[Senate Hearing 106-676]
[From the U.S. Government Publishing Office]
S. Hrg. 106-676
THE ANNUAL REPORT OF THE POSTMASTER GENERAL
=======================================================================
HEARING
before the
INTERNATIONAL SECURITY, PROLIFERATION, AND
FEDERAL SERVICES SUBCOMMITTEE
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
JULY 13, 2000
__________
Printed for the use of the Committee on Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE
66-250 cc WASHINGTON : 2000
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
U.S. Government Printing Office, Washington, DC 20402
COMMITTEE ON GOVERNMENTAL AFFAIRS
FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
Hannah S. Sistare, Staff Director and Counsel
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Darla D. Cassell, Chief Clerk
------
INTERNATIONAL SECURITY, PROLIFERATION, AND FEDERAL SERVICES
SUBCOMMITTEE
THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska DANIEL K. AKAKA, Hawaii
SUSAN M. COLLINS, Maine CARL LEVIN, Michigan
PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey
ARLEN SPECTER, Pennsylvania MAX CLELAND, Georgia
JUDD GREGG, New Hampshire JOHN EDWARDS, North Carolina
Mitchel B. Kugler, Staff Director
Richard J. Kessler, Minority Staff Director
Julie A. Sander, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Cochran.............................................. 1
Senator Akaka................................................ 7
Senator Levin................................................ 8
Prepared statement:
Senator Cleland.............................................. 21
WITNESS
Wednesday, July 13, 2000
William J. Henderson, Postmaster General, U.S. Postal Service:
Testimony.................................................... 2
Prepared statement........................................... 23
APPENDIX
List of the Postal Service's electronic commerce initiatives
responses to Senator Cochran's request......................... 29
E-Bay website pages submitted by Senator Akaka................... 31
Responses from Mr. Henderson:
For questions submitted by Senator Cochran................... 38
For questions submitted by Senator Domenici.................. 44
For questions submitted by Senator Lieberman................. 45
For questions submitted by Senator Akaka..................... 48
ANNUAL REPORT OF THE POSTMASTER GENERAL
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THURSDAY, JULY 13, 2000
U.S. Senate,
Subcommittee on International Security,
Proliferation, and Federal Services
of the Committee on Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:10 p.m. in
room 342, Dirksen Senate Office Building, Hon. Thad Cochran,
Chairman of the Subcommittee, presiding.
Present: Senators Cochran, Akaka, and Levin.
OPENING STATEMENT OF SENATOR COCHRAN
Senator Cochran. The Subcommittee will please come to
order.
Today we have the pleasure of hearing from the Postmaster
General of the United States, William Henderson, who is here to
present the annual report of the U.S. Postal Service to the
Congress, specifically to the Senate Subcommittee that has
jurisdiction over the Postal Service.
In 1970, Congress converted, in the Postal Reorganization
Act, the Post Office Department of the Federal Government to an
independently managed U.S. Postal Service. Since that time,
there has been a tremendous amount of growth in the Postal
Service and in its activities. It now employs over 800,000
employees, and takes in more than $64 billion dollars in annual
revenues.
One of the changes that has been most significant is that
instead of a deficit operation, year in and year out, that was
subsidized by the taxpayers of the United States, the U.S.
Postal Service has made major improvements in its financial
policies and management. It has reported a positive net income
for 5 straight years, operating without the benefit of
taxpayers' subsidies.
The Postal Service has also consistently improved its
performance. It has become and is recognized as a dependable
deliverer of mail to American citizens through the country and
its territories.
Despite these impressive achievements, there are still some
interesting challenges and problems facing the Postal Service.
There is increased competition, technological changes,
electronic communications, to name just a few of the
developments in recent years that affect the operation of the
Postal Service and its capacity to continue to operate without
subsidies from the taxpayers.
We are pleased to have this opportunity to review with the
Postmaster General the activities and problems of the Postal
Service and any issues that, in his judgment, should be brought
to the attention of this Subcommittee.
We do hope the Postal Service will continue to pursue its
fundamental responsibilities, providing universal mail service
at affordable rates.
Mr. Henderson, we congratulate you on your performance
during the time you have been in office. We look forward to
hearing your report.
TESTIMONY OF HON. WILLIAM J. HENDERSON,\1\ POSTMASTER GENERAL,
U.S. POSTAL SERVICE
Mr. Henderson. Thank you, Mr. Chairman.
