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NOMINATIONS OF HON. MARK D. ACTON AND 

ROBERT G. TAUB 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

NOMINATIONS OF HON. MARK D. ACTON AND ROBERT G. TAUB TO BE 

COMMISSIONERS, POSTAL REGULATORY COMMISSION 

JULY 28, 2011 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas 

MICHAEL L. ALEXANDER, Staff Director 

KRISTINE V. LAM, Professional Staff Member 

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

Management, Government Information, Federal Services, and International Security 

NICHOLAS A. ROSSI, Minority Staff Director 

JENNIFER L. TARR, Minority Counsel 

WILLIAM H. WRIGHT, Minority Staff Director, Subcommittee on Federal Financial 

Management, Government Information, Federal Services, and International Security 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk 

LAURA W. KILBRIDE, Hearing Clerk 

(III) 

C O N T E N T S 

Opening statement: Page 

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

Senator Brown .................................................................................................. 3 

Senator Tester .................................................................................................. 12 

Senator Pryor .................................................................................................... 15 

Senator Begich .................................................................................................. 18 

Prepared statements: 

Senator Carper ................................................................................................. 37 

Senator Brown .................................................................................................. 39 

WITNESSES 

THURSDAY, JULY 28, 2011 

Hon. John M. McHugh, Secretary, U.S. Army ...................................................... 3 

Hon. George A. Omas, Former Chairman of the Postal Rate Commission ........ 5 

Robert G. Taub to be a Commissioner, Postal Regulatory Commission ............. 6 

Hon. Mark D. Acton to be a Commissioner, Postal Regulatory Commission ..... 8 

ALPHABETICAL LIST OF WITNESSES

Acton, Hon. Mark D.: 

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

Prepared statement .......................................................................................... 70 

Biographical and financial information .......................................................... 71 

Letter from the Office of Government Ethics ................................................. 79 

Responses to pre-hearing questions ................................................................ 80 

McHugh, Hon. John M.: 

Testimony .......................................................................................................... 3 

Prepared statement .......................................................................................... 42 

Omas, Hon. George A.: 

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

Taub, Robert G.: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 44 

Biographical and financial information .......................................................... 46 

Letter from the Office of Government Ethics ................................................. 58 

Responses to pre-hearing questions ................................................................ 59 

APPENDIX 

Document for the Record submitted by Senator Begich ....................................... 40 

(1) 

NOMINATIONS OF HON. MARK D. ACTON AND 

ROBERT G. TAUB 

THURSDAY, JULY 28, 2011 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 2:35 p.m., in room 

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

presiding. 

Present: Senators Carper, Pryor, Tester, Begich, and Brown. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. This hearing will come to order. 

We want to welcome our witnesses, our introducers, and everyone in the audience. If there are any family members that you 

would like to introduce, you are welcome to do that. 

Today, we are going to be considering two nominations to fill 

openings on the Postal Regulatory Commission, Mark Acton and 

Robert Taub. 

As my colleagues know and I am sure much of our audience and 

our nominees know, this is a very challenging time for the Postal 

Service and this country. We are a few months away from the end 

of the fiscal year, and the Postal Service is projecting further 

record losses, perhaps more than $8 billion. 

Postal Service management has already stopped making its 

share of its employees’ Federal Employees Retirement System 

(FERS) pension payments. Absent a change in the law, payments 

due in September and October related to retiree health and workers’ compensation could be in jeopardy due to a serious cash crisis 

at the Postal Service. It is not out of the question that the Postal 

Service’s ability to meet its payroll and, as a result, to continue operations might be in danger, as well, once the new fiscal year starts 

in October. Other than that, everything is pretty good. [Laughter.] 

Unfortunately, things are not projected to get a whole lot better. 

Just over a year ago, our former Postmaster General Jack Potter 

announced the findings from a group of three respected outside 

consultants showing that the Postal Service’s financial condition is 

likely to continue to erode in the coming years. Those consultants 

found that without major change, the Postal Service would run up 

cumulative deficits of more than $230 billion by 2020. 

The Postal Service, in partnership with its employees, is starting 

to chip away at that number, but more and difficult change will 

need to occur in both the near and the long term if we are going 

2 

to set things right. We will need to work quickly to start making 

that change happen. Even if the Postal Service was able to somehow make it through the financial land mines it will encounter in 

the coming months, fiscal year 2012 is shaping up to be little short 

of a disaster for the Postal Service and for all the customers and 

businesses that rely on it. 

Even during the slow and halting economic recovery that our 

country is experiencing today, mail volume has been falling, particularly First Class mail volume. This likely means that the electronic diversion of the mail is happening at an even quicker rate 

than any of us might have imagined. If this trend continues or if 

it should worsen, the Postal Service will almost certainly run out 

of cash and borrowing authority and be forced to shut its doors no 

later than next summer. We cannot afford to let that happen in 

this country. 

Millions of jobs in a wide variety of industries depend on a 

healthy Postal Service. We owe it to the men and women who hold 

those jobs to take whatever steps might be necessary to ensure 

that the Postal Service continues to remain solvent. We have to 

take those steps even if they may prove, at least in the near term, 

unpopular. 

Now, I know that it is Congress and the Postal Service that will 

ultimately need to take those steps, not the Postal Regulatory Commission (PRC), but I wanted to mention all this at this hearing because it is essential that anyone who serves on the Commission or 

is thinking of joining the Commission be mindful of the current crisis and the impact their decisions as commissioners could have in 

either improving or worsening it. 

I have not made a secret of the fact that I have some concerns 

about the Commission and some of its recent work. It was troubling to me, for example, when the Commission’s Chair expressed 

her views on the Postal Service’s proposal to eliminate Saturday 

delivery before that proposal had even gone to the Commission for 

examination. It was even more troubling when the Commission’s 

report on the advisability of the Postal Service’s proposal did not 

appear for about a year and, in a lot of ways, created more questions than it answered. On top of that, two recent Commission decisions on rate making and the Postal Service’s licensing authority 

were recently remanded to the Commission by the courts. In one 

of those cases, the courts even criticized the Commission for doing 

sloppy work. 

At a time like this, we need to do better. All of us need to do 

better, and that includes me. We need to do a better job here in 

Congress in finding consensus around the changes in law that are 

necessary to help the Postal Service survive, and the Postal Regulatory Commission can probably do a better job, too. 

I look forward to exploring with our witnesses today how they 

would contribute to the Commission’s work at this difficult time, 

and I also want to explore how they would balance the competing 

demands placed on the Commission to weigh both customer service 

needs and the Postal Service’s financial challenges. 

With that having been said, I am going to close my remarks at 

this point and turn to Senator Brown, the Ranking Republican of 

my Subommittee on Federal Financial Management, Government 

3 

1The prepared statement of Senator Brown appears in the Appendix on page 39. 

2The prepared statement of Secretary McHugh appears in the Appendix on page 42. 

Information, Federal Services, and International Security, to ask 

him to make any comments he might like to make. 

OPENING STATEMENT OF SENATOR BROWN 1

Senator BROWN. In the interest of time, since I would like to hear 

the nominees who are here testifying, I will submit my comments 

for the record.1 Thank you. 

Senator CARPER. Thanks so much. Thanks for being here. 

Before we start our questions, we have a couple of distinguished 

guests to introduce our witnesses, and we will start with John 

McHugh, a former colleague of mine in the House of Representatives, a fellow who is probably regarded as the foremost Representative with knowledge of the Postal Service as anyone that has 

served, certainly in the time that I have been here. He is now the 

Secretary of the Army. I had the pleasure of meeting last night 

with your boss, Leon Panetta, who was also an old colleague of 

mine in the House. You are going to be introducing Robert Taub, 

so please go ahead with your introduction and then we will yield 

to Mr. Omas. But again, thank you, Mr. Secretary. Thank you so 

much, and thank you for your continued service to our country. 

TESTIMONY OF HON. JOHN M. MCHUGH,2 SECRETARY, U.S. 

ARMY 

Secretary MCHUGH. Well, thank you, Mr. Chairman, and let me 

tell both you and the distinguished Ranking Member, Senator 

Brown, how much I truly appreciate the opportunity to be here 

today to appear before this distinguished Committee on behalf of 

my good friend and long-term colleague and, I would add, partner, 

Robert Taub. 

I would be remiss, gentlemen, if I did not also gratefully acknowledge the presence of Mark Acton, someone who has been in 

the trenches and has been working these issues, and, as a member 

of the Commission and to introduce him, my good friend George 

Omas, who spent many years in the House of Representatives on 

Postal Service issues and other matters and did so after his time 

in the House, as well. So I am sure they will provide you with some 

very provocative thoughts on these very important issues, as you 

said in your opening statement. 

I am particularly pleased because, as I understand it, Mr. Chairman, under the protocol, I am neither expected to face questions 

nor submit responses for the record, which, compared to my other 

congressional appearances—— 

Senator CARPER. No, we have questions. [Laughter.] 

Secretary MCHUGH. You will have to catch me on the way out. 

[Laughter.] 

But that is a good day for me and probably for you, as well. But 

I would note, as you so graciously noted, I am here today principally in my position as the 21st Secretary of the Army, but I 

think it is very relevant to take a moment to reflect on the 17 years 

I spent as a member of the House of Representatives and dwell a 

bit on what I think is a shared experience between members of 

4 

both Houses. Whether it is on national talk shows or local television, members of the Senate and the House are the faces and the 

voices of those we serve. It is a life that we all live in the public 

eye with demanding schedules, bad hours, writing laws, meeting in 

committees, long sessions in Washington, longer commutes back 

home. And every few years, they ask you to campaign, to go out 

and raise a lot of money, with just incredible strains on time and 

attention. 

But we choose to do that, living in the public eye. We are 

blessed, though, to have around us individuals who do not seek the 

attention or the praise, who at the same time keep our schedules 

and meet our demands and whose industry and counsel, I would 

argue, are absolutely essential to all that we do. While members 

of Congress are the face and the voice, the individuals behind us 

are often the heart and the soul of what we are able to do. 

And during my time in the House and later in the Pentagon, I 

have been fortunate—indeed, I have been blessed—to have just 

such a person working for me, working with me, for now the better 

part of 17 years. And as you noted, Mr. Chairman, while in Congress as my Chief of Staff, Mr. Taub was instrumental in assisting 

me better overcome the daily rigors of congressional life and, more 

to the point for your consideration today, was a key figure in the 

advancement of postal reform legislation that in the House, I had 

the opportunity to work on for the better part of 10 years as chairman of the Postal Service Subcommittee, and I guess the fact that 

it took us 10 years speaks to my incompetence. 

But nevertheless, on the day we voted on that bill, I told my colleagues during floor proceedings that Mr. Taub was, as I put it, the 

intellectual and spiritual glue that held the effort together. And 

truly, to my amazement, he was always willing and, frankly, even 

anxious to hold one more meeting, make one more effort to advance 

reform. When others saw failure, he saw a challenge. When others 

lost hope, he remained focused. And when others became angry, including me often, he remained calm. In short, he is a truly remarkable man. 

I said back then and I want to repeat to you today that as proud 

as I was of his work and his steadfastness, I am prouder still that 

in my heart, I consider him a friend. That friendship has endured 

and has grown since Mr. Taub joined the committee staff back in 

1995, continuing a career in public service that first began when 

he was a student at Gloversville High School, when he would go 

to work at his State Assemblyman’s office after classes got out— 

and I have it on good authority he did it for free—I would hope he 

would not have to meet his next challenge in that way, but it is 

another thing Mr. Taub and I have in common. We are both from 

small towns in upstate New York. Of course, where I live now in 

Pierrepont Manor, it has a population of about 1,600. Gloversville, 

where Mr. Taub’s home town is, has about 15,000 residents, so we 

used to call that the big city. 

