House Committee Releases Very Misleading Video On Who Supports Issa-Ross Postal Reform Bill
Filed under: politics, postal, postal finances, postal news, postal reform, press releases, scams, usps, videos
This news release and video suggests that the entire House Committee On Oversight and Government Reform and all Senators support the Issa-Ross-McCain Postal Reform Bill as well as the views on the USPS overpayment. However, only one member of the Committee has signed on as a co-sponsor for HR 2309. Very misleading on all fronts. Read more
GOP-Led Panel At House Hearing Had More On Its Mind Than Liberating USPS
Analysis: House Hearing Sets Troubling Precedent
APWU members across the country cheered when President Cliff Guffey stood up for postal workers at a hearing of the House Committee on Oversight and Government Reform on April 5, but the inquiry into the union’s tentative Collective Bargaining Agreement set a troubling precedent nonetheless.
With governors and state legislatures across the country chipping away at the rights of teachers, nurses, and firefighters to engage in collective bargaining, the committee’s decision to examine the APWU’s proposed contract took on an ominous tone. Read more
Oversight Committee Passes Bill Targeting Tax Delinquent Federal Workers
Oversight Committee Passes Bills Addressing Tax Delinquent Contractors and Federal Workers, and Federal Employee Performance
WASHINGTON- The House Committee on Oversight and Government Reform today passed three accountability and performance related bills: two targeting seriously tax delinquent federal employees, grantees, and contractors, and the third expanding the probationary period for newly hired federal employees.
“The bills we reported today further the Oversight and Government Reform Committee’s core mission of ensuring that money Washington takes from taxpayers is well spent, and contributes to an efficient and effective government,” said Rep. Darrell Issa, R-Calif., chairman of the committee.
H.R. 829, the Contracting and Tax Accountability Act of 2011, was introduced February 28,2011 by Rep. Jason Chaffetz, R-Utah, passed on a voice vote. The bill prohibits any person who has a seriously delinquent tax debt from obtaining a federal government contract or grant. The Committee accepted an amendment from Rep. Jackie Speier, D-Calif., which would require an agency to notify Congress if a waiver to this law is granted.
H.R. 828, the Federal Employee Tax Accountability Act of 2011, also introduced by Rep. Chaffetz, passed on a voice vote. The bill makes an individual who has a seriously delinquent tax debt ineligible to be appointed, or to continue serving, as a federal employee. Chaffetz introduced an amendment in the nature of a substitute which exempted uniformed military personnel from this act. The committee also adopted an amendment on a voice vote from Rep. Stephen Lynch, D-Mass., that would require a notice period before personnel action is taken by an agency, among other technical changes to protect due process. Mr. Chaffetz and Mr. Lynch negotiated a notice period of 60 days notice at the markup.
Both of these bills define “seriously delinquent tax debt” as an outstanding tax debt for which a notice of lien has been filed in public record. Please note this does not include a debt being paid in a timely manner or a debt with respect to which a collection due process hearing is requested or pending.
H.R. 1470, a bill extending the probationary period for federal employees to not less than two years, passed on a recorded vote of 17-14. The probationary period is currently set via regulation at one year. The bill was introduced by Rep. Dennis Ross, R-Fla., who chairs the subcommittee on Federal Workforce, the Postal Service, and Labor Policy. Rep. Ross introduced an amendment in the nature of a substitute which specified that only new hires would have the probationary period and that the bill would not apply to preference eligible veterans. H.R. 1470 is supported by the National Council of Social Security Management Associations, FAA Managers Association, Federal Managers Association, Senior Executives Association, and the Professional Managers Association.
House Oversight Hearing To Examine USPS Workshare Discounts
U.S. House of Representatives, Federal Workforce, Postal Service and the District of Columbia Subcommittee
On Wednesday, May 12, 2010, the Federal Workforce, Postal Service and the District of Columbia Subcommittee will hold a hearing entitled, “The Price is Right, or is it? An Examination of USPS Workshare Discounts and Products that Do Not Cover Their Costs.” The hearing will take place at 2:00 p.m. in room 2154 Rayburn House Office Building.