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\1\ The prepared statement of Mr. Henderson appears in the Appendix
on page 23.
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We were almost late for this hearing, because of the
President's motorcade running around here. It has got all the
traffic locked up.
Senator Cochran. Thanks for the warning. [Laughter.]
Mr. Henderson. I will submit my testimony for the record. I
will not read back to you what you have already read.
I will try to summarize it. There are three fundamental
issues facing the Postal Service in the future. It is true that
the Postal Reorganization Act in 1970 was a huge success. It
put modern business practices into an agency that desperately
needed modern business practices.
Today, we face three big issues, as I said. The first one
is affordability. We have to keep the price of postage down.
That means that we have to undertake heroic cost cutting. That
troubles me, as a CEO of an organization; not the cost cutting,
but having the ability to do that, and to keep costs low.
Because the second issue facing us is growth. We are simply
not growing at a rate that funds our infrastructure. Last year,
we missed our revenue targets by $600 million. That was
primarily due to migration of advertising mail to the Internet.
Companies have fixed budgets for advertising. When people
saw the Internet as another channel, they took money out of
direct mail, and prospecting with direct mail and First Class,
and went to the Internet. The good news is, they did not get
much out of it. Nonetheless, you can see the Internet as a
channel that is going to be a potential substitute for
advertising mail in the future.
This year, we are seeing about a $700 million to $800
million softening in our revenue, primarily due to
consolidation of First-Class mail.
Let me explain that. The banks have consolidated their
billings. They use duplex printing, which means they print on
both sides of the paper, which means mail is lighter. That is
having an effect.
In the future, we see the erosion in bills and bill
payments. It is not a matter of if, but when; and $17 billion
of the $64 billion in revenues that you mentioned are directly
attributable to bills and bill payments. That puts the Postal
Service, at some time in the future, in a crisis mode.
So growth is a very important factor for us, for the Postal
Service to watch. Because as the revenues slow, then the only
avenue you have, if you have done extensive cost cutting, is to
raise prices. Raising prices in today's world is not a smart
thing to do, from a business perspective.
Second, we believe in the Postal Service that the Postal
Reorganization Act of 1970 needs reform. It needs reform in the
area of more pricing freedoms for the Postal Service, faster
ability to move products to the marketplace. The speed of
business today is accelerating, geometrically. We are locked
into a much slower process than what we think is necessary to
have a viable business.
Third, we would like some opportunity to use our investment
monies in the marketplace to make investments, to have the
freedom so that we can make money off those investments, as
opposed to government securities.
Finally, we think the issue of resolution of disputes
between labor and management needs to be examined, both by
labor and by management. Something other than arbitration
should be put in place.
These issues need to be looked at, and we look to the
Congress for help in making those kinds of adjustments, because
we think a healthy Postal Service is extremely important, for a
long time to come, to America.
That concludes my summary, Mr. Chairman.
Senator Cochran. Thank you very much.
You mentioned the idea of reform of the Postal
Reorganization Act of 1970. When I first assumed the
responsibility as Chairman of this Subcommittee, I reviewed the
proposal that was, at that time, pending in the House of
Representatives for reform. It is H.R. 22, a comprehensive
reform bill.
After a little analysis, we discovered that that was also
very controversial. A lot of people were disagreeing with the
proposal for various reasons. That bill is still pending in the
House, and has not been enacted.
We decided to try to do a more modest proposed reform,
targeting some individual subject areas for change that we
thought might be noncontroversial. I introduced a
noncontroversial, modest bill, which became immediately
controversial. It was introduced. [Laughter.]
I came to the conclusion that there is no such thing as a
modest, noncontroversial reform available for the Postal
Service.
What is your suggestion about specific changes that we need
to consider making in the Postal Reorganization Act?
Mr. Henderson. Well, the first one, as I said earlier, is
pricing freedoms. The Postal Service needs the ability to
adjust prices during the fiscal year to respond to changing
business conditions.
It needs the ability to negotiate prices with large
customers. We believe in universal service at affordable rates,
but we need pricing flexibility.
Second, we also need the ability to go to the marketplace
quickly to test products. When you have a full-blown hearing
for 10 months on a product, it is not exactly innovative, by
the time it gets to the marketplace.
Third, as I said, we need some investment income freedoms,
so that we can make money off of our cash flow, the monies that
we have.