But I know he was raised in an environment that cherishes loyalty, respects hard work, and values achievement. I want to be 

honest. It is very difficult for me to lose him. He came with me to 

the Pentagon as a Special Assistant when I was confirmed as the 

Secretary, and I have relied so deeply upon his friendship, his comVerDate Nov 24 2008 14:27 Feb 29, 2012 Jkt 68019 PO 00000 Frm 000008 Fmt 06633 Sfmt 06633 P:\DOCS\68019.TXT SAFFAIRS PsN: PAT
5 

mon sense, and his good judgment. But I know that his commitment to the postal regulation environment, his steady leadership, 

and his calm resolve will serve the Postal Service, all of you in this 

great Congress, and our Nation so very well. 

America’s first Postmaster General, Benjamin Franklin, observed 

in his famous Poor Richard’s Almanac that ‘‘a good example is the 

best sermon.’’ Mr. Taub continues to set a good example every day 

in everything he does. I am grateful for President Obama’s wise 

nomination of this great leader, and I would, gentlemen, respectfully urge your favorable consideration of his nomination. 

With that, I yield back. 

Senator CARPER. Well, thank you very much. We hear a lot of introductions here. That was truly a lovely introduction. Thank you. 

If he is half the man that you say he is, we are lucky to have him. 

Secretary MCHUGH. He is all of it. 

Senator CARPER. Good. 

I know your schedule is busy, and whenever you need to leave, 

feel free to do so. 

Secretary MCHUGH. I will respectfully wait for Mr. Omas. 

Senator CARPER. Very good. 

Our next introducer is George Omas. He was a former chairman 

of the Postal Rate Commission. He knows something about that 

Commission and the kind of men and women that we need to 

serve. Mr. Omas, even though you are a former chairman, we are 

delighted that you are here and look forward to hear what you 

have to say about Mr. Acton. Thank you. Welcome. 

TESTIMONY OF HON. GEORGE A. OMAS, FORMER CHAIRMAN 

OF THE POSTAL RATE COMMISSION 

Mr. OMAS. Thank you, Mr. Chairman and Members of the Committee. It is indeed an honor to once again appear before this 

panel. And I will say, it is going to be very difficult to follow Congressman McHugh after that glowing remark, but I will try. I 

served as chairman from November 2001 until December 2006 of 

the Postal Rate Commission, which was, as you know, the predecessor to the Postal Regulatory Commission. I really do take some 

pride in believing that during my time at the agency, I contributed 

toward making many key decisions that benefited the greater interest of the Postal Service and the postal community as a whole. 

I am here today to say that selecting your nominee, Mr. Acton, 

as my special assistant when I became chairman is certainly 

among the best choices I made while I was chairman. I have known 

Mr. Acton for more than 25 years, and I have known him to be a 

man of honor and integrity. I have always been impressed that 

once Mr. Acton becomes a part of a staff for any endeavor, he diligently sets out to learn the principles, and he did that in trying to 

learn the principal regulations and rulemaking because when he 

came to the Commission, I think all he knew was the name of the 

Commission. But in his vigor to become a better partner with the 

rest of his colleagues at the Commission, he went on to earn an 

M.B.A. and to prepare himself for the role, and for the past 5 

years, I feel he has served with distinction as a member of the 

Commission, and I am pleased that he has decided to continue to 

secure a second term at the Commission. 

6 

1The prepared statement of Mr. Taub appears in the Appendix on page 44. 

Mr. Chairman and Members of the Committee, I am delighted to 

introduce Mark Acton to you and to endorse his second term. 

Thank you. 

Senator CARPER. Mr. Omas, very nice to see you. Thank you for 

those kind words about Mr. Acton. 

Mr. Secretary, so long. 

Secretary MCHUGH. Thank you, Mr. Chairman. 

Senator CARPER. Take care. As we say in the Navy, fair winds 

and a following sea. 

Mr. Taub, would you like to lead off? Your entire statement will 

be made part of the record. Feel free to introduce any special 

guests or family members that you have with you. You are recognized at this time. 

TESTIMONY OF ROBERT G. TAUB 1 TO BE A COMMISSIONER, 

POSTAL REGULATORY COMMISSION 

Mr. TAUB. Mr. Chairman, Senator Brown, distinguished Members of the Committee, I want to thank you for the opportunity to 

appear before you today and for your consideration of my qualifications to be a Commissioner of the Postal Regulatory Commission. 

I would like to thank President Obama for the opportunity he has 

afforded me through this nomination. I am honored by his trust. 

I am pleased that many of my family, friends, and colleagues are 

here and am grateful for their support. 

Senator CARPER. Where are they sitting? 

Mr. TAUB. Well, while I cannot acknowledge them all, I would 

like to introduce my family. 

Senator CARPER. Sure. 

Mr. TAUB. My dear wife, Cynthia Taub. 

Senator CARPER. Which one is your wife? 

Mr. TAUB. At the end. Our daughter, Hannah Taub. 

Senator CARPER. Hannah, welcome. 

Mr. TAUB. Her twin sister, Madeline, is at camp and cannot 

enjoy our Constitution in action today. 

Senator CARPER. Are they identical twins? 

Mr. TAUB. Fraternal. 

Senator CARPER. Very good. 

Mr. TAUB. My sister and brother, who traveled a distance to be 

here, Beth Laddin and Bill Taub—— 

Senator CARPER. Where did they come from? 

Mr. TAUB. Albany, New York, and Cherry Hill, New Jersey. 

Senator CARPER. I have a son living in Albany now, so keep an 

eye on him. [Laughter.] 

Welcome all. 

Mr. TAUB. Like good families everywhere, all have lent me love, 

encouragement, and a good dose of understanding. While our parents could not be physically present, I feel their support with us 

today, as well. 

Finally, a special thank you to Secretary of the Army John 

McHugh for his kind introduction. For close to two decades, I have 

had the privilege of working with one of the finest officials I have 

ever met in my 25 years of public service. If confirmed, I know I 

7 

will succeed in the challenges of being a Commissioner if I can 

bring even half the measure of dedication to duty and thoughtful 

analysis that I have seen in Secretary McHugh these many years. 

We started working together in January 1995, when he became 

Chairman of the newly created House Postal Service Subcommittee, and I had joined the staff after 8 years at the Government Accountability Office. Neither of us could anticipate that the 

journey of modernizing our Nation’s postal sector would take so 

long or be so challenging. 

In addition to the numerous postal issues we worked on for 15 

years, most notably in passage of the Postal Accountability and Enhancement Act, I subsequently had the honor of serving as his 

Chief of Staff for a decade, helping him represent that very rural 

area of Northern New York State where we were both born and 

raised. And for the past 2 years, I have supported him at the Army 

as he confronts the challenges of managing that Department in the 

midst of tightening budgets concurrent with a decade of war. So, 

deep thanks to my boss, my mentor, and my friend, Army Secretary John McHugh. 

Last month, the Army celebrated its 236th birthday since its 

founding in 1775. Another institution as venerable as the U.S. 

Army also marked its 236th birthday this year, the U.S. Postal 

Service. Indeed, almost to the day of this hearing, it was on July 

26, 1775, that the Continental Congress appointed Benjamin 

Franklin as our Nation’s first Postmaster General. For 236 years, 

this is a service that American people and American businesses 

alike have come and grown to expect. Universal service at a uniform price, no questions asked. Very few in this country go to his 

or her mailbox or his or her local post office wondering if the mail 

will be there. It is always there. It has always been there. But the 

true question, the question confronting our Nation, is will the mail 

always be there? 

I want to assure this Committee that I appear here before you 

today with few delusions as to the difficulties that lie ahead. I believe I have a clear understanding of the serious and numerous 

challenges that face America’s postal system. As you all know well, 

the mail stream of today has been diminished by electronic means 

of communication that replace mail. They replace stamps. And, 

thus, they replace the revenues necessary to operate our key mail 

delivery system. Some may even suggest that the time of the Postal 

Service has passed. But the fact is, for all the challenges the Postal 

Service of the 21st Century faces, it still retains an integral place 

as a key cog in how American businesses conduct their affairs and 

how Americans all across this land communicate. 

The U.S. postal and delivery sector represents a $1-trillion-a-year 

industry with 8 million jobs, making it vital to our economy. Postal 

marketers speak of the proverbial ‘‘mail moment,’’ that instant of 

receiving and opening mail that holds special meaning. And despite 

the immediacy of email or Skype, take one look at the men and 

women in the military and their families stationed around the 

planet when they get that hard copy letter or packet. 

However, the Postal Service is in a serious financial crisis. For 

the Postal Service to continue to be self-financing may require a restructuring of its statutory and regulatory framework to reflect 

8 

1The prepared statement of Mr. Acton appears in the Appendix on page 70. 

business and consumers’ changing use of the mail. I am aware that 

the Postal Regulatory Commission is now conducting its 5-year review of the law with recommendations to improve it. 

If confirmed, I would welcome the opportunity to focus my executive and management skills on ensuring transparency and accountability of the Postal Service and fostering a vital and efficient 

universal mail system. I would bring to the job 25 years of public 

service achievement, and I pledge to work with all stakeholders to 

address the current difficulties. There are no easy answers to these 

challenges, but answer, we must. And I promise you, if confirmed, 

my first priority will be, along with this Committee, the Congress, 

the President of the United States, and, of course, the other Commissioners, to engage in a constant search for the discovery and 

implementation of solutions. 

I am truly honored to be considered. Thank you. 

Senator CARPER. Thank you, Mr. Taub. Mr. Acton, welcome. 

Please proceed. 

TESTIMONY OF HON. MARK D. ACTON 1 TO BE A 

COMMISSIONER, POSTAL REGULATORY COMMISSION 

Mr. ACTON. Thank you, Mr. Chairman and Members of the Committee. I am honored to be with you today, and I thank you for 

holding this hearing to consider my nomination as a Postal Regulatory Commissioner. 

I want to thank President Obama for his confidence in me and 

for the honor of nominating me for this important appointment. 

I am most grateful for the support of our Minority Leader and 

my home State Senator, Mitch McConnell. My thanks, too, to the 

Committee staff for their expert guidance. I would also like to acknowledge the loving support of my partner, John Channing 

Wickham, my family, and my friends. 

I want to make special mention today of my fellow Commissioners, Chairman Ruth Goldway, Commissioner Nancy Langley, 

and Commissioner Tony Hammond. 

I am fortunate to have spent 4 years on staff at the former Postal 

Rate Commission assisting the agency chief, Chairman Omas, in 

administering all PRC operations in the past 5 years, as first a 

Postal Rate Commissioner and now a Postal Regulatory Commissioner. 

To the employees of the PRC, I want to offer my profound thanks 

for their dedicated hard work. 

Much has changed in the postal world during my 9 years at the 

Commission, and we find ourselves today in particularly challenging times. I believe that my experience affords me a clear appreciation of the key postal issues and a close familiarity with the 

concerns of the postal community stakeholders, and I am quite 

pleased to be considered for a continuing role. 

If confirmed, I pledge today to work with this Committee in 

advancing workable solutions that help to renew and ensure the vitality of a great American institution, the U.S. Postal Service. 

9 

Mr. Chairman, I look forward to working with you and the other 

Members of this Committee, and I will be pleased to answer any 

questions. 

Senator CARPER. Mr. Acton, thank you. Thanks for your testimony. 

Our Committee rules require that all witnesses at nomination 

hearings give their testimony under oath. 

I ask you to stand and raise your right hand. 

Do you swear the testimony you will give before this Committee 

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

help you, God? 