PCMA: Altering Mail Delivery Schedule Could Negatively Impact Consumers Relying on Home Delivery of Prescription Drugs
WASHINGTON -A United States Postal Service (USPS) proposal that would reduce delivery of mail to five days could negatively impact the millions of Americans with chronic conditions who rely on the convenience and value provided by mail-service pharmacies, the Pharmaceutical Care Management Association (PCMA) said in letters sent to U.S. House Committee on Oversight and Government Reform Chairman Edolphus Towns (D-NY) and U.S. Senate Committee on Homeland Security and Government Affairs Chairman Joseph Lieberman (I-CT)
“About 1-in-6 prescriptions that are home delivered arrive on Saturday. Consumers count on getting their prescriptions at the right time and often can’t wait an additional two days, or even three days in the case of federal holidays that fall on a Monday,” said PCMA President and CEO Mark Merritt.
Government and independent studies have examined the increased savings, safety, and adherence provided by mail-service pharmacies. That research includes:
- Federal Trade Commission (FTC). The FTC found that mail-order pharmacies provide more savings than retail pharmacies.
- Pharmacotherapy: Official Journal of the American College of Clinical Pharmacy. Peer reviewed data found that highly automated mail-service pharmacies dispensed prescriptions with 23-times greater accuracy than retail pharmacies. The mail-service error rate was zero in several of the most critical areas, including dispensing the correct drug, dosage, and dosage form.
- Harvard University. Independent, peer-reviewed research conducted by Harvard University and published in 2004 by Health Affairs, analyzed some 670 million prescription drug claims and concluded that generic drug substitution rates at PBM mail-service pharmacies were slightly higher than at retail pharmacies.
- American Journal of Managed Care. Consumers receiving their prescription medications for chronic conditions through a mail-service pharmacy “were more likely to take them as prescribed by their doctors than did patients who obtained them from a local pharmacy,” according to the study. The study also found that 84.7 percent of patients who received their medications by mail at least two-thirds of the time stuck to their physician-prescribed regimen versus 76.9 percent who picked up their medications at “brick and mortar” Kaiser Permanente pharmacies.
PCMA represents the nation’s pharmacy benefit managers (PBMs), which improve affordability and quality of care through the use of electronic prescribing (e-prescribing), generic alternatives, mail-service pharmacies, and other innovative tools for 210-plus million Americans.
Rationale for Five-Day Delivery Shattered at House Hearing
APWU News
A USPS myth was demolished at House hearing April 15 — a myth that serves as the Postal Service’s rationale for eliminating Saturday mail delivery.
In response to questions by Rep. Gerry Connolly (D-VA), Postmaster General John E. Potter admitted that predictions that the Postal Service would amass losses of $238 billion by the year 2020 were “theoretical.” The exchange confirms allegations made by the APWU that the USPS forecast is wildly exaggerated, outlandish and unsupported. [See Phony Deficit Projections Mask Management’s Real Goal]
The projections, which were widely reported in the mainstream press, have been cited by the Postal Service repeatedly as justification for ending six-day delivery
But Potter and Phillip Herr, of the Government Accountability Office (GAO), admitted in response to Connolly’s questioning that the figure is based on the premise that management would “do nothing” over the next 10 years to reduce costs, and that revenue, mail volume and the number of employees would remain unchanged.
“I’m a little concerned that in bandying about this $238 billion number, we’re ignoring some obvious things that are going to happen,” Connolly said. “It looks, frankly, a little bit like a scare tactic to get us to make some decisions.”
The figure would only be valid if nothing changes, Herr admitted. “The number was by far a worst-case scenario,” he said, “a number the Postal Service came up with.”
The exchange ended with Connolly addressing Potter about the validity of the $238 billion projection:
Connolly: “You’d have to assume for $238 billion to be real, we do nothing, including you. You’ve already said you’re going to use the authority you have to make reductions totaling $123 billion. Is that correct?”
Potter: “That’s correct.”
Connolly: “So the $238 billion number is already not real.”
Potter: “It’s a theoretical number.”
