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HAVING THEIR SAY: CUSTOMER AND EMPLOYEE 

VIEWS ON THE FUTURE OF THE 

U.S. POSTAL SERVICE 

JOINT HEARING 

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE 

OF THE

COMMITTEE ON HOMELAND SECURITY 

AND GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

AND THE

FEDERAL WORKFORCE, POSTAL SERVICE, AND THE 

DISTRICT OF COLUMBIA SUBCOMMITTEE 

OF THE

COMMITTEE ON OVERSIGHT AND 

GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

OF THE

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JUNE 23, 2010 

Serial No. 111–141 

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

Printed for the use of the Committees on Homeland Security and 

Governmental Affairs and Oversight and Government Reform 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

ROLAND W. BURRIS, Illinois 

EDWARD E. KAUFMAN, Delaware 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

LINDSEY GRAHAM, South Carolina 

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk and GPO Detailee 

SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY 

THOMAS R. CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

MARK L. PRYOR, Arkansas 

CLAIRE MCCASKILL, Missouri 

ROLAND W. BURRIS, Illinois 

JOHN MCCAIN, Arizona 

TOM COBURN, Oklahoma 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

JOHN KILVINGTON, Staff Director 

BRYAN PARKER, Staff Director and General Counsel to the Minority 

DEIRDRE G. ARMSTRONG, Chief Clerk 

(III) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

EDOLPHUS TOWNS, New York, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

CAROLYN B. MALONEY, New York 

ELIJAH E. CUMMINGS, Maryland 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

DIANE E. WATSON, California 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

MARCY KAPTUR, Ohio 

ELEANOR HOLMES NORTON, District of 

Columbia 

PATRICK J. KENNEDY, Rhode Island 

DANNY K. DAVIS, Illinois 

CHRIS VAN HOLLEN, Maryland 

HENRY CUELLAR, Texas 

PAUL W. HODES, New Hampshire 

CHRISTOPHER S. MURPHY, Connecticut 

PETER WELCH, Vermont 

BILL FOSTER, Illinois 

JACKIE SPEIER, California 

STEVE DRIEHAUS, Ohio 

JUDY CHU, California 

DARRELL E. ISSA, California 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

JOHN J. DUNCAN, JR., Tennessee 

MICHAEL R. TURNER, Ohio 

LYNN A. WESTMORELAND, Georgia 

PATRICK T. MCHENRY, North Carolina 

BRIAN P. BILBRAY, California 

JIM JORDAN, Ohio 

JEFF FLAKE, Arizona 

JEFF FORTENBERRY, Nebraska 

JASON CHAFFETZ, Utah 

AARON SCHOCK, Illinois 

BLAINE LEUTKEMEYER, Missouri 

ANH ‘‘JOSEPH’’ CAO, Louisiana 

BILL SHUSTER, Pennsylvania 

RON STROMAN, Staff Director 

MICHAEL MCCARTHY, Deputy Staff Director 

CARLA HULTBERG, Chief Clerk 

LARRY BRADY, Minority Staff Director 

SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL SERVICE, AND THE DISTRICT OF

COLUMBIA

STEPHEN F. LYNCH, Massachusetts, Chairman 

ELEANOR HOLMES NORTON, District of 

Columbia 

DANNY K. DAVIS, Illinois 

ELIJAH E. CUMMINGS, Maryland 

DENNIS J. KUCINICH, Ohio 

WM. LACY CLAY, Missouri 

GERALD E. CONNOLLY, Virginia 

JASON CHAFFETZ, Utah 

BRIAN P. BILBRAY, California 

ANH ‘‘JOSEPH’’ CAO, Louisiana 

——— ——— 

WILLIAM MILES, Staff Director 

(IV) 

C O N T E N T S 

Opening statements: Page 

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

Representative Lynch ....................................................................................... 4 

Representative Chaffetz ................................................................................... 5 

Senator McCaskill ............................................................................................ 7 

Senator Coburn ................................................................................................. 28 

Representative Holmes Norton ....................................................................... 35 

Senator Akaka .................................................................................................. 55 

Prepared statements: 

Senator Carper ................................................................................................. 67 

Senator Akaka .................................................................................................. 70 

Senator McCain ................................................................................................ 72 

Representative Lynch ....................................................................................... 74 

Representative Chaffetz ................................................................................... 76 

WITNESSES 

WEDNESDAY, JUNE 23, 2010 

H. James Gooden, Chairman, Board of Directors, American Lung Association, 

on behalf of the Alliance of Nonprofit Mailers .................................................. 8 

Donald J. Hall, Jr., President and Chief Executive Officer, Hallmark Cards, 

Inc. ......................................................................................................................... 10 

Allen Abbott, Executive Vice President and Chief Operating Officer, Paul 

Fredrick MenStyle, Inc., and Chairman, American Catalog Mailers Association ........................................................................................................................ 12

Keith McFalls, Vice President of Operations, PrimeMail and Triessant, Prime 

Therapeutics, on behalf of the Pharmaceutical Care Management Association ........................................................................................................................ 14

Paul Misener, Vice President of Global Public Policy, Amazon.com ................... 15 

Andrew Rendich, Chief Service and DVD Operations Officer, Netflix, Inc. ....... 17 

Don Cantriel, President, National Rural Letter Cariers Association .................. 38 

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

CIO ........................................................................................................................ 40 

William Burrus, President, American Postal Workers Union, AFL–CIO ........... 42 

Richard Collins, Assistant to the Presdient, National Postal Mail Handlers 

Union ..................................................................................................................... 44 

Louis Atkins, Executive Vice President, National Association of Postal Supervisors ..................................................................................................................... 46 

Charles Mapa, President, National League of Postmasters ................................. 47 

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

United States ........................................................................................................ 49 

ALPHABETICAL LIST OF WITNESSES

Abbott, Allen : 

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

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

Atkins, Louis: 

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

Prepared statement .......................................................................................... 132 

Burrus, William: 

Testimony .......................................................................................................... 42 

Prepared statement .......................................................................................... 121 

Page

V 

Cantriel, Don: 

Testimony .......................................................................................................... 38 

Prepared statement .......................................................................................... 109 

Collins, Richard: 

Testimony .......................................................................................................... 44 

Prepared statement .......................................................................................... 124 

Gooden, H. James: 

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

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

Hall, Donald J. Jr.: 

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

Prepared statement .......................................................................................... 81 

Mapa, Charles: 

Testimony .......................................................................................................... 47 

Prepared statement .......................................................................................... 137 

McFalls, Keith: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 94 

Misener, Paul: 

Testimony .......................................................................................................... 15 

Prepared statement .......................................................................................... 97 

Rapoza, Robert J.: 

Testimony .......................................................................................................... 49 

Prepared statement .......................................................................................... 152 

Rendich, Andrew: 

Testimony .......................................................................................................... 17 

Prepared statement .......................................................................................... 101 

Rolando, Frederic V.: 

Testimony .......................................................................................................... 40 

Prepared statement .......................................................................................... 113 

APPENDIX 

Vincent P. Giuliano, Senior Vice President, Government Relations, on behalf 

of Valassis Direct Mail, Inc., prepared statement ............................................. 161 

Questions and responses for the Record from: 

Mr. Hall with an attachment .......................................................................... 168 

Mr. Burrus ........................................................................................................ 172 

(1) 

HAVING THEIR SAY: CUSTOMER AND 

EMPLOYEE VIEWS ON THE FUTURE 

OF THE U.S. POSTAL SERVICE 

WEDNESDAY, JUNE 23, 2010 

JOINT HEARING WITH THE U.S. SENATE,

SUBCOMMITTEE ON FEDERAL FINANCIAL

MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL

SERVICES, AND INTERNATIONAL SECURITY, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS,

AND THE U.S. HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL

SERVICE, AND THE DISTRICT OF COLUMBIA, OF THE

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC. 

The Subcommittees met, pursuant to notice, at 2:41 p.m., in 

room G–50, Dirksen Senate Office Building, Hon. Thomas R. Carper, Chairman of the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, presiding. 

Present: Senators Carper, Akaka, McCaskill, Burris, and Coburn. 

Representatives Lynch, Holmes-Norton, Kucinich, Clay, Connolly, 

and Chaffetz. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. The hearing will come to order. Welcome, one 

and all. I especially want to welcome our witnesses, the first panel 

and our second panel of witnesses. Thank you for joining us. And 

a warm welcome to our House colleagues. We don’t get to do this 

every day, so this is a real treat for us over here and thank you 

all for joining us. 

I am going to make an opening statement, and then if anybody 

would like to—when I look at the names right here, I look at 

Akaka—it says ‘‘Akaka’’—but I know that this is Senator Akaka. 

Representative Lynch, we are glad to have you here. 

Mr. LYNCH. No offense to Mr. Akaka, either. 

Senator CARPER. No. We are glad you guys are here, and if Senator John McCain is not here, we will just come to you and we will 

bounce back and forth. 

I am going to ask Senator McCaskill to introduce one of her constituents from Missouri, so I am glad that you could join us. 

I think this is the second hearing that I have chaired this year 

on the financial crisis currently facing the Postal Service, and we 

2 

are going to talk about that and the proposals that Postal management and the Government Accountability Office (GAO) have made 

to address that crisis. 

We are joined at this hearing by our colleagues, as I mentioned, 

from the House Oversight and Government Reform Committee’s 

Subcommittee on the Federal Workforce, Postal Service, and the 

District of Columbia. That is almost as long a name as the name 

of our Subcommittee. So if we put our names together, we could 

have a book, probably. But to our Chairman from the House, to our 

Ranking Member and your colleagues, we welcome you warmly and 

we look forward to working with all of you as we try to come to 

some consensus on the changes that are needed to help the Postal 

Service respond both in the short run and to the long-term challenges that they face. 

Senator Coburn, welcome. Good to see you. You might know a 

couple of these fellows and gals from the House. 

As we all know, the economic crisis that our country continues 

to face has impacted just about every family and just about every 

business in our Nation. It has been especially traumatic, I would 

argue, for the Postal Service, for the folks who work there, and for 

their key customers. 

The Postal Service ended fiscal year 2009 with a 13-percent decline in mail volume compared to fiscal year 2008. This resulted in 

a year-end loss of some $3.8 billion, up from $2.8 billion a year before. And this loss came despite heroic efforts on the part of the 

Postmaster General, his team, and a lot of folks who work at the 

Postal Service to achieve more than $6 billion in cost savings over 

a very short period of time. And the loss would have been significantly higher, a total, I think, of about $7.8 billion, to be exact, if 

Congress and the President had not acted at the last minute to reduce the size of the Postal Service’s overly large retiree health 

prefunding payment. 

Unfortunately, the projections for the current fiscal year look no 

better than these results for fiscal year 2009. And despite an expected recovery in at least some areas of the economy, the Postal 

Service is anticipating a further decline in mail volumes. This, coupled with the fact that savings will likely be harder to come by this 

year, will result in the kind of massive $7 or $8 billion loss that 

we were expecting right up until the end of fiscal year 2009. 

On top of this news, the Postal Service recently hired a group of 

three outside consultants, well respected, to look at the business 

model and to look at future prospects. The consultants came back 

with findings showing that the Postal Service will continue to lose 

mail volume, even when the economy recovers. They even pointed 

out that the Postal Service can be expected to lose more than, I 

think, $230 billion over the next decade—$230 billion over the next 

decade—if major changes are not made. 

So in short, we have our work cut out for us. At the Postal Service, it is imperative that Postal management not let up on their efforts to streamline operations and find ways to save money. The 

processing, delivery, and retail networks that the Postal Service 

uses today were built, for the most part, with the thought that mail 

volume would continue to grow forever. 

3 

Based on the work that I have seen over the years from GAO, 

the Postal Service’s Inspector General (IG), and others, we likely 

have some overcapacity and too large a workforce, and this must 

be confronted head-on. Postal customers, including those we will 

hear from today, still depend on the Postal Service, but at a time 

when the pace of electronic diversion is likely going to continue to 

pick up, we are aware that we can’t rely forever on customers’ willingness to continue paying more for a Postal system that seems in 

many ways to be larger than the one that we need. 

Congress also has a role to play. All too often, we criticize the 

Postal Service for various management and service problems, but 

then we stand in the way when the Postmaster General puts painful but necessary changes on the table. 

We have also failed recently to address the financial constraints 

that have worsened the Postal Service’s problems. There is growing 

evidence that the formula created in the 1970s to determine how 

much the Postal Service must pay into the old Civil Service Retirement System has resulted in significant overpayments. In addition, 

it has become evident that in the 2006 Postal Reform legislation, 

we saddled the Postal Service with an overly aggressive retiree 

health prefunding schedule that has pushed Postal finances into 

the red for many years to come. These two issues need to be resolved sooner rather than later and in a comprehensive manner so 

that Postal management can be free to address the long-term structural problems that threaten the Postal Service’s survival in the 

coming years. 

Following this hearing, I plan to work with my colleagues here 

in the Senate, and I hope in the House, to begin the process of putting together legislation to help the Postal Service to execute the 

reform plans that Postmaster General John E. Potter put forth at 

our last hearing. This bill will not be another attempt at Postal reform. It is my hope, however, that it will remove the obstacles that 

prevent Postal management and the folks who work for the Postal 

Service from cutting costs while dealing once and for all with the 

pension and retiree health issues that we spent so much time discussing of late. 

The Committee reported out legislation last summer to address 

the 2006 retiree health payment schedule. It also touched on labor 

costs through a provision requiring arbitrators to take the Postal 

Service’s financial condition into account during labor disputes. Following the Postal Service’s announcement this spring regarding its 

long-term deficit projections, however, it has become clear to me 

that this legislation does not go far enough. 

So I look forward to working with all Postal stakeholders, including those in the room today, to put together a meaningful and effective bill. In doing so, I plan to urge everyone to put aside the 

biases and the political battles that made Postal reform so difficult 

in 2006 and that has prevented us from making progress on the 

pension and retiree health issues, at least so far. 

It is long past time that those interested in the Postal Service, 

whether they be unions, mailers, or Members of the House or Senate, recognize that we all need to make some sacrifices in order to 

preserve the vital service that our Postal Service provides. 

4 

And what I am going to do now, in the absence of Senator 

McCain, we are going to come right to Representative Lynch and 

ask him to make his opening statement, and then if Senator 

McCain is here, we will yield to him, and then to Representative 

Chaffetz. Thank you. Welcome. 

OPENING STATEMENT OF HON. STEPHEN LYNCH 

Mr. LYNCH. Thank you, Senator Carper. I want to thank you and 

your staff for your great kindness in hosting this important hearing. 

I don’t know if I am going to be able to get my Members to go 

back to the House after they enjoy this air conditioning over here. 

I do believe you could hang sides of beef in this room and keep 

them fresh. [Laughter.] 

This is great. This is a real treat. 

Senator CARPER. Actually, that is what we normally use this 

room for. [Laughter.] 

Mr. LYNCH. I heard that. 

Senator CARPER. The question they ask over here a lot is, where 

is the beef, and we say—— 

Senator MCCASKILL. Also known as Senators. [Laughter.] 

Mr. LYNCH. Well, thank you. I also want to thank the Members 

of the Senate Subcommittee on Federal Financial Management, 

Government Information, Federal Services, and International Security for agreeing to hold this House and Senate joint hearing, 

which goes to show that both Houses of Congress recognize the 

critical state of affairs currently confronting the U.S. Postal Service 

(USPS). 

As Chairman of the House Subcommittee with oversight of the 

Postal Service, I remain quite concerned about the financial and 

operational challenges that have caused our Nation’s most trusted 

and prominent public institution to fall upon such difficult times. 

With new technology and the rise of electronic communications, the 

landscape for the way Americans communicate and transact business has been altered forever. Mail volume is declining dramatically as the cost of delivering mail to an expanding number of addresses continues to grow. The recent economic downturn has accelerated this trend and businesses have cut expenses and reduced 

their investment in the mail. 

Statutorily imposed benefit obligations, such as prefunding of future retiree health benefits, as the Senator mentioned, have made 

the Postal Service’s financial situation even worse. This perfect 

storm has resulted in the Postal Service’s experiencing an unprecedented cumulative loss of nearly $12 billion over the past three 

consecutive fiscal years. 

While the Postal Service has recently revealed some relatively 

good news, that it is doing better this year than previously anticipated by approximately $1.3 billion, if current projections come 

true, the Postal Service could stand to lose another $7 billion by 

the end of this year. 

Given these extraordinary financial challenges, I am encouraged 

in some parts by the efforts of the Postal Service’s action plan for 

the future, as well as GAO’s report entitled, ‘‘Strategies and Options to Facilitate Progress Towards Financial Viability at the Post 

5 

Office.’’ The Postal Service’s plan and the GAO’s report have 

spurred a meaningful dialog about how best to return the Postal 

Service to sound financial footing, a dialog upon which all interested stakeholders can participate. 

While my Subcommittee and its Full Committee received some 

initial testimony on the Postal Service’s plan and GAO’s report in 

April of this year, constraints at the hearing did not allow for us 

to receive the testimony from other interested stakeholders such as 

the employees and customers who are here today. Customers and 

employees are the lifeblood of the U.S. Postal Service. Without 

them, there would be no U.S. Postal Service. It is essential that we 

hear the ideas, thoughts, and concerns of those most closely affected by the Postal Service before moving forward with any potential reforms. Only after hearing from the members of the Postal 

community can we fully explore and consider the ramifications of 

all viable options for ensuring a robust and vibrant Postal Service 

for decades to come. 

I appreciate today’s witnesses for being here with us this afternoon to offer their feedback on the Postal Service’s plan and GAO’s 

recent report, as well as other suggested strategies on how to best 

increase revenue, reduce costs, and improve efficiency in order to 

help ensure the future sustainability of the Postal Service. 

Again, I would like to thank you, Senator Carper, for agreeing 

to hold this House and Senate joint hearing and I look forward to 

an informative discussion this afternoon. Thank you. 

Senator CARPER. Good. Mr. Chairman, thank you so much, and 

thanks also for coming over here and chilling out with us for a little bit. 

I am pleased now to introduce from Utah, Representative 

Chaffetz. Has anyone ever mispronounced your name? 

Mr. CHAFFETZ. Oh, never. Not here in the Senate, I guess not. 

[Laughter.] 

Senator CARPER. We will try to do a good job here today. We are 

glad you are here and we welcome your testimony. 

OPENING STATEMENT OF HON. JASON CHAFFETZ 

Mr. CHAFFETZ. Thank you, and thanks to all of the witnesses 

who are coming today and testifying. I do appreciate the bipartisan 

way in which Chairman Lynch has approached this and I thank 

him and his staff. I think we work fairly collaboratively. 

The issues before us are huge. We obviously need to talk about 

cutting costs and becoming more effective and efficient. What I 

think is often absent in this discussion along the way, though, is 

how is the Postal Service going to become more relevant in people’s 

lives? 

And so while we do need to continue to discuss and examine and 

hear from the customers and the Postal Service and the unions and 

all of those folks who are involved in how to cut costs, let us also 

talk about the relevancy in the future. That discussion does not get 

enough out there. We have some of the great customers of the Postal Service and we look forward to hearing from you, but it is going 

to be the collective creativity, the collective genius of the users that 

are ultimately, I think, going to come up with the best solutions 

6 

on how to make the Postal Service more relevant and more useful 

in people’s lives. The community includes a $1.2 trillion mailing industry. The 

Postal Service delivers nearly half of all of the world’s mail. The 

numbers are absolutely unbelievable in what happens. The U.S. 

Postal Service still has more retail locations than McDonald’s, 

Starbucks, Walgreen’s, and Wal-Mart combined. I think it is something that we need to address in a very serious manner. But there 

is no blinking from the fact that the Postal Service continues to 

suffer a major economic crisis. 

Now, I do think we should give recognition to the Postal Service 

for the cuts that they have made along the way. If only the rest 

of the Federal Government would follow the lead of the Postal 

Service—again, I still think there needs to be more, but as a whole 

you can look at the Postal community and say they have made difficult decisions. They have been bringing down costs. You can’t say 

that about any other part of the Federal Government. And they 

don’t get enough credit for that along the way and I think we 

should note that as we do that. 

I do appreciate the bipartisan way in the House that we dealt 

with H.R. 22. It was a significant stride and I would make note of 

that. 

The Postal Service continues to advocate cutting to a 5-day delivery. I personally am opposed to that. I am going to need to be convinced that we should move away from the 6-day delivery that we 

enjoy now. I, for one, believe that there is some sort of hybrid. I 

am going to introduce legislation that would give authorization to 

the Postal Service to allow up to 12 days of delivery. There are 

probably some Saturdays or Tuesdays in August or July where not 

many people are going to miss getting their mail that day. Maybe 

that is the balance between cutting 52 days. I don’t think we are 

going to cut a Saturday before Mother’s Day and satisfy the customers, but I do think there is some sort of hybrid in between, and 

maybe 12 days, allowing them to find 12 Postal holidays would be 

the right type of balance that would allow them to cut costs. 

There are creative things that I think we can do in this. We are 

obviously going to have to deal with the Civil Service Retirement 

System. It is a key issue. I do think we need to look at a BRAC 

type of system, a PRAC, if you will, where we look at how to cut 

back the Postal issues. We are going to have to deal with the reality of the postmaster, who every time we say we are going to cut 

a physical facility, the Member of Congress in that district calls 

him up and says, oh, anywhere else but my district. We have to 

create a way where we can objectively look at how to cut the number of physical facilities and still meet the needs of the customers 

along the way. Somehow, creatively, we are going to have to do 

that and bypass the politics that are normally instilled there. 

Again, I think for all the witnesses, I appreciate doing this in a 

bicameral way, and my colleagues who do pay attention to this 

issue. I thank the witnesses for being here today and look forward 

to the dialog. 

I yield back. Thank you. 

Senator CARPER. Congressman Chaffetz, thank you for the very 

thoughtful comments, from both you and the Chairman. 

7 

I am going to just give very brief introductions of our witnesses. 

I am going to call on Senator McCaskill to give a little bit longer 

introduction of Mr. Hall from Missouri. 

But on the first panel, we have a number of witnesses who are 

here representing some of the major customers of the Postal Service and Postal groups. 

First, we have James Gooden, and he serves as the Chairman of 

the Board of Directors of the American Lung Association, which is 

a major nonprofit mailer. Welcome. It is nice to see you. 

Mr. GOODEN. Thank you. 

Senator CARPER. Donald Hall is next, and he will be introduced 

in greater detail by Senator McCaskill. 

