said, the Postal Service should function like a business. But, I would have to say that while I would 

want to see the business case and the arguments, I would probably 

start with some skepticism against proposals to eliminate it. But, 

as I say, I do not want to completely prejudge what I do not know. 

But, I start with some skepticism, is the way I would put that. 

Now, as to the bigger picture that you were getting at, I know 

time is limited, so I will not repeat myself much. I think the Board 

has to play really a vigorous and energetic role at pushing urgency 

on management to develop options, thorough analysis, strategic 

thinking, innovation, and so on. 

Senator LANKFORD. One last question that I have for you is trying to deal with the expectation of information flowing not only 

from Congress and from the Board of Governors to Congress, but 

from the Board of Governors and the leadership of the USPS. You 

have a responsibility to be able to hold people to account, to be able 

to bounce around ideas, to be able to, as a Board, talk through the 

difficult issues, and to be able to help provide a second guess in 

this and to be able to help make that decision. 

Tell me your expectation for the quality of information, the timeliness of information, and the thoroughness of information that you 

would expect coming to you on the Board of Governors. 

Mr. ROSEN. I think you probably are getting at something I feel 

pretty strongly about, which is the Board of Governors has to be 

insistent on that and has to be diligent itself, not passive, not as 

in, oh, we asked for something and they said it would be next 

month, but it got canceled to the next meeting. I think that the direction of energy on that has to be the other way. 

The Board has to be saying, not we will just show up and you 

will tell us whatever you want, but we want A, B, C, and D. We 

want a presentation on this. We want to see a plan on this. We 

want to know what we are doing about the personnel on this. We 

want it promptly and we may want followup and we want that to 

be done promptly, and I do not think everything has to wait for 

meetings. I think there is a little bit of a balance, that Governors 

should not become micromanagers or interfere with management, 

but should be insistent on timely information. 

Senator LANKFORD. Mr. Rosen, I am going to give you an opportunity to make any other final statements you want to make to be 

able to put on the record before this hearing closes. 

Mr. ROSEN. Thank you, Senator, but I think that between the 

statement and the questions, I am happy to stop here, and if there 

are other questions, I would be more than happy to answer them, 

but I think I have had my say. And I look forward, that if the Committee chooses to approve me and the Senate confirms me, I would, 

as I said at the outset, do everything I can to fulfill the expectations and responsibilities you would be entrusting to me. 

Senator LANKFORD. OK. Mr. Rosen has filed responses to biographical and financial questionnaires, answered prehearing questions submitted by the Committee, and had financial statements 

reviewed by the Office of Government Ethics. Without objection, 

this information will be made part of the hearing record, with the 

exception of the financial data, which is on file and available for 

public inspection in the Committee offices. 
15 

The hearing record will remain open until noon tomorrow, April 

22, 2016, for the submission of statements and questions for the 

record. 

Mr. Rosen, thank you for being here, and for your already consistent public service that has happened in the past. We appreciate 

this and look forward to being able to move forward on this in the 

future. 

This hearing is adjourned. 

[Whereupon, at 10:02 a.m., the Committee was adjourned.] 

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