Mr. TAUB. Yes, I do. 

Mr. ACTON. I do. 

Senator CARPER. I have three standard questions that we ask of 

all nominees, and I will pose each question and ask each of you to 

briefly respond, and we will do that three times. 

First, is there anything you are aware of in your background that 

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

which you have been nominated? 

Mr. TAUB. No, Mr. Chairman. 

Mr. ACTON. No. 

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

discharging the responsibilities of the office to which you have been 

nominated? 

Mr. TAUB. No. 

Mr. ACTON. No. 

Senator CARPER. Do you agree without reservation to respond to 

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

Mr. TAUB. Yes, I do. 

Mr. ACTON. Yes, certainly. 

Senator CARPER. All right. So far, so good. Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. 

Senator CARPER. You are welcome. 

Senator BROWN. First of all, congratulations to you both for being 

nominated. I certainly look forward to your answers to a lot of the 

questions. As we know, the Postal Service is having difficulty, and 

I think you noted, Mr. Taub, what the challenges are. I have had 

people in my office, probably more people than I know or I can remember on a particular issue, advocating, wondering, and questioning where we are going and what are the solutions. They are 

the same questions we are asking today on where we are going on 

our debt and, obviously, our default issues. 

In a rush to bring the Postal Service into the 21st Century, what 

are your biggest concerns with ensuring that the Postal Service 

continues to provide a safety net for those left behind by the digital 

revolution? Mr. Acton. 

Mr. ACTON. Thank you, Senator Brown. That concern falls pretty 

squarely under the rubric of the Universal Service Obligation 

(USO), and the regulator plays an important role in ensuring the 

integrity of the Universal Service Obligation. Indeed, part of the 

provisions of the Postal Accountability and Enhancement Act of 

2006 (PAEA) was a mandate that the Commission look at the quesVerDate Nov 24 2008 14:27 Feb 29, 2012 Jkt 68019 PO 00000 Frm 000013 Fmt 06633 Sfmt 06633 P:\DOCS\68019.TXT SAFFAIRS PsN: PAT
10 

tion of the Universal Service Obligation and suggest a definition 

and a framework of what defines the USO. We did that in a 2008 

report where we put forth a framework of different elements and 

aspects that should be included, and part of that includes uniform 

price and range of products, accessibility, and those sorts of questions. So the regulator, the Postal Regulatory Commission in this 

instance, has an important role in ensuring that type of universal 

service availability. 

Senator BROWN. You know, it is interesting, one of the suggestions that I have heard about getting the fiscal and financial stability of the Postal Service under control is to eliminate Saturday 

service. 

As somebody who is a consumer and user of the Postal Service, 

there are two things that I recognize. There is a cut-off point where 

we will stop using the post office if the price of a basic stamp gets 

too high. I am not quite sure what that is for me, but for many 

people, it is getting really close. They can do it online. They can 

save that 44 cents, and ultimately their cut-off may be 50 cents. 

It would seem that cutting Saturday delivery potentially would 

be counterproductive, whereas that seems to have the most opportunity to excel and expand upon because your competitors—FedEx, 

UPS, DHL—do not really have that niche. So any comments on 

that issue of the Saturday delivery and then that breaking point? 

Mr. Taub. 

Mr. TAUB. Senator, the Saturday delivery issue, having it on the 

table, I think, is emblematic of the challenge we are facing with the 

Postal Service today. They lost $8.5 billion last year, and they are 

on that pace again. One of the requirements of the postal reform 

bill of 2006 was mandating that the Postal Service prefund its future retiree health benefits, and that is a very important goal. But 

as the Government Accountability Office and others have pointed 

out, given the current financial state, that should be a mandate 

that is required only to the maximum extent financially feasible. 

That being said, having worked on that issue a couple of years 

ago in the House with then-Congressman McHugh before he went 

to the Army, there are Congressional Budget Office (CBO) challenges in scoring that. And where that leaves you in the Postal 

Service, it seems, is having to look at a variety of other options to 

save money, and one of those is Saturday delivery. I know the 

Commission has looked at that and has raised some concerns about 

the impact in rural areas. So I think, at the end of the day, that 

has to be a very carefully considered approach. But I well understand, given the financial challenges of the Postal Service, that policy makers should have all options on the table where there can 

be savings. 

Senator BROWN. I know that you know, probably both of you, 

that Senator Carper and Senator Collins have two competing bills. 

Do you have any comments on those bills and what your preference 

would be at all? 

Mr. TAUB. Senator, I believe that the goal shared by Senator Collins, Senator Carper, and the folks in the House is everyone is trying to get to that same end game. How do we preserve universal 

service? 

11 

One of the aspects of the postal reform bill of 2006 was to mandate a few studies. We did not anticipate that the financial situation would be such, but one of those was a Government Accountability Office study of the long-term business model. That was done 

in April 2010. That laid out a menu of options for policy makers 

to consider in the regulatory area, governance area, products, 

prices, and many of those ideas are reflected in the pending bills 

before the Senate. 

I think the goal is the same at the end of the day. It is a matter, 

frankly, of getting the votes and moving it forward to help the 

Postal Service. 

Senator BROWN. Mr. Acton, do you believe that the Universal 

Service Obligation applies in consideration of eliminating that Saturday service, and if so, why? 

Mr. ACTON. It is definitely a component of the USO. The frequency of delivery is an essential element of the Universal Service 

Obligation. It does not mean that it prohibits the elimination of 

Saturday delivery. It just means that when you contemplate the 

balance that is needed when trying to satisfy the USO requirements, frequency of delivery is an important part of that balancing. 

I would like to touch base on a couple of questions that you addressed to both of us earlier. 

Senator BROWN. Right. 

Mr. ACTON. I would echo most of what Mr. Taub just said, but 

the question of giving up Saturday delivery and the very unique 

niche that Saturday delivery is for the Postal Service was something that the Commission wrestled with in our advisory opinion, 

as well. In the course of our testimony, we heard viewpoints from 

both sides, and some of the most perplexing aspects of that decision 

involved very forward-thinking, progressive organizations who were 

on opposite sides of the issue. Netflix was fine with eliminating 

Saturday delivery. Amazon, on the other hand, wanted the addition 

of Sunday delivery. 

So it is hard to go anywhere where you can get a unanimous 

viewpoint on whether or not the elimination of Saturday delivery 

is a good or bad thing. But for me, it comes down eventually, in 

the longer term, to a cost-benefit analysis. At what point are the 

benefits that you garner from having Saturday delivery outweighed 

by the cost involved in providing that service, and I think that is 

really the crux of the issue. 

Senator BROWN. Right, but what if they took the gloves off a little bit and let you do more in that Saturday time frame, versus 

eliminating it, versus taking the gloves off and letting you do more 

and expand that Saturday service? It would be more competitive. 

Mr. ACTON. Certainly, that is an option. One thing that the Postal Service clearly demonstrated during the course of its development of that proposal for the elimination of Saturday delivery is 

that when they learned of individual constituency’s concerns about 

certain aspects of their proposal, they were very good at applying 

their resources toward coming up with better solutions, albeit each 

time they did that, it cuts into the proposed cost savings. But at 

the same time, it makes the plan more workable. 

Senator BROWN. Right. Thank you, Mr. Chairman. 

Senator CARPER. Senator Tester. 

12 

OPENING STATEMENT OF SENATOR TESTER 

Senator TESTER. Thank you, Mr. Chairman. 

I want to thank you both for your willingness to serve and your 

public service in the past. I just have a couple of questions. 

Now, the Postal Regulatory Commission is there to give recommendations to the Postal Service, is that correct? 

Mr. ACTON. It is correct in the sense we certainly do fulfill an 

important advisory role, but we also have important compliance 

duties, as well. 

Senator TESTER. For example, when they are talking about going 

from 6-day to 5-day delivery of mail, do they let you know ahead 

of time they are thinking about it and do they ask you for your recommendation? 

Mr. TAUB. Not having served at the Commission—Mr. Acton was 

there—but indeed under the statute and under the process, when 

you have a national change in service, they have to seek an advisory opinion from the Postal Regulatory Commission. 

Senator TESTER. Did you give them an advisory opinion? 

Mr. ACTON. We did, indeed. 

Senator TESTER. And what was that opinion? 

Mr. ACTON. The opinion was that we believed that the financial 

prospects, the cost savings from their proposal is considerably less 

than what they forecast. The Postal Service’s estimate is in the 

realm of about $3.1 billion annually, and we are estimating more 

along the lines of $1.7 billion annually. 

Senator TESTER. And I would assume they have their accountants and you have your accountants, is that right? 

Mr. ACTON. That is right, Senator. 

Senator TESTER. They just announced 3,700 post offices being 

closed, a fair number of them in Montana. The Chairman got lucky. 

He got off with none. But the question is, did they ask you about 

your recommendation on those 3,700 post offices? 

Mr. ACTON. Well, they have asked us, as a matter of fact. There 

was an earlier advisory opinion that the Postal Service requested 

of the Postal Regulatory Commission, and we offered some very 

thoughtful feedback—— 

Senator TESTER. Yes. 

Mr. ACTON [continuing]. Primarily about processing procedures, 

and the Postal Service has incorporated a lot of those thoughts in 

their new advisory opinion request, which was filed yesterday and 

docketed this morning. So I think the Postal Service hears the call 

for better adherence to the sort of regulations and rules that they 

are obligated to follow when they want to close these post offices. 

But how closely they have managed that in their new proposal is 

too early for me to report, simply because the filing was only yesterday, and once it is filed, I cannot talk in depth about it. 

Senator TESTER. Yes, but do they not ask you before they file it? 

Mr. ACTON. They ask if they can close a post office? 

Senator TESTER. Yes, if you think it is a good idea. 

Mr. ACTON. I am speaking of the advisory process in terms of 

what the Commission thinks and the community thinks about 

what it is they are proposing. What you are talking about, I think, 

is the appeals process. 

13 

Senator TESTER. What I am talking about is there are 3,700 post 

offices they are recommending closing. Does the Commission have 

any recommendations on those closures, either generally or specifically? 

Mr. ACTON. We do. We have an important role. It is outlined in 

statute. 

Senator TESTER. And what was your recommendation to the 

Postal Service? 

Mr. ACTON. Well, it is an instance-by-instance assessment, Senator. Each time they want to make a change in the status of an 

individual post office, station, or branch, they do that themselves, 

and then if there is a party involved with the community who has 

a problem with it, then they file a complaint—— 

Senator TESTER. So there are 3,700 of them. 

Mr. ACTON. There are a lot. 

Senator TESTER. There are 85 in Montana, alone. 

Mr. ACTON. It is an enormous—— 

Senator TESTER. Are you going to do that on an individual basis? 

Mr. ACTON. Well, we do not know how many of those will reach 

us for further consideration. 

Senator TESTER. So what you are saying is that—I do not want 

to put words in your mouth—the post office in Hingham, Montana, 

for example, could be closed down and you would never be able to 

make a recommendation on it because it would be long gone by the 

time it gets to you? 

Mr. ACTON. Well, the distinction to make here is that you have 

the appeals process and you have the advisory opinion process, and 

in no instance is the Postal Service planning on—they tell us—advancing with the closure of those thousands of post offices you have 

on your list until the beginning of the year. And by then, the Postal 

Regulatory Commission will have issued its advisory opinion. 

Senator TESTER. On each one of them? 

Mr. ACTON. The advisory opinion is—— 

Senator TESTER. Or it will be more general? 

