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75–218 PDF 2012

S. Hrg. 112–538 

NOMINATIONS OF HON. JAMES C. MILLER III 

AND HON. KATHERINE C. TOBIN 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

NOMINATIONS OF HON. JAMES C. MILLER III AND HON. KATHERINE C. 

TOBIN TO BE GOVERNORS, U.S. POSTAL SERVICE 

June 21, 2012 

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 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas 

MICHAEL L. ALEXANDER, Staff Director 

LAWRENCE B. NOVEY, Associate Staff Director and Chief Counsel for Governmental Affairs 

KENYA N. WILEY, Counsel 

KRISTINE V. LAM, Professional Staff Member 

JOHN P. KILVINGTON, Staff Director, Subcommittee on Federal Financial Management, 

Government Information, Federal Services, and International Security 

NICHOLAS A. ROSSI, Minority Staff Director 

JENNIFER L. TARR, Minority Counsel 

JOHN A. KANE, Minority Professional Staff Member 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk 

LAURA W. KILBRIDE, Hearing Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

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

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

Senator Begich .................................................................................................. 17 

Prepared statements: 

Senator Carper ................................................................................................. 23 

Senator Collins ................................................................................................. 26 

Senator Brown .................................................................................................. 29 

WITNESSES 

THURSDAY, JUNE 21, 2012 

Hon. Harry Reid, a U.S. Senator from the State of Nevada: 

Testimony .......................................................................................................... 1 

Prepared statement .......................................................................................... 31 

Hon. James C. Miller III to be a Governor, U.S. Postal Service: 

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

Prepared statement with an attachment ....................................................... 32 

Biographical and financial information .......................................................... 44 

Responses to pre-hearing questions ................................................................ 51 

Letter from the Office of Government Ethics ................................................. 64 

Responses to post-hearing questions for the Record ..................................... 66 

Hon. Katherine C. Tobin to be a Governor, U.S. Postal Service: 

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

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

Biographical and financial information .......................................................... 72 

Responses to pre-hearing questions ................................................................ 83 

Letter from the Office of Government Ethics ................................................. 99 

Responses to post-hearing questions for the Record ..................................... 100 

(1) 

NOMINATIONS OF HON. JAMES C. MILLER III 

AND HON. KATHERINE C. TOBIN 

THURSDAY, JUNE 21, 2012 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:03 a.m., in room 

SD–342, Dirksen Senate Office Building, Senator Thomas R. Carper, presiding. 

Present: Senators Carper, Begich, and Collins. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Welcome. Senator Reid, even though you have 

a lot on your plate today and every day, I think it is great that you 

could come by and introduce Ms. Tobin. 

TESTIMONY OF THE HON. HARRY REID, A U.S. SENATOR FROM 

THE STATE OF NEVADA 

Senator REID. Thank you very much. I am here to talk about Ms. 

Tobin, but, of course, Mr. Miller has an outstanding resume, and 

I think that is the caliber of people that we are going to see going 

to the Postal Board of Governors. If there was ever a time we needed people with good qualifications, this is it. 

The Postal Service, as we know, is going through a lot of turmoil 

and problems. Ms. Tobin has served there before. I am here totally 

prejudiced, understand that. Ms. Tobin’s husband and I have been 

friends for 30 years. He was on the Court of International Trade 

for a long time. He is now in the Federal Circuit as a judge. 

They have been friends of my wife, Landra, and mine. We have 

traveled together. So I am totally prejudiced. But she is a wonderful woman. Her educational background—she has a Ph.D. from 

Stanford University—and she is such a determined person, and we 

all know these are not full-time jobs, but they are important jobs. 

The things that we have to deal with here with the Postal Service are going to be more complex all the time, and even though I 

have a close personal relationship with her husband and her, no 

one could ever question her qualifications and her experience. So 

I appreciate very much your letting me introduce Katherine Tobin 

to this Committee and also say a nice word about Jim Miller. 

Senator CARPER. Thank you so much, Senator Reid. And I know 

you have a lot to do today. When do you think we will start voting, 

11 or so? 

2 

Senator REID. We are going to come in at 10:30. We should start 

voting around 11. We should be finished by 2 o’clock. We have a 

cloture vote that we have received permission to move up on flood 

insurance. We do not have that worked out yet, but we are going 

to finish it next week, one way or the other. 

Senator CARPER. Great. 

Senator REID. I hope that we can do it sooner rather than later 

because it is important legislation, and I think we have a path forward to do the student loans. I think that is 95 percent worked out. 

It should be. 

Senator CARPER. Great. 

Senator REID. We just have to figure out a way to do it. We have 

to have some vehicle to do it. And also I am telling you a lot more 

than your question. 

Senator CARPER. Oh, this is good. 

Senator REID. But I had a really good meeting with the Speaker 

on Tuesday, with Chairman John Mica, Chairman Barbara Boxer, 

and Senator James Inhofe. It was a wonderful meeting. If someone 

had asked me on Tuesday morning about the chance of the highway bill, I would have said pretty negligible. But I think we have 

at least a 50–50 chance of passing that bill. 

Senator CARPER. Good. 

Senator REID. Last night, the House overwhelmingly voted to instruct the conferees to report back with a completed bill by tomorrow, and that was 385 votes, and you can only get there if you have 

a lot of bipartisanship. So maybe things are turning a little bit. 

Maybe we can start doing some things. I think the farm bill, together with the highway bill and what we did with postal reform, 

as difficult as it has been, I think it has been good for the Senate 

to be able to vote. We voted on those three things, on over 200 

measures, but we survived, and I think it has been good for the 

country and the Senate. 

Senator CARPER. There was a good spirit on the floor yesterday, 

I thought. All right, Senator Reid, thanks so much. Thanks for 

coming. 

Today, we will be considering the nominations of James Miller 

and Katherine Tobin to be members of the Postal Service Board of 

Governors. We are delighted that their families could be with us 

here today as we celebrate an anniversary, an important birthday, 

and a couple of important nominations as well. 

Both of our nominees know as well as anyone that the Postal 

Service has been in dire financial trouble for some time. This trouble will come to a head in the coming months. The Postal Service 

is reporting record losses each quarter and hemorrhages, I am told, 

about $25 million a day. By the end of this fiscal year, it may not 

have enough money to meet its health and workers’ compensation 

obligations. By some time in 2013, it may not have enough money 

to continue operations at all. 

The Postal Service operates, as we know, at the center of a $1 

trillion mailing industry that puts as many 8 million men and 

women to work each day. It is a key cog in our economy. Its continued vitality is an important part of our efforts to get our economy 

moving again. And at a time of so much economic uncertainty, we 

3 

cannot afford to let the Postal Service collapse or to let this uncertainty prevail. 

The Senate, as you know, passed legislation in April that attempts to address the Postal Service’s near-term financial crisis 

and to give it some of the tools it will need to address its long-term 

challenges. 