Finally, we think we need a new model for resolving labor
disputes, that does not put so much authority in the hands of
one person, the arbitrator, since we are very labor intensive.
Our customers need to be involved in this equation.
For our employees, we are not saying that labor is broken,
by any stretch of the imagination, but we need a new resolution
model. I think those areas will allow the Postal Service to
stay healthy.
I might add that looking at other postal administrations
and their reforms, most have come about because of a crisis, or
some major economic change. Since we have not had a crisis, so
to speak, and as you said in your opening remarks, we have been
financially successful over the last 4 or 5 years, we are
having a hard time generating the kind of interest in postal
reform that we think should be there, if you actually looked at
the tea leaves, 5 to 8 years out.
But postal administrations around the world are
modernizing. They are becoming more commercial. The German
Post, in the fall, is likely going to have an initial public
offering, which will make it private, to some degree.
The German Post owns 51 percent of DHL International. They
are the largest or one of the largest logistics organizations
in the world. They still have a core mail business, and they
have an express business. So the Germans are operating under a
model.
The Deutsche Post bought TNT and became TPG. It is now a
publicly traded organization. It is very aggressive in the
world. So they are not only aggressive in their countries in
Europe, they are also aggressive in the United States.
We look at ourselves as fairly outdated, compared to
industrialized posts around the world. We do not think all of
those models are wrong. We think that needs to be examined for
the Postal Service.
Senator Cochran. I think it is part of the Reorganization
Act that each class of mail has to stand on its own two feet,
so to speak. In other words, you cannot use the revenues from
one class to subsidize the operations of another class or
character of service.
Does that present you a particular problem, and is there
any proposal for change in that, that you would make?
Mr. Henderson. The answer is no. I think that you would
create more controversy if you allowed, say, First-Class mail
to subsidize standard A, or vice versa. I think that getting a
consensus in the customer community would be nearly impossible,
without those kinds of safeguards.
Senator Cochran. One of the criticisms that I have had
brought to my attention from some who compete in the delivery
of parcels and bulk items is in the international area, where
they allege that there is just no way for you to actually carry
the packages and the parcels the distances that you do, and not
have some overhead expense paid for by other classes of mail or
other operations of the Postal Service. Is that a fair
criticism?
Mr. Henderson. No, sir.
Senator Cochran. If not, why not?
Mr. Henderson. Well, as you will recall, I think a couple
of years ago, we had a hearing on that subject, maybe in this
very room. We committed to having an independent review of the
cost coverage of international.
The conclusion was that domestic mail does not subsidize
international mail. The Postal Rate Commission looks at that
issue at every rate filing. So we are confident that our
international mail is not subsidized by our domestic.
Senator Cochran. There is always concern that the price of
postage is going to continue to go up, just for the reasons
that we have both pointed out. The pressures from competition
and technology, e-commerce, and the like, make it more and more
difficult to do business at the same postage rates in the
future.
What do you anticipate in terms of future rate increases
for the various types of mail that you deliver? Is it
inevitable that we are going to see prices continue to go up?
Mr. Henderson. Under the current regimen of 1970, I think
it is inevitable that prices will continue to go up. They will
continue to go up, fueled by things like internal inflation,
the cost of fuel.
As you can see, for example, this year alone, the increase
in the price of fuel for the Postal Service is costing us $240
million in unexpected costs. The rise in inflation in the
United States, beyond what was predicted, is costing another
$50 million.
Those kind of pressures, along with the pressures of labor,
inevitably translate themselves into price increases. That is
in spite of the fact that we have the highest labor
productivity this fiscal year that we have had in a decade.
Senator Cochran. What do you anticipate will be your next
increase in postage rates, and when will that occur?
Mr. Henderson. It will occur likely in January. It will be
for First-Class postage, a one-cent increase. For the other
classes of mail, it will vary, based on their individual cost
cells.
Senator Cochran. There is some indication from a meeting
that I had with postmasters and their representatives recently
that there was concern that because of the arbitration clauses
and the powers that the employee unions have, that salaries for
some of the employees have gone up, because of those pressures,
above the salaries that are paid to some postmasters.
There is some concern that that is unfair. Their
responsibilities for managing and supervising and doing the
things that are in the job definition of a postmaster justify
higher salaries and wages than they are getting, compared with
some of those who are working in the post office with them, and
whose wages have gone up because of arbitration and other
pressures.