Next is Allen Abbott, the Executive Vice President and Chief Operating Officer at Paul Fredrick MenStyle, representing the catalog 

industry. Mr. Abbott, nice to see you. 

Following him is Keith McFalls from Prime Therapeutics, a 

major pharmaceutical mailer. Good afternoon. 

Next, Paul Misener, who is the Vice President of Global Public 

Policy at Amazon.com. A pleasure. Welcome. 

And finally, we have Andrew Rendich, the Chief Service and 

DVD Operations Officer for Netflix. Five years ago, if we had been 

having this hearing, would you have been here? Would Netflix have 

been here? 

Mr. RENDICH. I would hope we would have been viewed as an up 

and comer, but I probably would not have been here. 

Senator CARPER. All right. Fair enough. We are glad you are 

here. 

Senator McCaskill. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Thank you, Mr. Chairman. It is an honor 

today for me to take just a couple of minutes to introduce one of 

the witnesses. Kansas City is fortunate for many reasons, but 

among them is the fact that we have the finest greeting card company in the world that has a home base in Kansas City. 

A hundred years ago, our witness’s grandfather founded Hallmark Cards, I think with a couple of shoeboxes of cards, and has 

built it into one of the most widely respected companies in the 

world, with international reach and with the kind of civic responsibility that is uniquely American. This is a company—both Donald 

Hall, Junior, his father, and his grandfather not only built an incredible company that everyone in Missouri is very proud of, they 

also built a culture around civic commitment, around giving back 

to the community, about participating in everything from the arts 

to the education of our citizens to the streets to our parks, you 

name it. Hallmark and the great employees at the Hallmark Company shape the civic community in Kansas City in all the right 

ways. 

I know that Donald Hall is here today representing a company, 

but he is really here representing hundreds of artists, professionals, managers, salesmen and thousands of small businesses 

across this country that depend on the mail service and depend on 

the fine business culture of Hallmark for their livelihood and for, 

in fact, looking forward to getting out of bed in the morning. 

8 

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

I have many friends that have worked for Hallmark, and it is almost like there is something in the water at this company. You 

walk in, everybody is so damn happy, you want to know what the 

heck is going on because the people who work there are so proud. 

So it is great to have you here today, Mr. Hall. Great that Hallmark is being represented today on this panel, and we look forward 

to your testimony. 

And thank you so much for the courtesy of the introduction, Mr. 

Chairman. 

Senator CARPER. You are quite welcome. Thanks a lot for providing the introduction. 

The entire statements of our witnesses will be made a part of the 

record. I would just ask that you each proceed. Mr. Gooden, I am 

going to call on you to go first. I would ask you to try to stick to 

5 minutes. If you go much beyond that, we will have to intervene. 

We are going to have a series of votes here, in fact, I expected 

them to start by now, but they have not, so let us go ahead and 

go as far as we can. Thank you very much. Mr. Gooden, please proceed. 

TESTIMONY OF H. JAMES GOODEN,1 CHAIRMAN, BOARD OF DIRECTORS, AMERICAN LUNG ASSOCIATION, ON BEHALF OF 

THE ALLIANCE OF NONPROFIT MAILERS 

Mr. GOODEN. Thank you, Mr. Chairman and Members of the 

Subcommittees, my name is Jim Gooden and I am the Chairman 

of the Board of Directors for the American Lung Association. 

The American Lung Association was founded in 1904 to fight tuberculosis, and today, our mission is to save lives by improving 

lung health and preventing lung disease. We accomplish this 

through research, advocacy, and education. 

I am honored today to testify on behalf of members of the Alliance of Nonprofit Mailers, of which the American Lung Association 

is a charter member. The Alliance of Nonprofit Mailers was established in 1980 as a national coalition of nonprofit organizations 

sharing a vested interest in nonprofit Postal policy. The Alliance is 

the primary representative of nonprofit mailers before the U.S. 

Postal Service, Postal Regulatory Commission (PRC), and on Capitol Hill. Our membership is a cross-section of America and it includes public health and medical groups, colleges and universities, 

consumer organizations, Farm Bureaus, and religious organizations. 

In 1907, the American Lung Association invented direct mail 

fundraising in the United States through our Christmas Seals program. A volunteer named Emily Bissell came up with a plan based 

on one that had worked in Denmark. She designed and printed 

special holiday seals and sold them at the Post Office for a penny 

each. By the end of her holiday campaign, she and a large group 

of committed volunteers had raised 10 times her initial goal, and 

with it, the American Lung Association Christmas Seals was born. 

We have a sample over to my left. 

The American Lung Association, like many other members of the 

Alliance, uses mail primarily to communicate with volunteers and 

9 

to raise money. However, unlike many other organizations, we are 

also responsible for driving additional mail volume across the country as our Christmas Seals encourage Americans to send Christmas 

and other holiday cards, thereby boosting First Class mail. But an 

oversize, over-budget Postal Service threatens the members of the 

Alliance of Nonprofit Mailers and all other nonprofits, as the Postal 

Service will inevitably fall back on raising postage rates, in part to 

make up for its projected deficit. 

Our organizations are greatly troubled that the Postal Service 

has announced that it will raise postage rates by early 2011. The 

increase is expected to be 5 to 10 times the rate of inflation. Nonprofits will be forced to not only cut back on the number of pieces 

we mail, but it will also greatly impact nonprofit organizations’ 

abilities to deliver key programs and services across the Nation. 

For the Lung Association, it will impact our funding research to 

provide and improve treatments and to find cures for more than 35 

million Americans with chronic lung disease, giving children the 

tools they need to manage their asthma so that they can stay 

healthy in school and be ready to learn, also for fighting for healthy 

air and fighting against tobacco. We, like other nonprofits, would 

also be forced to reduce mail volume, which will just reinforce the 

Postal Service’s downward spiral. 

The American Lung Association and all nonprofit organizations 

are heavily dependent on a fiscally sound U.S. Postal Service, a 

cost effective, efficient Postal System. We believe the only solution 

is for the Postal Service to finally bring its infrastructure and its 

capacity in line with actual demand. That is why the Alliance of 

Nonprofit Mailers has taken the difficult step to support the Postal 

Service’s recommendation to eliminate Saturday delivery. 

In addition to the threat of a general postage increase in early 

2011, nonprofits are also concerned that preferred nonprofit postal 

rates could also be eliminated. This move would be a terrible mistake. Congress has authorized special nonprofit rates for more than 

50 years and has repeatedly reaffirmed that policy because it still 

makes good sense. Reduced postage rates enable the American 

Lung Association and other nonprofit organizations, including 

churches and faith organizations, to provide a critical role in our 

society, one that is even more crucial today, when cash-strapped 

State and local governments are struggling to meet the basic needs 

of its citizens. 

Thank you for this opportunity to testify before you today. Nonprofit organizations can be found in every State and every Congressional district in this Nation and they provide a unique and necessary role in America. On behalf of all nonprofits, we ask for your 

continued support moving forward to ensure that we can continue 

to rely on an affordable and fiscally sound U.S. Postal Service. 

Thank you. 

Senator CARPER. Thank you very much. Were you ever in the 

Army? 

Mr. GOODEN. No, sir. I play one on television. [Laughter.] 

Senator CARPER. I thought so. It is not every day we have someone who has a distinguished career like you, and also—what was 

the name of the show, on Lifeline? 

Mr. GOODEN. On Lifetime. 

10 

1The prepared statement of Mr. Hall appears in the Appendix on page 81. 

Senator CARPER. There you go. All right. Well, good to see you. 

Mr. GOODEN. Thank you, sir. 

Senator CARPER. You look younger in person. [Laughter.] 

Mr. LYNCH. That is what they say about you, Mr. Chairman. 

Senator CARPER. I wish they did. They say other things about 

me. [Laughter.] 

All right. Mr. Hall, you are on. Welcome. Please proceed. 

TESTIMONY OF DONALD J. HALL, JR.,1 PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, HALLMARK CARDS, INC. 

Mr. HALL. Good afternoon, and thank you very much, Chairman 

Carper, Chairman Lynch, Ranking Member Chaffetz, and other 

distinguished Members of this Committee. I also want to thank 

Senator McCaskill for the warm Missouri welcome. 

I appreciate the opportunity to speak with you about a critical 

situation, the sustainability of the U.S. Postal Service. It is a subject I care deeply about. I care because for much of Hallmark’s 100- 

year history, the Postal Service has been a vital partner to us. We 

participate with others in our industry through the Greeting Card 

Association, and I am a member of the CEO Council of the Mailing 

Industry Task Force. 

We all share a common goal for a robust and stable Postal Service, one that I believe is vitally important to the people of this 

country. Yet the Postal Service is facing the most severe crisis in 

its history. We have all heard the dire volume and revenue forecasts signaling potential losses of as much as $238 billion by 2020. 

I compliment the Postmaster General for actions to date to bring 

Postal costs in line, but it is not enough if we are to sustain this 

institution. 

Over the past 30 years, it has never been easy to manage the 

Postal budget. Often, shortfalls have been solved by raising Postal 

rates, which consumers have accepted. However, given this economic contraction, consumers’ unwillingness to now accept price increases in every aspect of their lives, and the number of alternatives available to users of the mail system, solving budget shortfalls through price increases and reduction of service not only won’t 

work, it will make matters worse. We are at a tipping point. We 

must find a sustainable solution now. No one knows better than 

you that that will not be easy. But we can no longer avoid this reality. 

When the Postal Service was reorganized in the 1970s, it was 

charged with operating more like a business, less dependent on 

Federal subsidies. Operating like a business today means facing intensified pressures on volumes, costs, and pricing. Most businesses 

today are addressing the new realities of substitution and declining 

demand. I know of no business that is trying to compete by raising 

prices and degrading service. 

And yet that is precisely what the Postal Service seems determined to do with its proposal to end Saturday delivery and to increase rates far in excess of inflation. The advisability of such a 

move is questionable. Some debate the projected savings. Others 

worry that this is just the first step toward 4- or 3-day delivery. 

11 

I encourage you to reject the notion of reduced service as the path 

to sustainability. 

I believe there are a number of things Congress can do. The 

manner in which the 2006 law requires the Postal Service to 

prefund future retiree health care costs is untenable. No other 

branch of the Federal Government is required to prefund at such 

an aggressive rate. I am not recommending that Congress eliminate this requirement, just extend its timeframe for meeting this 

obligation, thus lowering the annual costs. 

Also, it should be determined immediately whether the Civil 

Service Retirement System obligation has been over-funded. If so, 

the $75 billion could be reapplied toward funding the retiree health 

care obligation. 

I encourage Congress to allow the Postal Service to close excess 

facilities by establishing a base closing-type commission, to eliminate the prohibition on closing Post Offices for economic reasons, 

and to allow arbitrators to consider the financial health of the Postal Service. 

None of these actions alone is sufficient to solve the projected 

losses. With more than 80 percent of their costs allocated to wages 

and benefits, Postal management, union leaders, and stakeholders 

must work together to find solutions that reflect the current financial situation. 

Over the next 2 years, labor and management will be renegotiating contracts. Both parties will raise legitimate issues. The only 

way to preserve the institution and maximize the number of quality jobs will be to take actions consistent with the long-term view. 

And it is not just Postal jobs that I am worried about. The mailing industry has lost 1.5 million jobs since 2006. The remaining 7.5 

million jobs rely on a robust Postal Service. Those jobs have to be 

considered, as well. 

You have an opportunity to take bold action on behalf of the citizens and Postal stakeholders. You can make changes that will address undue financial burdens, allow the Postal Service to manage 

its facilities in light of required capacities, and continue to provide 

service at competitive pricing that will retain people in the Postal 

System. 

I am here because we are a partner with the Postal Service and 

care deeply about its future. We value the people who work at the 

Postal Service, the people whose businesses depend on the mail, 

and the American public that is connected by it. Absent a longterm view, prices will continue to increase greater than inflation, 

more mail will be driven out of the system, and more jobs will be 

lost. The future of the Postal Service hangs in the balance. Thank 

you. 

Senator CARPER. Thank you for an excellent statement. Very nice 

to see you. Mr. Abbott, please proceed. 

12 

1The prepared statement of Mr. Abbott appears in the Appendix on page 89. 

TESTIMONY OF ALLEN ABBOTT,1 EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER, PAUL FREDRICK 

MENSTYLE, INC., AND CHAIRMAN, AMERICAN CATALOG 

MAILERS ASSOCIATION 

Mr. ABBOTT. Good afternoon. I want to thank the Subcommittee 

Chairmen, the Ranking Members, and the other distinguished Subcommittee Members for hearing my testimony today. My name is 

Allen Abbott and I am the Executive Vice President and Chief Operating Operator of Paul Fredrick MenStyle, a direct marketer of 

men’s apparel located in Fleetwood, PA. 

Senator CARPER. Where is Fleetwood? 

Mr. ABBOTT. Fleetwood is between Allentown and Reading. 

Senator CARPER. OK. Thanks. 

Mr. ABBOTT. Paul Fredrick originates about nine million pieces 

of mail each year and our Berks County employees are highly dependent on an efficient and affordable U.S. Postal Service. 

I also serve as the Chairman of the American Catalog Mailers 

Association, an advocacy group that was formed on behalf of the 

catalog industry after the punishing rate hikes that our businesses 

experienced as a result of the 2006 Postal Rate Case. 

Paul Fredrick operates no retail stores. We are 100 percent dependent on direct response marketing. Ten years ago, the vast majority of our marketing strategy was built around mailing catalogs. 

Since the increase that we experienced in 2007, however, while our 

sales have increased by 34 percent, our catalog circulation has 

dropped by 29 percent. So why is this? 

Why, in a situation where we know a customer achieved and 

gained through catalog prospecting is actually the best customer in 

the long term, have we cut our spending? Because catalog postage 

rates have increased 58 percent between 1997 and 2008, while the 

general rate of inflation was just 34 percent during that period. 

This has skewed the economics of mailing catalogs versus other 

marketing options, especially in the area of new customer acquisition. 

Paul Fredrick loses money when we acquire a new customer, assuming a fair return on investment downstream. When our postage 

rates went up 20 percent in 2007, with little prior notification, we 

were forced to reallocate much of our catalog prospecting budget to 

other channels. We now distribute only half the number of 

prospecting catalogs we distributed just 3 years ago. 

The 2007 postal rate increase and the recession of 2008–2009 

also required us to look carefully at mailings to our own customers. 

And now we are facing an exigent rate case that will further exacerbate the situation. Increasing catalog postage rates beyond the 

consumer price index (CPI) will further erode mail quantity in the 

years to come. This will put the jobs at Paul Fredrick in jeopardy, 

along with tens of thousands of other catalog-related jobs at other 

companies across the country. 

The GAO has stated that the current USPS model is not sustainable, and they are right. The current situation is not sustainable 

and everyone involved in the system needs to face this fact, doing 

what is necessary to change the model. As a business leader, trade 

13 

organization chair, and U.S. taxpayer, I am asking that the following steps be taken to address this dire situation. 

In the Postal reform legislation passed in 2006, Congress empowered the USPS to function more like a business. Please reinforce 

that mandate and encourage the USPS to aggressively move forward with both cost reduction and revenue enhancement activities. 

Also, please encourage the USPS to start pricing products and 

services to maximize the individual customer variable marketing 

contribution, something every successful business model does. 

Many of the costs in the USPS pricing models are sunk. They will 

remain no matter what mail volumes are generated. The agency 

must understand those pricing strategies that will generate incremental customer contribution and go after them. Meaningful reduction in catalog prospecting postage rates will generate a great deal 

of incremental mail from Paul Fredrick. 

Also, please aggressively challenge those who oppose the closing 

of non-productive Postal facilities or the amendment of archaic 

work rules that drive up costs. I am sympathetic that local changes 

can have a painful impact on those directly affected, but the efficiency it creates is good for the majority over the long term. If we 

don’t do this, costs will continue to grow and mail volumes will continue to shrink, ultimately costing more jobs in both the public and 

private sector. 

Also, please allow the USPS to shift to a 5-day-per-week delivery 

schedule. It is not optimal, but we can live with 5-day delivery if 

it generates the savings indicated by the Postmaster-General’s Department (PMG). 

Please adjust the inequities in the pension plan funding requirements for employees who have worked in both Civil Service and 

the Postal Service, ensuring a fair apportionment of costs between 

the USPS and the Federal Government, and also, please adjust the 

funding requirements for USPS retiree health care benefits to be 

aligned with actuarial need. The dramatic prefunding obligation, 

adding $5 to $6 billion in annual funding requirement, is a recipe 

for disaster for the long-term health of the USPS given where we 

are today. 

The Postal Service has historically contributed a great service to 

the citizens of our country at no cost to the U.S. taxpayer. This 

won’t last much longer if we do not all act to restore the fiscal 

health of this fine institution. I respectfully implore you to do so 

now. Thank you. 

Senator CARPER. Thank you very much for that testimony. 

Mr. ABBOTT. You are welcome. 

Senator CARPER. Before I turn to Mr. McFalls, Chairman Lynch 

tells me he thinks the House might start voting again around 3:30 

p.m. We have learned now the Senate is going to remain in what 

we call Morning Business until 4:30 p.m., which means we will 

have no recorded votes until at least that time. We have an opportunity maybe to actually complete this hearing without any interruptions, and we will just keep going while the House is in session. 

After Mr. Rendich has given his testimony, I am going to ask our 

Chairman from the House and our Ranking Member to go ahead 

and ask your questions before you have to go vote, and then we 

14 

1The prepared statement of Mr. McFalls appears in the Appendix on page 94. 

will ask some questions while you are away, and when you come 

back you will have your turn. 

Please proceed, Mr. McFalls. 

TESTIMONY OF KEITH MCFALLS,1 VICE PRESIDENT OF OPERATIONS, PRIMEMAIL AND TRIESSANT, PRIME THERAPEUTICS, ON BEHALF OF THE PHARMACEUTICAL CARE 

MANAGEMENT ASSOCIATION 

Mr. MCFALLS. Thank you, Chairman Lynch, Chairman Carper, 

Ranking Member Chaffetz, and Members of the Subcommittees. 

My name is Keith McFalls and I am a pharmacist and the Vice 

President of Mail and Specialty Pharmacy Operations for Prime 

Therapeutics. Prime is a pharmacy benefit management company 

collectively owned by 12 nonprofit Blue Cross-Blue Shield plans. 

We manage the prescription drug benefits for enrollees in Blue’s 

plans, employer groups, and union groups, covering approximately 

17 million people. 

While here representing Prime, I am also speaking on behalf of 

the Pharmaceutical Care Management Association (PCMA). PCMA 

is the national trade association for pharmacy benefit managers, 

which administers prescription drug plans for more than 210 million Americans. Pharmacy Benefit Managers (PBMs) such as Prime 

aggregate the purchasing clout of enrollees through their client 

health plans by negotiating price discounts from retail pharmacies, 

rebates from pharmaceutical manufacturers, and by running highly 

efficient mail service pharmacies. Last year, PBM mail service 

pharmacies collectively filled more than 238 million prescriptions 

nationwide, growing this year to over 250 million, nearly 90 percent of which were shipped via the U.S. Postal Service, which 

brings us here today. 

Mail service pharmacies are not only a growing and reliable customer to the U.S. Postal Service, but increasingly are an essential 

point of treatment access for patients suffering from chronic conditions and relying on maintenance medications. Mail service represents the fastest growing distribution channel for prescription 

drugs. We expect continued growth in the coming years as mail 

service provides a means for controlling costs and increasing savings. This will be particularly important as health care reform implementation increases access to the health system overall. 

A growing number of patients, including the elderly, disabled, 

and people living far from both Post Offices and pharmacies, prefer 

having regularly needed medications delivered to their home. In 

fact, 50 percent of the members serviced by Prime are rural patients. Prescriptions are filled and mailed to the customers, usually 

within a 3- to 5-day timeframe. Some mail service pharmacies offer 

delivery within 24 to 48 hours, depending on patient need and type 

of medication required. Mail service pharmacies also retain pharmacists on staff who are available to counsel patients and consult 

with physicians. 

Prime Therapeutics has significant concerns with the Postmaster 

General’s proposed elimination of a Saturday mail delivery. A reduction in service delivery days would mean a reduction in individVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
15 

1The prepared statement of Mr. Misener appears in the Appendix on page 97. 

uals’ ability to obtain their drugs easily and conveniently. Eliminating Saturday delivery would result in a prescription processing 

delay of at least one, but potentially multiple days in the case of 

Federal holidays. 

Moreover, it is my understanding that Postmaster General Potter 

has suggested that additional counter service delays could also be 

considered. The U.S. Postal Service proposes that Saturday counter 

service would allow people needing a critical package or piece of 

mail to come to the Post Office to retrieve it. We would counter 

that the very reason some people use mail delivery of drugs is because they are unable to travel to a drug store or the Post Office 

to get their medication. For others, having to go to the drug store 

simply discourages them from getting their prescriptions filled at 

all. 

About 25 percent of all prescriptions are never filled, in part 

because having to go to the drug store or the Post Office is an impediment for some people. Mail service pharmacies have helped improve drug adherence by delivering drugs to people’s doorsteps. Research shows that poor adherence adds approximately $290 billion 

in additional costs to our health system. Thus, our member companies would likely look for other ways to ensure timely deliveries. 

Indeed, PCMA has already received inquiries from organizations 

seeking to assure our member companies that they could fill in the 

delivery gap should mail delivery be reduced to 5 days. 

PBMs rely heavily on the U.S. Postal Service for our mail service 

pharmacies and we are a growing business partner of the Postal 

Service. Ensuring continued Saturday delivery is not only in our 

interest, but also of critical importance to the millions of Americans 

who rely on mail service pharmacy to obtain their prescription 

drugs. 

We look forward to working with this Committee to ensure the 

continued vitality of the U.S. Postal Service. We urge you to explore all possible options to expand the Postal Service’s ability to 

remain competitive in this marketplace, including pricing and product flexibility. 

Thank you for your time and I am happy to answer any questions that you may have. 

Senator CARPER. You bet. Thanks very much for sharing your 

thoughts with us today. 

And now we will turn to Mr. Misener. Welcome. 

TESTIMONY OF PAUL MISENER,1 VICE PRESIDENT OF GLOBAL 

PUBLIC POLICY, AMAZON.COM 

Mr. MISENER. Thank you very much, Mr. Chairman. Chairman 

Carper, Ranking Member McCain, Ranking Member Chaffetz and 

Chairman Lynch and Members of the Subcommittees, my name is 

Paul Misener and I am Amazon.com’s Vice President for Global 

Public Policy. On behalf of my company and our millions of American customers, thank you very much for inviting me to testify at 

this important hearing on the future of the U.S. Postal Service. 