Our bill, for example, would clean up the Postal Service’s books by refunding the more than $10 billion it has over-paid into the 

Federal Employees Retirement System and setting up a less aggressive schedule for funding postal retiree health obligations. A 

portion of the pension refund should be used to encourage about 

100,000 eligible postal employees to retire, an effort that could save 

as much as, we are told, $8 billion per year. 

Our bill would also push the Postal Service to streamline its 

processing, delivery, and retail networks, albeit at a more gradual 

pace than postal management would have liked. These provisions 

would allow the Postal Service to achieve billions of dollars in savings while preserving levels of service that many customers rely 

upon. 

If these cost-cutting efforts do not prove sufficient in the coming 

years, the Postal Service would be permitted to move forward with 

more aggressive efforts. But our bill does not just focus on cuts. It 

also attempts to free the Postal Service to be more entrepreneurial 

and pushes it to find innovative ways to bring in more mail volume 

and make the best use of the valuable system that it maintains in 

order to deliver the mail to every home and business 6 days a 

week. 

Our legislation is not perfect. It does not solve all the Postal 

Service’s problems. But it gets us most of the way there, and depending on how serious the Postmaster General and his team are 

about continuing to cut costs in a smart way and to make effective 

use of the tools that we seek to give them, it has the potential to 

get us to our goal of a financial stable, even thriving, Postal Service. 

I know that the current members of the Board of Governors disagree with this assessment. They put out a statement after the 

Senate passage of our bill stating that it was not enough, and I 

agree it was not enough. I am told that both of our nominees have 

stated in policy questionnaires filled out in preparation for today’s 

hearing that they agree with the Board’s statement. 

If that is the case, I would hope to learn some more today about 

what they would suggest to postal management and to Congress as 

we work to get the Postal Service back on track. 

I also look forward to hearing from Mr. Miller and Ms. Tobin 

about what they have learned from their previous work, both inside 

and outside of government, including their previous service on the 

Board, that will help them, if confirmed, to tackle the Postal Service’s real and mounting financial challenges. 

The last thing I would say before turning it over to Senator Collins is how much I appreciated the opportunity to work with her 

and her staff again this year, and with Senator Lieberman, Senator 

Brown, and their staffs as well, to fashion a bipartisan bill. 

It is hard, as you know, to get much of anything done around 

here, and to be able to get a bipartisan bill introduced, through 

4 

Committee, on the floor with all kinds of bipartisan amendments, 

and actually off the floor into conference, if we could have a conference, is no small undertaking. 

And we need for the House to act. We need the House to pass 

a bill. It is not enough for them just to carp about our legislation. 

They need to pass it so it can go to conference, take input from a 

lot of folks including you, and pass the kind of legislation that will 

really help set the stage for the Postal Service to do the work that 

it needs to do and to not be a burden on the taxpayers. Senator 

Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you very much, Mr. Chairman. It has 

been a pleasure to join you in this effort. You and I have worked 

together on postal issues for many years now. We keep thinking we 

are finished with postal issues and then they keep popping up. 

But the fact is that throughout our history, the U.S. Postal Service has served as a vital part of our national communications network and of our economy. As the Chairman has mentioned, I do 

not think most Americans appreciate just how critical the Postal 

Service is to our economy. 

It is the lynchpin of a trillion-dollar mailing industry that employs more than 8 million people in fields as diverse as direct mail 

printing, catalog companies, paper manufacturing, and financial 

services. The list goes on and on. 

Unfortunately, the Postal Service’s financial status is abysmal 

and this great American institution is teetering on the brink of collapse. It lost $3.2 billion in the first quarter of this fiscal year 

alone. I believe that we have begun to right the ship with the passage of the 21st Century Postal Service Act of 2012 that Senator 

Carper and I, along with Chairman Lieberman and Senator Scott 

Brown, authored. 

But there is still much more work to be done, including, as Senator Carper indicated, working with our colleagues on the House 

side. We have implored them to act sooner rather than later. It is 

important that we get into conference and work out the differences 

and send legislation to the President. 

Good legislation, however, while absolutely necessary, is not sufficient to solve the Postal Service’s problems. Good management is 

also essential. And today, we are here to discuss the qualifications 

of the two nominees to the Postal Board of Governors, James Miller 

and Katherine Tobin, neither of whom are strangers to this Committee or to these issues. 

An effective Postal Board of Governors is essential to provide direction to the management of the second largest non-governmental 

employer in the country. With more than half a million employees 

and more retail sites than Wal-Mart and Starbucks combined, the 

job of governing the Postal Service is not for the faint of heart. 

This was true in 2006 when Senator Carper and I authored the 

Postal Accountability and Enhancement Act, which established specific qualifications to ensure that future governors had suitable 

business and management experience, and it is even more true 

today. 

5 

In the 2006 law, we required that governors be selected based 

solely on their experience in management, accounting, or other relevant fields. Meeting these basic qualifications has never been 

more important as the Postal Service faces the perfect storm of rising labor costs, shrinking volume, and declining revenue. 

The 2006 law required that within 9 years of enactment, a date 

that we obviously have not yet reached, at least four members of 

the Board must be selected solely for having managed a large organization of 50,000 or more employees. Now, looking back at that 

number, I personally have concluded that it is too high. It would, 

for example, preclude the extremely capable chief executive officers 

of the very largest companies in my State—Bath Iron Works, 

Cianbro Corporation, L.L. Bean, and others—from serving on the 

Board. 

But even if we set the number too high, the principle is a sound 

one and it is time for the Administration to start taking active 

steps to meet this requirement. I am concerned that we have yet 

to receive a single nominee who even comes close to having that 

kind of extensive managerial experience. 

The nominees before us today are grandfathered, in many senses. 

They have served previously on the Board, and they were nominated originally before the 2006 law was even enacted. They both 

possess valuable experience, and I do welcome the opportunity to 

consider their nominations. 

I also respect the current Board as well as these nominees for 

their public service and their willingness to take on an enormous 

and often thankless job. But I do want to mention that as a concern. Let me also briefly turn to two other concerns that I have. 

The first is whether the Postal Board of Governors truly is serving 

as a check on the decisions made by postal management. 

I am concerned that the Postal Board of Governors may not be 

aggressive enough in questioning decisions that are being made, 

whether it is signing labor contracts that seem unwise given the 

need to reduce the workforce in a compassionate way through buyouts and other incentives that we have included in our bill, or 

whether it is asking tough questions about whether service cuts are 

going to lead to revenue declines that cause a spiral of the Postal 

Service losing more and more customers. Are those questions being 

asked by the Board? They are certainly being asked by Members 

of this Committee and the Congress at large. 

And second, I am extremely disappointed in the intemperate and 

unhelpful reaction of the Board to our legislation. The fact is, this 

was a bipartisan bill that passed with overwhelming support, 62 

votes. Hardly anything gets 62 votes in the Senate. 