The Committee on Oversight and Government Reform also heard testimony from Ruth Goldway, chairman of the Postal Regulatory Commission; David Williams, Inspector General, USPS Office of Inspector General; John O’Brien, senior advisor to the director, Office of Personnel Management; and Kevin Kosar, analyst, Congressional Research Service.
Congressman Darrell Issa Goes After Size of Federal Workforce
From Governemnt Executive
Rep. Darrell Issa, the ranking member on the House Oversight and Government Reform, went after the size of the federal workforce in general this morning at the opening of a hearing on the sorry financial state of the Postal Service. He claimed that the Postal Service has “more or less” a third more workers than it actually needs, and while insisting that he wants to support Postal workers and make sure they’re fully employed, is making no bones about the fact that he thinks the federal government is overstaffed.
Testimony of USPS Inspector General David C. Williams
Hearing before the Committee on Oversight and Government Reform and the Subcommittee on the Federal Workforce, Postal Service, and the District of Columbia House of Representatives
Mr. David C. Williams
Inspector General
United States Postal Service
Mr. Chairman and members of the committee, thank you for asking for our testimony today. The Postal Service’s financial condition is serious. The situation is the product of the economic downturn and the chaos of the digital age that has sent shock waves through the communications sector of the economy. Further the Postal Service entered this storm with some chronic problems that had been masked by its success in earlier years.
Two pathways lie before the Postal Service. The most obvious is a serious financial crisis with temporary patches that will consume the energy for change and will leave mounting debts with little chance of repayment.
The other pathway is much more hopeful. The current crisis is an opportunity to migrate toward a lean and successful enterprise that is well positioned for a highly adaptive future and thrives in the model envisioned by the Postal Accountability and Enhancement Act of 2006 (PAEA). This pathway will require long-term solutions, effectively executed, to address a few critically important issues.
- First, the optimization of the Postal Service’s costly network of plants, post offices, and administrative apparatus must be accomplished as rapidly as possible, while balancing commitment to service. Since 2003, the Postal Service has streamlined its network by reducing over 130,000 employees and, in 2009 alone, cutting $6 billion in costs. These are credible actions, but more is needed to match the declining mail volume projected through 2020.
- Next, rigid workforce rules do not match the ebb and flow of mail and customer demand in plants and post offices. As the mail continues to decline the need for more flexible staff to perform a wider range of duties becomes more evident. Also the greater use of evaluated letter carrier routes would provide better incentives to allow for more effective management.
- Thirdly, we and the Postal Service, have recognized the need for a simplified, pricing structure, to replace the over 10,000 prices contained in their 1,700 page customer manual. A simpler pricing structure would be easier to use, encourage new customers, and improve revenue accountability.
- Finally, this year Congress directed the Postal Service, OPM, and OMB to develop “a fiscally responsible legislative proposal” for Postal Service benefit payments. Our office found three areas where overpayments are occurring:
An exaggerated 7 percent health care inflation forecast instead of the 5 percent industry standard, resulting in an overpayment of $13.2 billion by 2016;
An excessive 100 percent benefit plan prefunding requirement compared to OPM’s own prefunding level of 41 percent and the S&P 500’s, 80 percent rate. Even using the higher 80 percent funding goal would result in a $52 billion surplus.
Lastly, the Postal Service Pension Fund was overcharged $75 billion, so that employees could retire at promised levels. When the Post Office Department became the Postal Service, employees that belonged to the Federal Pension Fund now contributed to the Postal Service. Retirement costs were divided according to the number of years employees had belonged to each fund. However, the Federal Pension Fund paid for retirements based on 1971 salaries, not final salaries. The Federal Pension Fund collected full contributions, but paid only partial benefits.
OPM has explained that these mischarges were in response to what they believed to be the will of Congress expressed in 1974 legislation. However, the 1974 language was repealed by Congress in 2003, when large overpayments were discovered. At that time OPM inexplicably had not detected a 41 percent overfunding error in this $190 billion pension fund. Congress directed OPM to use its authority to oversee the reforms using accepted “dynamic assumptions” that include pay increases and inflation.
Fixing the last issue alone would fully fund the pension and health retiree plans. The Postal Service’s $7 billion annual payments would no longer be needed, since the plans would be fully funded and interest income could pay annual premiums. The Postal Service is being bled white with erroneous payments before they open their doors. The $7 billion mischarge accounts for 66 percent of the Postal Service’s projected $11 billion loss for this year.