Amazon.com Inc.’s subsidiaries fulfill customer orders from our 

retail business and increasingly through Fulfillment by Amazon 

16 

sales by third parties, including many of the nearly 2 million sellers who offer products on Amazon Web sites. Thus, Amazon’s perspective is from that of a customer-focused company that ships parcels, not other types of mail, and I hope that our views will be helpful to the Subcommittees. 

Amazon enjoys a strong and extensive relationship with the Postal Service. The USPS is an integral part of the service we provide 

our customers. Globally, we spent well over $1 billion last year on 

outbound shipping, an increase of over 20 percent since 2008. In 

dollars, we spend nine figures annually on USPS, with over 2 million shipments per week using the Postal Service. And on behalf 

of our customers, we are talking with the USPS about ways to increase the number of these shipments. 

We cooperate with the Service as efficiently as possible. For example, we worked closely with the USPS to begin using a postal 

consolidator to shift a large portion of our downstream injection 

shipments from bulk mail centers to further downstream to local 

Post Offices. For years, we have supported the Postal Service’s efforts to make itself more competitive, such as by introducing new 

products, including downstream injection, and entering negotiated 

service agreements. 

Our customers have come to appreciate and expect a Saturday 

delivery, and this is an instance where the USPS currently maintains a decided advantage over other carriers. And in some urban/ 

suburban areas, we have even begun to use USPS for Sunday delivery via Express Mail. 

Amazon was very interested to review the recent USPS report 

entitled, ‘‘Ensuring a Viable Postal Service for America,’’ which 

confirms that parcel delivery is a bright spot for the service. While 

First Class and standard mail volumes are decreasing, parcel volume is increasing. This makes perfect sense, for although there are 

online or virtual substitutes for letters, bills, and advertising that 

decrease use of the mail, online shopping actually increases the 

need for physical shipments. 

Oh behalf of our buyer and seller customers, the issue that I 

want to focus on today is the USPS proposal to cease Saturday delivery service, except for Express Mail. We believe this is a bad 

idea. Not only would it be bad for parcel shippers, who would face 

higher costs to reach their urban and suburban customers on Saturday, it would be even worse for rural consumers and for the 

USPS itself. 

As I mentioned before, Amazon’s customers have come to appreciate and expect Saturday delivery. While they may be willing to 

wait until Monday or Tuesday for a bill they don’t really want, an 

advertisement they didn’t ask for, or a magazine to which they subscribed long ago, they expect the items they purchased this week 

to be delivered as soon as possible. In addition to the United 

States, Amazon subsidiaries utilize Saturday delivery services in 

the United Kingdom, Germany, Japan, France, and China. 

Ceasing Saturday street delivery service would be much worse 

for our rural customers who simply would not be able to receive 

parcels on Saturday because there are no delivery alternatives to 

the USPS. Maintaining Saturday Express Mail delivery would not 

address this serious problem because Express Mail has an even 

17 

1The prepared statement of Mr. Rendich appears in the Appendix on page 101. 

less extensive rural coverage area than Saturday service from other 

carriers. 

Moving to 5-day delivery service would even be bad for the Postal 

Service, which would abandon its competitive advantage on Saturdays. As I mentioned before, we are looking for ways to increase 

our business with the USPS, but eliminating Saturday delivery 

would cause us to significantly decrease spending and package 

count. This is a key point. Elimination of Saturday street delivery 

will cause us to shift a significant fraction, approximately a sixth, 

of our current USPS business to other carriers. 

Unlike mailers that send other classes of mail, we have Saturday 

package delivery options for most of our urban and suburban customers who will not wait for Monday or Tuesday delivery if Saturday delivery is possible via other carriers. We likely would even 

shift some of the deliveries that otherwise would occur on Friday 

if we believe there is too much risk that delivery would miss Friday 

and then be held until Monday or Tuesday. That is, where we have 

a 2-day window in which our customer expects delivery, we may 

decide that some of the parcels that would be delivered by the 

USPS on Friday should now be shifted to other carriers to ensure 

Friday or Saturday delivery. 

So ceasing Saturday delivery would make the USPS less competitive, significantly reduce the parcel volume the Postal Service carries in urban-suburban areas, and worst of all, would deny consumers in rural areas a service they currently appreciate and expect. 

On behalf of Amazon’s customers, particularly those living in 

rural America, we hope the USPS will withdraw this proposal. If 

the 5-day delivery proposal is not withdrawn, however, we ask that 

Congress ensure that Saturday delivery be maintained. 

So thank you very much and I look forward to your questions. 

Senator CARPER. Well, you are right on the money. Way to go. 

Mr. Rendich, please proceed. 

TESTIMONY OF ANDREW RENDICH,1 CHIEF SERVICE AND DVD 

OPERATIONS OFFICER, NETFLIX, INC. 

Mr. RENDICH. Good afternoon. My name is Andrew Rendich. I 

am the Chief Service and DVD Operations Officer for Netflix. I am 

pleased to be here today and to discuss the issues related to the 

future of the Postal Service. I oversee all aspects of DVD operations, including shipping and receiving as well as our relationship 

with the Post Office. 

Netflix is an online movie subscription company. We deliver movies and TV episodes to more than 14 million subscribers in two 

ways. First, we stream directly over the Internet. And second, we 

ship DVDs through the U.S. Postal System. 

On average, we ship 2 million disks daily from our nationwide 

network of more than 50 distribution centers. These centers have 

been strategically located to optimize our fulfillment operations 

with that of the Postal Service, thus helping to provide 97 percent 

of our subscribers of DVD to getting their DVDs in one business 

day. 

18 

For 2010, we anticipate spending about $600 million in First 

Class postage, making us the largest growing First Class mailer in 

the United States. While Netflix delivers movies and TV episodes 

in two ways, my comments today will only be about the DVD side 

of our business. 

At the macro level, Netflix believes the Postal Service should 

have the ability to adjust and change technologies as customer demand shifts. The Postal Service is operating in a time of significant 

change and is facing many challenges. These challenges have been 

outlined by the Postal Service and confirmed by the GAO. We believe that multiple proposals put forward by the Postal Service in 

the Action Plan for the Future will help secure the vitality of the 

Post Office for many years to come and help assure that our Nation 

continues to enjoy a reliable, trusted, and affordable mail service. 

With my limited time today, I would like to focus on three of the 

Postal Service’s important proposals. First, we believe a well-functioning Postal Service positioned over the long haul to meet the 

changing customer demand is more important than maintaining 

the current delivery frequency. The Postal Service has proposed 

eliminating Saturday operations. While this change would affect 

our subscribers, we believe the overall impact would be fairly 

small. We support the proposal, but to be clear, Netflix does not 

favor ending Saturday delivery in a vacuum. Rather, it is a reasonable part of a comprehensive reform package that in totality will 

address the very difficult challenges facing the Postal Service in 

the future. 

Second, with respect to the Postal Service’s obligation to fund retiree health benefits, we are all concerned that additional rate increases might be used to cover this obligation and will unnecessarily impact businesses and consumers that use the Postal Service. Companies like Netflix would either have to bear the impact 

of these increases or pass that cost along to its customers. In either 

case, we believe that these additional costs will only further worsen 

the challenges faced by the Postal Service, making the products 

more expensive and further negatively impacting mail volumes. 

Third, the Postal Service has announced its intention to seek a 

rate increase due to exceptional and extraordinary circumstances. 

Netflix believes the economic turmoil of the past few years, coupled 

with rapidly changing technology issues, constitute exceptional or 

extraordinary circumstances. Nonetheless, we hope that Congress 

will provide relief to the Postal Service on many of the issues it is 

facing, thereby minimizing any necessity to raise rates. 

Finally, as noted in my written testimony, we also support the 

Postal Service’s other proposals as a comprehensive approach to 

deal with the challenges that they face. 

I would like to thank the Subcommittees for their time and the 

opportunity to be here today. 

Senator CARPER. Mr. Rendich, thanks very much. 

I am going to go ahead and start off with 5 minutes of questions 

and we will turn to Chairman Lynch and then to Congressman 

Chaffetz. 

The first question I would ask is for Mr. Abbott. You tell a distressing story in your testimony about how the value of the mail 

has eroded in recent years for you, for your firm, and for at least 

19 

some of your colleagues in the catalog industry. It sounds, though, 

like you would like to remain in the mail, working with the Postal 

Service, and maybe even expand your use of it. What are some of 

the things that the folks at the Postal Service can do in order to 

make that happen? 

Mr. ABBOTT. Certainly. I want to make clear that we are a big 

fan of the U.S. Postal Service for many reasons. I appreciate their 

cooperation over the last several years in my capacity with the 

American Catalog Mailers Association. And at the same time, a 

catalog customer acquired through a catalog mailing is our best 

customer downstream. We get a lot more value out of that customer than we do out of a customer acquired either online or 

through magazine advertising. 

But it comes down to a simple question of economics. There is 

a value of a catalog-acquired customer, which is higher than any 

other customer, but the investment to acquire that customer has 

just gotten higher and higher as the cost of postage has outraced 

inflation, certainly. And what I ask is that the Postal Service look 

at us as a customer and speak with us and sit down and ask the 

question, OK, is there a price at which we will mail so much more 

mail than we are currently mailing that you will get more marketing contribution from us as a customer? That is what we do 

when we are talking strategy within our company. So we want to 

have that dialog. 

Obviously, we are not asking for a reduction in rates just so that 

we can pocket the money. We are asking for a rate to be considered 

that would allow us to dramatically increase the amount of mail we 

send, which should be a win for everybody. 

Senator CARPER. Thank you. 

A question for the whole panel, if I could, and Mr. Rendich, if 

you will just start us off, please. One thing that hasn’t received a 

whole lot of attention since the Postal Service issued its plan is the 

need for the Postal management to seek out new sources of revenue. Let me just ask, what has been your assessment of the Postal 

Service’s recent efforts in this area and what else can they do? 

Mr. RENDICH. Well, I think in the Post Office’s case, seeking out 

new sources of revenue is obviously one of the key things that is 

going to help provide us with a stable, reliable Post Office. I know 

that many of the automated kiosks have been well received. They 

have been put in areas where consumers typically are, not unlike 

DVD kiosks, for example. They are out there and they are convenient and they get a lot of us. 

So I think the efforts that the Post Office have made so far are 

great. I think they need to continue to invest in this, and invest 

diligently. It shouldn’t just be a part-time thing. 

I wish I had the solution for, where do we find the next Netflix? 

Where is there another big revenue stream that is coming? Unfortunately, I don’t have that answer. 

Senator CARPER. All right, thanks. Mr. Misener. 

Mr. MISENER. Mr. Chairman, we have long advocated Postal 

Service flexibility to enter negotiated service agreements, and these 

would be one-off deals that they could do like any other business 

is able to do, and we would like to see expanded use of that. It 

seems to make a lot of sense for them to operate more like a busiVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
20 

ness and have that additional flexibility, which, for example, led to 

our cooperation to use a mail consolidator to move traffic further 

downstream. We have the volume to do that. Perhaps other mailers 

do, as well. 

Senator CARPER. OK, thanks. Mr. McFalls. 

Mr. MCFALLS. I am in agreement with my colleague here in that 

we are a new revenue source. We are a growing business that is 

starting to use the Postal Service more and more frequently. Ninety percent of everything we ship today goes through the Post Office. And our industry is continuing to grow at 4 to 5 percent every 

year as an industry. That is going to be new revenue for the Postal 

Service, and by impacting the number of days’ delivery, we can potentially impact the patients’ care. We need that additional service 

to be able to drive and grow this industry faster. 

Senator CARPER. Thanks very much. I guess by virtue of the 

baby boomers coming online for retirement and Medicare Part D. 

Mr. MCFALLS. It is a very big part of our growing business. 

Senator CARPER. It has got to be. OK, thanks. Mr. Abbott. 

Mr. ABBOTT. It was mentioned earlier that the Postal Service has 

more retail outlets than McDonald’s, Wal-Mart, a couple others 

combined. I would love to see them use some of that space to introduce consumers to some of their mail customers like Paul Fredrick. 

We are not a household name like some of the bigger catalogers, 

but we could work with them to generate some introductory offers 

or just get acquainted with Paul Fredrick and others like us. I 

think it would be a terrific partnership opportunity. 

Senator CARPER. OK. Thanks. Mr. Hall. 

Mr. HALL. I think that innovation is terribly critical for every 

business today and I think there are some things the Postal Service is doing that can be amplified. For instance, one of the things 

we are taking advantage of is the intelligent bar code, which is 

making it more convenient for consumers to send mail. We are putting our advertising behind it so that we can promote it with the 

consumer. And I think those kinds of things, enjoin business to 

help promote the use of the mail is very important right now. 

The summer sale that they had last year was very helpful in promoting the usage of mail and bringing people back into the mail 

stream. I think those kinds of efforts need to be sustained, and I 

think there was an opportunity this year to have gone further with 

that kind of promotional approach to get people back into the mail 

stream. 

I think, apart from price, which we have all talked about, I think 

one of the things that will limit creativity will be adding slowness 

to the mail stream. 

Senator CARPER. Say that again. Adding what? 

Mr. HALL. Adding greater delay to the mail stream. Consumers 

today are looking for more and more immediacy in their lives, and 

I think immediacy has to be part of the total product bundle. I 

think the more time we add to the mail stream, the more of a perception we create around ‘‘snail mail’’ and the less likely we will 

be able to find carrying on opportunities that actually increase the 

relevancy and usage of the mail. So I think speed and price are 

very critical to help drive innovation. 

Senator CARPER. All right. Thanks. Mr. Gooden. 

21 

Mr. GOODEN. Yes. The American Lung Association and all other 

nonprofit organizations are very heavily dependent upon a very fiscally sound U.S. Postal Service, and this is an ideal opportunity for 

the U.S. Postal Service to be more innovative, as Mr. Hall has said, 

in order to find better ways to reach the American people that we 

serve through the American Lung Association. 

Senator CARPER. OK. Thanks. I am going to stop right there. I 

have gone about 6 minutes and 45 seconds, and we will just ask 

our other Members to keep their comments or questions within 7 

minutes. I may slip out of the room for a moment, Mr. Chairman. 

If I do, you are in charge. Take it away. 

Mr. LYNCH. Thank you, sir. 

I was sort of keeping score here on the 5-day delivery question 

and I noticed that Mr. Gooden and Mr. Abbott, you came down in 

favor of the elimination of 6-day delivery, and Mr. Hall and Mr. 

Misener—and all of the testimony is good. I am not critical of your 

approach to this, but I thought it did come out in a counterintuitive 

way. Mr. Misener, I thought your remarks were very thoughtful on 

that, and I tend to agree with you. Mr. Rendich, you sort of hedged, 

reluctantly conceding that if something has to happen, you 

wouldn’t want to just see Saturday go away, but some type of management of that transition. 

But I was surprised that, Mr. Gooden, a nonprofit mailer that 

gets a discount from the U.S. Postal Service, and Mr. Abbott, the 

catalogs are probably one of the more costly items actually to mail 

and they get a substantial discount, you two folks are getting a discount from the Post Office and you want to see Saturday go away. 

And I am just curious, are UPS and FedEx giving you a discount 

for nonprofit? 

Mr. GOODEN. To my knowledge, the other services do not provide 

discounts to nonprofit organizations. If there is a discount, it may 

be based on bulk volume, which goes to all consumers, not necessarily nonprofits only. 

Mr. LYNCH. Mr. Abbott, are you getting a better rate from FedEx 

and UPS on catalogs? 

Mr. ABBOTT. We don’t distribute catalogs through FedEx and 

UPS. 

Mr. LYNCH. Why is that? Too expensive? 

Mr. ABBOTT. They don’t offer that service. I mean, you could use 

their services. It would cost a lot more than it costs in the Postal 

Service. 

Mr. LYNCH. Yes. 

Mr. ABBOTT. But specifically to Saturday delivery, it is not optimal in my mind that it be eliminated. I think I am in agreement 

with Mr. Rendich that as part of a comprehensive cost reduction 

program that Postmaster General Potter has put forward, we can 

live with it. 

Mr. LYNCH. Yes. 

Mr. ABBOTT. Again, it is not optimal, but we are willing to make 

that concession for the overall good of the Postal Service’s health. 

Mr. LYNCH. I am glad you qualified and refined your statement. 

Mr. Misener, I thought you were spot on in terms of, look, if we 

stop Saturday delivery, and if I am a customer and I know the Post 

Office is going to be closed on Saturday and Sunday and maybe it 

22 

is a holiday on Monday, I don’t go to the Post Office. Just to make 

sure my stuff gets delivered, I pull my business over to FedEx or 

UPS just to be sure that it gets delivered within the next 3 days. 

And I think that is what Mr. McFalls was raising in his concern 

with folks’ prescription drugs. 

Mr. Misener said if you close on Saturday, one-sixth of my business goes from the Post Office to FedEx, UPS, or to somebody else. 

And if that happens across all industries and across all customers, 

and then on top of that, the halo effect of the Post Office being 

closed for Saturday and Sunday, I think you lose even more business. And so it is sort of like—there is water in the boat and it is 

sinking, so let us drill holes in the bottom of the boat, and then 

you just sink even faster. So I don’t buy into the analysis. 

I had a chance at a previous hearing to talk to Mr. Potter, who 

is a good man and I think he is really trying to find some ways 

to find some solutions and we are lucky to have him. But he did 

say that if we went to 5-day delivery now, he said he wouldn’t lay 

off any career employees. He would have to cut all part-timers, but 

that he wouldn’t have to lay off right now. I am just very concerned 

about the downward spiral that this—we have a lot of part-time 

workers, so unemployment is going to go up if we go to 5-day delivery because we will lose all those part-time employees that we have 

out there. I understand the need for efficiency, but I am very concerned about the long-term viability. 

And also, think about this. If you stop Saturday delivery, FedEx 

and UPS will do the most profitable routes. They will pick that up. 

That is how capitalism is. But they will not adopt the standard of 

universal service. So if we go to 5-day delivery, that is the end of 

universal service because these locations that we are adding every 

year, and I think about my rural colleagues, how they are served, 

they will suffer the greatest, I think, those folks that are out in the 

boonies and don’t have immediate access. So I worry about that aspect of it, as well. 

Mr. Abbott, could you talk about those concerns? 

Mr. GOODEN. With the American Lung Association, we would 

have to make some modifications in our delivery. We would have 

to change our drop dates to ensure that we would fall within that 

window of opportunity for mail delivery so that it would not fall on 

a traditional Saturday or a holiday. We take those things into consideration now, and it would require some more work on our end, 

but we would do that if it were necessary to save the Postal Service. 

Mr. LYNCH. OK. Mr. Abbott, anything to add? 

Mr. ABBOTT. I think we are in a similar situation. We would 

have to adjust delivery schedules of catalogs, but again, it is just 

something we are willing to do if it helps the overall situation. 

Mr. LYNCH. OK. I have a minute left, so does anybody else have 

anything they would like to add? All right. Yes, Mr. Hall? 

Mr. HALL. I would be willing to offer a contrary opinion from my 

colleagues on either side of me. 

Mr. LYNCH. God bless you. [Laughter.] 

Mr. HALL. I think, although we view it very differently, I think 

everybody who voiced support for the idea of 5-day have couched 

that very carefully around a commensurate reduction in cost. The 

23 

concern I have with that approach is I think it is a slippery slope. 

We would be giving up 16 percent of our total service commitment 

for what is purported to be a 4 percent decrease in cost. I think 

that when we really tie into those numbers, we will find that the 

cost is probably not that large, and I would suggest that what we 

will see in terms of trade-off in volume, people leaving the mail 

stream or people moving their choices to alternatives would very 

quickly start to erode whatever savings we were able to garner 

from a 5-day schedule. 

Mr. LYNCH. Thank you. Any closing comments? My time has expired, but I am just looking at technology down the road. I know 

that in a couple of Scandinavian countries, they have this on the 

Internet now so that you can see your mail on the Internet and you 

can click whether you want that mail delivered or not, and I just 

think that technology is coming down the road and that technology 

will even further reduce the volume of mail that is out there. It will 

make us more efficient, no question about it, but it will reduce the 

volume, too, so I am fearful of that. 

But I really appreciate all your testimony, regardless of whether 

necessarily I agreed with it all, but I think it is very thoughtful 

and it certainly helps us in making our decision. I yield back. 

Senator CARPER. Mr. Chaffetz, before you start, we have a group 

of exemplary educators who are here today from my State and they 

are waiting to meet with me at 4 p.m. in the Visitors Center. I am 

going to slip out for a little bit to go spend some time with them 

and then come back and forth. It sounds like the House might reconvene and may start voting around 4:15 p.m. 

Maybe we can get some extra time for our House colleagues so 

that they can get their questions in, and the Senate goes into session, I think, maybe a little bit later than that. 

Mr. Chaffetz, you are on, and then after that, I think according 

to our list here, Ms. Norton and Senator Coburn, Representative 

Connolly, Senator McCaskill, Senator Burris, and we have maybe 

one more down there. I don’t know. OK. Thank you. 

Mr. CHAFFETZ. Thank you. I appreciate it. The time is short, so 

I want to just try to touch on a few things if I could. 

I want to talk about price elasticity, because one of the things 

that you hear is we should have this postal rate increase in order 

to drive revenue. But when you raise prices, I have a hard time believing that the volume is going to start going in the right direction. Can you tell me what kind of effect that is going to have on 

something like Hallmark, and then perhaps if we could also talk 

about Netflix and what a rate increase does to your business and 

what you anticipate would happen in volume? 

Mr. HALL. Yes, I would be happy to address that, and I think 

that the comments would be not only in terms of greeting card volume, but I think would affect all classes of mail. 

I think there was a time when the Postal System enjoyed a monopoly, where there were price increases, they were readily accepted by the consumer and volumes were increasing. And I think we 

lived in that world for many years, until very recently. But I think 

that whole world has dramatically changed and why I think this 

is a tipping point. 

24 

The consumer today has many alternatives. They can move their 

mail many different directions, whether it is greeting cards or 

whether it is magazines or whether it is any of the types of mail 

that we are talking about. People can use different points of the 

mail stream. 