It is not the bill that I would have written. I dare say, it is not 

the bill that Senator Carper would have written on his own. But 

it reflects a carefully balanced compromise and attention to all the 

stakeholders’ concerns, and it is a bill that passed and that would 

make a big difference, as is evident by the fact that it had been 

scored by the Postal Service to save some $19 billion, not an insignificant amount. 

Now, some of those provisions adopted on the floor lower those 

savings, but they still are significant. And the Board’s intemperate 

and unhelpful comments do not help to advance it. Therefore, I am 

6 

very disappointed that our two nominees, I am told, have expressed 

agreement with the Board’s comments, if not in tone, at least in 

substance, and that gives me great concern about whether they are 

truly willing to work with this Committee to accomplish the goal 

of getting postal reform legislation that is absolutely vital to the 

survival of the Postal Service passed and signed into law this year. 

The Postmaster General has told us over and over again that the 

Postal Service is in danger of not being able to meet its obligations, 

and whether that occurs in the fall or at the end of the year or 

early next year, in some ways, is irrelevant. If they cannot meet 

its obligations, we must act. 

And it is not helpful to have nominees criticizing the one postal 

bill that has made it through the Senate. So Mr. Chairman, I wanted to put that on the record, and I look forward to hearing the responses of our witnesses. Thank you. 

Senator CARPER. And I would say, Senator Collins really spoke 

for both of us when she said that. I am reminded of the old saying, 

Who are editorial writers? They have been described as people who 

come onto the battlefield when the shooting is over and shoot the 

wounded. That is probably an exaggeration here, but I think that 

captures the way that some of us felt a little bit. 

Now, I will have some questions, and I am going to have a 

chance to drill down on some particular provisions that we thought 

we were being asked to include in legislation, we thought we were 

told would be helpful, and we will go through each of those provisions and give you all a chance to say which ones you agreed with 

and maybe did not agree with. 

Both Mr. Miller and Ms. Tobin have filed responses to biographical and financial questionnaires, answered pre-hearing questions 

submitted by the Committee, and had their financial statements 

reviewed by the Office of Government Ethics. Without objection, 

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

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

public inspection in the Committee’s offices. 

Our Committee rules require that all witnesses at a nomination 

hearing give their testimony under oath, so I am going to ask you 

to stand and raise your right hand, if you would, please. You have 

done this before. 

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. TOBIN. I do. 

Mr. MILLER. I do. 

Senator CARPER. Please be seated. Mr. Miller, welcome. It is nice 

to see you again, and it was very nice to see your patient wife of 

50 years, and your family, including your 8-year-old grandson. You 

may now proceed with your opening statement. And feel free to introduce anyone in your family individually. Thank you. 

7 

1The prepared statement of Mr. Miller appears in the Appendix on page 32. 

2The lecture referenced by Mr. Miller appears in the Appendix on page 33. 

TESTIMONY OF HON. JAMES C. MILLER III 1 TO BE A 

GOVERNOR, U.S. POSTAL SERVICE 

Mr. MILLER. Mr. Chairman, Senator Collins, and Members of the 

Committee, thank you for holding this hearing and inviting me to 

appear. I want to thank President Obama for nominating me for 

this post, Senator Mitch McConnell for recommending me, Senator 

Reid for his kind remarks, and others who have supported me over 

the years. 

Today I am joined by my wife, Dr. Demaris Miller, our son-inlaw, Fernando Pagkalinawan, our daughter, Sabrina, and our 

grandsons, Tristan and Rommel. 

Now, I know your time is quite valuable so my statement will be 

short. I have provided the Committee, as you noted, with answers 

to the questionnaires, and you have put these in the record. I am 

particularly honored today to appear with Governor Katherine 

Tobin. 

I served on the Board of Governors with Ms. Tobin for several 

years, and I found her a person of great integrity, an independent 

and innovative thinker, and a person of remarkable talent and industry. She commanded the respect not only of her fellow governors, but of U.S. Postal Service employees generally. Accordingly, 

I urge you to confirm her as soon as possible. 

The U.S. Postal Service, as both of you have noted, faces a crisis 

unlike any in history. It has weathered great storms in the past, 

such as during the Great Depression, but this storm is different. 

There is no recovery in sight. Restoration of our economy will not 

resurrect the U.S. Postal Service. 

The old business model, where profits on monopoly letter mail 

are used to cross-subsidize other losing classes of mail and an inefficiently large network, simply does not work anymore. The reason 

is that the profits on monopoly mail have all but disappeared. The 

reason is partly the economy, but mostly it is the steady erosion 

of first-class mail to electronic communications. There is every reason to believe this erosion will continue. 

To survive, the U.S. Postal Service must be given freedom to restructure itself and become a truly competitive business enterprise. 

This means freedom to move quickly to take advantage of changing 

customer demands, freedom to adjust to changing cost levels and 

structure, and most especially, freedom to rationalize its logistical 

system and deal with its current employment situation. 

I will not go into that in any detail here, as I have responded 

to the questionnaires and have addressed those and other matters 

in materials I have provided to the Committee. 

In particular, I want to draw your attention to an invited lecture 

I gave in November 2010 at a session of the Southern Economic Association that was given in honor of the late Professor Roger Sherman, my dissertation advisor. I have appended a copy of that paper 

to my statement, and I ask, Mr. Chairman, that it be included in 

the record.2

Senator CARPER. Without objection. 

8 

1The prepared statement of Ms. Tobin appears in the Appendix on page 71. 

Mr. MILLER. Mr. Chairman, Senator Collins, and Members of the 

Committee, that concludes my opening statement. I will be happy 

to address any questions you may have, including the issues raised 

by Senator Collins. 

Senator CARPER. I thank you so much, Mr. Miller. Ms. Tobin, 

please proceed. 

TESTIMONY OF HON. KATHERINE C. TOBIN 1 TO BE A 

GOVERNOR, U.S. POSTAL SERVICE 

Ms. TOBIN. Chairman Carper and Senator Collins, it is an honor 

and a pleasure to be here today as a nominee for the position of 

Governor of the U.S. Postal Service. I am delighted to be paired in 

this confirmation hearing with my colleague and friend, Jim Miller. 

Thank you, Senators, for your consideration of our interest in 

continuing our service. I am joined by my husband, Judge Evan 

Wallach, my sister, Alice Zaff, and several dear friends. 

I am here today for one reason, which is the U.S. Postal Service 

is an outstanding American institution. It is neither, as we all 

know, a business nor a classic government agency, and yet, we expect it to be both at the same time. We can do better to help it 

transform. It needs to transform, but its mission has not changed. 

It is still of vital importance for this country to have this amazing 

network and infrastructure that ties people, products, and services 

together. 

The U.S. Postal Service provides national communications. It is 

a catalyst for commerce. It plays key roles in terms of security and 

law enforcement. As was noted in your opening remarks, it is a 

large national employer, providing jobs to more veterans than any 

other institution. 