Mr. ACTON [continuing]. Comprehensive in scope, Senator—— 

Senator TESTER. You both talked about how the post office is always there. The post office mail is always there. You talked about 

workable solutions for the future. I can tell you that in Montana, 

these are all rural post offices, frontier post offices. In some cases 

in Southeastern Montana, people are going to have to get their 

mail in Wyoming because there is not going to be a post office for 

40 miles. 

Do you think the Commission’s position on this would be to put 

the shortfall on the back of rural post offices? 

Mr. ACTON. I can answer that. 

Senator TESTER. Yes, go ahead. 

Mr. ACTON. And again, keep in mind, Senator, they have filed a 

request for an advisory opinion. 

Senator TESTER. Yes. 

Mr. ACTON. Counsel advises me to tread cautiously in terms of 

how I respond because I do not want to give you the impression 

that I have prejudged anything, which I have not. But I am quite 

ready to answer your concern. 

Senator TESTER. Sure. That is OK. 

14 

Mr. ACTON. I am from Kentucky. I have been in a few rural post 

offices. 

Senator TESTER. Yes. 

Mr. ACTON. I know the value of the rural post office back home. 

Senator TESTER. I figured you might. 

Mr. ACTON. In fact, I make a regular stop there when I make visits back to the Commonwealth. 

Senator TESTER. Sure. 

Mr. ACTON. But an important element that I have tried to stress 

with the Postal Service before they filed their advisory opinion because I had this concern, as well—— 

Senator TESTER. Yes. 

Mr. ACTON [continuing]. Is they present a very cogent and thorough assessment of the alternative access provisions that they will 

include when they are talking about closing any rural or other post 

office so that individuals who otherwise might have had to go to 

that post office have some workable option instead. And how that 

applies in this particular instance, we have not assessed yet. 

Senator TESTER. You will also assess how much money they are 

proposing to save versus how much money you think they are really going to save, much like 6-day to 5-day delivery? 

Mr. ACTON. We do that in the context of the advisory opinion, almost surely. 

Senator TESTER. All right. Can you tell me, what does the Postmaster General make? 

Mr. ACTON. Well, he reports that to us regularly. The organization does. I cannot tell you to a penny, but probably about 

$250,000. 

Senator TESTER. Is that with benefits? 

Mr. ACTON. I am guessing. I certainly can look it up for you. 

Senator TESTER. Well, it is not very transparent. I wish it was 

more transparent. 

Mr. ACTON. Well, we make it available—— 

Senator TESTER. But our figure is a little different than yours. 

Mr. ACTON. Yes. 

Senator TESTER. It was about $550,000. 

Mr. ACTON. I understand that. 

Senator TESTER. Does that sound reasonable? I mean, does that 

sound accurate? 

Mr. ACTON. It certainly sounds reasonable. If it is accurate to the 

dollar, I cannot say without referencing our Web site—— 

Senator TESTER. We are in the ballpark. 

Mr. ACTON [continuing]. Where we disclose that information. 

Senator TESTER. The shortfall is billions of dollars, and we are 

talking about a couple hundred grand, but it seems to me that if 

we are really looking to save money, the first place we cut a service 

is shutting down post offices. Do you ever make recommendations 

on salary? Quite frankly, I think I make a lot of money in the U.S. 

Senate, and he makes over triple. 

Mr. ACTON. We are not asked by the provisions of the statute to 

provide insight on the salary of the executives of the Postal Service. 

That primarily, I believe, is the Board of Governors’ responsibility. 

Typically, the regulator does not have a role in that other than to 

ensure the sort of transparency that you are asking for here today. 

15 

Senator TESTER. I understand, and I think we probably have a 

little role in that, too. 

Mr. ACTON. Yes, you do. 

Senator TESTER [continuing]. And we might be asking for your 

recommendation on that because, quite frankly, when times are 

tough, when you start cinching your belt down, that ought to be the 

first place we are looking, not the last place. 

Mr. ACTON. I do not necessarily disagree with you, Senator, I am 

just trying to explain to you my understanding of the differentials 

in terms of the management responsibilities of the Postal Regulatory Commission—— 

Senator TESTER. I understand. 

Mr. ACTON [continuing]. Versus the Board of Governors. 

Senator TESTER. And I also understand that you give recommendations, and I appreciate that and I think they ought to be 

listened to a lot more than they have been listened to, quite honestly. You have important jobs, important connections, and quite 

frankly, from my constituency’s base, you are a big deal because 

you can make a difference. The poor old man who is living 12 miles 

west of Big Sandy who gets his mail in his mailbox forever, and 

it has always been there for 6 days a week, and now we are looking 

at 5 days a week, we are looking at potentially shutting a post office down near him or maybe his post office, and this is going to 

raise heck with rural America, I am just telling you. And I think 

I hear you say similar things. 

Mr. ACTON. I appreciate knowing your views on a first-hand 

basis, Senator Tester. 

Senator TESTER. Yes. Thank you very much. 

Senator CARPER. Senator Pryor. 

OPENING STATEMENT OF SENATOR PRYOR 

Senator PRYOR. Thank you, Mr. Chairman, and I want to thank 

our two witnesses for being here today. 

I would first like to let you know that just a couple of days ago, 

Senators Tester, Begich, McCaskill, and I sent a letter to the Postmaster General. I do not know if you have seen this letter, but one 

of the reasons we sent it is that some of us have been frustrated 

with a lack of detail and analysis in the process of closing certain 

post offices and how the money works. You all may have access to 

that, but it has been very difficult to get information out of the 

Postal Service. 

Mr. Acton, does the Postal Service provide you with an analysis 

of how much money is saved for each post office they close? 

Mr. ACTON. As I mentioned earlier, Senator, they have filed a request for an advisory opinion, and in that advisory opinion, typically, there are the details that you are describing. But I have not 

had a chance yet, given that it was filed late yesterday, to actually 

examine this filing and know for sure that it does contain the information that usually is included. 

Senator PRYOR. But they will give a breakdown of how much savings there will be per post office or other postal facility? 

Mr. ACTON. I think that if they do not, it is fair to expect that 

the Commission may have an interest in knowing that. 

16 

Senator PRYOR. This has been a sore point with me because in 

Arkansas, some facilities have been closed and consolidated, and I 

just cannot tell if the numbers add up. They tell us that there is 

a certain amount of savings, and maybe there is, but the numbers 

do not seem to add up to me. For whatever reason, they do not 

want to or they are not able to give us the entire picture of how 

things are impacted. 

Mr. ACTON. Well, Senator, it is a very commonplace occurrence, 

regrettably, for the Commission and the Postal Service to differ in 

terms of our cost savings estimates and other data points. But one 

important thing to remember is that Congress in the Postal Accountability Enhancement Act empowered the new Postal Regulatory Commission with subpoena privileges. And if need be, if 

there is important information that has been excluded that the regulator needs to properly examine the issue at hand, I do not think 

there will be a lack of popular support to get it any way we need 

to. 

Senator PRYOR. I would encourage you all to consider that as you 

look at the most recent request by the Postal Service because we 

need more transparency and someone needs to hold the Postal 

Service accountable. Given the way things are set up today and 

just how things have been going, it has been difficult to do that. 

I understand that the Postal Service is in a financial bind. Everybody understands that, but I just want to make sure the process 

is fair. It sounds like that is your concern as well, and I want to 

make sure that it is fair and it is done right, according to the law 

and according to the rules. 

We talked about the advisory opinion role, and I know that is a 

statutory issue. In your opinion, should the PRC have more authority to go beyond just an advisory opinion? Mr. Taub, do you want 

to respond? 

Mr. TAUB. One of the big changes done in 2006 with the Postal 

Accountability and Enhancement Act was transforming what had 

been, frankly, a weak rate-recommending body, the Postal Rate 

Commission, into a Postal Regulatory Commission with many tools, 

such as subpoena authority and final decisionmaking authority in 

certain areas of products and prices. It did retain advisory opinion 

on operational issues, such as this one, that the Board of Governors 

is responsible for. 

Not having served at the Commission, one of the things that the 

Commission did after the law had been passed in 2006 was undertake a Strategic and Operational Plan to assess where they are 

going. I would, if confirmed, advocate that the Commission review 

that plan, which has not been updated in 4 years, to identify areas 

of strengths and weaknesses that it would help to identify, to the 

extent that there are changes needed. 

And one last point. The law did mandate 5 years after the enactment of 2006, which is this year, that the regulator provide to Congress a report on how well the law is working with recommendations for improvement. I would assume that would be looked at as 

part of what the Commission will be doing coming forward, and if 

confirmed, I would certainly make sure I had a chance to look at 

that to the extent it is still going on. 

Senator PRYOR. Great. Thank you. Mr. Acton. 

17 

Mr. ACTON. The Commission is presently in the midst of developing the response to Section 701 of the Postal Accountability and 

Enhancement Act, and it will include a reference to this concern. 

If I can just touch on a couple of points that you raised here 

quickly, Senator. One has to do with this question of the availability of data, and I agree with you that the Commission needs 

certain data in order to make a proper assessment of what is happening in terms of the Postal Service proposal, and the issue we 

often are addressed with when we take up this cause is the Postal 

Service is citing its fiscal state and the fact that it takes money to 

develop the sort of data that we are asking for. So we are trying 

to walk that balance where we ask for what is reasonable in terms 

of fulfilling our lawful responsibilities. But just keep in mind that 

we try to do it in a way that is not going to contribute toward the 

fiscal insolvency that the Postal Service is already suffering. 

I think you are asking if we should have final authority over 

these questions. It is not my belief that the regulator should have 

final authority, but we certainly have an important role, and I 

think the way that it is described and has been outlined now in the 

rules, the regulations, and the law works as long as the Postal 

Service works with the regulator in ensuring they provide us the 

information we need and a ripe and robust administrative record 

that we can review to be sure that issues like the Universal Service 

Obligation, which goes to the core of this access issue that you are 

raising, are properly satisfied. 

Senator PRYOR. Let me make a quick statement for all of you to 

consider as you are looking at the Postal Service’s most recent request for an advisory opinion. When you look at the breakdown of 

the post offices and postal facilities that are closing, Arkansas happens to be fourth in the number of facilities that would close. That 

puzzles me because we are not fourth in population. We are nowhere close to that. We are not fourth in geographical size. We are 

nowhere close to that. So, again, I am curious. I really think we 

all deserve to know what the criteria is for how the Postal Service 

makes these determinations. 

Another thing I have heard and would like you to know about 

is that the Postal Service is, in some cases, bound and determined 

to close a certain facility. They may give public notice, but it is not 

very adequate and the folks that you think would want to know 

about it may not know about it. But then they are actually closing 

the facility during the appeal process. I have heard of that complaint. Again, I have not verified that, but that would certainly be 

a concern of mine. 

I would like to ask one last question about an issue that you 

have been focused on, Mr. Chairman. This may not have anything 

to do with this panel, but I am just curious if you have a viewpoint 

on the retirement fund issue. We hear the Postal Service is, in effect, overpaying into that fund right now, at least by some standards. Do any of you have an opinion on whether that should be addressed? 

Mr. TAUB. I know the Commission, in fact, has done a study 

looking at the funding of the retirement obligations. They had an 

outside group, the Segal Group, that studied that issue and indeed 

in their opinion found that there was an enormous overpayment, 

18 

1The map submitted by Senator Begich appears in the Appendix on page 40. 

on the order of $50 billion, and recommended changes to that. I 

know Mr. Acton could speak to that issue, as well. 

Related in a different way is the statutory mandate to prefund 

future retiree health benefits, and for the first 10 years after enactment, there were statutory locked-in figures of $5 to $6 billion. I 

think all would agree it is important to prefund, but the Postal 

Service, not with appropriated dollars, but with ratepayer money, 

has prefunded on the order of $42 billion already, and given the 

current financial circumstances, that would be an area, it would 

seem, that Congress, to the extent possible, working with CBO, 

could revisit. 