The economy, I think, has changed that pricing elasticity dramatically, and I think we can look at it in terms of greeting card 

price elasticities, but I think we see it in virtually every consumer 

good today. There is the consumer speaking to that with their actions and choices, and we see it reflected in the CPI. We see it reflected by wholesalers and retailers having to constantly reduce 

their prices to engage the consumer again and—— 

Mr. CHAFFETZ. Thank you. The time is so short. Mr. Rendich. 

Mr. RENDICH. In general, obviously, increasing postal rates is not 

going to be good for our business. Netflix does understand that periodically the Post Office does need to make a slight adjustment to 

the postal rates to cover its cost, and that is understandable. But 

if we are talking about big postal rates, in other words, trying to 

deal with the retiree issue or some of the other major issues that 

are going on with the Post Office, that would be prohibitive. 

Netflix is growing its DVD shipment by 18 percent year over 

year. You hear a lot about streaming in the press about Netflix, but 

let me tell you, DVD is a big growth business for us. We are going 

to be shipping DVDs for 20 more years. DVDs has a whole new life 

in terms of BlueRay and HD–DVD. Anyone that has seen that 

knows that is a wonderful experience and it is going to give DVD 

a lot of legs. We have not yet peaked on our DVD shipments. 

So what I am getting to is, as I said before, we need a reliable, 

trustworthy, affordable U.S. Postal Service. We all benefit from it, 

whether it is the folks at this table here or the American consumer 

in general. And I think slight price increments in terms of having 

to deal with what it actually costs to get mail delivered can be appropriate. But big rate increases will absolutely squash business. 

It will absolutely slow growth for a company like Netflix. 

Mr. CHAFFETZ. Thank you. And for those of you that didn’t have 

a chance to answer some of these questions, if you care to comment 

after the fact, to insert something in the record, we would certainly 

appreciate it. I know we are kind of hand picking and we have to 

go very briefly. If you want to expand on these, I would invite you 

to please do so. 

Maybe, Mr. Abbott and Mr. McFalls and Mr. Misener, if you 

could very quickly, it was brought up earlier, under the model of 

a FedEx or one of the other models out there, there is a surcharge 

for Saturday delivery. Is that something you are open to? Would 

you be open to paying a premium for a Saturday type of delivery? 

Mr. Abbott. 

Mr. ABBOTT. I would offer that option to our customers, if they 

are willing to pay for that delivery, which is the way we work it 

now with UPS and FedEx on our parcels. You know, we do have 

an option for Saturday delivery. It is an up-charge on the shipping 

charge to the customer. It is not something that we would want to 

absorb as part of our operating expenses. 

Mr. CHAFFETZ. Mr. McFalls. 

25 

Mr. MCFALLS. We absolutely would pay that surcharge to ensure 

that the patient got their medications in a timely manner and that 

we didn’t impact any patient care. It is just a very prudent approach within our industry to ensure that. We currently pay those 

surcharges now for all those expedited packages that we need to 

get there on a Saturday or at a member’s request or because of the 

medication type that we have. 

Mr. MISENER. Mr. Chaffetz, I think we would have to recognize, 

dependent on how much the surcharge would be, whether we would 

stay with the Postal Service or go elsewhere. But certainly maintaining Saturday delivery is so critical, especially, as I say, in rural 

areas of the country where there aren’t those competitive alternatives. So perhaps in those areas, it makes sense to have a surcharge for the Postal Service, where you don’t have the opportunity 

to go to another carrier. 

Mr. CHAFFETZ. OK. Mr. Gooden, you mentioned the need and 

concern for a viable Postal Service. The one area in which the 

American taxpayers have a supplemental appropriation is with the 

nonprofit mailers. Certainly, the American Lung Association is the 

most worthy of causes that we could probably come up with as an 

example of nonprofit mailers. There are some others that, well, 

may be pushing the limits a little bit. How would you react—how 

do you think the industry, the nonprofit mailers would react to a 

rate increase to cover the very basic costs, because right now, it 

looks like, financially, they are upside down and the American people are supplementing the expenses of nonprofit mailers. How does 

that strike you? 

Mr. GOODEN. I wouldn’t be able to speak for all nonprofits—— 

Mr. CHAFFETZ. Sure. I understand. 

Mr. GOODEN [continuing]. Especially those that fall into that dubious category that you mentioned, but for the American Lung Association, we depend on the preferred rates that Congress established for us 50 years ago, and has reaffirmed over those past 50 

years, that nonprofits such as the American Lung Association serve 

a critical role in American society. We provide education, health 

care, information, and research, and we do this in part through our 

mailings. So it would directly impact our ability to serve those people in the United States who suffer from asthma and other lung 

diseases. So it is very critical for us to be able to maintain this preferred status. 

Mr. CHAFFETZ. Thank you. And Mr. Rendich, I have just 30 seconds here. I have a hard time understanding or believing that 

somebody who goes online on a Thursday night and places an order 

and wants to get their DVDs, or pops it back in the mail so it 

starts to go back through the process, if that process starts on a 

Thursday and gets back on a Friday, that the next delivery possibility is on a Tuesday. 

If you look at, for instance, a 5-day delivery, where we are eliminating a Saturday delivery, and Monday is a holiday, you have 

quite a gap here between that Friday and the Tuesday. I still am 

a little mystified, a little surprised in your testimony that, oh, yes, 

we will be OK with that. 

Mr. RENDICH. OK. Well, to clear up the misunderstanding, not 

all days are actually consistent at Netflix. In fact, Tuesday happens 

26 

to be twice as many shipments and deliveries as any other day of 

the week. As it turns out, you go further in the week, a smaller 

number of DVDs come in. 

And what ends up happening is most of our customers watch 

their DVDs over the weekend. They put them in the mail on Monday. We receive them on Tuesday, send them another shipment. 

They get it on Wednesday and they are set for the weekend. 

I am sure there are some customers that might fall into your 

Tuesday example, but the fact of the matter is, it is actually a 

small number of customers in our customer base. 

Mr. CHAFFETZ. Thank you, Mr. Chairman. I yield back. 

Mr. LYNCH [presiding]. I thank the gentleman. 

The Chairman recognizes the gentleman from Virginia, Mr. 

Connolly, for 5 minutes. 

Mr. CONNOLLY. I thank the Chairman and thank the panel for 

being here. 

Let me first begin, Mr. Chairman—I am sorry Senator Carper 

just left the room, but we have heard this figure of $238 billion 

over 10 years bandied about. I will recall for my colleagues on the 

House side that at our Subcommittee hearing which you chaired, 

Mr. Chairman, in direct questioning—and I am passing this out 

now so all of my colleagues on the Senate and House side have a 

copy—in direct questioning to the Postmaster General about the 

validity of this $238 billion figure, he admitted, ‘‘it was a theoretical number.’’ And when pressed, he admitted that he already 

has the authority and the plans to cut half of that number right 

now. 

So we are not talking about $238 billion over 10 years. We are 

talking about something quite less, and that assumed that the Congress would do absolutely nothing for the next 10 years. It assumed 

that economic performance would have no appreciable effect on performance, even though history tells us otherwise. We have actually 

had the debate about going from 6 to 5 days many times in the history of the Postal Service, always to be proved to be premature. 

Cassandra-like statements are followed by record profits. So a little 

word of caution. 

But I just want my colleagues to have a copy of this exchange. 

It is a matter of public record that the $238 billion number is a 

scare tactic to get us to make some decisions and maybe in some 

ways to substitute for a viable business model, which is really what 

we need to be talking about. What is the business model of the future for the Postal Service? And simply coming up with a list of 

cuts that may very well, as Mr. Hall was indicating, put us in a 

death spiral with the best of intentions. 

But at some point, it is self-defeating for a business to cut core 

services in that business and then to expect to actually stay viable 

and make a profit. That is an odd way to run a business, and if 

we want to actually look at the model for how that is working, the 

newspaper business is a great example. That is exactly what they 

have done, and what has happened is they have fewer and fewer 

readers, fewer and fewer subscribers, and fewer and fewer advertisers because the product is no longer viable, and we have to be 

very careful about that with the Postal Service. 

27 

Mr. Gooden and Mr. Abbott, in response to the questioning of 

Chairman Lynch, you said that, well, if it was required to save the 

Postal Service or to make sure it was viable, you could live with 

going from 6 to 5 days a week. But if I understood your earlier testimony, what you also said was we are willing to sacrifice that for 

the public so long as our discounts aren’t touched. Isn’t that really 

true? 

Mr. GOODEN. I don’t know if it is an either/or. 

Mr. CONNOLLY. So you would be willing to sacrifice your current 

discount rate if that is what it took to save the Postal Service? 

Mr. GOODEN. I would not be able to speak on that right now. 

Mr. CONNOLLY. No, I didn’t think so. But you are able to speak 

about going from 6 to 5 days? 

Mr. GOODEN. That, I am. 

Mr. CONNOLLY. Yes. Well, that affects the whole public, not just 

you, and they might have something to say about that. 

Mr. McFalls, I am a little concerned about the issue of prescriptions. There are prescriptions and there are prescriptions. There 

are some pills that maybe it wouldn’t matter whether there was a 

2- or 3-day hiatus, as Mr. Chaffetz suggested, depending on the 

weekend. But there are other drugs that need to be delivered fairly 

fresh. What are some of the consequences, potentially, in terms of 

medication on patients if we go to 5-day delivery? 

Mr. MCFALLS. I think you will impact patient therapy, and there 

are some critical diseases that are affected. Diabetes is the first one 

that comes to mind. You can’t go for a very long period of time 

without your diabetic medication, whether that be insulin or an 

oral medication. It is going to put you into some type of a medical 

crisis which could then end up in the emergency room or physicians or hospitalizations. So it is actually going to drive up health 

care costs. 

That is one of the ways that we see this particular problem, is 

it is not really a budgetary issue, it is a health care issue from our 

side. Hypertension is the same way. I take high blood pressure 

medicine, as many Americans do, one day here or there, I don’t 

worry about it too much. But if I know I am going to have to go 

3 or 4 days without medication, that starts to concern me. Is it 

going to throw me into a crisis that ends up into the emergency 

room? Probably not, but is it going to create anxiety and change 

me a little bit? Absolutely, and I am going to make sure that I 

don’t run out of that and have to figure out how to hoard, which 

then creates a whole other issue of medication use and waste. 

Mr. CONNOLLY. And, Mr. McFalls, if I start to get worried about 

the reliability of the mail service for my medication, are there other 

alternatives available to me in terms of getting my medication? 

Mr. MCFALLS. There absolutely are. We are going to go to other 

alternative delivery systems, whether that be a FedEx, a UPS, or 

some other business that is going to fill into that niche, whether 

it be a consolidator, and injecting further down into the Post Office, 

but being able to expedite through. 

We also are going to come back and look at what it takes us 

within our own operations to improve or to shorten that length of 

time. Right now, we talk about that it takes 3 to 5 days to deliver 

a prescription. Well, out of that 3 to 5 days, typically 1, 11⁄2 days 

28 

of it is only spent in our facility. The rest of it is delivery time, incoming and outgoing through the Post Office. So we would increase 

our operating capabilities, even shorten that more, which then 

again is going to drive different economic impacts. 

Mr. CONNOLLY. Mr. Misener has pointed out that in his business, 

in his line of business, it could affect maybe more rural areas especially in terms of delivery of goods. Mr. Hall, you were in sort of 

the midst of a pretty thoughtful statement when your time ran out, 

but I wonder if you want to continue that statement. 

But, obviously, greeting cards, if we go, as Mr. Chaffetz suggested, with a whole 3-day period of no mail delivery because Monday is a holiday, and that holiday is a greeting card holiday, you 

are going to have to look at some alternatives to the Postal Service. 

Mr. HALL. There is no question that the consumer is looking for 

more and more immediacy. We see it with every one of our seasons, 

that the purchase of greeting cards gets later and later in the season. That happened for Father’s Day. It happened for Mother’s 

Day. It happened last Mother’s Day, last Father’s Day, last holiday. 

People are waiting longer because they are used to greater immediacy. 

The more we add to the time dimension, the less the Postal Service will be a viable opportunity for people to connect with others, 

and I think that will be true in many other industries beyond 

greeting cards. 

Mr. CONNOLLY. And again, I have alternatives. 

Mr. HALL. Yes. 

Mr. CONNOLLY. In the old days, I didn’t have alternatives. Now, 

I have alternatives. 

Mr. HALL. Yes. 

Mr. CONNOLLY. Mr. Chairman, my time is running out. I just 

want to quote H.L. Mencken, who once said that ‘‘for every human 

problem, there is a solution that is simple, neat, and wrong.’’ Going 

from 6 to 5 days is one of those solutions. I yield back. 

Mr. LYNCH. Thank you, Mr. Mencken. 

The Chairman recognizes the distinguished gentleman from 

Oklahoma, Senator Coburn, for 7 minutes. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Thank you, Mr. Chairman. 

All of you, with the exception of Mr. Gooden, run businesses or 

are involved with businesses. How many of you all would negotiate 

a labor contract not considering the financial state of your business? Anybody? And yet we do that every year with the Postal 

Service when we negotiate contracts, that we are forbidden to consider the financial condition of the Postal Service. How many of you 

all think it is a wise idea? How many of you think it is unwise? 

[Show of hands.] 

Senator COBURN. Yes. Nobody would do that. In the Postal Reform bill that mandate was removed, that we would start considering the financial condition of the Post Office in negotiating labor 

contracts. That is idiocy at its best. 

Mr. McFalls, do you have data that shows the length of overlap 

on prescriptions that you repeatedly send to your customers? In 

29 

other words, how many of them are out of medicine at the time the 

medicine arrives? 

Mr. MCFALLS. We can provide that data. I do not have it with 

me. One of the things that we have built into place, though, is that 

there is a window of opportunity that we allow a refill to occur so 

that we have adequate time to get that prescription to a person before they run out. 

Senator COBURN. Right. So Saturday delivery really wouldn’t 

make any difference on that unless it is insulin or some other medicine that is an injectable, right? 

Mr. MCFALLS. I disagree with that, because I do think it would, 

because it comes back to human behavior, and right now, we have 

challenges. People don’t use that window to its full effect. 

Senator COBURN. Well, they are not using it now. Why would it 

be any different if we had 5- or 6-day delivery. I am not advocating 

either way but you all have to have data that shows that. 

Mr. MCFALLS. We do have the data and we can provide that. 

Senator COBURN. You are doing these critical medicines not 

through the Postal Service anyway. You are doing a lot of the Saturday stuff through other shipping mechanisms, as well, are you 

not? 

Mr. MCFALLS. No, sir. Ninety percent of everything we ship right 

now goes through USPS. 

Senator COBURN. OK. What is the other 10 percent? 

Mr. MCFALLS. The other 10 percent is products that are typically 

temperature sensitive and need to have some high handling. 

Senator COBURN. Right. 

Mr. MCFALLS. Those are going overnight, next day. It may be 

Saturday—— 

Senator COBURN. So you are not shipping insulin through the 

mail. You are doing overnight—— 

Mr. MCFALLS. We are doing that under an overnight—— 

Senator COBURN. That is right, and so critical drugs like insulin, 

which is one of the most critical, you are already handling a different way. 

Mr. MCFALLS. We are. 

Senator COBURN. As a physician, there aren’t many other drugs 

other than injectables that have to maintain a temperature range 

that fall into that category. 

Mr. MCFALLS. That is correct. 

Senator COBURN. That is correct. 

You have all premised an opinion. I would like for you to restate 

your opinions, if you would, on what you think the Postal Service 

should do in terms of maintaining, or eliminating some of the cost 

factors that you know are there that could be changed. Do you have 

any ideas to offer this bicameral panel that we could give the Postal Service? We have heard several of you mention the fact that 

closing things that are not efficient, yet we can’t close them because a politician gets in front of that. Any suggestions? Mr. Hall. 

Mr. HALL. The GAO has estimated that we are 50 percent over 

capacity in the system. The Inspector General has noted in a recent 

report that since 2005, we have only reduced the costs in our bulk 

mailing centers by 2 percent and our processing and distribution 

centers by 1 percent. I think bringing capacities in line is someVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
30 

thing that any business has to do to be able to be vital, and as Mr. 

Abbott mentioned, a lot of costs are fixed. 

Senator COBURN. Yes. You would agree that you have probably 

had more productivity increase in your organization during that period of time than what the Postal Service has had? 

Mr. HALL. Well, I think every business has to drive more, and 

to be viable, you have to drive at higher rates than this. 

Senator COBURN. Would anybody disagree with the fact that they 

ought to fix those things before they ever consider a rate increase? 

Does anybody disagree with that? So that is true. 

Mr. Rendich, I seem to recall a statement by your company talking about this fast conversion from mailing to digital. Am I in error 

on that, or did I hear that in the last month as a press release from 

your company, that the expected growth on digital transmission of 

your service was going phenomenally, and they made some comment about how the postal side of that would be declining? 

Mr. RENDICH. I believe—— 

Senator COBURN. Did I make that up? Did I dream that, or is 

that—— 

Mr. RENDICH. It is true that our digital delivery is growing quite 

nicely. However, as I stated here and we have stated publicly other 

times, our DVD business—in other words, the number of shipments, the number of times we are making First Class mailings 

each and every day—is growing by 18 percent year over year. Most 

businesses would love to have that type of growth. And so for us, 

the U.S. Post Office is a long-term partner. 

We have been on the record of saying we will be shipping DVDs 

for the next 20 years. We have not yet hit the peak for DVD’s. With 

a business that is growing like that and has such other alternatives, like the high-definition BlueRay, we believe DVD has a lot 

of legs to it. 

The reason that I am here is because the Post Office is a longterm partner for us. It is very serious, and we want to make sure 

that we have a sound, resilient, affordable U.S. Postal Service to 

best serve our business as well as the American consumer. 

Senator COBURN. I don’t think I have any further questions, Mr. 

Chairman. Thank you. 

Mr. LYNCH. I thank the gentleman. 

The Chairman recognizes the gentleman from Missouri, Mr. 

Clay, for 7 minutes. 

Mr. CLAY. Thank you, Mr. Chairman. 

Let me start with Mr. Hall. Mr. Hall, what motivated Hallmark 

to start a product initiative utilizing the Postal Service’s intelligent 

mail bar code technology? 

Mr. HALL. I thank you. The technology was being developed by 

the USPS and we were very interested in it. We partnered with 

them. They developed this new technology and we saw that it could 

be applied and would address the convenience that is important to 

consumers, and we thought that by helping to market it and bring 

it to life in a product, it would utilize the technology and help introduce it to people. 

Mr. CLAY. And how successful has this initiative been? 

Mr. HALL. The working relationship with the USPS has been 

very good on this, and we have been very appreciative of the focus 

31 

and attention they put around innovation. We will be launching it 

the first of next year. 

Mr. CLAY. And was it difficult to undertake? Did you have to 

change out personnel or hire new personnel or make technological 

changes? 

Mr. HALL. I don’t know how much technological change was 

needed within the Postal System, but I think from the other standpoint, it is purely about product and innovation and promotion. So 

it has been all additive and good for everybody. 

Mr. CLAY. And do you think other mailers can work with the 

Postal Service to create innovative solutions to help alleviate future 

postal issues? 

Mr. HALL. I think that is a really good point, because I think we 

all have to look for innovative ways to get people to use the mail 

more, and we all have a vested interested in helping to drive more 

to the mail stream. 

Mr. CLAY. Thank you for your response. 

Mr. Gooden, in your role as a member of the Alliance of Nonprofit Mailers, do you believe that a rise in postal costs will disproportionately affect nonprofits? 

Mr. GOODEN. Yes, I do. We depend greatly upon return mail to 

be sent to the national office and to other offices around the country, and an increase in postage would also take away the money 

that they would be donating to the American Lung Association and 

other nonprofits for us to do our important work. 

Mr. CLAY. Are there any other proposed changes that, in your 

opinion, would disproportionately affect nonprofit mailers? 

Mr. GOODEN. I wouldn’t be able to answer that off the top of my 

head, no. 

Mr. CLAY. Can you explain how the Alliance of Nonprofit Mailers 

came to support the elimination of 6-day service? 

Mr. GOODEN. Those details, I would be glad to submit for the 

record, to be put into the record. 

Mr. CLAY. To be put—— 

Mr. GOODEN. Put into the record, yes. I don’t have that information on hand. 

Mr. CLAY. So you took a vote, or did your Association take a vote 

on it, discuss it? 

Mr. GOODEN. The details on how we came to this conclusion? 

Mr. CLAY. Yes. 

Mr. GOODEN. That, I am not sure of. 

Mr. CLAY. You don’t want to discuss it in open hearing? 

Mr. GOODEN. I will be glad to get you the information. 

Mr. CLAY. What does that mean? 

Mr. GOODEN. I don’t have the information with me. 

Mr. CLAY. OK. So you were—— 

Mr. GOODEN. I would have to confer with those others who put 

together this package and be able to give the information necessary. 

Mr. CLAY. I see. 

And Mr. Misener, do you have any suggestion of how your Association could work with the Postal Service to come up with strategies and utilize the Service? 

32 

Mr. MISENER. Thank you, Mr. Clay. As I mentioned before, the 

delivery of parcels sent by companies like Amazon.com to our customers is growing at a terrific rate and USPS is benefiting from 

this. Our global shipping expenditures are growing at the pace of 

about 20 percent a year. And so this is a bright spot for the Service. 

My points simply were that if the Postal Service were to drop 

Saturday delivery, there would be a disproportionate impact on 

rural communities for which there is no competitive alternative, 

and in the places like urban/suburban areas where there is a competitive alternative, we would simply shift carriers, taking business 

away from the USPS and giving it to the alternative carriers. 

Mr. CLAY. Yes, but also, I have witnessed that on Sundays and 

some holidays, the Postal Service making deliveries. I mean, could 

you still utilize those services with the USPS? 

Mr. MISENER. Yes, sir. In fact, we do use Express Mail in some 

limited markets for delivery on Sunday, and that certainly is an alternative on Saturday, except that the geographic coverage of Express Mail is even smaller than that of other carriers. And so rural 

areas still would have no alternative on Saturday. 

Mr. CLAY. I see. OK. So it is about populations and sparsity. 

Mr. Chairman, those are the questions I have and I yield back. 

Mr. LYNCH. I thank the gentleman. 

The Chairman recognizes the gentlelady from Missouri, Senator 

McCaskill, for 7 minutes. 