Is that a legitimate concern; and if so, what is there that
we can tell them that will be done by the management of the
Postal Service that will respond to that concern?
Mr. Henderson. We periodically have consultation with our
postmaster organizations to talk about wages, pay for
performance, and those kinds of things. If you look at our
smaller postmasters, I understand you are getting that
complaint. I get that complaint, myself.
If you look at level 11, 13, and 15, those are the smaller
rural offices, and the average salary and benefits are about
$60,000 a year. We think that is fair compensation. But we are
mindful of the differential for postmasters who have craft
employees working for them. We do not have situations, to my
knowledge, where a postmaster has a craft employee working for
him that makes more money than they do. I am not aware of any
situations to that extent.
In smaller offices, where there are no craft employees, the
postmasters are paid less; in other words, where the postmaster
works on the window, or works, in essence, like a window clerk
does, in a larger office. We look at those, as compared to the
next higher level postmaster. We try to keep comparability in
there.
Senator Cochran. There was a lot of pressure, at one time,
about new rules for closing post offices, and getting public
opinion of the local community, to be sure that everybody knows
what the plan of the Postal Service is for a particular
location.
Do you think the changes that have been put in place and
the openness of the process now have served to alleviate the
concerns? There was pressure to actually change the law, to put
in specific requirements, by law, that you would have to
follow, if you wanted to close or relocate a post office. Has
that concern been satisfactorily addressed, in your opinion?
Mr. Henderson. Yes, we have a moratorium right now on
closing post offices. If you go in and close a post office, by
the time you close one that the community does not want closed,
you have lost so much good will, in the eyes of the community,
it is simply not worth it.
Most of the post offices that are closed now are really
abandoned. There are post offices where the person retires, and
has a post office in their grocery store or whatever, and they
simply do not want to do it anymore, and we cannot find someone
to serve it.
But we have been working with our postmaster organizations
to identify any opportunities in these, what we call suspended
post offices, and that is the postal term, to reopen them. But
by and large, we have not closed any post offices now in a
couple of years.
Senator Cochran. Speaking of suspension, we are going to
have to suspend this hearing, because I am just advised that we
have a vote occurring in the Senate, and there are only 5
minutes remaining to cast the vote. I have to go and do that. I
will return and we will reconvene, as soon as I can get back. I
apologize to everybody for that.
[Whereupon, at 2:27 p.m., the Subcommittee recessed to
vote.]
Senator Cochran. The Subcommittee will come back to order.
We are pleased to be joined by the distinguished Ranking
Member of the Subcommittee, Senator Akaka, and Senator Levin.
Senator Akaka and I have introduced a bill, S. 2686, which
is intended to improve the process for establishing postal
rates for nonprofit and reduced rate mailers. The bill would
establish a structured relationship between nonprofit and
commercial postage rates. Some of these nonprofit groups are
worried they will see another substantial rate increase, unless
the current rate setting procedure is changed.
Do you believe that changes in the law are appropriate to
avoid unpredictable rate changes for nonprofit mailers, and
would you support the adoption of S. 2686?
Mr. Henderson. Absolutely; we think it is essential for the
health of nonprofits to have that piece of legislation.
Senator Cochran. I have one other question about the
employment situation, and the number of employees. We
understand that in the Postal Service, there is a plan to
eliminate some 700 administrative positions. Are there plans to
do this, and what specifically do you have in mind?
Mr. Henderson. The answer to your question is yes, and that
is the beginning and not the end. We are going to eliminate 700
administrative jobs.
Essentially, we are reviewing the organization and its
structure, to get rid of duplicate work. We are also looking at
redesigning our processes to reduce the number of employees.
It is just the pressures of being in a competitive
environment that make you constantly look at yourself and say,
is there not a more efficient way to operate? This is simply
the outcome of that.
Senator Cochran. I have had a chance to ask a number of
questions. I am going to yield, at this time, to the
distinguished Ranking Minority Member of the Subcommittee,
Senator Akaka, for any comments or other questions that he
would like to ask.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Mr. Chairman, my good
friend and great leader, Senator Cochran.
As the Ranking Member of the Subcommittee, I look forward
to receiving the Postmaster General's testimony today from Mr.