Mr. ACTON. Mr. Taub did a good job of describing the findings 

of the Commission, and that is an important contribution of the 

Commission for this debate because there is a provision in the 

PAEA that calls for the Commission, upon request from Congress 

or the Postal Service, to engage in independent, expert studies. 

And in producing these numbers, the Commission did not craft 

these outcomes on its own. It was a bit of a crapshoot in terms of 

going down this road and wondering where it was going to take us. 

But in the end, an independent and certified actuarial firm told 

us that this methodology that is imposed on this retiree health benefit fund as well as the prepayments for the Civil Service Retirement System (CSRS) is really out of keeping with modern standards. So it is the Commission’s view that Congress should take a 

close look at that and see if there is a way to better amortize those 

costs in a responsible fashion that still meets the need but does not 

sink the Postal Service in the process. 

Senator PRYOR. Thank you. I am sorry I have exceeded my time. 

Senator CARPER. Quite all right. We are glad you are here. 

I would say to our witnesses, there are more ‘‘Marks’’ in the U.S. 

Senate than any other name. There are five, and we are privileged 

to have two of them here—they are not all from States that start 

with the letter ‘‘A’’—the Marks from Arkansas and Alaska are 

here, and we are now pleased to recognize Senator Begich. 

OPENING STATEMENT OF SENATOR BEGICH 

Senator BEGICH. Thank you very much, Mr. Chairman. Sometimes people forget AK and AR; they get them mixed up—not the 

people at the post office, the people who write the letters. We work 

on that. 

I want to follow up on, first, Senator Tester and Senator Pryor’s 

comments. I know we had a great conversation already in regard 

to my view on the closings and the process, but I just want to give 

a visual from the State of Alaska’s perspective. Here would be 

Montana. Here would be Arkansas, to give you a visual. All these 

blue dots here or squares are the post offices that are going to be 

closed, or at least on the list, I should say.1 You can see the distance there for just my State. Delaware is too small to even have 

on the map, but—— [Laughter.] 

Senator CARPER. That is not true. I took my family to Denali, a 

great national park, several years ago for vacation, and we learned 

that Denali is three times the size of the State of Delaware. 

19 

Senator BEGICH. There we go. [Laughter.] 

Senator CARPER. We do not even have a national park. You have 

one three times bigger than our State. 

Senator BEGICH. There we go. [Laughter.] 

We had a little discussion—you know my views, and I will state 

them here again. I think your role regulatory role and the process 

you go through should be more aggressive than it has been. I do 

not think it has been as aggressive as it could be. 

In regard to these 3,700 locations, I think Senator Tester’s question was when do you enter the process, and if it is case by case, 

that is never going to happen. He had a four- or five-page list that 

I am sure he was going to show you. I know Senator Pryor has a 

list of rural sites. That is not what I am interested in. I am interested in when they say we have 3,700 locations we are considering, 

is it at that point when they announce it that you enter, or is there 

work done ahead of time to have a conversation before they file and 

create a docket? The problem is, as you said, there is this legal 

framework once they create a docket, and some agencies will use 

that with the regulatory board so they do not really have to talk 

to you. They are making a decision and will tell you what the decision is, and then you have to respond, but they have already moved 

down the path. 

So is there a process and do you think you have the powers to 

have the process before a docket is filed, before you get restricted, 

because, obviously, you want to have as much freedom of discussion 

to create a better outcome than just this regulatory process, which 

is not always the best way to do things. Who would like to respond? Either one. 

Mr. ACTON. Senator, I will just say again, and this is the last 

time I will add this caveat about it being the pending docket, that 

I do not want to give the impression with anyone that I have prejudged a matter that I have not had a chance to explore yet. It is 

of great concern to the attorneys when I do that. 

I would like to say that there was a previous advisory opinion, 

which I think helps go to your point, that the Postal Service had 

brought to the Commission for our thoughts about the disclosure 

process that they were using at the time, and we did provide some 

good feedback in terms of procedures and process, which I believe 

they may have incorporated in their new request for an advisory 

opinion. And prior to this request yesterday, the Postal Service had 

come over and consulted with the Commission and briefed us, basically, on what it is they were planning. 

Senator BEGICH. At that time, do you give input or are you in 

a listening mode only? 

Mr. ACTON. We are first in a listening mode—— 

Senator BEGICH. Sure. 

Mr. ACTON [continuing]. And then we certainly do provide input, 

not official input because that is—— 

Senator BEGICH. I understand that. But, I mean, input that 

maybe helps areas in which they are not doing as well as they 

could and saying, here are some suggestions—— 

Mr. ACTON. For instance, I can share with you that the last time 

I had an informal discussion, before this request for an advisory 

opinion was filed, with the top executives at the Postal Service, I 

20 

tried to stress with them the import in their proposal of ensuring 

that there was an adequate, thorough, and robust discussion of alternative access and the integrity of the Universal Service Obligation. So I am hopeful that when I make time when we are done 

here today to sit down with that proposal and read it in greater 

detail, they will be taking care to be specific in addressing a lot of 

the concerns that you are raising today. 

Senator BEGICH. Very good. Mr. Taub, do you want to add to that 

as a new member? 

Mr. TAUB. Yes, and not having ever served at the Commission, 

but Mr. Acton’s description certainly is consistent with the framework set up in the statute. 

Senator BEGICH. Very good. Let me ask you both—I think I know 

the answer to this, but I want it on the record. Do you believe the 

Postal Service should have universal service, no matter where the 

locations are, equal treatment in whatever delivery of service? 

Now, equal treatment could be a kiosk, could be a post office, or 

could be home delivery, but people should get their mail wherever 

they are located. 

Mr. TAUB. Universal service is, to me, the key cornerstone of 

what we are expecting of our Nation’s Postal Service and its postal 

system. 

Mr. ACTON. Senator, having enjoyed this process for the second 

time now, I can ensure you that the importance of the regulators’ 

role in preserving the integrity of the Universal Service Obligation 

is of paramount interest to me and to the agency. 

Senator BEGICH. Who do you believe, at the end of the day, you 

represent? 

Mr. TAUB. From my perspective—— 

Senator BEGICH. Yes. 

Mr. TAUB [continuing]. If confirmed, I would be representing the 

public interest. 

Mr. ACTON. Well, I would agree with that, but I also recognize—— 

Senator BEGICH. Sure. 

Mr. ACTON [continuing]. That for the details of these important 

policy concerns where it comes to the U.S. Postal Service, you have 

a lot of work to do up here, and you are looking for proxies who 

are going to delve into the weeds and bring to the fore the information you need to make more informed judgments. 

Senator BEGICH. And based on the statutes we have passed. 

Mr. ACTON. Yes. 

Senator BEGICH. Yes. 

Mr. ACTON. Of course. So I think that we are there to do a lot 

of the spade work for you so that we can offer up the sort of information that informs your views. 

Senator BEGICH. Do you think that going from 6-day to 5-day delivery, if that ends up an issue, has a conflict with universal service? 

Mr. TAUB. Frequency of delivery is one measure of universal 

service. Since 1982, Congress has, in essence, mandated the frequency of 6 days in the annual appropriation bill, and unless and 

until that no longer is in the bill, that standard will be there. At 

the end of the day, then, it is up to Congress. 

21 

Senator BEGICH. So if it is out of the appropriation bill as a rider, 

then—— 

Mr. TAUB. The Postal Service would have that operational flexibility. 

Senator BEGICH. Do you agree with that, Mr. Acton? 

Mr. ACTON. Senator, when we met, I think I mentioned that we 

had a lot to say in those 200 pages of the advisory opinion on the 

elimination of Saturday mail delivery. 

Senator BEGICH. Right. 

Mr. ACTON. A lot of it went to cost differentials and to service 

impact discussions. And honestly, I think we got it more closely 

correct than the Postal Service. But the crux of my concern with 

the Saturday proposal does not so much go to the differential in 

terms of cost and service impact. It goes to the role of the regulator 

in guarding the integrity of the Universal Service Obligation because the way I perceive this proposal, in its present form and at 

the present time, but maybe not going forward because this is a dynamic environment we are living in—— 

Senator BEGICH. Right. It is in movement now. 

Mr. ACTON. Yes. It is not the same tomorrow as it is today. 

Senator BEGICH. Right. 

Mr. ACTON. And the trend seems clear that we are heading toward a time when perhaps not having Saturday delivery, given 

that there is proper accommodation in all these special circumstances, may be possible. But for the time being, at least, it 

was the Commission’s assessment on a consensus viewpoint that 

there is a disproportionate effect between all of America and rural, 

remote, and non-contiguous America. So as long as that gap exists, 

then the proposal is problematic. 

Senator BEGICH. Very good. If I can just take one last question 

because I think all of us would be concerned about this next one, 

which is military bases. I know in Alaska, on that chart I just 

showed you, all of our military bases look like they might have a 

post office closed. Here is the dynamics of a military base. 

In our State, we will probably have 8,000 troops deployed by January in Afghanistan. Many of the spouses do not necessarily have 

transportation off base. I mean, that is it. Base is base. That is 

where they live. That is their community. That is their place of 

business and so forth. I want you to know, not only my State but 

other States have issues around this. In Alaska, I am very concerned about this. I know this as a mayor. We had challenges trying to have people come off base to be integrated into the community while their spouses are gone. It is a very difficult task because 

they live on the base, that is where their life is. And if you close 

the post office and they are trying to get communication back and 

forth, even though they utilize email quite a bit, you cannot email 

a care package, let me tell you that. That does not work. Maybe 

some day. I do not know. But you cannot do it. 

So do you believe, as a regulator, in regard to these base issues 

with post offices, that there has to be full accommodation of some 

sort—maybe it is a kiosk or it is sales through the commissary. 

These bases are too isolated in some cases. I mean, I can tell you, 

Fort Greely, we are talking isolated. Clear Air Force Base is isolated. So tell me your thoughts on that. 

22 

Mr. TAUB. Senator, having served the last 2 years as a senior executive in the Army supporting Secretary McHugh, I well understand and appreciate what you are describing. In fact, a year ago, 

I was with him up at Fort Wainwright in Fairbanks—— 

Senator BEGICH. You know exactly what I am talking about. 

Mr. TAUB [continuing]. And to the extent that this is part of the 

proposal of the 3,700 post offices on which the Postal Service is 

seeking an advisory opinion, if confirmed, indeed, as with all of 

them, but particularly in that area, I would be looking to get a 

good assessment of that because what you have described of the 

men and women serving in our military and their reliance of communicating—email and Skype are nice, but that hard copy, package—— 

Senator BEGICH. The care package. 

Mr. TAUB [continuing]. Is an important one. 

Mr. ACTON. Senator, again, it is a pending matter, and I think 

part of my response earlier about the stress for alternative access 

and the integrity of that information is responsive in part to what 

you are asking. 

But I certainly recognize that this is a difficult issue because I 

appreciate the circumstance the Postal Service finds itself in. They 

have an infrastructural network that was developed decades ago 

that is not in touch with modern consumer demands. And I appreciate that may be the case for most of America. But I also understand that there are particular instances in areas like Alaska, 

which is separated from the rest of us by another nation, where 

you have special challenges that have to somehow be addressed by 

this American institution. So that is the nature of the issue we are 

wrestling with. 

Senator BEGICH. Very good. I know I took more time than I 

should, but I appreciate your meeting yesterday—I think it was 

yesterday, I have lost track of time, maybe it was the day before— 

but thank you very much. I really appreciate it, and I look forward 

to seeing you on the regulatory board. Thanks. 