Senator MCCASKILL. Thank you. Let me start, Mr. Hall, I assume that you have had an opportunity to look at the recent GAO 

report about the efforts on excess capacity, and I know that the 

previous report that you referenced in your testimony was that the 

capacity was at 50 percent. That certainly catches my eye as an 

auditor. It certainly catches my eye as someone who realizes that 

we have the U.S. Postal Service in direct head-to-head competition 

with businesses that have much more flexibility and many times 

much more nimble about their ability to adapt to the marketplace. 

What is your reaction to what was deemed satisfactory progress by 

the GAO in terms of the excess capacity issue? 

Mr. HALL. Yes. I think you are referring to the June 16 report, 

which indicated that—and acknowledged the fact that the USPS 

has made progress and reduced costs by about $140 million. And 

while that is progress and a step in the right direction, it is not 

a big enough step to have a meaningful difference. And I think to 

look over the timeframe and to see that we have had such little impact at reducing those capacities and introducing flexibility, that 

the mountain has only gotten bigger. And I think as Representative Chaffetz said in his opening remarks, the mail volume isn’t expected to come bounding back, and I think some decline is something that we have to continue to envision. So those capacities, if 

not addressed, will only become more burdensome. 

Senator MCCASKILL. Now, it seems to me that as we look at the 

labor issues and if we look at the 6-day delivery issues and we look 

at the cost of mailing things issue and then we look at the excess 

capacity, it seems to me the excess capacity is the least painful. I 

certainly agree with the points you made in your testimony. 

33 

To what extent have Hallmark’s customers, and to what extent 

have Americans gravitated toward the Internet when it comes to 

personal greetings? I hate to say this to my friends who have sent 

them to me—I get emailed Christmas cards, and my emailed birthday wishes, and emailed ‘‘hope you are having a nice day,’’ and, I 

don’t know, they feel spammy to me compared to opening an envelope, seeing the signature or reading the personal note. Now, I 

know it sounds like I am making a commercial for you, but I am 

curious. Am I the only one? I mean, is this happening? Are Americans gravitating towards the Internet for personal greetings? 

Mr. HALL. Well, I am really glad to hear you feel that way. A 

lot of people feel that way. The e-cards have been around almost 

15 years. We do offer e-cards. But they have been incremental. 

They have not been substitutes. And we have seen that greeting 

card volumes have not varied greatly over that period of time. So 

they have not had an impact on the usage of this part of the mail 

stream. In fact, it has been one of the more stable parts of the mail 

stream. 

The thing that will make it unstable, and I think the reason why 

I feel such a great sense of urgency about this moment in time, is 

that people are making important economic choices, and while they 

would prefer to send a greeting card, postage will become a factor, 

and we are seeing that dramatically in box Christmas cards, where 

postage is actually now more expensive than the greeting card. I 

have heard members of the magazine industry indicate similar 

kinds of experiences. 

I think at this point in time, consumers have an elasticity that 

is very different, and I think that if they make those choices to stop 

because of price, we will see the volume declines accelerate dramatically. 

Senator MCCASKILL. Mr. Abbott, I get lots of catalogs and they 

are my reading of choice in that period of time before I can turn 

on my electronic device while I am sitting on the runway and they 

won’t let me do anything electronic, but you need to let some of 

your fellow members know that I don’t need four Pottery Barn 

catalogs. Maybe this is a signal of how much I shop over the Internet, but there is an awful lot of duplication that is going on that 

I think could help with the cost structure. 

Let me get to Mr. Misener. I am a huge customer of yours. I am 

Prime. I can’t figure out how you make that work. I pay very little 

and get free shipping all year long. I am curious why you ever use 

anyone other than USPS. Why are the competitors, other than the 

rural component, why is it that—because I kind of watch to see if 

it is a brown truck or a white truck or a red, white, and blue truck 

that pulls up my driveway, and I am curious who makes that decision and why can’t we get more of your business? Why can’t we get 

90 percent of your business like we are getting 90 percent of Mr. 

McFalls’ business? 

Mr. MISENER. Thank you, Senator, very much. There are a variety of reasons that go into which carrier we choose. If you count 

all of our carriers in the United States, there are probably 15 or 

so that specialize in different areas. The Postal Service is obviously 

one of the very biggest ones. A lot of it has to do with the guarantee, how certain are we that it will land within the promise that 

34 

we make to our customers. Which day that it will land on is very 

important to us, and this is why I mentioned in my testimony that 

we would likely move a lot of our Friday delivery service from the 

Postal Service to competitive carriers—— 

Senator MCCASKILL. Right. 

Mr. MISENER [continuing]. For fear of missing the Friday-Saturday window, or actually missing the Friday window when we gave 

them Friday-Saturday as the possibility. 

So it has to do with a lot of factors. Cost is one of them, of 

course. We are always trying to drive down our cost for our customers. But the USPS is vital to us in rural areas. It really is, especially, for example, on Saturday deliveries, and it would just be 

a very unfortunate disproportionate impact on our rural customers 

if Saturday delivery were dropped. 

Senator MCCASKILL. I am not talking about the people that sell 

on your side, but for Amazon, what percentage of your business is 

going to the U.S. Postal Service now? 

Mr. MISENER. It is a very large percentage. We don’t release the 

number, Senator—— 

Senator MCCASKILL. I am looking for a number. 

Mr. MISENER. It is nine figures business, and—— 

Senator MCCASKILL. But what percentage? Like, let us assume 

that—is it 50 percent? Is it 70 percent? Is it 80 percent? 

Mr. MISENER. It is tens of percents, Senator. I am sorry. We just 

don’t release that number, and it changes all the time. But we do 

rely on the service. We have recognized that they have these 

unique abilities in particular in rural areas, but in other areas, 

particularly on Saturday, we do have alternatives and we simply 

will switch to those alternatives if necessary. We just can’t wait to 

ship our products until next week. As I say, a bill, a customer, consumer can wait for. Perhaps a catalog, a couple of days, it doesn’t 

make a difference. But a parcel that has been ordered just a few 

days earlier makes a huge difference—— 

Senator MCCASKILL. No, I know. It is free, 2-day—one click, free, 

2-day. I pay extra if I want it in 1 day. 

Mr. MISENER. Right. 

Senator MCCASKILL. But is it a majority? If you can’t give me a 

percentage, is it more than 50? I am a prosecutor. I won’t give up. 

[Laughter.] 

Mr. MISENER. It is a large percentage, Senator. 

Senator MCCASKILL. OK. So you are not going to tell me. 

Can you tell me why? Let us just say I order from Amazon and 

it is something relatively small. A book is probably not a good example, because I would probably order the book electronically, but 

let us assume I was ordering a hard-cover book I can’t get on Kindle. So is that something—let us assume it is a book. Why would 

you choose FedEx or UPS as opposed to the Postal Service to ship 

a book? 

Mr. MISENER. To meet our promise to our customers. 

Senator MCCASKILL. OK. 

Mr. MISENER. Especially a Prime customer, as yourself—we want 

to ensure that delivery occurs as quickly as possible, and that is 

often not possible or is not predictable through the Postal Service. 

35 

Senator MCCASKILL. Well, the reason I am trying to pin you 

down is I am trying to figure out what the competitive advantages 

and disadvantages are for the Postal Service. There is a reason for 

this line of questioning. So I am going to go to work trying to figure 

out a way to ask this question of all of you for the record so that 

I can try to figure out what are the competitive advantages for the 

Postal Service and what are the competitive disadvantages so we 

can begin in our oversight capacity to really hone in on making the 

Postal Service as good as they can possibly be when they have a 

competitive advantage, and that might very well be 6-day delivery. 

Mr. MISENER. It is—— 

Senator MCCASKILL. Maybe we need to focus on 6-day delivery 

as the lead of why we can compete as opposed to abandoning it 

first. Since I don’t think I am going to get you to answer the question the way I want you to today, I am going to work on trying to 

figure out a way to get you to answer it a different way in writing 

and maybe we can get to the nub of the matter, what is the business advantage the Postal Service has and are they exercising it 

to the best of their ability. 

Thank you, Mr. Chairman. 

Mr. LYNCH. I thank the gentlelady. And to the gentlelady’s point, 

we are going to leave the record open. I know that a lot of other 

hearings are going on today, so we will leave the record open for 

5 legislative days for Members who are otherwise occupied to ask 

you further questions which you would be required to respond to 

in writing. 

With that, I will recognize the gentlelady from the District of Columbia, Ms. Eleanor Holmes Norton, for 7 minutes. 

OPENING STATEMENT OF HON. ELEANOR HOLMES NORTON, 

DELEGATE, DISTRICT OF COLUMBIA 

Ms. HOLMES NORTON [presiding]. Thank you very much, Mr. 

Chairman. I have been on this Subcommittee ever since I have 

been a Member of Congress and I have gotten to the point of fear 

and trepidation about the loss of the only agency that is in the 

Constitution, where the Framers intended there to be a universal 

Postal Service. And frankly, I have heard so much nickeling and 

diming of the Postal Service, including by the Postal Service, that 

I am rather much past that. I believe the Postal Service is in such 

danger that if we cannot find larger trunks, that we are just fooling 

ourselves. It is going to go down the drain while we find smaller 

and smaller trunks. 

I have seen some reference, minor references, in some testimony 

you have offered. This whole hearing has discussed eliminating 

Saturday delivery as if it were the centerpiece because there is so 

much money there. Do you realize how much money? Have any of 

you any notion of how much money you would save on an annual 

basis? Does anyone know that figure, because—— 

Mr. ABBOTT. If I may, I think the Postmaster General indicated about $3 billion—— 

Ms. HOLMES NORTON. That is about right. 

Mr. ABBOTT. And the PRC is saying maybe $2.3 or $2.4 billion. 

Ms. HOLMES NORTON. That is about right. And if we look at the 

shortfall, whether Mr. Connolly is right or not, it is plus or 

36 

minus—mostly right—and given the condition of the Postal Service, 

I don’t want them to lowball it, frankly. So the Postal Service says, 

10 years, 2010 to 2020, $238 billion shortfall. See, I am through 

with Saturday service as a lead, even a lead, as my good friend 

from Missouri says, because you are leading with a very weak leg. 

And then you are going to be back here doing the same thing. 

I just think we are all being very irresponsible, not you, but the 

Congress knows good and well that if we go after 6-day service, 

that Congresswoman Norton, a big city girl, won’t mind much, but 

her good friends from smaller communities will be up in arms, and 

it is probably going to be impossible. So let me look at something 

that has been mentioned in the testimony of at least two of you, 

and it may have been in others, but I picked it up in two testimonies. 

How many of you are required to prepay your health benefit premiums? Any of you? 

[Heads shaking.] 

Ms. HOLMES NORTON. How many of you on an accelerated basis 

prepay your retirement benefits? Gentlemen, you are from the private sector. Do you realize that we are requiring the Postal Service 

to do something that none of you in the private sector do, and the 

Federal Government looks very hypocritical because it is the last 

entity to do that. 

But this Congress hasn’t moved off that and yet you want to talk 

about 6-day delivery knowing full well that that doesn’t crack this 

nut. Why wouldn’t the private sector, which is in the business of 

staying in business, look beyond the low-hanging fruit and get up 

in the trees where the big money is and where nobody can say that 

the Postal Service somehow would be reneging on something to use 

what we always use the private sector understands should be done? 

So I want to know, and I will refer to two pieces of testimony 

from Mr. Hall. Mr. Hall, there was certainly some mention of what 

you called the need for a sustainable cost structure, and you recognize, without saying so, that $3 billion annually is not going to get 

you there. I was particularly intrigued, Mr. Rendich, by what you 

had to say, because you not only discussed these retiree health benefits, but you indicate that at the rate that the Postal Service is 

required to pay them, that the Postal Service will have no alternative but to raise the costs on entities like your own. 

I would just like to devote my time here to hearing your discussion of this accelerated prepayment for the retiree benefits and the 

prepayment for the health benefits, which no entity in the United 

States does, and whether you would recommend that the Congress 

look for some real money first, at which time I think we would all 

have a lot more credibility to even talk about a lousy $3 billion. 

So I want to go right across—you don’t have to do it—and ask 

you whether you would recommend that we engage in some greater 

equitable policy with respect to retirement and health benefits for 

the Postal Service, perhaps modeling it on what others do, like the 

Federal Government or even the private sector, and I would like 

an answer from everyone here, since none of you, you tell me, has 

to prepay the way the Postal Service does, and yet few of you even 

mentioned this as a possible way to break through this and finally 

get at this deficit—I should say, at least two of you did. But I want 

37 

to hear from all of you and whether you would recommend that 

Congress, in fact, look into—consider as a priority making what 

the—or allowing the Post Office to do what apparently every other 

entity, public and private in the United States, does in some form 

or fashion. Mr. Gooden. 

Mr. GOODEN. I would hope that the Congress would look at the 

higher fruit in the tree and find the greatest cost savings that 

could be found. 

Ms. HOLMES NORTON. I am asking you about the cost savings, 

Mr. Gooden, that I indicated, and the reason I asked you about 

them is I asked what yours were first. So compare it to yourself 

and your entity and tell me whether you would recommend something similar for the Postal Service, which is in far greater trouble, 

as I understand it, than you are, sir. So please try to answer my 

question directly. This is a very serious situation here. 

Mr. GOODEN. I agree. It is very serious. I am with the American 

Lung Association and I can only speak for the American Lung Association in that capacity today at this point with your question. 

And we do not, as far as I know, participate in the plan that you 

are talking about that the Postal Service does. 

Ms. HOLMES NORTON. If you did, would your business be harder 

to conduct from a cost-benefit point of view? 

Mr. GOODEN. I would imagine so, yes. 

Ms. HOLMES NORTON. Thank you. Mr. Hall. 

Mr. HALL. Yes, Representative Norton. I think that you are putting your finger right on one of the most important issues in front 

of Congress right now as you address this question. I think that 

the funding formula should be addressed, at least in the short 

term. It is untenable to expect that kind of prefunding of the retiree medical plan. 

I think, also, the Civil Service Retirement System obligation has 

perhaps been over-funded, and I think that one of the things that 

you could do is determine whether it has, and if so, that money 

could be reapplied to the benefit. 

Ms. HOLMES NORTON. Thank you very much, Mr. Hall. Mr. Abbott. 

Mr. ABBOTT. Congresswoman Norton, I absolutely agree with 

you. It is included in my testimony that both the prefunding of the 

health care benefits for retirees and the pension issue must be addressed. 

Ms. HOLMES NORTON. Thank you very much, Mr. Abbott. I am 

sorry if I overlooked you. I was trying to get this by listening to 

who mentioned it, so I appreciate that you had done so. Mr. 

McFalls. 

Mr. MCFALLS. Yes, ma’am. I would absolutely agree with you on 

this point. 

Ms. HOLMES NORTON. Thank you. Mr. Misener. 

Mr. MISENER. Yes, ma’am, I also agree. I didn’t include it in my 

testimony. We are not experts in the pension funding issue. But 

certainly, it seems to be the low-hanging fruit, and as you point 

out, there is at least the order of several orders of magnitude difference between that and eliminating Saturday delivery as a savings for the Post Office. 

Ms. HOLMES NORTON. Thank you, Mr. Misener. Mr. Rendich. 

38 

1The prepared statement of Mr. Cantriel appears in the Appendix on page 109. 

Mr. RENDICH. Yes, Representative Norton. You have hit the nail 

on the head. It is the single biggest financial issue that the U.S. 

Post Office faces. Five to $6 billion a year is a lot of money to come 

up with. No wonder that the Post Office has been unable to do it 

successfully so far. So the answer is, I would wholeheartedly agree 

that this is an area that needs to be adjusted, and as such, I devoted a large part of my oral testimony and written testimony to 

the subject. 

Ms. HOLMES NORTON. Your advice on this point is extremely valuable to us. We really do look to the private sector to try to compare what we in the government do and what the private sector 

does, and sometimes those comparisons are not apropos. But it 

does seem to me that they are apropos here because the Postal 

Service is treated as a private business and it is forced to compete 

against other private businesses, and yet they are hamstrung with 

something that would put us out of business. And so it makes the 

Federal Government look—shall I be kind about it—a bit hypocritical to continue to do so, and your opinion on this important 

point of where money is that, with even some delay, some greater 

sense of how to apportion what was due when they could help the 

Postal Service out of a burden that is certainly not all its to bear. 

Thank you very much for this testimony. My colleagues will return soon and the respective Chairmen has asked me to dismiss 

this panel with the appreciation of both the Members of the Senate 

and the House and to ask for the second panel to come forward at 

this time. 

Will the second panel please take their seats. 

The organizations represented on our second panel play a key 

role in our Subcommittee’s oversight efforts, so I am going to identify you as I call upon you. 

First, Don Cantriel, President of the National Rural Letter Carriers Association. You may begin. 

TESTIMONY OF DON CANTRIEL,1 PRESIDENT, NATIONAL 

RURAL LETTER CARRIERS ASSOCIATION 

Mr. CANTRIEL. Our country is experiencing numerous economic 

challenges and the Postal Service has not been immune to these 

difficult financial times. Unusually low mail volumes have caused 

the Postal Service to consider drastic steps to change its business 

model and its operations. The cornerstone of the Postal Service 

plan is to do away with Saturday mail delivery to the millions of 

homes and businesses that receive mail. This idea is terribly misguided and will hurt, not help, the Postal Service’s business and 

the customers it serves. 

Chairman Carper, Chairman Lynch, and Members of the Senate 

and House Subcommittees, I urge you in the strongest and most 

forceful way, do not support the Postal Service’s proposal to eliminate the congressionally mandated 6-day delivery of mail. The 

Postal Service cannot expect that by working less, it will achieve 

more. Consumers and businesses will not use a Postal Service that 

reduces services by 17 percent. 

39 

Once consumers and businesses find an alternative, and they 

surely will, they likely will stay away from the Postal Service for 

good. The vacuum that would be left by shutting down delivery operations on Saturday is sure to be filled by a competitor, and once 

we lose that business, we will forever be fighting at even greater 

expense to get it back. If Saturday delivery is eliminated, customers and businesses that rely on the mail will see an increase 

in the delivery time for their product. Failure to meet Postal customers’ delivery expectations could negatively impact the Postal 

Service’s business model and the public’s expectation that mail will 

be delivered in a timely manner. 

If we go to 5-day delivery, there will be no need for most of our 

relief carriers. Tens of thousands of rural carrier relief employees 

will be without a job, without a livelihood. 

If there is no Saturday delivery, the intangible functions our carriers perform at no cost to the American public will be missed. The 

report of a house fire, an accident, or assistance to the elderly that 

our carriers routinely provide will be diminished. These byproducts 

of the work we do and the fact that we are out and visible, working 

with the public in communities large and small, will be curtailed 

on the weekend. 

Our public health and safety function will also be curtailed if 

rural carriers are not working on Saturdays. Back in 2002 in the 

wake of September 11, 2001, and the anthrax attacks that terrorized the Nation and killed private citizens and Postal workers 

alike, the Postal Service prepared itself to serve as a public health 

army. In the event of biological terrorism, the Postal Service will 

play an important role in the delivery of medicines. We continue 

to play that role still today, but we cannot fulfill that mission completely if our employees are not working on Saturdays. 

Customers want the contact with their rural carrier and many 

absolutely depend on it. Whether it is prescription drugs, public assistance, vital legal documents, or important business mailings, our 

customers and mailers want and need Saturday delivery. 

There is an easier way to put the Postal Service on firm financial 

footing that does not involve eliminating Saturday delivery. First, 

something must be done about the prefunding of the Future Retirees Health Benefit Plan. No other government agency or corporation is required to prefund their retiree health benefits, let alone 

required to almost fully prefund them at an accelerated pace. Reducing the amount of money the Postal Service is required to pay 

into the Retiree Health Benefits Fund has the potential to save the 

Postal Service billions of dollars and still not put employees’ pensions at risk. 

The Inspector General reported that the Postal Service has been 

overcharged $75 billion on its CSRS Pension Fund responsibility. 

The report continues to say that if the overcharge was used to prepay the Retiree Health Benefits Fund, it would fully meet the retiree health care liabilities and eliminate the need for the Postal 

Service to continue paying $5 billion annually, as mandated by the 

Postal Accountability and Enhancement Act (PAEA). The Postal 

Service should be permitted to have the money it was overcharged 

returned. 

40 

1The prepared statement of Mr. Rolando appears in the Appendix on page 113. 

Additionally, the Postal Service can initiate internal cost cutting 

measures right now to reduce its operating expenses. If a Postal 

employee is not involved in processing, collecting, or delivering the 

mail, their job should be under the microscope. We have managers 

that do nothing but manage other managers. 

The Postal Service can also reduce its operating expenses by consolidating many of its current districts and areas. The consolidation 

of districts and areas with the repetitive position in each of those 

districts and areas would save the Postal Service millions, if not 

billions, and in my opinion would make for a more consistent policy 

and better provide, more consistent service. 

Thank you for inviting me to testify today on behalf of the National Rural Letter Carriers. I would be happy to answer any additional questions you may have. 

Senator CARPER [presiding]. Mr. Cantriel, thank you so much for 

your testimony, and later on when we do some questions, I am 

going to come back and ask you, of those items you mentioned right 

there at the end, to what extent have you heard from the management side about their willingness to take up some of those ideas, 

OK. 

Frederic Rolando, President of the National Association of Letter 

Carriers, we are happy that you are here. It is nice to see you. 

Please proceed. 

TESTIMONY OF FREDERIC V. ROLANDO,1 PRESIDENT, 

NATIONAL ASSOCIATION OF LETTER CARRIERS, AFL–CIO 

Mr. ROLANDO. Likewise. Good afternoon, Chairman Carper and 

Representative Norton. I am pleased to be here on behalf of the 

National Association of Letter Carriers (NALC). 

Senator CARPER. And before you start, I just want to say a special thanks to our Delegate Eleanor Holmes Norton. Thank you so 

much for being here to run this ship. You were the captain and, 

I am told, a very good one. Thanks so much. Go ahead, Mr. 

Rolando. 

Mr. ROLANDO. Although the economy has begun to recover from 

the 2007–2009 economic meltdown and the Postal Service has recorded a profit of nearly a billion dollars so far this year before accounting for the massive retiree health prefunding payment that no 

other company or agency in the country is required to make, we 

are not out of the woods yet. 

To help the Postal Service survive and adapt to an uncertain 

post-crash economy, Postal employees and their unions have to embrace innovation and seek win-win solutions with the Postal Service at the bargaining table. NALC has recently negotiated a route 

adjustment process that has saved the Postal Service hundreds of 

millions of dollars. Going forward, we are committed to doing what 

is necessary to promote new, innovative uses of the Postal Service’s 

networks, even as we lose some traditional mail to electronic alternatives. 

