OPTIONS TO BRING THE POSTAL SERVICE BACK FROM INSOLVENCY HEARING BEFORE THE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED THIRTEENTH CONGRESS FIRST SESSION APRIL 17, 2013 Serial No. 113–50 Printed for the use of the Committee on Oversight and Government Reform ( Available via the World Wide Web: http://www.fdsys.gov http://www.house.gov/reform U.S. GOVERNMENT PRINTING OFFICE 82–436 PDF WASHINGTON : 2013 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Aug 31 2005 10:09 Sep 04, 2013 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 C:\DOCS\82436.TXT APRIL COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM DARRELL E. ISSA, California, Chairman JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland, Ranking MICHAEL R. TURNER, Ohio Minority Member JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York PATRICK T. MCHENRY, North Carolina ELEANOR HOLMES NORTON, District of JIM JORDAN, Ohio Columbia JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts TIM WALBERG, Michigan WM. LACY CLAY, Missouri JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts JUSTIN AMASH, Michigan JIM COOPER, Tennessee PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California SCOTT DESJARLAIS, Tennessee MATTHEW A. CARTWRIGHT, Pennsylvania TREY GOWDY, South Carolina MARK POCAN, Wisconsin BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois DOC HASTINGS, Washington ROBIN L. KELLY, Illinois CYNTHIA M. LUMMIS, Wyoming DANNY K. DAVIS, Illinois ROB WOODALL, Georgia PETER WELCH, Vermont THOMAS MASSIE, Kentucky TONY CARDENAS, California DOUG COLLINS, Georgia STEVEN A. HORSFORD, Nevada MARK MEADOWS, North Carolina MICHELLE LUJAN GRISHAM, New Mexico KERRY L. BENTIVOLIO, Michigan RON DESANTIS, Florida LAWRENCE J. BRADY, Staff Director JOHN D. CUADERES, Deputy Staff Director STEPHEN CASTOR, General Counsel LINDA A. GOOD, Chief Clerk DAVID RAPALLO, Minority Staff Director (II) VerDate Aug 31 2005 10:09 Sep 04, 2013 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 C:\DOCS\82436.TXT APRIL C O N T E N T S Page Hearing held on April 17, 2013 .............................................................................. 1 WITNESSES The Hon. Gene Dodaro, Comptroller General, U.S. Government Accountability Office Oral Statement ................................................................................................. 6 Written Statement ............................................................................................ 8 The Hon. Mickey Barnett, Chairman, Board of Governors, United States Postal Service Oral Statement ................................................................................................. 25 The Hon. Patrick Donahoe, Postmaster General and Chief Executive Officer, United States Postal Service Oral Statement ................................................................................................. 62 Written Statement ............................................................................................ 65 Mr. Frederic Rolando, President, National Association of Letter Carriers, AFL–CIO Oral Statement ................................................................................................. 81 Written Statement ............................................................................................ 83 APPENDIX Statement of Rep. Cummings submitted for the record ....................................... 138 Legal Opinion regarding the Postal Service’s proposal to discontinue Satur- day’s delivery, submitted by Chairman Issa ...................................................... 140 A letter to Rep. Connolly from GAO dated March 21, 2013, submitted for the record by Rep. Connolly ................................................................................ 157 Statement from Tony Cardenas, a Member of Congress from the State of California .............................................................................................................. 164 Responses to questions submitted for the record .................................................. 