Senator BROWN [presiding]. Thank you very much. Senator Carper stepped out for a moment and asked me to take over. 

I had a follow-up to Senator Pryor’s question. Mr. Taub, you indi- cated that there has been that overpayment and there is about $50 

million—was it million or billion? 

Mr. TAUB. About $42 billion in prefund—— 

Senator BROWN. So $42 billion is great. 

Mr. TAUB. There is the $50 billion on the Civil Service Retirement System that there have been studies suggesting that—— 

Senator BROWN. Right. So basically the Postal Service has overpaid between $40 and $50 billion into these funds, correct? 

Mr. TAUB. Those are two separate issues. The Civil Service Retirement System, there is a view that they have overpaid—— 

Senator BROWN. Yes. 

Mr. TAUB. The prefunding is real money that over the last sev- eral years the Postal Service has paid $42 billion. 

Senator BROWN. Right. So let us take the Civil Service Retirement System overpayment. There are other civil service groups 

that have actually underpaid. So when you say that we would like 

to maybe adjust because of those overpayments, I mean, where is 

23 

the money—who is going to write the check because we do not have 

any money. That is why we are coming up to a deadline. So when 

you say that we want to adjust, and if we get that money back we 

will have the ability to do this and do that, I have not heard anybody tell me where the money is actually coming from, and it is 

the biggest question that is hanging out there. It is the big red herring. 

Mr. TAUB. You have hit that right on the head. I mean, that is 

the challenge of dealing with this. There is the issue of the Postal 

Service itself having paid, in their perspective, ratepayer money. 

This is not taxpayer dollars that—— 

Senator BROWN. Ratepayer money into where? 

Mr. TAUB. The CSRS, and some—— 

Senator BROWN. And the CSRS does not want to give it back. 

Mr. TAUB. Right. As some would view it, they are helping mask, 

if you will, a deficit that actually would be there if the ratepayer 

had not been overpaying, and given the financial situation of the 

Postal Service, there is the view that this would help deal with a 

fairness issue. But that is the policy making challenge from that 

score. 

The study done by the Segal Group was for the Postal Regulatory 

Commission. I do not know if Mr. Acton may have better insights 

on that, but it is really a judgment call at the end of the day on 

the overpayment issue, I would suggest. 

Senator BROWN. Well, let us just assume that everyone agrees 

with you. Once again, where is the money? Where is it coming 

from? How do you get it from them back to you? Not you, per se, 

but back to them? 

Mr. TAUB. I know the Administration, in their fiscal year 2012 

budget proposal, outlined an approach amortizing it over 30 years, 

reducing some payments—— 

Senator BROWN. Yes, but that does not really help the issue at 

hand in terms of the fiscal and financial stability of the Postal 

Service. 

Mr. TAUB. It definitely would not be a check back for $50 billion 

right now, but it would be a piece of the billions of dollars—— 

Senator BROWN. So you are saying maybe it would be $8.5 billion 

over time per year to get them off the problems that they are having right now? 

Mr. TAUB. Yes, and again, Senator, I think that is why so many 

areas are on the table to be looked at, whether it is 5-day delivery—the Government Accountability Office, the Postal Service’s Inspector General, all have identified a menu of areas where they 

could save money. Some would have big implications, whether it is 

rural service or the service we have come to expect, but given the 

times they are facing in the Postal Service, understandably, they 

are looking to put everything on the table. 

Senator BROWN. Thank you. 

Mr. Acton, with the Postal Service recently releasing, as has 

been talked about by Senator Begich and Senator Pryor, 3,700 post 

offices for closure or conversion, 44 of which would be in my home 

State of Massachusetts, in your pre-hearing questionnaire, you endorse a Base Realignment and Closure (BRAC) type of approach for 

24 

closing post offices. What benefit do you think this approach has 

over any other approach? 

Mr. ACTON. I believe in my public policy questionnaire, Senator, 

I did reference the BRAC approach from Chairman Darrell Issa’s 

proposal as something that Congress may want to consider when 

they are talking about making this type of change, and I included 

that view primarily because it is a proven vehicle for driving the 

type of change and the network arrangement that we are talking 

about, one that removes some of the constraints that otherwise are 

in place and puts it perhaps into a more impartial environment 

where some of the difficult choices can be made. But it all depends 

on the structure of the Commission and what their priorities are. 

I appreciate that. So I was not addressing the details of the application of BRAC, but I was talking about the general acceptability 

and proven record of that type of approach. 

Senator BROWN. Thank you. Senator Begich, did you have some 

other questions, too, because I just have one more. 

Senator BEGICH. Yes, I just had one more to follow up on your 

pension question. 

Senator BROWN. Well, please go ahead. 

Senator BEGICH. I want to follow up because I want to make sure 

we understand the two buckets. The first is the $50 billion overpayment in the Civil Service Retirement System years ago. The 

issue is there is an analysis done that assumes that number was 

paid by ratepayers and what can be done. 

The second piece is your existing retirement fund that the Postal 

Service manages. You have been paying into it at a pretty high 

rate based on a 10-year schedule, which I agree with you—I mean, 

that is CBO black box magic. No one does it that way. I dealt with 

this when I was the Mayor of Anchorage. You amortize it over a 

period of time, which is much longer, usually 20, 30, or 40 years, 

depending on the assumptions you utilize, and that is the real government and private sector model. That is what you want to 

achieve. Is that a fair statement? Both of you, if you could just 

quickly respond. 

Mr. TAUB. That is correct, Senator. 

Mr. ACTON. Yes, Senator, that is a fair characterization. 

Senator BEGICH. And under that scenario, then you can take into 

account changing assumptions, maybe on a 3-year, 5-year, whatever that rolling basis is, because the economy could change and 

a lot of things could change. Rate of return, all kinds of assumptions could change. That would also potentially have an impact, is 

that fair? 

Mr. TAUB. Actually, it would not. The issue of the prefunding is 

prefunding future retirees’ health benefits, separate from the pension. 

Senator BEGICH. I apologize. You are right. And the last part of 

this is, if this one item could be resolved, the amount of fiscal pressure on the Postal Service could be reduced significantly, is that a 

fair statement? 

Mr. TAUB. Very much so, Senator. The Postal Service points out 

that they have paid in $21 billion over the last 4 years. At the 

same time, they have lost $20 billion. They have, in fact, maxed out 

25 

their borrowing from Treasury to prefund these future retiree 

health benefits. 

Mr. ACTON. Not to sound cliched, Senator, but there is no silver 

bullet. But this is an important move that is a responsible approach that is endorsed and recommended by a bona fide and certified actuarial accounting firm, which we have hired in response 

to a provision of the law. 

Senator BEGICH. Right. 

Mr. ACTON. So the Commission did not cook these numbers up. 

It is something that is a modern and equitable approach toward 

this type of accounting. 

Senator BEGICH. Again, I appreciate your being here, and I guess 

if everything breaks down and we cannot get to a bigger package, 

if there is one thing we could do, in my personal opinion, this is 

it, in order to create an actual private sector model for pension 

management and health care management. I do not know why anyone would be against that, other than CBO, but they operate in a 

world no one knows. No disrespect to the CBO people who might 

be watching and the work they do because I need good scores on 

some of the things I am working on. [Laughter.] 

But, again, you just want a model like the private sector and 

other government practices that are done all over the country. 

Mr. TAUB. In fact, Senator, I would simply add, the Postal Service is the only Federal Government entity that is required to 

prefund for its future retiree health benefits. 

Mr. ACTON. I would just like to mention quickly, too, that there 

is a good reason why no other organization, public or private, suffers under this type of responsibility. It is because it is a recipe for 

insolvency. 

Senator BEGICH. Right. You just summed it up. Thank you very 

much for giving me an opportunity to add a little bit. 

Senator CARPER [presiding]. Senator Begich, it is always a pleasure. 

I sat back during this hearing. I wanted the other Senators to 

go ahead with their questions. I have been on the phone a little bit 

and trying to follow what is happening on the floor. But what is 

going on here actually very much involves what is before the Senate and before the House this evening. As we all know, we are spending a little more than $1 trillion 

a year more than we have, and the Postal Service is drawing down 

pretty much all of its $15 billion line of credit from the Federal 

Government. As I said earlier, we had those three really smart consulting groups that worked about a year ago and said that the 

Postal Service was on line to lose about $230 billion more over the 

next 10 years. That was when we had actually somewhat rosier 

forecasts, particularly for First Class mail, than we have today. 

So this all plays into it. Almost in every part of our Federal Government, although the Postal Service is sort of a quasi-public-private operation, we just have to make tough decisions. 

For Democrats, those tough decisions involve, among other 

things, entitlement programs to try to rein in the growth of, for example, Medicare. We are going to spend a little over $500 billion 

this year in Medicare, and in 2020, we will spend over $900 billion. 

That will include so-called improper payments with respect to 

26 

Medicare, about $50 billion in improper payments, mostly overpayments, and about another $60 billion in fraud involving Medicare, 

and the numbers for Medicaid are significant, too. So we have a lot 

of concern on our side about how we do not want to cut benefits 

for folks, particularly older folks, but is there some way we can rein 

in the growth of those costs and maybe, even with less money, get 

some better results. 

My bumper sticker these days is ‘‘Better results for less money,’’ 

or ‘‘Better results for not much more money,’’ and we need to do 

that everywhere, and we need to try to figure out how we can do 

that with the Postal Service. One of the things we have been talking about here today is what many believe to be the overpayment 

of the Postal Service’s obligation to the Civil Service Retirement 

System, and we have four studies now, including some pretty reputable outfits—Segal Company used to do a lot of work for us in 

Delaware when I was State treasurer and governor—that think the 

overpayment is anywhere from $50 to $75 billion. We have the Office of Personnel Management speaking for the Administration that 

says, not so fast. Do not think you are going to get that money to 

help address this problem. 

We have the concern about going from 6 to 5 days, and we have estimates anywhere from $1.7 billion or so per year up to a little 

more than $3 billion. CBO says it is about $2.5 billion a year that 

could be saved by going from 6-day-a-week service to 5-day-a-week 

service, and some think that is fine. There is some interesting polling data, I think it was by Gallup, indicating that fewer people object to that than I thought would be the case. We saw some numbers from earlier this year that said maybe two-thirds of the people 

in this country were OK with going from 6-day to 5-day service. 

They probably do not live in rural areas, that would be my guess. 

In some places, it is less a burden. 

But for myself, I like the idea of 6-day-a-week service. I have offered legislation that actually allows the Postal Service to use its 

judgment to go to 5 days if they think they need to in order to cut 

their losses. My own view is I personally like the idea of 6-day-aweek service and think it can be helpful as part of their business 

model. But having said that, we have to figure out how, collectively, to save enough money so the Postal Service does not continue to rack up debt and become a drain on the Federal dollars. 

In the legislation I have introduced, we want to be able to allow 

the Postal Service to diversify, to move away from their basic bread 

and butter to be able to do some other things that are related to 

delivery of mail, things like delivery of wine and spirits that we 

allow other folks to do but we do not allow the Postal Service to 

do, but there are other things, as well. People object to that, as you 

might imagine. 

So you have folks who do not agree with the idea of recovering 

the overpayments in the Civil Service Retirement System. You 

have folks who do not want to go from 6-day to 5-day-a-week delivery, even if it would save some real dollars. You have folks who do 

not think we ought to let the Postal Service diversify because they 

are going to encroach on somebody else’s market share or business. 