This is also serious because the Postal Service Pension Fund is not made up of tax dollars. The two funding streams are employees’ own money and money collected from postage sales inflated as a result of this mischarge.
The mischarges should be backed out and fund balances reset to proper levels to achieve the retirement reforms Congress enacted in 2003. This would give the Postal Service a good chance of adapting to efficient market forces envisioned in PAEA.
Testimony of PRC Chairman Ruth Y. Goldway
Testimony of Chairman Ruth Y. Goldway, Postal Regulatory Commission
Before the U.S. House of Representatives Committee on Oversight and Government Reform and the Subcommittee on Federal Workforce, Postal Service and the District of Columbia
April 15, 2010
Chairman Towns, Chairman Lynch, Ranking Members Issa and Chaffetz and members of the Committee and Subcommittee, thank you for the opportunity to testify to this joint hearing.
Before addressing the questions you put to the Commission, I must reiterate to the public that no decision has yet been made to reduce service to five days. I am afraid the public has been confused by the Postal Service’s recent announcements. We need to reassure them that this important matter requires the consideration of both the Commission and the Congress.
POSTAL SERVICE PLAN FOR THE FUTURE
On March 2 of this year, the Postal Service presented to the Nation its vision for the future of our mail system that I find very troubling. In a litany of problems and worst case scenarios, it estimates that there will be cumulative financial losses of $238 billion by the year 2020 if no changes are made.
What is the Postal Service’s response to these potential losses? In two words, it is: reduce service. Its plan promises fewer employees to serve the public, fewer processing plants and postal operated retail facilities, and reduced mail collections and fewer collection boxes – more than 24 thousand collection boxes were removed from American neighborhoods just in the past year. In addition, the Postal Service plan eliminates Saturday mail delivery service, which heretofore has been considered a competitive advantage for the Postal Service.
The basic outcome of all these ideas is that there may well be less mail and less Postal Service and that those who rely exclusively on the mail, the elderly, the poor, rural America and those who cannot or will not connect to the internet may suffer the most.
Even more troubling, its plan stops at the year 2020. There is nothing in the plan to indicate how forecasted mail declines will be arrested in the following decade. On the contrary, the plan’s proposals seem likely to spur further declines, a downward trajectory that suggests further shrinkage of the system, with mail and this fundamental communication infrastructure disappearing in tandem.
POWER OF THE MAIL
I do not believe that this vision is the inevitable future of the Postal Service. I believe in the Constitution of the United States and Title 39’s mandate to provide a postal system that binds the Nation together. Even in the Internet Age, mail has a unique power to touch readers and deliver results for senders. It can drive sales, touch emotions, deliver votes, and shape important personal decisions that affect life and country.
I also believe that able managers and visionary leaders can navigate the current troubled waters to create growth and find new revenue while also controlling costs. I believe that America’s mail system can be reinvented, reengineered and reenergized for a new century of customers. In the Postal Service plan regrettably, there is no growth, no rejuvenation and little innovation.
If the last few years have taught us anything, they have shown how unpredictable the future can be. In my 12 years on the Commission, I can recall times when the Postal Service predicted billion dollar losses and ended the year with billion dollar gains.
Even this year, it looks like the Postal Service might significantly exceed its own expectations. The latest financial report received by the Commission reveals that through the end of February it is nearly $1.2 billion dollars ahead of its forecast. Although mail volume is down by 8 percent, Standard Mail volume grew slightly for the month and Shipping Services are up 1.3 percent for the year. Both of these products are sensitive to changes in economic conditions. It may be that the economy is starting to have a tonic effect on the mail.
Seeing this kind of variability in only six months, suggests that it may be prudent to view projections that lie six years or more down the road with some caution.
A BETTER APPROACH TO THE FUTURE
The Commission commends the Postal Service for its sustained effort over many years to increase productivity, improve processes and lower its costs. We appreciate that this effort must continue and evolve for the future. Today’s discussions, however, must not simply focus on costs and deficits. The Postal Service should reposition its goals to meet the needs of an evolving society.