But for us to be successful, we need Congress to act, as well. Although we have never objected to the principle of prefunding of future retiree health benefits, it is now clear that the policy adopted 

41 

in 2006 was deeply flawed. Even if the economy had not crashed, 

hard-wiring a 10-year schedule to prefund 80 percent of a 75-year 

liability was, in hindsight, a mistake. This decision by Congress, 

not the recession and not the impact of the Internet, is primarily 

responsible for the financial crisis faced by the Postal Service in recent years. 

The fact is, if not for these payments, the Postal Service would 

have been profitable in 3 of the last 4 years, despite the deepest 

downturn since the Great Depression. No private company would 

have borrowed billions to prefund future retiree health benefits in 

the middle of a recession. The Postal Service has been forced to use 

most of its borrowing authority to make $12.4 billion in payments 

to prefund retiree health benefits rather than to invest for the long 

term or to restructure its operations. There is no way to sugar coat 

this. Congress must undo the unintentional error of 2006. 

Fortunately, there is a way to do this without retreating from the 

laudable goal of prefunding retiree health benefits. The IG’s January report now being reviewed by the PRC provides a road map to 

Congress for reform. Indeed, the Postal Service has recently proposed legislation based on that report that the NALC fully endorses. It calls for Congress to direct the Office of Personnel Management (OPM) to recalculate the allocation of pre-1971 pension 

costs on a years-of-service basis and then to transfer the resulting 

surplus in the Postal subaccount of the Civil Service Retirement 

System to the Postal Service Retiree Health Benefits Fund. This 

would correct a grossly unfair allocation of costs made by OPM in 

2007 and allow the Congress to repeal the hard-wired and crushing 

prefunded schedule in the PAEA. 

Of course, we understand that the budget rules make this a lot 

easier said than done. Nevertheless, it is regrettable that good policy often takes a back seat to the peculiar world of budget scoring 

and the arcane rules of pay go. Every time Congress has made 

changes in this area of the law, allocating pension costs between 

taxpayers and rate payers, compromises have been made to deal 

with scoring issues. These compromises have often backfired. 

We understand that the years-of-service approach adopted by the 

IG has its critics, and we acknowledge that there are compromise 

positions being discussed between the approaches taken by OPM 

and the USPS IG. Had the Postal Service given away grossly excessive wage increases after 1971, the critics would have a legitimate 

dispute with the years-of-service allocation of costs. Pre-1971 pension costs would soar and taxpayers would be punished by these 

wage decisions. 

However, that was not the case. The inflation-adjusted wages of 

Postal employees are roughly the same as they were in 1972. We 

therefore believe that the Postal Service and the IG approach is 

reasonable. However, if a fair compromise is needed, OPM should 

hold the Postal Service accountable for pension costs associated 

with wage increases above and beyond what other Federal employees received from Congress. Reforming the pension retiree prefunding provisions of the law is the essential first step to giving the 

Postal Service a fighting chance to adapt and survive in the postcrash Internet age. 

42 

1The prepared statement of Mr. Burrus appears in the Appendix on page 121. 

Let me finish by briefly addressing a major issue between the 

House and Senate Appropriations Committee. As you know, the 

Postal Service has proposed the elimination of Saturday collection 

and delivery services. We think this would be a blunder of the first 

order, saving very little money and risking the loss of much more 

revenue over time. Cutting service is not a way to strengthen the 

Postal Service. In America, business is conducted 24 hours a day, 

7 days a week. Many businesses, especially small businesses such 

as eBay retailers, rely on Saturday delivery, and reducing the 

speed and quality of service will simply drive customers away. At 

a time when the Nation is suffering an acute job crisis, throwing 

another 80,000 decent jobs away in a moment of panic does not 

make sense. 

Both the Obama Administration and a bipartisan majority of the 

House of Representatives who have cosponsored House Resolution 

173 oppose the elimination of Saturday delivery. We urge all of you 

to reject this proposal, as well. 

Thanks again for inviting me to testify. 

Senator CARPER. You bet. Thanks so much for being here and for 

your testimony and for your leadership, as well. 

Mr. Burrus, it is great to see you. Thank you so much for coming, 

and we welcome your testimony. 

TESTIMONY OF WILLIAM BURRUS,1 PRESIDENT, AMERICAN 

POSTAL WORKERS UNION, AFL–CIO 

Mr. BURRUS. Chairman Carper and Congresswoman Norton, 

thank you for providing this opportunity to share the views of our 

union, the American Postal Workers Union, on the difficulties currently facing the Postal Service and on Postal management’s plans 

to address them. 

The request that oral presentation be limited to 5 minutes restricts my remarks to a summary of our positions on a wide range 

of issues, but we welcome the opportunity to speak on the subject 

of concern. 

My union has analyzed the current state of hard copy communication and we reject the projection that is currently in vogue, 

that mail is destined to perpetually decline. Our evaluation signals 

that, in fact, mail volume will experience growth in fiscal year 

2012, and I ask that you make note of our prediction. When we revisit this issue in 2013, let us see if mail volume actually increased 

or declined. Virtually every other study of mailing trends has concluded that mail volume will continue to decline and this projection 

has served as the basis for the recommendations for radical 

changes to the Postal structure and to the services that we offer. 

If we are right in our prediction that volume will, in fact, grow in 

the relative near future, these dire predictions must be discarded 

as the alarmist projections that they are. 

After much soul searching, the Postal community has concluded 

that the payment schedule for prefunding future retiree health care 

liabilities is driving the Postal Service to the brink of insolvency 

and must be modified. Correction of this overpayment of the Civil 

Service Retirement and Disability Trust Fund would more than 

43 

satisfy this obligation, and there seems to be unanimous agreement 

within the Postal community that the prefunding obligation is the 

primary source of the Postal financial difficulties and that it must 

be corrected. I urge lawmakers to find the appropriate methods to 

do so. 

I would be remiss in my testimony if I did not include in this 

summary what not to do. Drastic reduction in service must be removed from consideration. This includes the poster child for service 

reductions, the elimination of Saturday delivery. We should not 

even seriously engage in discussion of this proposal. The reason is 

simple. No service-oriented business can grow by reducing service. 

The very concept must be abandoned. To the contrary, we believe 

the Postal Service can and must expand the services it offers. 

In addition, we believe the Postal Service must eliminate excessive work share discounts. These discounts, to the tune of over $1 

billion a year, deprive the Postal Service of desperately needed revenue and subsidize major mailers at the expense of small business 

and individual citizens. They are illegal and self-defeating. I want 

to digress for a moment to commend Chairman Lynch for holding 

the first ever hearing on this crucial topic last month. 

Finally, I cannot miss the opportunity to remind policy makers 

that the business model that governs the Postal Service was a creation of the Postal Accountability and Enhancement Act of 2006. 

Now, less than 4 years after its adoption, many of the groups that 

supported the PAEA are again denouncing the business model as 

severely flawed. Those who advocated the passage of PAEA must 

take responsibility for the results, and their recommendation must 

be evaluated in light of the miscalculation of the effect of the law. 

The GAO, the Office of the Inspector General, Congressional 

Committees, mailers associations, and others drank the Kool-Aid of 

Postal reform and now we are offering solutions to the very problems that were created by that reform. Included in that is payment 

for future health care liability. Ironically, it seems that hardly a 

week goes by without these same agencies issuing reports to substitute their judgment for those of Postal management. Frankly, 

their attempts to micromanage the Postal Service are counterproductive. 

I have submitted for the record some of the written testimony 

that the American Postal Workers Union (APWU) has provided at 

recent hearings and forums, which expand our views on these and 

other important topics, and I would be pleased to respond to any 

questions that you may have. 

Senator CARPER. Mr. Burrus, thank you very much for that testimony. 

Mr. Collins, have you testified before us before? 

Mr. COLLINS. Not at this level. I testified back at the congressional hearings on the anthrax situation. 

Senator CARPER. OK, good. Well, we are glad you are here today. 

Are you the Assistant to John Hegarty? 

Mr. COLLINS. I am. 

Senator CARPER. OK, Mr. Collins from the National Postal Mail 

Handlers Union. We are delighted to see you. Thanks. 

44 

1The prepared statement of Mr. Collins appears in the Appendix on page 124. 

TESTIMONY OF RICHARD COLLINS,1 ASSISTANT TO THE 

PRESIDENT, NATIONAL POSTAL MAIL HANDLERS UNION 

Mr. COLLINS. Thank you, Congressman Lynch and Senator Carper, for holding this important joint hearing. 

Senator CARPER. Are you from Mississippi? 

Mr. COLLINS. I am, yes. [Laughter.] 

Senator CARPER. You are not. [Laughter.] 

Mr. COLLINS. No, sir. I am from Dorchester, Massachusetts. 

Senator CARPER. I thought you might be. 

Mr. COLLINS. Thank you. [Laughter.] 

Mail Handler National President John Hegarty sends his regrets 

that he couldn’t be here to testify today. My name is Richard Collins and I have served since 1994 as the Assistant to the National 

President. I was also a mail handler with the Postal Service for almost 30 years. My current duties include working on a daily basis 

with the U.S. Postal Service on a vast array of issues, including 

mail security, ergonomics, and labor-management relations. 

The Mail Handlers Union represents nearly 50,000 craft employees, the overwhelming majority of whom work in the large processing plants. Our members often perform the most dangerous jobs 

in the Postal system. We staff large machines. We drive the forklifts and other heavy machinery. And our members are the first 

and last to touch the mail when it arrives and leaves for processing. 

Mail processing is time sensitive. Any reduction in processing 

hours or days will have a dire impact on the timely delivery of both 

standard and First Class mail. This is especially true for mail 

items that need prompt processing and delivery, such as medicines 

from various pharmacy companies, newspapers and magazines, and 

a host of other mail items. That is why the Mail Handlers Union 

is opposed to the Postal Service’s proposal to eliminate residential 

delivery on most Saturdays. 

We are in the worst recession since the Great Depression. The 

Postal Service has been losing significant amounts of money, even 

with drastic cuts in the number of employees. But in reality, looking at Postal operations, the Postal Service has been a break-even 

or even profitable enterprise for 2 of the past 3 fiscal years. There 

has been tremendous downsizing of the Postal Service, including 

over 100,000 career jobs eliminated, producing billions of dollars in 

savings in each of the past few years. 

These changes have not been accomplished easily or without friction, but they have shown that without extraneous factors, the 

Postal Service remains a viable and vibrant institution. By extraneous factors, my union is referring to mandates placed on the 

Postal Service to fully fund the Retiree Health Benefits Fund during the next 7 or 8 years. And, Senator Carper, we agree with your 

characterization of these payments as overly aggressive. That is 

why Congress needs to focus on and fix the Retiree Health Benefits 

Fund. That fix is needed before the end of this fiscal year, on September 30. 

We understand that relying on a fix for the Retiree Health Benefits Fund and stating that the Postal Service is a viable institution 

45 

runs directly counter to the narrative coming from Postal headquarters. The Postal Service’s dominant message is, we are broke 

and swimming in a sea of red ink. We have a debt-ridden institution whose survival is dim, but we can be saved by cutting service 

and becoming less reliable. To us, that is not very reassuring and 

not very realistic. 

We disagree with the Postal Service’s basic analysis. As already 

noted, despite a recession since 2008, the Postal Service has been 

a break-even or profitable enterprise for 2 of the past 3 fiscal years. 

To be sure, there has been diversion of a significant amount of mail 

to the Internet and other electronic means of communication. But 

the Postal Service has reduced its workforce and is reducing its 

network to address those issues. 

Congress should deal immediately with the funding of the Retiree Health Benefits Fund, which already contains more than $35 

billion. In addition, it would be worthwhile for Congress to require 

recalculation of the Postal Pension surplus in the Civil Service Retirement System. The bottom line is that simply suspending the 

mandated payments in the Retiree Health Benefits Fund for several years will provide the necessary space needed for the Postal 

Service to ascertain its real needs in a realigned economy. Significantly, it also makes good business sense and is consistent with 

common sense bookkeeping and the actions taken by private enterprise. 

The Retiree Health Benefits Fund currently is healthy and growing, which is a good position to hold during good economic times. 

But in the current economic climate, mandated payments into the 

fund have become both an unacceptable burden and an unjustified 

luxury required of no other Federal agency or private sector employer. 

The calculation of the Civil Service Retirement System pension 

costs is also an internal matter that deserves resolution. If, as the 

Inspector General and others have concluded, the numbers are 

wrong to the tune of $75 billion, then they need to be fixed in order 

to accurately assess the future of the Postal Service. The Postal 

Service should not take an action of emergency proportions that 

may be based on faulty bookkeeping. 

In short, the Mail Handlers Union believes that we need legislation focusing on two issues, the Retiree Health Benefits Fund and 

the over-funding of the Civil Service Retirement System, possibly 

even to use the over-funded pension obligations as a substitute for 

payments to the Retiree Health Benefits Fund. 

Thank you, Chairmen Lynch and Carper, for holding these hearings, for allowing me to testify, and for making the future of the 

Postal Service an important front-burner issue. I look forward to 

answering any questions you may have. 

Senator CARPER. Good. Thank you for that testimony, Mr. Collins. 

Mr. Atkins is Executive Vice President of the National Association of Postal Supervisors. Great to see you. Welcome. Please proceed. 

46 

1The prepared statement of Mr. Atkins appears in the Appendix on page 132. 

TESTIMONY OF LOUIS ATKINS,1 EXECUTIVE VICE PRESIDENT, 

NATIONAL ASSOCIATION OF POSTAL SUPERVISORS 

Mr. ATKINS. Good afternoon, Chairman Carper and Representative Norton. My name is Louis Atkins. I am the Executive Vice 

President for our organization. Thank you for inviting me to testify 

on behalf of the National Association of Postal Supervisors (NAPS). 

Organized in 1908, NAPS exists to improve the Postal Service 

and the pay, the benefits, and working conditions of its members. 

Its members include first-line supervisors, managers, and postmasters working in mail processing and mail delivery. But NAPS 

also represents men and women working in virtually every other 

functional unit in the Postal Service, including sales, marketing, 

human resources, training, law enforcement, health and safety. 

NAPS takes seriously its responsibility to work with the Postal 

Service to preserve the health and vitality of the Nation’s Postal 

System. 

Postal supervisors are doing more than their share to help the 

Postal Service modernize and change. We collaborate with the 

Postal Service because there is no other responsible option, given 

how much revenue and mail volume are projected to drastically fall 

in the next few years. 

The revenue shortfall that the Postal Service once again faced 

this year is the result of three factors. The first factor, the deep recession, the worst in 80 years, and its downturn impact on mail 

volume, particularly advertising mail. We believe that the poor 

economy will be mitigated, though not entirely, as economic conditions improve. The consensus by many Postal experts is that much 

mail, though not all, will return to the system as the economy slowly rebounds. 

The second factor, the Internet migration, will continue to erode 

mail volume going forward and represent a long-term concern. 

The third factor is the burdensome and accelerated statutory requirement established by Congress that forced the Postal Service 

to set aside funds for future retiree health benefits at a cost of $5.5 

billion per year, or nearly $40 billion during the next 7 years. The 

overly aggressive prefunding schedule for retirement health benefits presents a viable area to pursue that could have a significant 

bottom-line impact upon the Postal Service. 

While benefit prefunding as a Postal policy can assure that assets will be available to satisfy obligations down the road, no other 

Federal entity or private sector enterprise other than the Postal 

Service has been required to or voluntarily committed itself to retiree health benefits prefunding at such an aggressive schedule. 

The Postal Service is bearing this burden now during the recession. 

In fact, in 2 out of the last 3 years, the Postal Service would have 

been in the black were it not for the aggressive prefunding schedule that Congress established. The sooner that Congress deals with 

this problem and realigns the prefunding schedule, the better it 

will be for the Postal Service and the mailing community. 

Recalculating the Postal pension surplus in the Civil Service Retirement System, using the so-called service ratio method to allocate pension costs related to the pre-1971, would provide a signifiVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
47 

1The prepared statement of Mr. Mapa appears in the Appendix on page 137. 

cant amount to cover the entire cost of the future retiree health 

benefits. This would permit the Congress to transfer the Postal 

CSRS surplus to the Postal Service Retiree Health Benefits Fund, 

either now or at some future point, and repeal the current 

prefunding schedule. It will place the Postal Service on a more certain financial footing and restore confidence by large volume mailers in the future of the Postal Service. 

During the past several years, NAPS has collaborated with the 

Postal Service on major organizational changes to cut costs and 

find efficiencies. Some of those changes eliminated management 

and supervisory jobs. In 2009 alone, nearly 3,600 management and 

supervisory positions were eliminated in the Postal Service. These 

changes have dramatically impacted the lives of and supervisors 

and managers represented by NAPS. 

We also support changes in the laws, infrastructure, and operation of the Postal Service that modernize and sustain Postal Service operations, production, and services. The first change in the law 

should revolve around the restructuring of the retiree health benefits prefunding schedule and the resolution of the past pension 

overpayment by the Postal Service for pre-1971 Post Office Department employees. This would help put the Postal Service on a more 

certain financial footing. As those actions and other continuous 

USPS cost cutting efforts take place, Congress and the Postal Service will be better situated to discern what needs to come next, including 5-day delivery and other significant cuts. 

The steep decline in mail volume over the past 2 years means 

that all Postal operations, including processing, transportation, and 

delivery, are operating at less than full capacity. A letter carrier 

that used to deliver six pieces of mail to a house is now delivering 

four. A business that used to get two trays of mail may be getting 

less than those two today. But nonetheless, we are still delivering 

to that address and every other business in the country. Consolidation of some processing and retail Postal facilities may need to 

occur based on facts and circumstances of best business judgment 

and the level of service that customers expect. 

Our organization will continue to work with the Postal Service 

to solve the current crisis and ensure that individuals who we represent can manage the operations that they have been entrusted to 

manage. 

Thank you again for the opportunity to express these views. I 

will be happy to answer any questions you may have. 

Senator CARPER. Good. Thank you so much for that testimony. 

We appreciate it very much. 

Our next witness is Charles Mapa, President of the National 

League of Postmasters. It is very good of you to come. Thank you. 

Please proceed. 

TESTIMONY OF CHARLES MAPA,1 PRESIDENT, NATIONAL 

LEAGUE OF POSTMASTERS 

Mr. MAPA. Chairman Carper, Chairman Lynch, and Representative Norton, my name is Charles Mapa and I am President of the 

National League of Postmasters. The National League of PostVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
48 

masters represents thousands of postmasters from around the 

country, particularly in rural areas. Thank you for inviting us here 

today for this very important hearing on this vital issue. 

Mr. Chairman, the League would like to stress the critical importance of fixing the overpayment of the Postal Service’s Civil Service 

Retiree Pension obligations by allowing the pension surplus to go 

to prefund the Postal Service’s retiree health obligation. This is absolutely essential to any long-term financial solution for the Postal 

Service. Mr. Potter has said several times to me, taking care of this 

problem would allow other problems to be handled more slowly, in 

a measured fashion over the next 10 years. This, to me, makes 

sense, for much of the mail volume will come back when the economy comes back. Even the doom and gloom predictions of the Postal Service’s consultants said that volume would go down by only 

1.5 percent per year. If those doom and gloom predictions are off 

by only two points, volume will increase. 

Much has been said about Post Offices today. Let me turn to 

Post Offices. First of all, Mr. Chairman, let me remind everyone 

that the American public wants its Post Offices. In a survey published in the Washington Post earlier this year, 80 percent of those 

surveyed did not want the Postal Service to start closing Post Offices. We have heard time and again over the last several months 

that the Postal Service has 37,000 retail facilities, more than 

Starbucks, McDonald’s, Sears, and Wal-Mart combined. The suggestion is then made that if we get rid of the retail function of the 

Postal Service by moving it online, then all this brick and mortar, 

the Post Offices, and all the costs associated with them could be 

eliminated. Chairman Carper, Chairman Lynch, Representative 

Norton, this is patent nonsense. 

First, the primary function of a Post Office is not a retail function but a delivery function. Indeed, Post Offices are the final processing and distribution nodes in the Postal delivery system, and online buying of stamps does not replace that function. True, stamps 

are sold in Post Offices, but Post Offices are located where they are 

for delivery reasons, not for retail reasons. They are the units out 

of which the carrier function works and is managed, and you need 

a brick and mortar establishment for that. Eliminate Post Offices, 

then, and you eliminate delivery. 

Second, Post Offices boxes are very important delivery points. 

They are very valuable because the businesses of this country use 

them to get their remittance mail. Without them, Postal business 

patrons would lose millions of dollars of float. Critically, Post Office 

boxes work and work well because they are located next to the delivery function, where the distance between the boxes and the carrier is measured in feet, not in miles. For this reason, they work. 

Closing significant numbers of Post Offices will hurt this efficiency 

and the value of Post Office boxes. 

We do believe, however, that our Post Office network is greatly 

underutilized by the Postal Service and that they could be used for 

a variety of other purposes. For instance, we could partner up with 

various Federal, State, and government agencies, as well as companies in the private sector to provide a variety of services and products. We could also sell advertisement in our Post Offices. The revenue from these projects would not be enormous, but they would 

49 

1The prepared statement of Mr. Rapoza appears in the Appendix on page 152. 

be enough to offset much of the cost of the retail function of the 

Post Office. 

Thank you for considering our views. 

Senator CARPER. Thanks very much for those ideas, especially at 

the end of your testimony. 

Our final witness, Robert Rapoza. Good to see you. President of 

the National Association of Postmasters of the United States. Once 

you conclude your testimony, we are going to be turning to Congresswoman Holmes Norton for the first round of questions for our 

witnesses. Thanks. Please proceed. 

TESTIMONY OF ROBERT J. RAPOZA,1 PRESIDENT, NATIONAL 

ASSOCIATION OF POSTMASTERS OF THE UNITED STATES 

Mr. RAPOZA. I want to thank Chairman Carper, Chairman 

Lynch, Congresswoman Norton, and my favorite Senator, Senator 

Akaka, and Subcommittee Members for allowing me to share the 

views of the—— 

Senator CARPER. Now, wait a minute. There is another Senator 

here. [Laughter.] 

No, actually, he is our favorite Senator, too, so you have good 

judgment. 

Mr. RAPOZA. Thank you for allowing me to share the views of the 

National Association of Postmasters of the United States (NAPUS) 

regarding the future of the Postal Service. 