And we have concerns, legitimate concerns, raised about closing or 

consolidating post offices, even if they are consolidated into a conVerDate Nov 24 2008 14:27 Feb 29, 2012 Jkt 68019 PO 00000 Frm 000030 Fmt 06633 Sfmt 06633 P:\DOCS\68019.TXT SAFFAIRS PsN: PAT
27 

venience store that is open 24/7 or a supermarket that is open 7 

days a week. We have people that are concerned about closing mail 

processing centers around the country because of the impact it has 

on employment in regions, and I can understand that. 

Senator Collins has been trying to do something with respect to 

Workers’ Compensation, as some of us know, and to try to be humane in doing that, but to try to make sure that we do not continue to spend money that is just, I think, hard in the final judgment to really continue to do, and that is another source of contention. 

This stuff is not easy, and that is why I suppose we find ourselves here as we sort of hit the three-quarters mark in the fiscal 

year with the Postal Service on the ropes. But I believe in the 

words of Albert Einstein, who used to say, among other things, ‘‘In 

adversity lies opportunity.’’ There is great adversity here, and there 

is also real opportunity. For us, the adversity is the challenges that 

we have been talking about. But the opportunity is to find a way 

to navigate out of it, and we can do that. And we can do that with 

our Federal budget, as well. I was just on the phone with one of 

our leaders trying to talk through a couple of aspects of that. 

As I think both of our witnesses are aware, and as I mentioned 

in my opening statement, it was frustrating to me that it took the 

Commission as long as it did to issue an advisory opinion on an 

issue as important as the Postal Service’s proposal to eliminate 

Saturday delivery. I have just a couple of questions about that 

issue. You have already been asked a little bit about it, but I want 

to come back and drill down on it just a little bit more. 

First, and this would be for both of you, would you agree that 

it was acceptable or unacceptable for the Commission to keep the 

Congress and the Postal Service waiting for so long for the Commission’s thoughts on the Saturday delivery issue? Mr. Acton, 

please go first. 

Mr. ACTON. Without getting into a discussion of the circumstances, Senator, I would like to answer your question directly, 

and for my own personal perspective, in retrospect, I do believe 

that we took too long to develop that product, and I think it is important that we work to do better going forward. 

Senator CARPER. All right. Thank you. 

Any response to that same question, Mr. Taub? 

Mr. TAUB. Being on the outside looking in, I am not sure to what 

extent any internal challenges are there. That is why I had suggested the Commission may be well served revisiting its Strategic 

and Operational Plan last done 4 years ago to identify areas where 

there may be challenges getting things out. 

I would also just simply observe that when the Postal Accountability and Enhancement Act was passed in 2006, there were a variety of on-the-record proceedings that were mandated with statutory time frames, one of them being the very complex exigency 

case, which required an on-the-record proceeding, and that was 

given only 90 days. In these challenging times for the Postal Service, with important issues being asked of the Commission, I certainly recognize that, without knowing the details of the internal 

operations, trying to more closely hit a 90-day schedule, give or 

take, is much more important to the policy makers. 

28 

Senator CARPER. All right. Thank you. There is an old saying 

that haste makes waste, but it works the other way, as well. 

I have a follow-up question, if I could, to Mr. Acton, and then I 

am going to ask Mr. Taub a variation of this question. But just 

share with me, if you will, your personal thoughts on what went 

wrong and what can you commit to do if reconfirmed to address 

whatever problems contributed to the delay. 

Mr. ACTON. Yes, I appreciate that, Senator. Mr. Taub did a good 

job without having been at the table of recognizing some of the details of the operational challenges that the Commission was faced 

with. I would just add on a personal note here that in my 9 years 

of public policy experience, four on the staff and five on the bench, 

I have never been presented with an issue as complex, as far-reaching, as, candidly, polarizing as this question of the elimination of 

Saturday delivery. And the Commission was determined to do a 

thorough job as quickly as due process allowed, but that meant 

hosting a whole series of field hearings and testimony here in 

Washington, development of the data, back and forth with the 

Postal Service to get what we needed to make a proper judgment. 

All of that ended up taking more time than it should have. 

And in addition to that, it was complicated by the fact that in 

the middle of our review, we were presented with the first ever exigent rate request, which, by the way, does, of course, have a deadline, as you outlined in PAEA. So we had to make some difficult 

choices about resource allocation, and we decided to allocate our resources toward ensuring that the exigent case was resolved within 

the time frame that was allowed. 

In terms of what we should be doing differently going forward, 

there is definitely some very sound and basic business principles 

that can be brought to bear at the Commission to ensure that there 

is a new administrative protocol for assessing these advisory opinions at the outset and making sort of a critical path gauge of what 

important milestones need to be done along the way and how long 

it will take to do it and how that is progressing throughout the development of the product. Believe me when I tell you, Senator, the 

Commissioners are very cognizant of your concerns on this front, 

and we are quite eager to be responsive. 

I hope we demonstrated part of that by filing today the notice of 

docketing of this request for an advisory opinion that was filed last 

evening from the Postal Service. And in that, we are putting forth 

the sort of procedural scheduling information that you are calling 

for. 

Senator CARPER. Thank you. And, Mr. Taub, same issue, as an 

outsider potentially coming into the Commission, following the 

issuance of a Saturday delivery report, how would you seek to address the problems that led to its delay? 

Mr. TAUB. I am a big proponent of strategic planning, whether 

it is at the Army with Secretary McHugh, trying to get a sense of 

where the Army is going in tightening budget times with two concurrent wars going on, or for the 10 years as Chief of Staff in the 

personal office for him as a member of Congress. It is critical you 

figure out where you are going, where you want to go, so you are 

not spending time unnecessarily focused on areas you should not. 

29 

And part of that is getting a good assessment of the challenges one 

faces, the resources available. 

I, again, would advocate a revisiting of the Commission’s Strategic and Operational Plan, which I hope would provide an opportunity to lay out what might be some of the challenges to meet a 

more aggressive time frame with the limited resources of a 70- 

some-person Commission, given all the issues on their plate. 

Senator CARPER. All right. Thank you. 

Mr. Acton, you mentioned the filing last night, I think, of some 

paperwork, and let me just drill down on that, if I can. The Postal 

Service has, I believe, filed the paperwork with the Commission 

seeking an advisory opinion on its recent proposal to close a significant number of post offices across the country. We have read a lot 

about that in the media. But could both of you commit that, if confirmed, you would work with your colleagues on the Commission to 

get your work done more quickly than the Commission did on this 

Saturday delivery issue? And by quickly, I mean something much 

closer to the 90 days that the Commission’s own regulation envisioned it completing work on advisory opinions. 

Mr. TAUB. Certainly, Senator, you have my commitment in that 

regard. 

Mr. ACTION. Senator, I am on the record with that commitment 

and the notice of the filing this morning with respect to that docket. 

Senator CARPER. Good. Thank you both. 

I spent a fair amount of time, as you may recall, in my opening 

statement discussing the Postal Service’s financial situation. I will 

discuss it a little more when my colleagues have finished asking 

their questions. But what role should and what role will postal finances play in your consideration of the issues that come before the 

Commission, if confirmed? Mr. Acton, would you go first. 

Mr. ACTON. With things as bad as they are, Senator, Postal Service finances are always the gorilla in the room regardless of the 

issue at hand. We try to make decisions based on the facts of the 

matter, and that is what we do. But we also have to be cognizant 

that the Postal Service is short on cash. Worse than that, they are 

billions of dollars in debt. So when we make decisions about allowing them to enter into experimental product pursuits or to do something that may not strictly be within the normal realm of the market test they have explored in the past, the Commissioners do that 

with the mindset that we do not want to be thwarting the sort of 

innovative thought that the Postal Service needs to engage in to 

help earn its way out of this hole. 

Senator CARPER. All right. Thanks for that. Mr. Taub. 

Mr. TAUB. I would concur with Mr. Acton in that regard. You 

know, when it comes to the finances of the Postal Service, given 

the cloud we are living under right now, one has to be very sensitive to that. Obviously, the issues presented to the Commission 

have to be decided on the facts presented. But it also seems to me 

we need to be very careful of keeping in mind the proverbial 

second- or third-order effects of a decision, how it may affect unintentionally the finances of the Postal Service because during these 

times that the Postal Service is facing, it seems, the Commission 

30 

has to always be very sensitive to how its decisions may affect the 

finances. 

Senator CARPER. Thanks. As Commissioners, you would be 

charged with reviewing and approving new products and services— 

I think we just talked a little bit about this—that the Postal Service might want to offer. Do you think that the Postal Service has 

done enough to innovate and to make the mail more valuable, and 

has the Commission done enough to facilitate the good ideas that 

the Postal Service has put forward? 

Some people think that the Postal Service does not do anything 

different now than they did 5, 10, 15, or 20 years ago, and actually, 

there are a lot of products that they offer. They did not deliver a 

lot of pharmaceuticals just a few years ago. Today, they do a lot. 

Netflix was not part of the package that ended up in the mail until 

very recently. Now, it is a big piece of their business. There are 

flat-rate boxes, and there are a number of things, like the idea of 

doing these cooperative arrangements where the Postal Service delivers the last mile for UPS and FedEx, and that is all smart stuff. 

So I do not want to take anything away from them, although I 

have said to two Postmaster Generals, the current one and the last 

one, both of whom I respect, that if I were in your job, I think I 

would create an entity within the Postal Service or maybe from 

outside the Postal Service where you have a lot of entrepreneurial 

people just looking at the basic business model and thinking, how 

can we use this basic business model, where we go into every community, every mailbox 6 days a week? How can we actually derive 

financial value from that? The nature of a big organization like 

that is not really to be entrepreneurial, as we know, and the same 

is true for a lot of big business organizations. 

In any event, do you think the Postal Service has done enough 

to innovate and make itself more valuable? Has the Commission 

done enough to facilitate the good ideas the Postal Service has put 

forward? And what thoughts would you have with regard to how 

we might end up with a Postal Service that actually is more innovative and entrepreneurial going forward? 

Mr. TAUB. Senator, I think the Postal Service, looking at it from 

the outside, has improved in its use of the tools available under the 

law, whether it is seasonal pricing, experimental market tests. I 

think they are trying to be more innovative. 

But you have hit on a key point. That was really the essence of 

the 2006 law, trying to take what had been a proverbial cost of 

service regulatory structure, where the Postal Service, whenever it 

felt the need for more money, generally speaking, could set its own 

revenue requirement. There might be an argument at the Commission over whether First Class might pay more than periodicals, but 

at the end of the day, whatever they wanted as the revenue, generally they would get. They were moved to a price cap system, 

where if they could live within that, they could retain earnings. Obviously, the financial challenges they are facing right now have 

caused them to hit the cap, but the idea of that system was to encourage a much more innovative culture at the Postal Service. 

And one of the other big changes in the law was, as I mentioned, 

taking what was a weak rate-recommending body, transforming it 

to a much more vibrant regulator, and 5 years later, we have a roVerDate Nov 24 2008 14:27 Feb 29, 2012 Jkt 68019 PO 00000 Frm 000034 Fmt 06633 Sfmt 06633 P:\DOCS\68019.TXT SAFFAIRS PsN: PAT
31 

bust, transparent array of data on costs and revenues that we did 

not have before. So to the extent that Congress is looking to maybe 

revisit the non-postal prohibition—certainly, there are issues to 

consider on fair competition and costs and how those would be 

funded, but unlike what we had in 2006, today, we do have a much 

more transparent process that may allow for moving in that area 

or allowing the Postal Service the opportunity to look at some innovative solutions. 

Senator CARPER. Mr. Acton. 

Mr. ACTON. Senator, there is always room for improvement on 

that front, but I would vehemently disagree with individuals who 

feel there is not innovative thought going on at the Postal Service. 

