S. Hrg. 115–450 NOMINATIONS OF HON. DAVID C. WILLIAMS, HON. ROBERT M. DUNCAN, AND CALVIN R. TUCKER TO BE GOVERNORS, U.S. POSTAL SERVICE HEARING BEFORE THE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION NOMINATIONS OF THE HONORABLE DAVID C. WILLIAMS, THE HONORABLE ROBERT M. DUNCAN, AND CALVIN R. TUCKER TO BE GOVERNORS, U.S. POSTAL SERVICE APRIL 18, 2018 Available via the World Wide Web: http://www.Govinfo.gov/ Printed for the use of the Committee on Homeland Security and Governmental Affairs ( U.S. GOVERNMENT PUBLISHING OFFICE 32–453 PDF WASHINGTON : 2019 COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS RON JOHNSON, Wisconsin, Chairman JOHN MCCAIN, Arizona CLAIRE MCCASKILL, Missouri ROB PORTMAN, Ohio THOMAS R. CARPER, Delaware RAND PAUL, Kentucky HEIDI HEITKAMP, North Dakota JAMES LANKFORD, Oklahoma GARY C. PETERS, Michigan MICHAEL B. ENZI, Wyoming MAGGIE HASSAN, New Hampshire JOHN HOEVEN, North Dakota KAMALA D. HARRIS, California STEVE DAINES, Montana DOUG JONES, Alabama CHRISTOPHER R. HIXON, Staff Director GABRIELLE D’ADAMO SINGER, Chief Counsel JENNIFER L. SELDE, Professional Staff Member MARGARET E. DAUM, Minority Staff Director DONALD K. SHERMAN, Minority Senior Advisor LAURA W. KILBRIDE, Chief Clerk BONNI E. DINERSTEIN, Hearing Clerk (II) C O N T E N T S Opening statements: Page Senator Johnson ............................................................................................... 1 Senator McCaskill ............................................................................................ 2 Senator Portman .............................................................................................. 16 Senator Heitkamp ............................................................................................ 19 Senator Peters .................................................................................................. 22 Senator Carper ................................................................................................. 25 Prepared statements: Senator Johnson ............................................................................................... 31 Senator McCaskill ............................................................................................ 32 WITNESSES WEDNESDAY, APRIL 18, 2018 Hon. Mitch McConnell, a U.S. Senator from the State of Kentucky 4 Hon. Rand Paul, a U.S. Senator from the State of Kentucky 5 Hon. David C. William to be Governor, U.S. Postal Service Testimony .......................................................................................................... 6 Prepared statement .......................................................................................... 37 Biographical and financial information .......................................................... 40 Letter from the Office of Government Ethics ................................................. 60 Responses to pre-hearing questions ................................................................ 64 Responses to post-hearing questions .............................................................. 97 Hon. Robert M. Duncan to be Governor, U.S. Postal Service Testimony .......................................................................................................... 8 Prepared statement .......................................................................................... 111 Biographical and financial information .......................................................... 113 Letter from the Office of Government Ethics ................................................. 133 Responses to pre-hearing questions ................................................................ 137 Responses to post-hearing questions .............................................................. 162 Calvin R. Tucker to be Governor, U.S. Postal Service Testimony .......................................................................................................... 10 Prepared statement .......................................................................................... 171 Biographical and financial information .......................................................... 175 Letter from the Office of Government Ethics ................................................. 191 Responses to pre-hearing questions ................................................................ 195 Responses to post-hearing questions .............................................................. 217 APPENDIX Income statement submitted by Senator Johnson ................................................ 228 (III) NOMINATIONS OF THE HONORABLE DAVID C. WILLIAMS, THE HONORABLE ROBERT M. DUNCAN, AND CALVIN R. TUCKER TO BE GOVERNORS, U.S. POSTAL SERVICE WEDNESDAY, APRIL 18, 2018 U.S. SENATE, COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS, Washington, DC. The Committee met, pursuant to notice, at 10:04 a.m., in room 342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman of the Committee, presiding. Present: Senators Johnson, Portman, Paul, Lankford, McCaskill, Carper, Heitkamp, Peters, Hassan, Harris, and Jones. OPENING STATEMENT OF CHAIRMAN JOHNSON Chairman JOHNSON. Good morning. This hearing is called to order. We are meeting to have a hearing on the nominations of three individuals to serve on the Postal Board of Governors (BOG), a position that I think is sorely needed. The history is interesting, in terms of how we came to this, what I consider a pretty sorry state of affairs where we have no Board members on the Board of Governors. The Board of Governors, their task is to, first of all, they are responsible for the hiring and firing of the Postmaster General and the Deputy Postmaster General. The Board of Governors approves the U.S. Postal Service’s (USPS) business plan and strategy, including major changes to the USPS network, collective bargaining agreements, and rate increases. Now I think anybody who has taken a look at the numbers, and I will be the first to admit that the numbers are kind of hard to analyze. We are actually passing out an income statement that was kind of a late-night project of mine last night, trying to make a lit- tle bit more sense, to take a look at it from an accountant’s stand- point versus kind of government accounting, just kind of laying out exactly what has happened with the Postal Service. It is pretty easy to diagnose. I mean, you have a fall-off in vol- ume from 2001, where Postal Service delivered, about 103.7 billion pieces of mail to now, last year it was 58.7. It is only 56.6 percent of that total volume. Now they tried to make it up with parcel post. I think part of the problem—and I do not have as accurate information as I would like before I release some information, but you take a look at the price increases over the last 11 years, since the last time Congress (1) 2 passed postal reform, which, by the way, did not fix the problem long term, the price increases of United Parcel Service (UPS) and Federal Express (FedEx) far exceed what the postal system has been able to run through. And I have had enough meetings with people who use the Postal Service that like it that way, but it cer- tainly has not produced a long-term, viable Postal Service. In 2006s postal reform, they came up with this concept of pre- funding, which, listen, as a fiscal conservative I appreciate the fact that they actually wanted to fully fund your pension plans. The problem is the Postal Service has not had the funds. So over the last 11 years, in total, the Postal Service was supposed to pre-fund about $62.5 billion. In fact, they have actually made payments equal to about $20.8 billion, which means they have defaulted on that 2006 postal reform to the tune of about $41.7 billion. And if you look at their income statement that I did pass out,1 you can see that the total United States Postal Service report in- come was a loss of $63.9 billion, and 62.5 percent, virtually all of it, has to do with that pre-funding. So, again, if you take a look at it in terms of what I passed out here, I think this kind of lays out exactly what has happened over the last 11 years. We obviously need to take a look at the balance sheet. We need to understand what it is going to take to make the postal system a long-term, economically viable organization, which it is not today. Now we do not have any Governors. The purpose of this hearing is to have one. Right now the Postal Service is basically having to deal with the 535-member Board of Directors and we are not very effective at doing the job. So again, I appreciate the nominees’ willingness to serve. I want to welcome you. I want to welcome your families. I am looking for- ward to your testimony. And with that I will turn it over to Sen- ator McCaskill. OPENING STATEMENT OF SENATOR MCCASKILL Senator MCCASKILL. Thank you, Mr. Chairman. I appreciate you holding this hearing and I certainly underscore and emphasize the comments that you made about how important it is that we con- firm some members to the Board of Governors. The Postal Service is the only delivery service reaching every ad- dress in America, and is growing by 1.1 million addressees per year. The Postal Service employs more than 500,000 people, includ- ing over 100,000 veterans, to deliver 150 billion pieces of mail and packages each year. It has operations in all 50 States, the District of Columbia, and all U.S. territories. Even as technological advances make the world feel smaller, mail delivery remains