NAPUS is a management association of 39,000 dues-paying 

members. We are the managers in charge of Post Offices who care 

deeply about a universal mail system. Postmasters are proud of the 

work we do for our Nation and the service we provide to our communities. 

My testimony has four themes. First, the financial challenges 

facing our Postal Service. Second, liberating the Postal Service 

from unfair, unnecessary, harmful funding obligations. Third, exploiting our national scope and consumer support. And fourth, safeguarding our universal Postal System. 

Immediately following the enactment of the Postal Reform Act of 

2006, a deep and broad recession inundated our country. The economic downturn devastated Postal reliant industries, resulting in 

less mail. It may be too early to tell how much of this volume drop 

is permanent. Nevertheless, over the past 2 years, the Postal Service has shed approximately $10 billion in expenses and slashed its 

workforce by 84,000 employees. Regrettably, these actions do not 

come without consequences. Postmaster positions remain vacant. 

Post Offices have been suspended and hours curtailed. In addition, 

there is considerable understaffing that has led to late mail deliveries and a stressed workforce. 

Unfortunately, two pieces of legislation that were crafted to promote Postal self-sufficiency and viability have inadvertently undermined both goals. Congress must correct the flawed 36-year-old 

statute that has compelled the Postal Service to over-fund its retirement obligations by $75 billion. And Congress should revisit a 

4-year-old provision that embeds an inaccurate Postal charge of 

prefunding retiree health care costs. 

50 

We understand that the Subcommittees have under consideration a proposal that strives to address the overly burdensome 

prefunding requirement and more accurately calculate the Postal 

Service’s true pension obligations. NAPUS believes that legislation 

to address these dual issues must be passed expeditiously and 

should exclude controversial provisions that would obstruct passage. 

The Postal Service is well positioned to develop new and innovative revenue streams to help support universal service. According 

to a recent Pew Research Center survey, 83 percent of Americans 

view the Postal Service favorably. The Postal Service needs to 

make good use of this good will to generate revenue and partner 

with others, such as Federal agencies, local governments, and even 

the private sector. Post Offices can be used for credentialing, licensing, and permitting services. The high trust value of Post Offices 

and Postal personnel provides assurance of privacy and accountability. 

We must be careful not to undermine the lofty trust and strong 

support of the agency by ending community due process rights in 

Post Office closings. I understand that there are two proposals 

under consideration that could jeopardize small and rural Post Offices. The first proposal would delete the statutory prohibition 

against closing a Post Office solely for having expenses that exceed 

revenue. The second proposal would establish a commission to close 

Post Offices. Both of these ideas garner meager Postal savings. According to the Postal Regulatory Commission, closing every small 

and rural Post Office would yield only about 0.07 of 1 percent of 

the Postal budget. 

Compounding that small number with the overwhelming public 

support of Post Offices and there is little reason to accelerate the 

rate of Post Office closures. A recent Gallup poll reported that 86 

percent of Americans oppose Post Office closings. Moreover, Post 

Offices provide a key economic anchor for towns and rural communities that support small businesses. It is also important to remember that the Postal Service can and does close Post Offices under 

current law. 

I know that Postal Service headquarters has suggested that Post 

Office operations be moved into big box stores because of traffic. 

However, this plan assumes that the Postal Service products are 

impulse purchases, which they are not. NAPUS believes that a viable Postal Service needs to offer the American public more products 

and services, not less. 

In addition, despite consistent characterizations of the agency as 

a business, it is not a business. The Postal Service is a constitutionally established federally operated public service. 

NAPUS looks forward to working with Congress and the Postal 

Service to continue to provide the American public with the universal service that our citizens deserve and to which they are entitled to. Thank you very much. 

Senator CARPER. Mr. Rapoza, thank you very much. 

I am going to withhold and ask my questions last. It has been 

a very good panel, very excellent testimony, in fact, from both panels, and we are grateful for that, a lot of ideas and some thinking 

outside the box here which we certainly welcome. 

51 

Since Congresswoman Holmes Norton was good enough to stay 

here through thick and thin when everyone else bailed to go vote 

and meet with their outstanding educators from States like Delaware, I am going to ask you to lead off the questioning. Thanks 

again. 

Ms. HOLMES NORTON. Well, thank you, Mr. Chairman. 

I was intrigued as we look for ways to get the Postal Service in 

some kind of permanent state of reform, as opposed to nibbling at 

the edges, and I agree with what all of you had to say about 

prefunding. It is so obvious. We know there are scoring problems. 

We also know that it was a huge mistake, an error made in 2006. 

It was not—the formula used was in error and it does seem to me 

that we have to—there is no way to get around that large tranche 

of money being used in a way no other entity uses it. 

But, Mr. Burrus, I was intrigued by, leaving that aside, and apparently with that on the table, I am not sure, but you in your testimony speak of volume, and you predict, indeed, you even doublydare us to invite you back to check on this, that mail volume will 

experience a growth in fiscal year 2012. I would like to know on 

what you base that, what is your basis for saying it and whether 

any of your colleagues agree with you. 

Mr. BURRUS. I have challenged my economists to prepare for me 

a model of Postal volume over the last 40 years, determining its 

rise and when it stalled and when it declined most notably in recent years and graph out for me exactly what were the influencing 

factors. Now, this is not the first occasion in the civilization of the 

human race that we have had diversions of communications. The 

highest volume period for the U.S. Postal Service in its history was 

2006. That is not close to the invention of the Internet or the other 

forms of diversion that we are now claiming are causing the decline. 

Ms. HOLMES NORTON. Why did it increase then? 

Mr. BURRUS. Economic activity. That was when we created the 

economic bubble in this country, and economic activity went up. 

Mail volume followed. 

Ms. HOLMES NORTON. And you think that is going to happen in 

2012? 

Mr. BURRUS. Our economy is going to recover, as certainly as 

night follows day that the economy will recover, and as the economy recovers, mail volume will follow, and—— 

Ms. HOLMES NORTON. So you are basing that on the recovery 

that we all anticipate? 

Mr. BURRUS. Yes, that we anticipate, and the history—— 

Ms. HOLMES NORTON. Of the recovery. 

Mr. BURRUS [continuing]. Of what volume did under a recovered 

economy, yes. 

Ms. HOLMES NORTON. I wonder if all of you could—one of our colleagues from the Senate on the other side puzzled me when he indicated that—and I literally ask this question out of total ignorance—that despite the fact that the Postal Service and its unions 

have free collective bargaining the way other entities in the private 

sector do, that there was some kind of mandate that the state of 

the business not be taken into consideration apparently in whatever result was reached in collective bargaining. Could you enVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
52 

lighten me on what—I am sorry he isn’t here, but I don’t think we 

can leave that question on the record without expanding on it and 

indicating what it could mean or if that was, in fact, the case. 

Mr. ROLANDO. Yes. I am sorry he is not here, also. I would like 

to expand on that a little bit. We talked a little bit about that at 

the hearing that I was invited to last year, and it appeared what 

we learned at that hearing is much of the support for that particular provision to require an arbitrator to consider the financial 

condition of the Postal Service was based on an understanding that 

the arbitrator was currently prohibited from doing that, which was 

totally inaccurate and that was pointed out at the last hearing. In 

fact, not only are they not prohibited, in every interest arbitration 

that we have had since Postal reorganization, the arbitrator has 

clearly considered the financial status of the Postal Service because 

it is an issue in every one of those interest arbitrations. 

Ms. HOLMES NORTON. Now, when you say it had to be indicated 

because there had been some notion that perhaps he couldn’t take 

into account—— 

Mr. ROLANDO. There was some notion at the time last year, from 

our understanding of the discussions in the Senate, from what we 

learned, is that there was a thought that the arbitrator was currently prohibited from considering—— 

Ms. HOLMES NORTON. But nothing in writing to show that? 

Mr. ROLANDO. Absolutely nothing, no. 

Ms. HOLMES NORTON. The reason I—— 

Mr. ROLANDO. It is contrary. 

Ms. HOLMES NORTON. I just think it is very important to clarify 

that. That is an almost incendiary statement, because in our country where we have free collective bargaining, and we have that 

with the Postal Service, even the Congress, with all of the thumping that we do up here, always say that collective bargaining is 

part and parcel of the free enterprise system, and we can’t put our 

thumb on the scale, either, even though as Members of Congress 

and as citizens we can express our strong view. 

If, for example, you were to bargain—I am not even sure this is 

subject to bargaining—let us say the 6-day week, whatever things 

are subject to bargaining, if you were to make some concession that 

Members of Congress disagreed with, we would be in hot water if 

we then said, well, collective bargaining doesn’t work when some 

of us don’t like the outcome of collective bargaining. 

So, Mr. Chairman, I just thought it was important so that wasn’t 

put on us in the Congress and wasn’t put on any of our colleagues 

who in the past, even in 2006, where we made this terrible error, 

that none of that was a matter of public record that the Congress 

had, indeed, mandated anything with respect to collective bargaining. Thank you very much. 

Senator CARPER. I am going to reserve my comments for later on. 

I was not in the room when the Senator that apparently raised this 

issue spoke, so I am not sure what exactly was said in exchange. 

My recollection is that there is language in the Federal law, that 

says that arbitrators must consider pay comparability, and the idea 

is to try to provide some comparability to the wages that we pay 

to Postal employees with other people who do, I don’t know if it is 

similar kind of work, but we will say similar kind of work. I don’t 

53 

know that there is anything in the law that says while they are 

doing that, trying to make sure there is pay comparability, that the 

arbitrators have to consider the condition of the economy, the financial state of the Postal Service. So we will have a chance to expand on this further. 

One other point I would like to clarify. Several of our witnesses, 

this panel and the earlier panel, I think, suggested that the Congress made a mistake. We make mistakes all the time. The only 

people that don’t make mistakes are people that don’t do anything, 

and in our jobs, we do a lot of stuff. And hopefully, when we make 

mistakes, we don’t repeat those mistakes. 

But the issue of the 2006 legislation, and the adoption of a very 

conservative approach to the prefunding of health benefits for retirees and future retirees, was a compromise. It was a demand by the 

previous Administration, in order for them to go along with, for example, ending the policy whereby the Postal Service had to assume 

the Military Retirement Service obligation for those who later on 

come to work, after serving in the military, come to work for the 

Postal Service. The Postal Service was the only, you may recall, the 

only Federal entity that had to assume and pay for those military 

service obligations. That wasn’t fair. That wasn’t equitable. In 

order to get the Administration to agree to back off of that, to stop 

that policy, one of the things we had to give on was this very conservative approach for prefunding health benefits. So I just want 

the record to be clear on that. 

All right, my friend, Mr. Chairman, do you want to jump right 

in here? 

Mr. LYNCH. Sure. 

Senator CARPER. Thanks. 

Mr. LYNCH. Thank you, Mr. Chairman. 

Let me see. Mr. Rapoza, I just want to push back a little bit. I 

don’t believe when we talk about closing Post Offices—and to be 

honest with you, that is one area that I think the Postal Service 

has fallen down on. We have 37,000 Post Office stations and we 

asked them to go out and look, because the volume of mail has 

dropped so low, we said, go out and look and try to find surplus 

locations that could be closed without impacting universal service 

and without harming the delivery process, but allowing consolidation. 

I know as an iron worker—I was an iron worker for 18 years— 

it seemed like every time we put up a high rise, whether it was 

in Boston or New York City, every time we would throw up a 30, 

40, 50, or 60-story building, we would put a Post Office on the bottom floor, and just because of the volume in that building, it would 

justify the location of that Post Office. 

Now, I don’t believe if we had closures it would happen in rural 

areas, and I know you cited the meager savings that would be obtained by closing rural Post Offices. And I don’t want Mr. Cantriel 

to get upset. That would not be our idea. As a matter of fact, to 

preserve that universal service, we would have to maintain the 

rural Post Offices, because you close down a Post Office out there 

in Nebraska or Oklahoma, someone has to drive for 400 miles to 

the next Post Office. 

54 

However, in some of the heavily urban areas, you have situations 

like we have in the major cities, where you have in a downtown 

area, a Post Office directly across the street from another Post Office. And you have also got the fact that the Post Office is paying 

downtown office space lease agreements, which are very high in 

Manhattan and Boston and San Francisco and Houston and Los 

Angeles and Chicago, all across this country. Those aren’t neighborhoods. Those are downtown commercial areas. So the mailroom 

from one place would have to shift their mail over across the street, 

and it would save probably hundreds of millions of dollars at a 

minimum by doing that consolidation. 

So at the end of the day, we asked the Post Office to look at 

those 37,000 Postal facilities and they came back with 140 locations. And when I looked down the list of locations, they were at 

airports, they were at shopping malls, they were indeed low traffic 

locations, but it wasn’t nearly what we were looking for. 

Now, there has been a suggestion put out there about a BRAC 

process—instead of a Base Relocation and Consolidation, it is going 

to be a Post Office Consolidation and Relocation and Closure. The 

difference between the two is that I have one military base, one 

military facility in my congressional district, but 37,000 Post Offices in 435 congressional districts, that is 85 Post Offices in the 

average member’s district. I probably have more than most. And if 

you asked me if I could find a Post Office in my district or a couple, 

I bet you I could find a couple that could be consolidated, like the 

ones I mentioned downtown. 

And I just think that there is an opportunity to do that and take 

some pressure off of our bottom line, and I am disappointed that 

the Postal Service didn’t do a better job. They came up with 140 

out of 37,000, and I think we have to revisit that. I think we can 

do it without causing layoffs at the Postal Service. I think we can 

do it without great inconvenience to the customers, including those 

mailers who are up here and the average person, the individual 

mailer, the individual Postal customer. I think we can do it without 

threatening universal service. I think there are savings out there. 

But I think we are just stuck in doing things we have done in the 

past when we could afford to do it that way. 

So that is one area I am going to push on, and you tell me why 

I shouldn’t. 

Mr. RAPOZA. Chairman Lynch, you mentioned the rural offices, 

and we are not against closing Post Offices. We are against closing 

Post Offices for solely economic reasons. The retail facilities that 

you mentioned are in downtown areas, these are stations and 

branches. They are not Post Offices where a postmaster is the 

manager, they come under a postmaster. I will give you an example of what we have in Hawaii. 

The Honolulu Post Office, and surrounding the downtown area 

have about four, five, or six different stations, and those stations 

are being consolidated. They are not Post Offices. 

Mr. LYNCH. Right. But out of Post Offices, stations, and—— 

Mr. RAPOZA. Branches. 

Mr. LYNCH [continuing]. Branches, they came back with 140 locations out of 37,000. That was it. Out of 37,000, 140. So that is one 

area that I think Postmaster General Potter does a wonderful job. 

55 

He is a good man and he is trying. But he didn’t try hard enough 

in this one particular area. And if I have to go to Plan B, that is 

going to lay off carriers or mail handlers or clerks when we 

shouldn’t have to consider that if they had done the closure piece 

of this correctly, so I think there is an answer out there where we 

can institute a BRAC-like process. 

But I think there is an opportunity to give the consumers out 

there—if I went to people in my district and said, we have to close 

a couple of Post Offices in my district, 640,000 people, 19 towns 

and two cities, and we have to close a couple, I bet we could find 

a couple. And if every congressional district did that, I think we 

could save a lot of money. And in this environment, we have to 

save a lot of money. 

I am just saying, we can do this more efficiently without negatively impacting the quality of service, and it won’t fall on the 

backs of the Postal employees, who, by the way, I think it was the 

Pew Foundation did a poll of public servants and they rated public 

servants. And when they rated customer satisfaction among public 

servants, the Postal employees, the clerks and carriers and mail 

handlers, came in at the very top. Congress did not come in at the 

very top. [Laughter.] 

We came down around swine flu and the Taliban, down at that 

level. 

Senator CARPER. No, let the record show. The Taliban are at 6 

percent. We are many times that. [Laughter.] 

Mr. LYNCH. OK. I stand corrected. But we did not do as well. 

So it would be counterintuitive to punish employees who are getting the highest rating in government service, and I am trying to 

avoid a bad situation. We have to look at every opportunity. I know 

you don’t like to do that. People don’t like change. However, we 

have no alternatives. We have either got to grapple with this or I 

think the system will collapse and then we won’t like the changes 

that are absolutely necessary at that point. 

I will yield back. 

Senator CARPER. Thanks, Mr. Chairman. 

From the Aloha State, every Senator’s favorite Senator, Senator 

Akaka. Please proceed with whatever questions you want to ask. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you. Thank you very much, Mr. Chairman. I want to thank you for holding this hearing. I want to add 

my welcome to this panel and I would also welcome with much 

aloha, our friend, Bob Rapoza from Hawaii, who is presently the 

President of the National Association of Postmasters of the United 

States. We are proud of you, Mr. Rapoza, and what you are doing. 

We have had a tough 4 years here. There have been dramatic 

changes in our communities and the economy of our country and 

there has been a lot of loss of jobs and restructuring of programs, 

as well. The Postal Service has been very successful, however, during this period in finding efficiencies wherever it can. However, 

there are some changes that require action by Congress, including 

modifying the burdensome payment schedule for prefunding retiree 

benefits, and health benefits. 

56 

The Inspector General, as you know, also recently found the 

Postal Service may have overpaid its retirement obligations by up 

to $75 billion. If true, the Postal Service should be allowed access 

to those funds. 

Perhaps the most controversial recommendation by the Postal 

Service is moving to a 5-day delivery. The Postal Service claims 

this would save over $3 billion, a 5 percent overall savings, by 

eliminating 17 percent of delivery service. I know that many of my 

constituents in Hawaii rely on the Postal Service for delivery of 

basic necessities. I also understand that some customers would sacrifice a day of service in order to keep rates low and make it also 

predictable. 

However, a Postal Service survey showed that consumers prefer 

the service cut to a 10 percent rate increase. However, an acrossthe-board increase of 10 percent would raise far more than the $3 

billion saved by reducing delivery. I look forward to the PRC’s full 

review of this particular issue. 

Many of you here today have also called for more concessions by 

Postal unions in the coming negotiations. As Chairman of the Senate Oversight of Government Management, the Federal Workforce, 

and the District of Columbia Subcommittee, and a strong believer 

in the established collective bargaining process, I hope that management and the unions will negotiate in good faith, recognizing 

the circumstances that we are all faced with. This will require 

tough sacrifices by both labor and management and may require 

arbitration. However, negotiations free from precondition are the 

cornerstone of the collective bargaining process. 

I would like to ask a question of Mr. Cantriel, Mr. Rolando, Mr. 

Burrus, and as well of Mr. Collins. As you know, economic conditions across the country have harmed many businesses in addition 

to the Postal Service, leading to high unemployment and wage 

cuts. I know you have worked hard with the Postal Service to reduce costs and improve efficiency. Would you discuss those efforts 

as well as how you expect the current economic crisis will affect the 

upcoming contract negotiations? Mr. Burrus. 

Mr. BURRUS. My union is the largest Postal union and we are the 

first up in negotiations in 2010. The other unions follow. I certainly 

trust that you will appreciate my reluctance to negotiate in public 

and to lay out my demands or my expectations of the bargaining 

process in an open forum. The worst a negotiator can do is negotiate with one’s self. I look forward to going to the bargaining table 

where the Postal Service will come and voice their demands on behalf of the American public, the Postal ratepayer. I will speak on 

behalf of the members of the American Postal Workers Union. And 

hopefully, we will come to an agreement. 

I enter negotiations with no preconditions, with no prior demands of what I expect the outcome to be. I expect free and open 

collective bargaining and I expect, truly expect to negotiate a contract. That means that the Postal Service will agree and the union 

will agree to the conditions of employment. Certainly, if we fail to 

reach agreement, the law requires binding arbitration. But I am 

not even considering arbitration at this point. 

I believe we can reach agreement, understanding the gravity of 

the situation that we are operating in today, the pressures, the exVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
57 

ternal pressures, the internal pressures, the demand of the PAEA. 

All those factors will be taken into consideration at the bargaining 

table, and I will speak on behalf of the 260,000 Postal employees 

who I represent and I expect Postal management to speak on behalf of the Postal consumer. 

Senator AKAKA. Thank you. Mr. Rolando. 

Mr. ROLANDO. Yes. Thank you. The NALC, we are going to continue to seek win-win solutions with creative and responsible bargaining with the Postal Service, as well as trying to engage the 

Postal Service’s efforts in innovative revenue generation that we 

can work on together in the future. We will continue a lot of the 

projects that we are working on now. I mentioned in my testimony 

that we saved hundreds of millions of dollars through the route adjustment process, and as long as we have a willing partner, we will 

certainly continue down that road. This year, we will reach a billion dollars in revenue to the Postal Service generated solely by the 

efforts of letter carriers with the businesses on their routes. So we 

are going to continue to just seek win-win solutions through bargaining, as we have. 

Senator AKAKA. Thank you. Mr. Cantriel. 

Mr. CANTRIEL. We are going to approach negotiations with a 

completely open mind and listen to proposals from the Postal Service. We have ideas of our own. I actually am going to meet tomorrow with the Postal Service to discuss some ideas that we have to 

cut costs on the adjustment procedures that we have and the way 

we count our mail and our ability to utilize some of the data that 

the Postal Service has without doing a physical count, which could 

account to millions of dollars of savings for the Postal Service. 

So we will approach it similar to President Burrus, that we will 

try to get the best for our people and keep in mind that the Postal 

Service has to survive. That is where we work. That is where our 

checks come from. But we will approach it with a very open mind 

and look to continue to generate revenue for the Postal Service in 

any way we can and try to work with them the best we can to 

make sure that they survive and we survive. 

Senator AKAKA. Thank you, Mr. Cantriel. Mr. Collins. 

Mr. COLLINS. Thank you, Senator Akaka. One of the reasons that 

I am pinch hitting here, in fact, the only reason I am pinch hitting 

today is that National President Hegarty is in a meeting with the 

National Executive Board of the Mail Handlers Union this week 

and they are the highest governing body of this union. And one of 

the things that they are discussing this week is the upcoming contract negotiations. 

So I can’t speak for them except to tell you that we are confident 

that we will enter those negotiations and conduct those negotiations with good faith and with due diligence and that we are hopeful that the result of those negotiations will be a contract and solutions that will be good for our members, for the Postal Service, and 

for the American public. 

Senator AKAKA. Thank you very much, Mr. Collins. 