I look forward to answering your questions and to working again 

with this wonderful, essential, and evolving organization, the U.S. 

Postal Service. Thank you. 

Senator CARPER. Thank you, Ms. Tobin. As you may recall, we 

are required to open with several questions. We ask these questions of all nominees, and I ask you to respond individually. Is 

there anything 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? 

Ms. TOBIN. No. 

Mr. MILLER. No. 

Senator CARPER. 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? 

Ms. TOBIN. No. 

Mr. MILLER. No. 

Senator CARPER. Do you agree without reservation to respond to 

any reasonable summons to appear and testify before any duly constituted committee of Congress if you are confirmed? 

Ms. TOBIN. Yes. 

Mr. MILLER. Yes. 

9 

Senator CARPER. Ms. Tobin, my last question is, what do you 

think the secret is to being married 20 years to the same guy? The 

anniversary you celebrate today, what is the key there? 

Ms. TOBIN. Having fun. 

Senator CARPER. That is good. Mr. Miller has been married for 

50 years to his wife, sitting right behind him. She said the key was 

patience. What do you think the secret is for being married 50 

years? 

Mr. MILLER. To roll out of the bed every morning excited about 

the day with your spouse. 

Senator CARPER. As Senator Collins knows, I love to ask questions of people who have been married a long time. Two weeks ago, 

I talked to a couple who have been married 57 years, and I asked 

the wife, ‘‘What is the secret to being married 57 years?’’ And she 

said, ‘‘Just give and take.’’ And I turned to the husband, and I said, 

‘‘What do you think, sir?’’ He said, ‘‘Just give.’’ [Laughter.] 

Let us get into the questions. Senator Collins and I worked on 

a number of provisions with Senators Lieberman and Brown, in 

concert with postal management and the Postmaster General, provisions that we thought made sense to be able to rein in the growth 

of costs and to increase the likelihood of generating some additional 

revenues. 

And the first major issue dealt with the over-payment of the 

Postal Service to the Federal Employees Retirement System. Everybody agrees it is about $11 billion, and it should be refunded, 

and we provided for that in our legislation. 

May we presume that you are OK with that? 

Ms. TOBIN. I am. 

Mr. MILLER. Yes. 

Senator CARPER. Second, we authorized the use of some of that 

money to pay retirement bonuses to incentivize some of the 125,000 

eligible postal employees to retire. Are you OK with that? 

Ms. TOBIN. Yes. 

Mr. MILLER. Yes, as a practical expedient, I think. 

Senator CARPER. Third, we added language with respect to arbitration. When there are contract negotiations between the bargaining units and the Postal Service, there is no requirement for 

the arbitrators to consider the financial condition of the Postal 

Service. We require that it has to be considered. Is that something 

that you are supportive of? 

Ms. TOBIN. It is absolutely essential, and I strongly support that. 

Mr. MILLER. In the short run, it is important. The problem has 

arisen that, in determining comparable pay, the arbitrators have 

typically chosen a subset of people who are really not representative of the pool to which the Postal Service goes for its employees. 

And consequently, by econometric studies, there is a delta, there is 

some over-payment. 

For the arbitrator to be given the direction you have included in 

the bill will be very helpful. I am hopeful that at some time the 

Postal Service will be much better off and that provision could 

come back and hurt the Postal Service. 

Senator CARPER. Thank you. Senator Collins has worked for 

many years on the issue of workers’ compensation, principally for 

postal employees, but more broadly for Federal employees. 

10 

Mr. MILLER. Right. 

Senator CARPER. And we included in the legislation a version, I 

think a good version, of her recommendations with respect to workers’ compensation. So we do not end up with people 60, 70, 80, or 

90 years old still drawing workers’ compensation. Are you comfortable with those changes? 

Mr. MILLER. Absolutely. Good point. 

Senator CARPER. Most employers in the country pay into Medicare. My wife is retired from DuPont. When folks who work for DuPont retire and then reach the age of 65, their primary source of 

health care is Medicare. The company provides a Medigap or wraparound plan to supplement that. A lot of companies, large companies especially, do that. 

And what we tried to do in our legislation is to allow the Postal 

Service to do that. Is that something that you are comfortable 

with? 

Ms. TOBIN. I am not fully familiar with it, but it sounds very 

smart. 

Senator CARPER. Mr. Miller. 

Mr. MILLER. Yes. 

Senator CARPER. Another provision in our bill is, we leave the 

door open if the Postal Service wants to try to negotiate, much as 

the United Auto Workers (UAW) did with the big three auto companies, an arrangement where the UAW basically runs a single 

employer system for health care for their employees. 

They think they get better accounting rules, better financial 

treatment, and the postal management asked us to allow in our bill 

for the Postal Service to explore doing a similar kind of system 

with the unions that represent your employees. Is that something 

you are comfortable with? 

Mr. MILLER. Yes. Whether it works out depends on the outcome 

of negotiations, but I think having that authority is valuable. 

Senator CARPER. Good. 

Ms. TOBIN. Yes, but with careful study to make certain that the 

level of health care remains top. 

Senator CARPER. Good. The issue of post office closings, as Senator Collins well knows, was a difficult issue to wrestle with. Out 

of 33,000 post offices around the country, there are, I do not know, 

maybe 3,000 or 4,000 that were really under close scrutiny to determine whether or not some of them should be closed. 

What we ended up with, and there was a projected savings of maybe $300 million a year, was a different idea espoused by, I 

think, the Postmaster General that said, rather than just looking 

at 3,000–4,000 post offices, why do we not look more broadly at as 

many as 13,000 post offices and offer the communities where we 

are paying a postmaster $50,000–$70,000 a year to run a post office that generates $15,000–$20,000 worth of business a menu of 

options. 

One, keep your post office. It is not going to be run by a postmaster earning that kind of money and it may not be open 8 hours 

a day, but it will remain open, 2 hours a day, 4 hours a day, or 

6 hours a day. That postmaster may come back as a retiree, as a 

contract employee, retain his pension, retain his benefits, and 

make $15 an hour and run the post office. 

11 

Or maybe they would like to have rural delivery so people would 

not have to come to the post office to pick up their mail. They will 

have rural delivery. Maybe the community would say, we would 

like to co-locate our post office in a supermarket or a convenience 

store or some of the local government offices there. 

But given that menu of options, and to offer that for as many as 

13,000 post offices, over a third of the post offices in the country, 

and instead of saving $300 million a year, maybe saving as much 

as a half-billion dollars a year, is that an approach that you are 

comfortable with? 

Ms. TOBIN. I am. 

Senator CARPER. Mr. Miller. 

Mr. MILLER. I think it definitely should be explored. We are in 

a situation where we need to explore every margin for cost savings. 

Senator Collins has articulated her concerns about deterioration of 

quality of service might drive away customers, and we need to be 

very cognizant of that, very careful about that. 