Rather than beginning with the premise that the Postal Service needs to be cut in size and scope to solve the deficit projections, these fundamental questions must first be addressed. What does the Constitution and the law require? What is best for the Nation? How can the Postal Service maintain and improve its universal service obligation and deliver that to citizens and the business community who rely on the mail? These are questions that the Postal Accountability and Enhancement Act requires the Commission to ask.
Both GAO and the Postal Service offer recommendations without this context. An axiom in the business community is that a company cannot cut its way to success. It has to have a real plan. The consensus among the mailers I have spoken with is that there is very little that is new in these two reports.
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The consultants hired by the Postal Service, and GAO analysts, should have begun by looking at what it will take to keep open as many post offices, and station and branches as possible; what new products the public needs that the Postal Service is uniquely positioned to provide; how to keep delivery at 6 days, the level required by Congress; and how to determine the service levels that are the most advantageous to its future success.
The consultants and analysts should have reviewed the Postal Service’s recent attempts at innovation. In this decade, the Postal Service embarked on two projects that it described as transformative: the Intelligent Mail Barcode (IMb) and the Flat Sequencing System (FSS).
The Postal Service promised that the IMb would revolutionize the transparency and efficiency of letter mail for the Postal Service and its customers, creating new value in the mail and opportunities for growth. The Commission believed the Postal Service and agreed to use the IMb as the basis for a measurement system to track service quality. Yet, we and the mailing community continue to wait for that promise to be realized.
Similarly, FSS promised to transform the processing of flats and catalogs so that they could be sorted automatically into walk sequence, at lower costs and with higher quality. Both the IMb and the FSS are well‐behind scheduled implementation. Does the Postal Service think these projects are not as promising as originally envisioned? What can be done to speed up their introduction and acceptance system‐wide? Perhaps, the regulator has been too lax. Answers to these questions would better inform future plans.
Why hasn’t a detailed, innovative new retail strategy been explored that will, at a minimum, improve the revenues of post offices to the point that their continuance is economically as well as socially justified. I agree that Postal Service efforts to build its website and expand customer access through internet use and sales of stamps at supermarkets are commendable. But ask the small towns of America if they think government business should be conducted in Walmarts. Why would any rational person compare the functions of a Post Office to Walmart as the Postal Service consultants did? Envisioning the future calls for a transformative process not a capitulation to big box retailing.
IDEAS FOR POSITIVE CHANGE
If I had been tasked with developing the 10‐year plan, here are some of the ideas I would have proposed for the Postal Service to accomplish by 2020:
1.Develop mail products based on value to the customer not necessarily on volume. This is the fundamental tenet needed to fix the Postal Service’s broken business model.
2.Convert the bulk of its vehicle fleet to run on electricity reducing annual fuel and maintenance expenses by more than $400 million per year and increasing America’s independence from foreign oil.
3.Have a range of products that are fully trackable and traceable and comparable with those of private package companies.
4.Provide a one‐stop shop for government services. Not just passports but national park passes, regional EZ passes, identity cards, etc.
5.Participate as a full partner in the nation’s 2020 census, thereby saving the country hundreds of millions.
6.Building on the money order services now offered, introduce and implement a system to provide assistance to the unbanked, replacing usurious “pay day” operations with reliable fair service.
7.Commit to having a network of post offices in key locations that are open more hours than in 2010 and even on Sundays and guarantee at least one 24‐7 post office in every big city.
8.Implement a comprehensive Vote‐by‐Mail system that suits the needs of all the states in the union for federal, state and local elections held at any and all times of the year.
9.Reinvent the letter carrier: Empower him/her to measure real‐time service: to be accessible to the community by email; to be the eyes and ears of the community; and to be the sales and service point for small businesses.
10.Reorganize the workforce ‐ not to make them part time employees ‐ but to enhance their skills thereby adding flexibility in the processing centers, new energy conservation technology to logistics and motivated outgoing sales people at retail counters.
11.Commit to having ten other ideas in place and operating within the decade.