There is a new executive leadership team there under Postmaster 

General Donahoe, and there is a group that is headed up by Paul 

Vogel, who is in charge of bringing in all the revenue that the Postal Service can generate. 

I had the privilege of seeing a demonstration of his team’s work 

on this front in terms of new, innovative products at the National 

Postal Forum earlier this year, and it reminded me a lot of my 

time in business school, where you had a lot of young and bright 

individuals who are trying to think how to leverage this Postal 

Service commodity in a new and maybe before-now-unheard-of 

way. So the regulator is obliged to try to promote that type of innovation whenever it can, and I think that the PRC has done a good 

job of doing that through the use of market test products and 

through experimental arrangements. We approved the sample box. 

We approved the Quick Response (QR) code. All of those sorts of 

experimental and market test initiatives that were brought to the 

Commission, we have approved, and we do that keeping in mind 

that we do not want to be in the way of good innovation at the 

Postal Service. 

Senator CARPER. All right. Thanks. 

You mentioned the name of our current Postmaster General, and 

his name is spelled ‘‘D-o-n-a-h-o-e,’’ I believe, and his name is pronounced all different kinds of ways, ‘‘Donna-hue,’’ ‘‘Donna-ho.’’ I 

asked him one day, how do you pronounce your last name? And he 

said, ‘‘Donna-who.’’ And I said, like The Who? As in, who are you? 

And he said, that is it. So since then, I have done a pretty good 

job of pronouncing his last name. 

Mr. ACTON. Senator, if I could just interject, I asked the same 

question, and he told me it was like the talk show host, Phil 

Donahue. So apparently he answers to several versions. [Laughter.] 

Senator CARPER. He is as bad as guys like me. [Laughter.] 

All right. Give me your best idea of an innovative piece of business that the Postal Service, if you were giving advice, might want 

to pursue. Just think about it. What might be a smart thing for 

them to do, kind of thinking outside the box? 

Mr. TAUB. Senator, the Postal Service itself about a year ago in 

their Long-Term Action Plan acknowledged that e-commerce, for 

example, is an area that may provide some new ways of providing 

the safety and security and peace of mind that many people have 

with the Postal Service, but using its brand to do so. It is an issue 

they have looked at in the past that was not much of a money 

maker. And in that same report, the Postal Service did point out 

32 

part of the challenge of the financial pressures they are under now 

is, if you are going to get new ideas started, you need that capital 

to invest in it, and capital is so tight right now for them. 

But certainly e-commerce would be one idea that the Postal Service, I know, has looked at within the confines of the current structure, continues to look at, but at the end of the day, as with all 

these new ideas, it is a balance of how much you are going to invest. These are risks, part of innovating. You are going to have 

things that succeed and fail. But when you are losing $8 billion a 

year, how much risk can you truly afford? 

Senator CARPER. Thanks. Mr. Acton, any thoughts? 

Mr. ACTON. Yes, Senator. I would sort of take a bifurcated approach in answering that. I think there are operational approaches 

that the Postal Service should do differently and better in order to 

promote themselves here on the Hill and elsewhere. I think that 

their new Deputy Postmaster General, Ron Stroman, has made a 

new effort to try to engage the Hill in these discussions, and that 

is going to be, as you know, an important part of the challenge because you hold all the key chips and those important decisions are 

going to be up to you, and they have to do a good job of being aggressive in pursuing their agenda and being sure that they are providing you the information you need. 

Now, that is separate and apart from what you are talking 

about, but on the product front, I encourage them to look to be 

more interactive with new technologies that are emerging, much in 

the way that Netflix is their biggest business mailer, and there is 

a reason for that. It is because Netflix is a very unique and progressive mix of new technologies that also incorporates into their 

business model in a very fundamental and important way the U.S. 

Postal Service. We need more of that. 

Senator CARPER. Yes. If you look at the legislation Senator Collins and I co-authored in 2006, one of the things we did was we 

spelled out in the legislation the kind of background that we are 

looking for when the President nominates people to serve as a Governor on the Board of Governors. We have had very fine people who 

serve, who continue to serve. 

But I do not think we have anybody who comes from, if you will, 

industries that involve social networking. There is nobody from 

Google, Facebook, Cisco, or any of those kinds of companies, and 

I think we are going to have a vacancy or two here in very short 

order, and one of the things I am going to do is to suggest to the 

Administration and the President that we make sure that we have 

some folks serving on the Board of Governors who bring a new perspective, really a perspective that is probably more akin to that of 

my sons, who are 21 and 23 and who are all over this social networking stuff. It might be helpful to have people who bring a different perspective and who are really innovative. That is kind of 

what they live and breathe. So that might be helpful. 

The last question I have concerns the legislation that I have introduced, which would allow the Postal Service to take advantage 

of its resources and its delivery network to experiment on a limited 

basis with non-postal products, and you have had a chance to comment on that, but I would welcome any other thoughts that you 

have. Let me just ask, how would you approach non-postal proVerDate Nov 24 2008 14:27 Feb 29, 2012 Jkt 68019 PO 00000 Frm 000036 Fmt 06633 Sfmt 06633 P:\DOCS\68019.TXT SAFFAIRS PsN: PAT
33 

posals if they were to come across your desk as a Commissioner? 

If you could just amplify some on what you have already said. 

Mr. TAUB. Oh, sure thing, Senator. Again, to the extent Congress 

provides more leeway there, I think the Commission, having a robust track record of transparent data, accountable data out there 

that was not there before, would allow maybe a little bit more of 

a comfort level if Congress went down that road. Certainly to the 

extent that there is criteria the Commission would need to look at, 

I would assume would be in statute, but things like unfair competition or the effect on competition of services that are already out 

there, how losses would be covered, revenue issues, things of that 

nature, may be some of the criteria that one would want to consider. 

Senator CARPER. Thank you. Commissioner Acton. 

Mr. ACTON. Well, Senator, this viewpoint is colored by the acknowledgement we all share that the Postal Service has a mixed 

record in terms of these sorts of enterprises. But that does not 

mean they should not be doing more of it going forward. It just 

means that the regulator is obliged to be sure that they are doing 

it in the context which you outline in your question, which means 

limited and perhaps experimental. That way, they can go ahead 

with the type of innovative thought everyone wants to encourage, 

but they can have a third-party non-biased regulator involved to be 

sure that there are no market distortions or monopoly misuses taking place. 

Senator CARPER. I have a couple of things I am going to say as 

we close down, but before I do, I just want to give each of you another minute or two, if there is anything else that you would like 

to add or take away, some things you did not mean to say or wish 

you had said. 

Mr. TAUB. Mr. Chairman, I would simply say, having spent a lot 

of blood, sweat, and tears for many years on this issue with nowSecretary McHugh in the House, this is a big challenge. These are 

challenging and fearful times in many ways for the Postal Service. 

But if confirmed, I would look forward, hoping in some small way, 

to add to the solutions and have a viable Postal Service. 

Senator CARPER. Thank you. 

Mr. ACTON. The one encouragement I offer, Senator, is to ask you 

to keep pursuing that legislative solution that you include in your 

bill, which calls for some addressing of these concerns about the retiree health benefits and the Civil Service Retirement System, because even though I do not regard that as a long-term repair for 

what needs to be done, it can provide some short-term adjustment 

if it is done in a responsible fashion that gives us all more time 

to think about what needs to be done going forward. 

Senator CARPER. Thanks for those thoughts. 

Mr. Taub, you just mentioned that these are fearful times for the 

Postal Service. For a lot of people in our country, these are scary 

times, and I would just say, whether we are talking about the Postal Service or our Nation as a whole, we just need to remember that 

we are all in this together. And in the end, people who elect us expect us to govern, and they do not expect us to throw bombs at 

each other here. They expect us to work together. That is the way 

34 

we do business in Delaware. I wish the rest of the country were 

just maybe a little bit more like my State in that regard. 

But Senator Collins and I worked a lot together, and some of you 

in this room helped a lot with the legislation we crafted in 2006, 

and ultimately we came together on legislation that, I think for the 

most part, was good. But things have changed, as we all know, in 

our economy and with the increased diversion away to electronic 

media. But my hope is to be able to work with Senator Collins, as 

we have in the past, with our Chairman, Senator Lieberman, and 

others on this Committee, including Senator Brown, to enable us 

to bring forth a bipartisan bill. 

I do not know if we are going to be here in the month of August. 

I have suggested to the President, if we end up unable with the 

House and the Senate to work something out in the near term on 

the debt ceiling, that he ask the Congress for maybe a 30-day 

bump-up in the debt level and that he basically say to the Congress, unpack your bags. You are not going anywhere in August 

until we work this out. And for the folks who have been planning 

on August recess, forget it. We need to solve this problem. 

And there are a bunch of us, Democrats and Republicans in the 

Senate, who pretty much like an idea that was worked up a year 

or so ago by the Fiscal Commission led by Erskine Bowles and 

Alan Simpson. That does not have to be the final answer, but I 

think that is a pretty good roadmap, one that I think we can follow. 

But we are all in this together, and part of the need to address 

the Postal Service and resolve its financial issues is because it is 

a significant part of the bigger problems and challenges that we 

face as a Nation. 

So I am not sure if we will be here in the month of August. If 

we are still in session, my hope is that Senator Collins and I can 

introduce bipartisan legislation and maybe hold a hearing before 

Labor Day. And if by some small miracle we work out our differences with our Republican friends in the Senate and the House 

and actually go forward with legislation that lifts the debt ceiling 

and provides for the opportunity for an up-or-down vote on, among 

other options, the Bowles-Simpson Commission idea, then maybe 

we will put off our bipartisan hearing until September. So we will 

see. 

This has been informative. We appreciate very much, first of all, 

your appearance here today, your preparation for this hearing, for 

Mr. Acton, your service already, and for Mr. Taub, your work with 

a very good former member of the House of Representatives, someone I had a chance to work with and have huge respect for and am 

very pleased to see have the opportunity to serve as our Secretary 

of Army today. 

Thank you all, and to your families, I would just say, I was 

watching your wife very carefully when you spoke, Mr. Taub, and 

I could just barely see her lips move when you spoke. [Laughter.] 

Senator CARPER. You guys are pretty good at this. 

Mr. TAUB. Nearly 18 years, we have been practicing that. 

Senator CARPER. That is good. How old is your daughter? 

Mr. TAUB. She will be 15 in a few weeks. 

Senator CARPER. Fifteen years old, and is she going to be a sophomore? 

35 

Mr. TAUB. A sophomore in high school. 

Senator CARPER. Those are good years. When our oldest boy was 

reaching the end of his sophomore year, we went out on road trips, 

and on these road trips we would drag along his younger brother, 

who is 2 years younger, and we would visit colleges and universities, here generally on the East Coast, and those were great trips. 

I do not give people a lot of advice, but just have a good time doing 

that. Hopefully, one of the places that you will take a look at is the 

University of Delaware—— [Laughter.] 

Or Delaware State University. There are some good places. 

Maybe over at Ohio State where I spent some time. There are a 

lot of great choices. But the great thing is just enjoying the trip. 

What do they say, the trip is sometimes better than the destination, so just have a good time out there on the road. And hopefully, 

if you are confirmed, your duties will allow you to have a little time 

to do that sort of thing. 

Our thanks to those who are with you, your loved ones and family, for their willingness to share you with us, or continue to share 

you with us. 

I think there are some Members of our Committee who were here 

today who will have some more questions and probably will submit 

those in writing. If they have any questions, they have until the 

close of business tomorrow to submit those questions. But if you 

get any, please respond right away. 

And with that, this hearing is adjourned. Thank you very much. 

[Whereupon, at 4:21 p.m., the Committee was adjourned.] 

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