But any large enterprise, whether it is a Wal-Mart or a Home 

Depot or some place like that, has had to make decisions on closing 

retail establishments from time to time. There is just no way of 

keeping them going. And so, I think it is important for the Postal 

Service to have that kind of freedom. 

I think it is the Board’s responsibility to make the policy within 

the four corners of the established law, and I think it is important 

for the Postal Service to oversee the carrying out of those policies. 

But I think each area needs to be addressed, each opportunity 

for saving money without losing revenue, putting together options 

to closing post offices so that people can get their mail or, just as 

you were describing, have it delivered at their home, rural delivery, 

etc. All those need to be explored. 

Senator CARPER. Those are just some of the provisions that we 

included in the legislation that the Board was highly critical of. 

There are others, 40-year amortization for the prepayment of 

health benefits for retirees, any number of others. But I need to 

yield to Senator Collins, so I will just ask you to hold your comment for now. 

But those are just some of the provisions that we included in the 

legislation that are designed to help on the cost side. There are also 

a number of provisions on the revenue side because it is not 

enough just to cut, cut, cut. The Postal Service has to find ways 

to grow some revenues. 

And in the second round of questions, what I would like to do 

is to come back and ask you to help us on the revenue side with 

the ideas that you are aware of and would be supportive of. Thank 

you very much. Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. The Postal Service 

is about to reach its $15 billion credit limit on how much it can borrow from the Treasury. It is part of the Federal employees health 

programs, life insurance programs, workers’ compensation programs. On the workers’ compensation program, it pays $1 billion 

a year into that program. 

It has lost billions of dollars during the past 2 years. In fact, the 

losses go beyond that. And those losses would have been billions 

more had we not waived a required payment of $5.5 billion into the 

12 

fund that is set aside for future retirees’ health benefits, very real 

liabilities. 

In view of all of that, Ms. Tobin, how can you say that the Postal 

Service has ‘‘too much oversight,’’ which was your statement in a 

staff briefing, and you particularly pointed to the oversight by Congress, among others? 

Ms. TOBIN. I come, Senator, from the business world, HewlettPackard, and I worked with the IBM executive team for a good 

number of years. I think oversight and accountability is absolutely 

essential, but the speed with which we can make decisions, the bureaucracy that has to be faced, slows down the Postal Service. 

So you spoke in the first part of your question about the tremendous losses that the Postal Service has had in recent years. One 

thing that I remind people is, this was never a profit-making entity. So it tried to match revenue and expenses, and as it was growing and as expenses were also growing, it did well. I mean, it could 

meet it. 

But in 2006 and 2007, we had major constraints coming from 

three different angles, which I believe very strongly the Postal 

Service has tried to face with tremendous responsibility. Those 

forces, you know them well. We have the prepayment of the retirees’ health care benefit. We have changing mail patterns—the degree, as Mr. Miller mentioned in his opening remarks, about firstclass mail. And we have a dramatic change in our country’s financial system. 

So I see us, Senator, as having been an expanding institution 

that is constraining. I think it has worked hard to try to stay. It 

is constrained within its revenue. It has not met it. 

In terms of oversight, we have an Inspector General who does an 

outstanding job, I think, of overseeing. We have Ernst & Young 

doing auditing. We have the Postal Regulatory Commission. I think 

there are many overlaps to those oversights that might be useful. 

I will just lay that out. It could be useful to look at streamlining. 

Senator COLLINS. The Postal Service has a $15 billion line of 

credit to the U.S. Treasury and is a participant in the Federal employee programs—and Senator Carper and I are totally open to the 

idea of a new health program for the Postal Service that takes 

them out of the Federal employee program. 

I would suggest to you that as long as those links are there and 

as long as the Postal Service is as critical to the economy as I hope 

it always will be, you are going to be subject to oversight, and I 

think appropriately so. 

Ms. TOBIN. I do believe in oversight. I chaired the Audit and Finance Committee, and I saw us, through oversight, become smarter. So it is not that I want to get rid of oversight. We cannot; you 

are right. 

And by the way, I am not happy with the debt ceiling. We are 

up against that debt ceiling. There was not a time when I was on 

the Board—I am certain it continued—that any one of the governors was comfortable in taking out more debt. 

Mr. MILLER. Senator, could I add that the question of oversight, 

to me, will come up anytime. You are the stockholders or represent 

the stockholders of the Postal Service, of which we would sit on the 

Board. That is not a problem. 

13 

The problem is the degree to which the Postal Service can meet 

the requirement that Congress has identified for it, and that is to 

cover its costs with the market that we face and the constraints 

that Congress has placed on our ability to get out there and compete, and that is the concern that I had, and I may have had similar answers in my responses to the questionnaire. 

With regard to the question you raised about your concerns, and 

also the Chairman’s concerns, about the tone of the Board of Governors’ response to the legislation, my reading of their statement 

is that all they say is, it is not sufficient. And I am here to tell you 

right now that my best business judgment is that it is not sufficient. Senator Carper has said that, and I think you have said that, 

too. 

Senator COLLINS. Well, I would suggest to you, Mr. Miller, that 

it is not helpful, and the tone of that statement was not helpful at 

all when we are trying to encourage the House to move on a bill, 

which may be more to your liking based on what I have read in 

your responses. But it was not helpful in trying to advance legislation, which everybody agrees is necessary. 

It is not sufficient and you may not like the bill, but to have the 

bill blasted is not helpful. My time has virtually expired, so I want 

to ask you two more quick questions, if I may, before I have to 

leave. 

Mr. Miller, at one point several years ago, you advocated privatization of the Postal Service. Is that still your position? 

Mr. MILLER. I think it would be best for the world, for the economy, and for the American people if the Postal Service was demonopolized and privatized, which is a position that I held when I 

worked for President Reagan and that is based on years of experience at the Postal Service that enlightened me to various things 

and problems, etc. It would not be easy to transition. In fact, right 

now, it would be impossible to transition. 

But having said that, I detect no interest whatsoever on the Hill 

to make such a move, and I have expended no personal resources 

trying to persuade people of that view. Senator, I am going to be 

honest and straightforward with you and all the other Members of 

Congress about what I see, and that is what I see. 

Senator COLLINS. So if I can just paraphrase what you have said, 

it remains your personal view that privatization ultimately would 

be your goal, but it is not a view that you are currently advocating 

because you do not see political support for it. Is that a fair assessment of what you said? 

Mr. MILLER. That is fair, and the corollary of that view is that 

my goal has been to restore the Postal Service to financial health 

and to make it operate as an efficient business enterprise. 

Senator COLLINS. Well, I would just comment that I appreciate 

your candor. I believe that privatization would result in rural 

America being left behind. I have no doubt that urban areas would 

do fine. There would be lots of competition for delivery, but I think 

rural America would be completely left behind. And thus, that troubles me. 