Commission staff is also up for the challenge. They are exploring ideas such as auctioning potential discounts for postage rates to get a real measure of market demand; adjusting pricing in First‐Class and Standard Mail to improve Postal Service margins and encourage mailer efficiencies; and offering postal vehicles as platforms for sensors that generate revenue from other government agencies or businesses to automatically measure pollution, collect weather data, identify chemical spills, identify cell phone/wireless dead spots, spot natural gas leaks and map potholes.
Just as limiting access and declines in service create a self‐fulfilling prophecy, improvements which may seem small can create the incremental reinvigoration that begets real growth.
CURRENT CRISIS
Nevertheless, I am not a Pollyanna. What seems beyond dispute at the moment is that the Postal Service is facing serious financial difficulties this year and next year.
The Postal Service ends its fiscal year on September 30. At that time, they must pay $5.5 billion into a fund for future retiree health benefits. Shortly after that, it will need to make sizeable payments for workers compensation obligations and to meet payroll. These large obligations, falling so close together, could cause the Postal Service to run out of cash. This is similar to the situation it faced last year when Congress provided $4 billion in relief.
My colleagues and I believe that the scheduled payments to fund future retiree health benefits should be readjusted, which would provide the Postal Service with further time to recover from the recession. However I think that the relief should be part of a larger strategy that is both financially and operationally transformative.
RETIREE HEALTH BENEFIT FUNDING
Last May, Chairman Lynch asked the Commission to look at OPM’s computation of the Retiree Health Benefits Fund (RHBF) liability. Based on changes in how to calculate long‐term medical inflation rates and the declining postal workforce, we found that a recalculation could greatly reduce the Postal Service’s liability and lower the required annual payments while meeting the original funding goals of the law.
The current payment schedule has proven to be too ambitious and should be adjusted in some fashion.
Over the past three years, the Postal Service has paid $15.4 billion to Treasury to prefund future retiree health benefits. During that same time, the Postal Service borrowed more than $8 billion from Treasury so that it could make those payments. This arrangement does not protect the Federal government in the event of a Postal Service default. And it burdens the Postal Service with increasing debt service costs, which could exceed $150 million this year. Borrowing by the Postal Service to make the payments does not make sense. On the other hand, borrowing for investment in operational innovations is absolutely necessary.
The RHBF payment schedule must to be revised so the Postal Service can make smaller payments over a longer period of time and/or so that yearly payments are tied to the Postal Service’s ability to pay in a given year.
PENSION LIABILITY
Currently, the Civil Service Retirement System pensions are considered fully funded, but a review by the Postal Service Inspector General determined that the Postal Service has been overcharged by $75 billion, related to the service of Post Office Department employees who continued to be employed by the Postal Service after Postal Reorganization in 1971.
Under provisions of the Postal Accountability and Enhancement Act, the Commission is in the process of hiring an actuary, at the Postal Service’s request, to review OPM’s calculation of the Postal Service pension liability. If any pension surplus is identified through this process, it could be used to lower Postal Service liability and payments for future retiree health benefits. We expect to issue our report this summer.
FIVE‐DAY DELIVERY DECISION
Until these overriding retiree funding issues are resolved by Congress, the advisability of enacting major reductions in mail service is questionable. The PAEA requires the Commission to monitor service levels to prevent deterioration in service and assure that the Postal Service meets its Universal Service Obligation (USO). Five‐day service may meet the USO. It does in other nations. However, is six‐day service a strategic marketing advantage for the Postal Service even if it is not part of the USO? Perhaps a pilot project in a limited geographic area or for one month of the year would be instructive. The implications of reducing service are unknown and must be carefully considered.
Last month, the Commission began a proceeding to evaluate the Postal Service plan for eliminating Saturday mail delivery service. In addition to on‐the‐record hearings at the Commission, we will hold a half‐dozen regional hearings across the Nation and we are soliciting the input of the American people in other ways as well. Already we have received more than 1,500 comments via our web site and through the mail. This is a vital issue for all who depend on the universal mail system.
We will build a comprehensive record on the proposal that fully and accurately reflects the viewpoints of all stakeholders and citizens and carefully evaluates potential cost savings, volume declines and alternatives. We hope to issue our Advisory Opinion in six to nine months.