166 (III) VerDate Aug 31 2005 10:09 Sep 04, 2013 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 C:\DOCS\82436.TXT APRIL VerDate Aug 31 2005 10:09 Sep 04, 2013 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 C:\DOCS\82436.TXT APRIL OPTIONS TO BRING THE POSTAL SERVICE BACK FROM INSOLVENCY Wednesday, April 17, 2013 HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, D.C. The committee met, pursuant to call, at 9:35 a.m., in Room 2154, Rayburn House Office Building, Hon. Darrell E. Issa [chairman of the committee] presiding. Present: Representatives Issa, Mica, Duncan, Chaffetz, Walberg, Lankford, Amash, DesJarlais, Gowdy, Farenthold, Collins, Bentivolio, Cummings, Maloney, Norton, Tierney, Clay, Connolly, Cartwright, Pocan, Duckworth, Welch, Cardenas, and Lujan Gris- ham. Staff Present: Ali Ahmad, Majority Communications Advisor; Molly Boyl, Majority Parliamentarian; Lawrence J. Brady, Majority Staff Director; Adam P. Fromm, Majority Director of Member Serv- ices and Committee Operations; Linda Good, Majority Chief Clerk; Justin LoFranco, Majority Digital Director; Mark D. Marin, Major- ity Director of Oversight; Jeffrey Post, Majority Professional Staff Member; Laura L. Rush, Majority Deputy Chief Clerk; Scott Schmidt, Majority Deputy Director of Digital Strategy; Peter War- ren, Majority Legislative Policy Director; Rebecca Watkins, Major- ity Deputy Director of Communications; Kevin Corbin, Minority Professional Staff Member; Jennifer Hoffman, Minority Press Sec- retary; Elisa LaNier, Minority Deputy Clerk; Lucinda Lessley, Mi- nority Policy Director; Safiya Simmons, Minority Press Secretary; and Mark Stephenson, Minority Director of Legislation. Chairman ISSA. The committee will come to order. The Oversight Committee exists to secure two fundamental prin- ciples: first, Americans have a right to know that the money Wash- ington takes from them is well spent, and I might say the money the Postal Service takes from them is well spent, and, second, Americans deserve an efficient, effective Government that works for them. Our duty on the Oversight and Government Reform Committee is to protect these rights. Our solemn responsibility is to hold Gov- ernment accountable to taxpayers, because taxpayers have a right to know what they get from their Government. Our job is to work tirelessly in partnership with citizen watchdogs to deliver the facts to the American people and bring genuine reform to the Federal bureaucracy. Today we are going to have two panels. First, the General Ac- countability Office is going to characterize the insolvency, the dire (1) VerDate Aug 31 2005 10:09 Sep 04, 2013 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\82436.TXT APRIL 2 situation with the post office. I personally see that today’s hearing said insolvency. I say so because there is no such thing as bank- ruptcy of a Federal entity. The post office, although required to be solvent, required to be self-funding, is in fact neither self-funding nor solvent. The Postmaster reported in the neighborhood of $16 billion in losses last year. Although there is controversy over the so-called prefunding that which is being paid in against the inevitable health care requirements in retirement by postal workers, even if you take away that $11.1 billion default over two years, the fact is, in the real world, by any standard, the post office is bleeding red ink. They are doing so not because the Postmaster General has failed to propose changes, not because the GAO will not testify that these changes are material and work; not because the CBO has failed to score what these savings will be; not because some of those savings have been statutorily possible since the 1970s; not because the American people failed to support these meaningful changes by clear majorities in each category. And I want to reiterate the majority of Americans see six day as not essential; the majority of Americans are perfectly happy going to a cluster box, a corner box, or a lockbox near their home to get their mail while $6.6 billion continues to be lost because some get it in the chute at a greater cost of labor by far. Even the Alaskans admit that although bypass mail is wonderful and convenient, and they believe it has become an entitlement, but it clearly is expensive and they understand it is a subsidy from the post office. As we try to balance all of these and more, we find ourselves back here again and again. The legislation is heralded by almost every newspaper in America; it is supported by the business com- munity. But behind the scenes lobbying continues to make it im- possible. Recently, the postmaster announced that he would in fact go from six day to a new six day that would provide different serv- ice. Legal opinions varied, but he certainly had a right to try and be challenged. He had other avenues. He was supported by the President, who called for five day both in last year’s and this year’s Congress’s budget, but he backed down. He backed down on the pressure of an inevitable lawsuit. He backed down because, in fact, the postal unions do not want to have these reforms at this time because it will reduce their revenue. They do not want to have these reforms even though they are vastly supported. That is the problem