Finally, and I know my time is gone, so let me just make a comment. I know that several of our colleagues are very concerned 

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14 

age that was approved for the previous Postmaster General. I believe you were both on the Board at the time, so I think we should 

have a question for the record on that. 

My final question has to do with looking at the impact of service 

reductions on revenue and the loss of customers. And if you have 

not already done so, I would encourage you to look at a study that 

the Postal Service itself filed with the Postal Regulatory Commission that indicated that if it proceeded with all the service reductions that you both seem to be very favorably inclined toward, it 

would lead to a dramatic decline in revenue and in mail volume, 

and that is the last thing that the Postal Service needs. 

Now, to be fair, the Postal Service has been trying to walk back 

from that study, but that is, in fact, what their independent study 

showed and it is, in fact, what they filed. So I would just ask, for 

my final question, are you familiar with this study? 

Ms. TOBIN. No. 

Mr. MILLER. No. I would just ask that you identify it for us, 

please. 

Ms. TOBIN. And I recall that they were about to begin that when 

I was leaving. 

Senator COLLINS. Well, we will follow-up with questions for the 

record on that as well. Thank you, Mr. Chairman, and you are very 

generous with your time. 

Ms. TOBIN. Thank you. 

Senator CARPER. I mentioned in my first round of questions that 

I wanted to come back and revisit the notion that it is not enough 

just to cut, cut, cut, we have to find ways to raise some revenues 

as well. And our legislation attempts to open more doors than we 

close with that in mind. 

As you may know, our friends at UPS and FedEx are allowed to 

deliver wine and beer; the Postal Service is not. And we change 

that. We give the Postal Service that flexibility as long as States 

are OK with that. If they are not, then the Postal Service could not 

do that. 

I am told by the Postmaster General that the Postal Service believes that there are some opportunities for making money for the 

Postal Service in something called electronic mailboxes. If you have 

anything you would like to share with us on that front, that would 

be good. 

We believe that particularly in a number of smaller towns, but 

maybe not so small towns, there is the opportunity for the Postal 

Service to say to State and local government entities, come on in. 

We have the space, come and share it with us, and that could have 

the potential of generating some revenues for the Postal Service. 

The Postmaster General mentioned to me last month that there 

is value added, we will say, to L.L. Bean or to Macy’s if they know 

the actual date that a catalog is hitting a customer’s mailbox. 

There is value added to that. And we would welcome hearing from 

you on that. 

I understand from the Postmaster General that as people do 

more of their shopping online instead of going to traditional brickand-mortar shopping centers and stores, obviously, the orders have 

to be delivered by somebody. It could be FedEx, could be UPS, 

15 

could be the Postal Service, and there appears to be a fair amount 

of upside potential there. Those are just some of the ideas. 

One thing that I have mentioned before and I will mention it 

again today is that I think by the end of this decade, we will see 

windmill farms off the east coast of the United States. There is a 

lot of that in Europe and there is interest from Maryland all the 

way up to Maine to deploy offshore wind. 

Senator Collins, her colleague from Maine, and I know that the 

wind does not always blow, the sun does not always shine, but 

when it does, sometimes it generates more electricity than can be 

used and it has to be stored somehow. And one of the ways to store 

that is being explored by a number of entities, including the University of Delaware’s College of Marine Studies. 

One idea would be the ability to use large fleets of vehicles to 

store electricity as it is generated and then put it back onto the 

grid when the market needs it. Those are just some ideas that I 

would welcome your comments on, and frankly, I would welcome 

some other ideas, better ideas than those. 

Ms. Tobin, do you want to go first, and then Mr. Miller? 

Ms. TOBIN. Sure. I want to add that as one looks at the recent 

financial statements, if you look closely, you see some good news 

in there, which I was pleased to see, and I think part of it has come 

about through what you have created in the Postal Act of 2006. 

The shipping and package industry has gained by double digit 

growth, and we all saw the marvelous marketing programs for ‘‘if 

it fits, it ships.’’ 

Thank you for the tool of that piece of the legislation. We have 

just begun to deal with the packaging and service opportunity. 

That is not a new idea, but it really has been taking hold in recent 

years. 

The Postal Service has a new marketing executive brought 

aboard whom I have not yet met, but she comes from the consumer 

industry. I think she will help us think more from a business, 

imaginative viewpoint. I have, in my career, just seen so much 

work being done, not only in small communities, but in IBM years, 

Hewlett-Packard years, by people working from their homes, and 

you cannot do that without having the structure of good service 

from the post office for receipt of packages and the like. 

I was reminded by someone in recent months, and I think it was 

Chairman Thurgood Marshall, that when Vice President Al Gore 

was leading the Re-Inventing Government Act, one of the ideas 

that was put forth then, many years ago, was to use post offices 

as centers for what you were just saying, Senator, various government activities. 

He did not mention State and local governments, but we have 

seen passport services come in, but is there more that could be 

done through these Federal Government centers of village post offices throughout our country? I do not have a list of silver bullet 

ideas at all, but I think it is wonderful that your staff, with whom 

I have talked, Congress, all of us have to be looking at that revenue side. 

I have to underline, I am hopeful, but we have to get through 

this legislative process now, and I think you will see the Postmaster General and the Board, and the staff and the business 

16 

mailers, so relieved that we can unleash some creative energy. I 

really look forward to that. 

Senator CARPER. Thank you. Mr. Miller, I laid out a couple of options for raising revenues. If you want to react to any of them, I 

especially would ask you to react to the idea of electronic mailboxes 

if you have any thoughts there, plus other ideas that maybe I did 

not mention. 

Mr. MILLER. Mr. Chairman, the Postal Service does the sorting 

and distribution of mail well. That is what its people are trained 

for. It can pick up some ancillary kinds of activities that I think, 

at very low training cost, would be very useful. Carrying beer and 

wine is a no-brainer. That would be one. 

On the other hand, I have heard some people say, ‘‘Well, what 

the Postal Service should do is to get in the banking business like 

the postal offices of many of the European countries.’’ I think that 

would be a disaster. The notion that somehow the Postal Service 

is going to become competitive with banks overnight is just to me 

pretty far-fetched. 

But I think there are some other things we can do. On the information technology (IT) matter—I have been gone 6 months, as you 

know—the Postal Service has brought on board a new IT person, 

and they are going to be looking at the sort of things that you have 

suggested. 

And there are other ideas. I mean, from selling Postal Service 

buttons to stamps to whatever. By the way, just as an aside, I 

think the notion of having the Postal Service issue stamps with live 

people’s pictures on them—other than doing it privately, with 

stamps.com, or something like that—would be a very bad idea. I 

can imagine the demands from every direction for that. For every 

friend you make, you would make thousands of enemies. 

The real problem here, and I cannot stress it enough, is the restraints under which the Postal Service operates whenever it wants 

to take an initiative in the business. Ordinary businesses will think 

of things that they want to do, new products or services, and they 

will launch them. They do not tell everybody about them in advance, in part because they do not want their competitors to know 

about it. 