I have a question for supervisors and postmasters, Mr. Atkins, 

Mr. Mapa, and Mr. Rapoza. I understand that there has been concern that as craft positions have been reduced, your working hours 

have grown and many managers are covering craft positions or adVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
58 

ditional management responsibilities. Can more be done to ensure 

reasonable working conditions for managers? Mr. Atkins. 

Mr. ATKINS. Thank you, Senator Akaka. To address that issue, 

we as an employee group, supervisors, we do everything viable and 

efficiently as possible to make sure we have one core process that 

we think about every day. That is delivery of the mail. And we take 

that option very seriously. 

Many of the budget cuts that the Postal Service headquarters 

have employed have been placed on the back of our first-line supervisors, managers, and postmasters. They have applied real diligence to the effort of delivering the mail, they have worked many 

hours that they are not being paid for, which technically if they are 

special exempt they shouldn’t be. And some of the budget that their 

office is given each year does not fully and actually calculate the 

number of work hours that are given there. 

But to answer your question directly. Now, how much more can 

be employed? I am not a techie advisor to go back and psychologically examine workers and see how much more they can do, but 

they are doing more than their fair share right now. I guess the 

honor of being a Postal employee is the dignity that they go to 

work with every day, and the ability to get the mail to our American public is foremost in their mind, and they have endured a lot 

and it is coming to a breaking point. But they are going to take 

whatever they can bear and get the mail delivered. 

Senator AKAKA. Thank you very much, Mr. Atkins. Mr. Mapa. 

Mr. MAPA. Senator Akaka, thank you for that question. As we 

have cut back on our workforce clerks, our carriers, both rural and 

city carriers—the load has shifted to postmasters. Also, we have 

cut back even on our supervisor workforce. So somebody has to get 

the work done, and these days, it is the postmaster. Postmasters 

have never shied from the responsibility, as my brother, Mr. Atkins, has said, to get the mail home. 

However, this has caused many work hours to be added to the 

backs of postmasters, and as Mr. Atkins said, generally speaking, 

they don’t get paid extra money to do that. So we have postmasters 

working 50, 60, 70 hours a week. Can we put some more on them? 

I think it would be the wrong thing to do, to expect them to work 

more. I think we have to look at more creative ways to enable our 

existing workforce to fill in where they are needed and maybe even 

to look at filling clerk-carrier positions so that we can allow the 

postmasters to work a more reasonable work day. 

Senator AKAKA. Thank you. Mr. Rapoza. 

Mr. RAPOZA. Senator Akaka, it is good to see you again. Thank 

you. 

Senator AKAKA. It is good to see you, too. 

Mr. RAPOZA. First of all, I want to thank you for introducing legislation to strengthen Title 39 to ensure reasonable and sustainable 

managerial workloads and schedules, and also to protect the integrity of management pay talks. We appreciate that very much. 

Postmasters are loyal. They are loyal to their communities. They 

are loyal to the Postal Service. We will do whatever is needed to 

get the job done. 

One of the areas that are really affecting us now is by having 

postmaster vacancies. Normally, these vacancies are filled with 

59 

craft employees, so the vacancy ends up in another office. This is 

an area that is hurting us and causing postmasters to perform 

more craft duties. 

Senator AKAKA. Thank you very much. I look forward to continuing to work with all of you and look forward to trying to resolve 

the present problems that we have. Thank you very much. 

Senator CARPER. Senator Akaka, thank you. Thanks so much, 

and thanks for your questions and for all that you do here. As you 

know, it is just a joy to be your colleague. 

I am going to yield back again to Chairman Lynch to ask some 

more questions he wants to ask, and then I want to wrap it up 

with about 2 hours of questions. [Laughter.] 

No, it won’t be that long. Chairman Lynch, jump in here, please. 

Mr. LYNCH. Thank you, Mr. Chairman. 

I want to talk for a bit about the CSRS dispute. You all are alleging, and I think you have a good case, with the support of the Inspector General for the U.S. Postal Service that you have overpaid 

into the pension plan to the tune of, I guess, approximately $75 billion. Let us call it $75 billion. 

I recently received a proposal from your group to try to reset that 

and to restore the overpayment to the U.S. Postal Service, and that 

would greatly improve your financial standing, more so if we put 

the Postal Service on a normal payment schedule instead of the 

prefunding requirement that you are under now, which is—it is extraordinary and I think it is unwarranted. 

However, this proposal, it is $75 billion, there is a dispute with 

OPM. They are saying it is something less or that the payment 

schedule is not abusive. So we have an active dispute going on. You 

have put forward a proposal that would artfully reconcile the 

amount that you believe and that by some, including the Inspector 

General, is supported. However, for us to reduce an amount from 

OPM’s column and put it in the Postal Service column, it triggers 

a scoring factor for us and that, in this environment, is—I won’t 

say insurmountable, but nearly so. 

And so we need to figure out a way that we can address the scoring issue, providing that your position is substantiated. And again, 

I think you have a case. And I don’t know if it is the $75 billion 

or $68 billion or whatever that number might be, but I think there 

is a fair case that you have made for a substantial overpayment, 

and as you have pointed out, that number is desperately needed 

and it could cure, at least in the short term and medium term, 

some of the requirements and some of the pressures that you are 

under now. 

Would you object if we came to some agreement as to the amount 

that you are owed, and it has to be in that range that you have 

suggested, but I don’t want to tie anybody else to a specific dollar 

amount, if there were legislation as you have offered to correct that 

situation? There is some dispute as to whether or not the scoring 

would be required. But I can’t find that out, I can’t get that answer 

without filing the bill. 

So what I would like to do is perhaps proceed, file the proposal 

that you have offered, but hold it until we get a CBO scoring decision. Either they are going to decide that it doesn’t have to be 

scored or they are going to decide from a budgetary standpoint that 

60 

it needs to be scored. I think before we can actively discuss that, 

we need to know that answer. So that is sort of the dilemma we 

have with settling out this negotiation about the amounts due for 

overpayment to CSRS. 

Is that something that you would entertain, or are you just hell 

bent on trying to push that legislation come hell or high water? 

Mr. ROLANDO. I guess we would need to clarify, Mr. Chairman. 

I think it is two-part legislation. I think the first part is, as OPM 

has said, they are not against the accounting method. They just 

said it would require a change in the law to use the other accounting method. So I think the first stage is to have it recalculated 

based on whatever methodology is agreed to and acknowledge the 

surplus. And once we have the surplus acknowledged, whatever 

that might be, like you said, then possibly to move forward with 

some legislation, like you said, to see how it scores. 

But I think that first step of acknowledging a surplus is there 

or whatever legislation is necessary to recognize the surplus, I 

think is what we would have to do first. I don’t know if that is 

what you meant, legislation to establish the surplus, and then legislation for some type of movement to see how that would score. 

Mr. LYNCH. Well, I think we need to do the two-step, then. We 

need to offer both suggestions and get that to the CBO and say, 

assuming that we approve this new accounting method, is this a 

solution that will require us to score because that is a lot of time 

and a lot of energy for a solution that no one will vote for, and I 

just don’t want to occupy the Members’ time and Congress’s time 

and the President’s time with that type of approach if ultimately 

it is not going to succeed. It is just a colossal waste of time. 

So I guess what I want to know is if we could try that method 

to get the decision by CBO, and they will only score it if it is live 

legislation. They won’t score it if it is hypothetical, or at least that 

is what they are telling me. 

Mr. ROLANDO. Right. 

Mr. BURRUS. I concur that I believe it would be a two-step process, that first get the decision that what the Postal Service’s obligation is in terms of funding. And then deal with the transfer of the 

money, which may or may not be scored, secondary. Deal with that 

later. We might choose to score it over a period of time, just as they 

imposed the payment over a period of time. You know, there are 

a lot of options in terms of the scoring process. But score what? 

You have to change the law before you know what has or does not 

have to be scored. 

So I would prefer a two-step process, and we will work in tandem, all the Postal community will work in tandem, because we are 

joined at the hip on this issue, Postal management, all of the 

unions, management associations. We will be moving in lock step 

on this issue. I believe it—I think it would be a better approach 

through a two-step process, one just to set the record straight first 

what the Postal Service’s obligation is. 

Mr. LYNCH. Right. I see my time has expired. My concern is that 

Congress is not locked at the hip, but I appreciate your input. 

Thank you. I yield back. 

Senator CARPER. Mr. Chairman, thanks for all your questions. 

Thanks so much for letting us be your partner and your teammate, 

61 

your wingman or your wingwoman as we approach again these important but challenging issues. 

I learned during the course of our discussion here today and the 

questioning and during an aside with our Chairman from the 

House that he is the father of two daughters and he represents an 

area in the greater Boston area, well beyond Boston, but in Massachusetts. One of my sons just graduated from school, and I am the 

father of two boys, a little bit older than his girls. 

Part of my goal, one of my goals in life is to pass on to my kids, 

and hopefully someday to their kids, just a better country, a better 

place in which to live and work and raise their families. I suspect 

that is one of the goals for all of us who are fortunate enough to 

be parents or grandparents or aunts or uncles, for that matter. 

Delaware is the last State on the East Coast where there was 

any auto assembly operation. From Maine to Florida, it is the last 

State where any autos were assembled. We had a General Motors 

(GM) plant. We had a Chrysler plant. And we lost our Chrysler 

plant December 31, 2008. We lost our GM plant about a year ago. 

Very painful. I worked for 30 years to help keep that Chrysler 

plant going and almost 20 years on the GM plant. We lost them 

both. Ron Gettelfinger is a fellow that some of you all know, a 

UAW leader. He came out of Ford UAW and led the UAW through 

one of the toughest times I can imagine any union president leading an organization, and he presided during the leadership of the 

UAW at a time when their membership dropped by more than half, 

probably by as much as two-thirds, and in the end agreed to make 

concessions and changes that resulted in the UAW taking over 

ownership of the Employee Health Fund and using that as a way 

to help save the industry, but to provide some up-side, I think as 

the industry comes back, some up-side benefit for the union. 

But I have real high regard for him, and for those of you who 

know him, you probably share that regard. During the course of 

the give and take, as GM and Chrysler went into bankruptcy and 

then out of bankruptcy, the UAW did some remarkable things in 

terms of what they were willing to sacrifice and put on the line in 

order to save not all the jobs, but to save the industry and give the 

folks who work there, maybe their sons and daughters, the hope 

that some day they could have a good job. 

Really, I think of the Postal Service, I think of the auto industry 

as really opportunities for employment that help people move into 

the middle class and stay in the middle class. I want to ask you 

to kind of reflect on what the UAW has gone through in this country, some of the, I think, rather remarkable changes they were willing to accept in terms of, first of all, the wage benefit structure 

maybe for some of the new people that are coming in. They won’t 

be able to participate at the same level of pay and benefits. Their 

willingness to do more of multiple training of employees who can 

do a variety of different tasks on the job. 

But just reflect, if you will for me, on what they have done to 

save the industry. Ford is coming back strongly. I think GM is 

going to make a profit this year, and I think, God willing, Chrysler 

will do that next year. We, as taxpayers, own 60 percent of GM and 

about 10 percent of Chrysler. Not many people know that. Most 

people think we threw our money away. But those of us who voted, 

62 

and I know the Chairman here did, as well, who voted to save the 

industry, we didn’t do it just out of the goodness of our heart. Later 

this year, GM is going to hold the first of a series of IPOs, stock 

offerings. The monies that will be raised, 60 percent of it will come 

back to the Treasury, the taxpayers. Next year, Chrysler will do a 

similar kind of thing. So people, I think, will be pleasantly surprised when that happens. 

But just reflect for us on what the UAW was willing to do and 

what lessons there might be for us with respect to the Postal Service, and for you. 

Mr. ROLANDO. I think it is somewhat of an unusual comparison 

because, of course, the UAW was dealing with companies that were 

involved in a taxpayer bailout, whereas the Postal Service is just 

trying to get access to what would be their own money. 

But certainly when we enter into collective bargaining, like I 

said, we want to be completely creative and innovative and adjust 

to what has to be done. Any particular thing the UAW did, of 

course, it is difficult to discuss without looking at the total package 

involved and the situations the Postal Service is in. 

Senator CARPER. You once mentioned to me in a conversation we 

had, Mr. Rolando, we were talking about how do we save 6-day 

service, and one of the ways I think you all had actually discussed 

at the bargaining table with Postal management was the possibility of folks who worked on Saturdays, maybe deliver the mail on 

Saturdays, would work under a different pay-benefit structure. 

Would you just mention that for us? 

Mr. ROLANDO. Yes. That was one of the proposals that we discussed in the last negotiations, where it would actually make Saturday delivery a little bit less expensive for the Postal Service by 

using a different workforce that would be primarily made up of 

possibly retirees, family, and so forth. But it never went anywhere, 

but it was an interesting proposal that we discussed last time. 

Senator CARPER. Thank you. Others, please. Mr. Burrus or Mr. 

Collins? 

Mr. BURRUS. Yes. As I said, we begin negotiations in August of 

this year, the first of the Postal unions that will be engaged in the 

process with Postal management during the period of this massive 

loss of volume as well as revenue. Everything is on the table. We 

will consider everything. However, there are some demands at the 

outset. 

I don’t expect the membership of the American Postal Workers 

Union, the people that I represent, to save the Postal Service. The 

Postal Service is a huge community. There are a lot of factors that 

have to be considered, many of them that were discussed here 

today. But among those are if the Postal Service is going to set the 

cost of the work that my members perform at the rate of 10.5 cents 

a letter in discounts, that has to be on the table. It has to be. 

If you are going to determine the value that is given to that activity, then that has to be on the table as we consider what is the 

value for my members to do the exact same work. So everything 

has to be on the table. Supervisors, managers, the structure, the 

employees, the hourly wage, all of that is on the table and we will 

work our way through it. If there is good faith on both sides, I expect that we will reach an agreement. 

63 

But one of the key factors is going to be—because the Postal 

management has a right to arbitrarily determine what the value of 

the work that my members perform is with the people that perform 

it. Those are the consolidators and others that perform that activity 

that set that rate. I certainly can’t go there in good faith and say, 

you determined if X does this work, it has value at 10.5 cents a 

letter, but if your members perform this work, half-a-cent per letter. That doesn’t lead to an agreement. 

Senator CARPER. OK, thanks. A vote has just started and we 

have between 5 and 10 minutes to go and vote. 

Let me just make a comment. Mr. Rolando said it seemed like 

an unlikely comparison, the situation that the UAW was in and the 

situation that we have in the Postal Service. One of the things to 

keep in mind, and I think I mentioned this in my opening statement, there are a number of stakeholders with respect to the Postal Service and this obviously includes customers, business, and otherwise, nonprofits and residents and so forth. But there are a number of stakeholders who include the folks who work at the Postal 

Service, retirees. They include the taxpayers. 

And when it came to the U.S. auto industry, there are a lot of 

stakeholders there, too, bond holders, those that owned shares, 

common stock, preferred stock, the folks who worked there, the retirees, their families, taxpayers. And what we tried to work out 

with the auto industry was a fair, equitable sharing of the sacrifice 

and everybody did a little bit, and I think at the end of the day, 

people said, they did good. So hopefully we can figure out something like that in this regard, too. 

Mr. Cantriel. 

Mr. CANTRIEL. I am a little bit in a unique situation because I 

worked for 8 years for Chrysler, from 1972 to 1980, during the period of time where gas prices did some weird things and jobs came 

and went overnight. So I experienced a lot of what the UAW went 

through during that period of time. 

Senator CARPER. Where did you work? 

Mr. CANTRIEL. I was at the Fenton, MO, assembly plant. 

Senator CARPER. OK. 

Mr. CANTRIEL. And I am familiar with some of our workers from 

that area went up to the Newark plant. 

Senator CARPER. Yes. 

Mr. CANTRIEL. So I am somewhat familiar with what you have 

and what you are talking about. I am not sure that I make the 

complete connection you do because of the universal service obligation that we have and so many things that are mandated to the 

Postal Service that Chrysler and GM are dependent on, the whims 

of the customers that they have, whether they like one product or 

another. If they move to another, the pricing is different. 

So it is significantly different on several aspects of it, and whenever you look at what makes this country great, the stronger the 

middle class, the stronger the country is going to be. And I don’t 

think that we want to erode the middle class any more, and I view 

the Postal Service jobs as good, strong middle class jobs. I think we 

have to be very careful when we look at eroding that and taking 

away from the value of our country. 

64 

There are a lot of things the Postal Service can do and look at 

before they start two-tiering the workers that do exactly the same 

job, because that tends to make it difficult to draw the class of people that you need in the Postal Service, where they look across the 

hall at someone doing exactly the same job they are doing for a 

third of the salary or a fourth or a fifth or half the salary. So I 

think we have to be very careful how we approach that. 

There are a lot of things in collective bargaining that we can 

open up and look at and both sides can benefit from. I am more 

interested in revenue generation and putting the Postal Service 

back on a solid base rather than eroding the middle class any more 

than it already has been. 

Senator CARPER. I think there might be room for both approaches. We will see. I focus a lot on revenue generation, as well, 

and I think that is important. And you and the folks that you represent probably have better ideas on revenue generation than most 

of us who sit on this side of the dais. We need those ideas and welcome them. 

Does anybody else want to make a comment on this issue? 

Please. 

Mr. ATKINS. Yes. Like the representative of the National Association of Postal Supervisors, I would like to make one comment. I 

agree with the gentlemen over here and my cohorts over here to 

my left as far as negotiations, but we have to negotiate, you have 

to have fairness on both sides, and that is somewhat disturbing. 

Being through a couple negotiations, there has been little give and 

take on the Postal Service headquarters side and we have to 

have—to obtain anything, we need to be fair, and I know workers 

that belong to the National Association of Postal Service will be 

willing to give and do everything to make the Postal Service survive. But the thing that they have to employ, that they are getting 

fair treatment and a fair break and have honest figures and have 

an honest day’s work before them before they sit down and actually 

can entertain and trust the other side. And it is trust that we build 

upon that leads to a relationship, and that is somewhat hard to— 

I would say that is somewhat hard to believe at this period in time. 

But we do want to look forward and make sure that the next negotiation period is one built on trust relationship and what is good 

for the American people, what is good for the Postal Service, and 

what is good for the National Association of Postal Supervisors’ 

members. 

Senator CARPER. All right. Thank you. 

I have a number of questions I am going to submit for the record. 

I may try to work one question in. In terms of what we need to 

do here, a lot of people have done a lot of work. You all have done 

a lot of work in the organizations that you lead. You have done a 

lot of work in trying to identify ways to raise revenues, increase 

the revenue stream, trying to find ways to provide better service 

for maybe less money, at least equal service for less money. 

And the three consulting firms that the Postal Service hired to 

do the work, I thought for the most part did good work. It is not 

to suggest that we should buy everything they said lock, stock, and 

barrel, but there is a lot of good work that has been done and a 

lot of good ideas, and if we are really smart, we will synthesize 

65 

those and try to figure out a comprehensive path forward. Some 

work has been done already to do that. 

Among the things I think we agree on, one, this formula by 

which we are required in the 2006 law to prepay retiree health 

benefits, the most conservative approach I have ever seen for any 

State or local government, any company in this country, is something that needs to be modified. 

I think another thing we can agree on, if the Inspector General 

for the Postal Service is right and the Postal Service has overpaid 

its Civil Service obligation, we need to try to use that money to 

meet, I think, the health care benefit obligation and try to pay that 

down. I think that will help in the near term and the long term, 

as well. 

I think part of the solution, as some of you suggested, is just to 

be very creative, very thoughtful in terms of identifying revenue 

generating opportunities. We don’t do a lot of voting by mail. They 

do in a couple of States. Oregon is one of those, and some of us, 

Senator Wyden and myself and others have been pushing that. For 

all I know, the Chairman over here to my left, Chairman Lynch, 

has been an advocate of that, as well. That could be a pretty good 

revenue stream for the Postal Service. It could also increase voter 

turnout and save money in terms of reducing the cost of having 

elections. 

There are ideas out there that if we just be smart and think outside the box and identify them, we can identify those. 

I want to say in terms of the collective bargaining work that is 

upcoming that is before all of you, you have a tough challenge 

ahead of you. We get elected and reelected if our people think that 

we are fairly representing their interests. We can’t continue with 

trillion-dollar deficits and we certainly can’t continue with the Postal Service running a deficit of $200 billion or whatever it is over 

the next 10 years. 

But we need as elected officials to ask people to, in some cases, 

get less in terms of benefits for programs or whatever from the 

Federal Government, and in some cases, if they are not paying 

their fair share of taxes, to ask them to pay a little bit more. That 

is not a combination for getting reelected. 

And for those of you who have to be elected and to run for office 

in many cases, to ask your folks to be willing to work maybe a little 

more, maybe a little smarter, a little bit harder for maybe not 

much more money, or maybe even the same, that is not an easy 

thing to do and to get reelected, as well. As one sort of political animal to another, we understand and we appreciate the challenges 

that provides for all of you. 

The other issue we have had some discussion back and forth on 

is facilities, whether they happen to be Post Offices, they happen 

to be like substations or branches or whatever, or the processing 

centers. We have to find a way. There have been a bunch of good 

ideas on how to do that in a fair and humane way and a smart 

way, and we need to identify those. I don’t know if the idea is a 

BRAC-like process. I am not sure what the answer is, but that has 

got to be part of the solution. 

And in that mix there, there is a pretty good strategy, and it includes some of the things that you have mentioned. I tried to sumVerDate Nov 24 2008 09:40 Jun 22, 2011 Jkt 058037 PO 00000 Frm 00071 Fmt 6633 Sfmt 6633 P:\DOCS\58037.TXT SAFFAIRS PsN: PAT
66 

marize some other ideas. There is a pretty good strategy there that 

asks a little bit of sharing and sacrifice from almost everybody with 

the potential for having a Postal Service that will be there when 

your daughters are 110 and 115 and my sons are 120 and 121. 

Mr. LYNCH. There you go. 

Senator CARPER. So our job is to figure that out and to work in 

that direction together, and that is what we pledge to do. 

Again, you all have been very good to spend this much time with 

us today to share your thoughts. Thank you for your leadership in 

this tough time. It is a real privilege to spend this time with you 

and I am grateful for all that you are doing in the House. Obviously, we don’t solve these issues in the Senate by ourselves, nor 

in the House by yourselves, nor without the Executive Branch, nor 

without your help and input, as well. So together, we will see if we 

can’t get this done. 

Thank you all very much, and with that, we are adjourned and 

we are going to go start voting. Thank you. 

[Whereupon, at 6:16 p.m., the Subcommittees were adjourned.] 

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