The Commission’s findings and the public record we develop will be readily available to members and your staffs as you consider whether to alter current legislation requiring six day delivery.
TIMING CHANGES
I understand the pressures that the Postal Service is under. And I appreciate the hard work and dedication both management and employees have shown in making changes that reduce costs without too much sacrifice in service ‐ so far. However, I am disappointed that the 10‐year plan and the newly issued GAO report are not effective plans for the future. Rather, by concentrating on cuts at the expense of service and innovation, they offer the path to obsolescence.
Now is not the time for sweeping changes to the Postal Service. Before the Congress agrees to major cuts in service, it should resolve the pension and retiree health benefit issues to determine manageable payment schedules for the Postal Service, and the Commission should be allowed to complete its analysis of the five‐day delivery proposal and present it to you.
Time will also provide breathing room for hard‐pressed Postal customers and the economy. If history is a guide, as the economy rises it will carry the mail with it. I believe it is possible to create a positive plan that really does envision the future, a future with a vibrant communications network providing universal service and meeting changing citizen and customer needs and demands.
Thank you, that concludes my testimony.
Opening Statement of Chairman Edolphus Towns, House Oversight Committee
Good morning and thank you all for being here at this hearing, “Continuing to Deliver: An Examination of the Postal Service’s Current Financial Crisis and Its Future Viability.”
We are here today to discuss the financial crisis facing the United States Postal Service and the unsustainable business model threatening its viability.
For more than 200 years the Postal Service has connected American citizens, facilitated commerce, and provided good paying jobs. Now, this tradition of service is under more pressure than ever before. Mail volume has dropped precipitously, from 213 billion pieces in 2006 to 177 billion pieces of mail in 2009, causing revenues to fall as well. The Postal Service is losing money at an alarming pace, and its health and pension obligations exceed the Postal Service’s ability to pay for them at this time.
In response to these problems, the Postal Service has cut jobs through attrition and put many cost saving measures into place over the past decade. Despite these efforts, the Postal Service has not yet implemented a comprehensive strategy to create a business model to put the Postal Service on a sustainable path.
Even in this difficult environment, postal workers continue to deliver a high level of service. The Postal Service remains one of the most trusted organizations in America.
We are not here to blame anybody for these problems. Everyone who has a stake in the success of the Postal Service needs to come together to find solutions that ensure its viability. Today, we will hear about two reports that provide potential solutions to the problems in the postal system.
The 2006 postal reform law required the Government Accountably Office to write a report on the postal business model by 2011. Because of the financial crisis at the Postal Service, GAO moved up the publication of this report by a year. This is a very comprehensive report, and I thank GAO for its timely and thorough work.
The Postal Service also released a report recently, explaining its strategies for the future. The report suggests several measures to help the Postal Service, with a heavy focus on cuts in service.
I recognize that changes are needed, but we need a model for change that carefully balance the economic needs of the Postal Service with its core mission of universal service at affordable prices.
I am also concerned about the impression left by the Postal Service publicity campaign on 5 day delivery. Some newspaper articles have created the impression that 5 day will solve all the Postal Service’s problems. We still don’t have a firm handle on how much would be saved by eliminating a day of delivery, nor do we have a complete understanding of the impact of this proposal on customers and the postal workforce. We need a through review of all aspects of the postal business model, including 5 day delivery, to make sure that economic and social issues are fully addressed in future business and policy decisions.
Besides long term business strategies for the Postal Service, another key issue is the agency’s responsibility for CSRS pension payments for employees. Employees who worked for both the old Post Office Department before 1971, and the independent Postal Service after 1971, receive pension payments that are funded by the federal government and the Postal Service.
The Postal Inspector General says that the Postal Service has overpaid for these pensions by as much as $75 billion dollars. If this is correct, it might put the changes suggested by the Postal Service and GAO in a whole new light.
We will take a closer look at this issue and I hope we can come to some kind of agreement on how to protect retiree pensions and strengthen the Postal Service.
First we will hear from the Postal Service and GAO on their reports, while our second panel will discuss the impact of these recommendations.
Again, I thank all our witnesses for appearing today and I look forward to their testimony.