The Postal Service cannot do that. It has to go to the Postal Regulatory Commission, wait for a long time, and so forth—the list of 

steps that the Postal Service has to take in order to launch a new 

product deadens the nerves. It deadens the brain. And so, do not 

be surprised if the Postal Service has not taken a number of these 

kinds of initiatives. 

So if you were to give the Postal Service more freedom, I think 

it would be possible for the Postal Service to move in these many 

new directions. 

Senator CARPER. Before I recognize Senator Begich—I do not 

know why a Senator from Alaska would be interested in a hearing 

of this nature, but he is here, so I will give him the opportunity 

to say his piece and ask some questions. 

But before he does, let me just say that there is a real interest 

on the part of a number of us in this body, Democrats and Republicans, to try to promote a nurturing environment for more of an 

entrepreneurial spirit—— 

17 

Mr. MILLER. Right. 

Senator CARPER [continuing]. To grow in the Postal Service. I am 

encouraged by the filling of the two positions you have each mentioned. And we expect to try to do our part and maybe have a summit where we invite smart people, younger people who might just 

think of some very clever ways to use a distribution network that 

goes to every home and every business in the country six times a 

week. 

What else could we do with that, and how do we unleash that 

entrepreneurial spirit? 

Mr. MILLER. Can I just say for the record, you mentioned vehicles. Because I serve on the Board of Clean Energy Fuels, the nation’s largest distributor of natural gas for vehicles, I recuse myself 

from anything having to do with vehicles. I just want to put that 

on the record. 

Senator CARPER. Thank you. Senator Begich, welcome. Good to 

see you. 

OPENING STATEMENT OF SENATOR BEGICH 

Senator BEGICH. Thank you very much, Mr. Chairman. Alaska 

cares about their post offices. They are a critical lifeline to many 

of our communities. You know it probably well. First, I want to say 

thank you for your willingness to serve. I have a couple questions 

and then I will leave it at that. I know we have votes coming up 

pretty quickly here, so let me first give you a couple examples. 

Skagway, Alaska, is a small community of about 1,000 yearround residents, but on any single day in the summer, it can swell 

to 12,000 people because of the tourist season and the activities of 

the cruise ship industry and so forth. 

We have at times three seasonal positions, but they are hard to 

fill and keep them filled in a timely manner for the season. And 

what happens is, as you can imagine, the small store owners cannot get their product because it comes in through the mail, so it 

is piling up. I mean, not just a few boxes. It is literally piling up, 

and they cannot get products to their stores because they do not 

have enough people in the facility. 

We have some temporary employees who have been sent from 

Juneau in order to help with this situation, but Juneau also has 

cruise ships that come in. So it is like dominoes falling very rapidly. And I do not know if you have any comments, not specifically 

on that, but on customizing the hiring practices and the ability to 

staff based on these unique community needs. 

Not just for us. There are other States that have similar spikes. 

But we anticipate, just in the southeast region this year alone, 

50,000 more visitors in a 90-day period. So you can imagine the 

flow that happens. And it is huge. So again, 1,000-person facility 

goes to 12,000 in one day, and it will be like that daily for 90 days 

or so. So any comments you would like to give, either one? 

Ms. TOBIN. This speaks not directly to your concern, but I think 

close to it. One of the things I mentioned in my answer to the policy questions was that I would like to see much more flexibility— 

and I would hope the unions would begin to work more on this in 

terms of moving people from one ‘‘craft’’ to another, such that if you 

18 

had people in one part of Alaska, you would have more flexibility 

on ‘‘work rules.’’ 

Senator BEGICH. Cross training. 

Ms. TOBIN. Yes. So I think that it would help if we did get those 

labor rule flexibilities for the Postal Service. As Mr. Miller has said 

earlier, they are so good with delivery. I mean, this is an organization that executes well. It just needs to have that second area of 

flexibility. 

I know Alaska well. I think we need to figure out how we can 

get that delivery working more efficiently. 

Senator BEGICH. Very good. 

Mr. MILLER. Senator, you have identified a very important peaking problem. We have those kinds of problems in the Postal Service. The Board of Governors went out to visit the UPS center in 

Kentucky and the FedEx center in Memphis. 

And what we observed is remarkable. Basically, the planes come 

in about midnight. 

Senator BEGICH. Yes, I have been there. I have seen it. 

Mr. MILLER. You have seen the same thing. 

Senator BEGICH. Absolutely. We are the international hub for 

FedEx and UPS. 

Mr. MILLER. Well, those companies hire people to work 4-hour 

shifts. 

Senator BEGICH. Right. 

Mr. MILLER. And they deal with the peak. They have another 

smaller peak in the morning, so they hire a lot of college students, 

but we do not have the flexibility to do that under our craft contracts. 

Ms. TOBIN. We used to years ago. Thirty years ago or so, I understand, for Christmas mail. 

Mr. MILLER. Yes. But we need to have the flexibility to address 

those peaks. And from the standpoint of a company, it makes no 

sense to have mail piled up that we cannot process. 

Senator BEGICH. Right. 

Mr. MILLER. I mean, we drive away revenue when we do that. 

Senator BEGICH. Right. So you recognize that is an important 

piece of the equation? 

Mr. MILLER. Yes. 

Senator BEGICH. Well, first I want to say thank you, and also, 

I will mention, as I said, for UPS, FedEx, Anchorage International 

Airport, to which you also have a 24-hour, 7-days-a-week operation 

right next door, Anchorage is the international hub. Anything west 

of the Mississippi that is going international is coming through Anchorage. 

Mr. MILLER. Right. Over the top. 

Senator BEGICH. Over the top. So it is big business. We have 700 

wide-body cargo planes come in there every week from 26 different 

countries, serving the global economy. So we think it is important. 

So I am glad you are willing to do that. 

I have been in Memphis at 10:30 or 11 o’clock at night when the 

planes start rolling in. It is an unbelievable sight. I think people 

who have not seen that should see it because it gives you an understanding of the uniqueness. 

19 

We have a unique situation also in Alaska. There is a certain period of time when they come in and they move. And so, I would 

first thank you for your recognition of the flexibility there. That is 

necessary. 

If I can go to another comment, and I will do one quick comment 

after that. We do have a growing problem and that is drug trafficking that is starting to occur through Postal Service product 

moving through. We have only one inspection office in the State. 

It is based in Anchorage. 

Now, you have to put in perspective the size of the State. 

Mr. MILLER. Bigger than Texas. 

Senator BEGICH. That is right. We would acknowledge that. I 

have a Texas joke, but I will not say it, but I will just say that you 

are correct. And it is important because what happens when drug 

trafficking occurs and gets into a rural village, it is like a plague, 

and it happens very quickly because these are roadless villages. In 

other words, 80 percent of our communities are not accessible, 

other than by boat or plane. 

So once the trafficker figures out that the access point is the 

postal system and they can get it in there, then it is a very quick 

plague that starts to occur in those villages. So I would ask you, 

if you could, to think about that as you are looking at Postal Service reform, which we are big supporters of here. We think it is important. 

I would also ask you to think about the inspection component of 

drug trafficking that is starting to occur in the system. It is a hard 

one because you cannot look at every package. But maybe there are 

some best practices from UPS, FedEx, and others. Maybe there is 

something we can do on a unified basis because, as you all know, 

the postal system is also the last mile for some of those guys. 

And so the more we can figure this out together, the more we can 

grab this drug trafficking and squeeze it hard because it is an economic issue, and if it is hard for them to move the product, then 

they will not move it. 

Ms. TOBIN. Are there connections that you know of with Homeland Security? 

Senator BEGICH. There are. We have actually talked to the Drug 

Enforcement Administration, the Federal Bureau of Investigation, 

and others, and we would be happy to share this with you. We 

think it is really devastating to our rural communities because 

once it is in, it is in, and it does not take a lot of product to move 

through a system. And the problem is we have one inspection office 

in Anchorage, and that is it. 

And that is great, that is where a lot of volume goes, but they 

have figured out the systems and the routes. And so, I just want 

to bring that to your attention if I could. 

I have one last comment, and then I will end on this. I thank 

the Chairman for allowing me to make a few comments. Obviously, 

I would love to invite you all up to Alaska. I know some of you 

have probably been there, but I always like to have folks come up 

and see how this system works from not only the hub, Anchorage, 

but the rural hub, and then the village itself. 

The other thing is, we are waiting. I know the Postal Service released a plan to protect rural post offices, which was great. UnforVerDate Nov 24 2008 12:10 Oct 16, 2012 Jkt 075218 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 P:\DOCS\75218.TXT SAFFAIRS PsN: PAT
20 

tunately, it did not talk about postal branches. And so, I want to 

put on the record that we would like to get the Postal Service to 

release that plan with regard to the future of postal branches. They 

did it with postal offices, which was great, and I think we all appreciated that effort, but what has happened is that some communities are kind of wondering how they fit in this mix. 

We did not realize that when the report came out until we started getting calls, and then we realized the branches were a piece 

that was missing in the equation. I will leave it at that. 

Thank you, Mr. Chairman. 

Senator CARPER. You are welcome. Thanks for joining us today, 

and I would note that the language in arbitration, which I mentioned earlier to our witnesses, Senator Begich, was language that 

you spent a lot of time working on, and we are very grateful for 

that. 

I have maybe one other question. We just started voting, I think. 

In the coming months, if the Congress and the Administration 

are not able to come to agreement on postal reform—and let me 

just say, we are going to work very hard, but we need the House 

to act so we can go to conference—the Postal Service is going to 

need to make some more tough decisions about how to preserve operations with a dwindling amount of cash. 

If you are confirmed, how would you direct postal management 

as it seeks to keep the business running through that kind of crisis 

that it would face? 

Mr. MILLER. Well, what you have to do is, I think, first talk with 

the lawyers about what is legally required. Then you have to look 

at the priorities, and you have to pay what keeps the organization 

running and going. That would probably be our employees rather 

than some of our vendors. We may have to postpone payment to 

some of our vendors. It really would not be a pretty sight. 

But what you will have to do is try to preserve the integrity of 

the enterprise until some solution is worked out. 

Senator CARPER. All right. 

Mr. MILLER. But I am hopeful that you will do that. Could I just 

say one final thing, Mr. Chairman? 

Senator CARPER. Sure. 

Mr. MILLER. The Board of Governors worked very hard on this 

restructuring. The Board of Governors drove the restructuring, not 

management. It was the Board of Governors. And in talking with 

some staff a couple of days ago, I had the impression that you were 

disappointed that the Board of Governors did not play a more important role in drafting the legislation. 

I think if that is the case, and I have no reason to doubt that, 

this is something you ought to communicate to the Board of Governors because the Board of Governors was under the impression 

that you really preferred dealing with the Postmaster General. 

Senator CARPER. Actually, I am pleased to know several of you, 

and I respect you and welcome the opportunity to talk to you. You 

all are free to call me any time, certainly the Chairman, but also 

the other Members. 

A former Chairman of the Board of Governors from Delaware 

just passed away last month, whom you served with. 

Mr. MILLER. Yes, I know, Rob Rider. 

21 

Senator CARPER. We remember him in gratitude for his service 

today. 

Ms. TOBIN. Two things that I want to say to your point, Senator. 

Senator CARPER. Please. 

Ms. TOBIN. First of all, I am aware, because we are being increasingly briefed on the current situation at the post office, that 

the Board of Governors is actively, in getting their Monday through 

Friday news, looking at the upcoming deadlines and discussing 

among each other how they are going to handle August, September, 

and October. And frankly, I suspect they have been doing that for 

the last year—kind of scenario planning. 

The second thing I want to say—and I understand the frustration Senator Collins voiced, and I know how hard this staff worked 

on the Senate legislation—I think that letter comes from the highest priority of the Board of Governors, being that fiduciary responsibility, and I believe that they could not, in good conscience, not 

speak because the legislation was not yet done. 

So I hope that there is some sense of trust or faith that the 

Board is very active, earnest, and bipartisan and takes its role very 

seriously. 

Senator CARPER. Senator Begich, do you want to say anything 

else? 

Senator BEGICH. No, thank you. 

Senator CARPER. Members have until noon tomorrow to provide 

any additional questions that they might have for you. We appreciate your previous service on the Board of Governors and look forward to having the opportunity to vote on the nominations to serve 

again. 

I would just conclude on this note. The situation that the Postal 

Service faces is dire. It is not hopeless. This is something we can 

fix. 

Ms. TOBIN. Yes. 

Senator CARPER. And we need the best ideas from the Board of 

Governors. We need the best ideas from postal management, from 

the unions that represent the postal employees, from our colleagues, and from your customers across the country. And all of us 

need to focus on how to be more entrepreneurial and to figure out 

how to grow the pie again as first-class mail revenues have 

dropped. We look forward to working with you in that regard. 

The other thing is that we need the House to act. It is all well 

and good that we work hard. And I will say personally that I very 

much enjoyed working with your Postmaster General and your 

Deputy Postmaster General. They work hard. 

Mr. MILLER. They are both good people. 

Senator CARPER. Yes. They work hard for the money, and they 

work hard for the postal employees, for the customers, and I think 

for the taxpayers as well. And so, we commend them in absentia. 

All right. With that having been said, this hearing is adjourned. 

Mr. MILLER. Thank you, Mr. Chairman. 

Ms. TOBIN. Thank you. 

Senator CARPER. Happy Anniversary, Happy Birthday. 

Ms. TOBIN. Thank you. 

[Whereupon, at 11:17 a.m., the hearing was adjourned.] 

(23) 

A P P E N D I X 


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