Henderson. The Postal Service enjoys a uniquely personal
relationship with the American people. A new Gallup poll found
that nine out of ten American households have a positive view
of the Postal Service.
I applaud the dedicated career postal employees, who have
earned their fellow citizens' appreciation, and Mr. Postmaster
General, your leadership in this effort.
Right now, the Postal Service is analyzing its operation,
products, and management in order to become a key player in the
e-commerce area, and deal with revenue shortfalls. As these
reviews are made and decisions reached, it is critical that the
Postal Service's mandate of universal service and commitments
to its employees are not compromised.
I am confident that under the leadership of the Postmaster
General, the Deputy Postmaster General and the Board of
Governors, the Postal Service will find answers to the diverse
challenges that lie ahead, without sacrificing customer
satisfaction or harming labor/management relations.
I wish to compliment the Postal Service on its recent
decision to donate out-of-date, stand-alone computer systems to
disadvantaged families without computers. As a former educator,
I am pleased that the Postal Service is working toward closing
that digital divide. I am well aware of the great community
services performed by postal employees, and this is yet another
example of the Postal Service enriching the lives of those it
serves.
As the Postmaster General knows, I recently introduced. S.
2703, the Postmaster's Fairness and Rights Act, which is co-
sponsored by 12 senators. I hope that you and I can work toward
addressing the issues raised in this bill.
My remarks would not be complete without mentioning my
interest in a U.S. postage stamp for Duke Kahanamoku, Hawaii's
five time Olympic medal winner, and the father of modern
surfing.
I have supported this effort for many years, and appreciate
knowing that the proposed stamp remains under serious
consideration by the Citizens Stamp Advisory Committee. The
time has come to honor the Duke, who holds a unique place in
surfing history, and whose Olympic skills are legend.
I thank you, again, Mr. Chairman, for this hearing. I look
forward to reviewing the Postmaster General's report.
Thank you.
Senator Cochran. Thank you, Senator Akaka.
Senator Levin.
OPENING STATEMENT OF SENATOR LEVIN
Senator Levin. Thank you, Mr. Chairman.
Senator Akaka's statistics about the favorable rating of
the Postal Service and its employees really is quite stunning.
Nine out of ten have a favorable view is a close second to the
view of the U.S. Congress. I just want to commend you for not
overtaking us. We really appreciate that. [Laughter.]
Mr. Henderson. Does that mean we cannot wear the yellow
jersey?
Senator Levin. You have to work harder. If you are No. 2,
you just try harder, that is all. [Laughter.]
As you know, Mr. Henderson, our sweepstakes legislation
went into effect in April of this year. This was an effort to
end the abuses that exist in the area of sweepstakes, the mail
that comes too often to our houses, telling us we won something
when we did not, and with screaming headlines saying you have
won a whole bunch of money, when in fact we have not, and other
kinds of come-ons that mislead so many people, and have caused
so much injury and economic hardship and misery in this
country.
We have some good news and some bad news, since April, when
this new law went into effect, and, as you know which this
Subcommittee had a great deal of involvement in making the law.
I guess the bad news first would be this sweepstakes notice
from McCalls Magazine. You have a copy of it in front of you
now. This is an urgent message, in big headlines here. It says,
``Urgent Message for `L,' you have been declared one of our
million dollar winners. We are waiting for you to claim your
prize money.'' That is in big print.
Now there is a little print right above it, which is the
hook. That says, ``No, you have not.'' The big headline says,
``You won a million.'' Then in these big headlines down here,
it says ``K, W, and L have been declared million dollar
winners. We will pay the next million dollars to the people
names, and them alone, but only if you respond to this
notice.''
This is the same kind of a come-on and misleading brochure
and sweepstakes notice that existed before the law changed. The
new law makes it very clear that it is illegal for any material
to go out which ``represents that an individual is a winner of
a prize, unless that individual has won such prize.''
I would like you to look at this. I am not going to ask you
to do that today, unless you would like to. But I would like
you to take this back to the office, give it to your folks in
charge of this, and let us know immediately whether, in your
judgment, that come-on complies with the new law. Because that
is exactly what we intended to put out of existence with the
new law.
Senator Collins is not here. She was very, very active in
this law. It was the Collins/Levin initiative, with Members of
this Subcommittee, by the way, our Chairman, Senator Akaka and
others, being very actively supportive of it. So we are all
familiar with this issue.
I cannot speak for any other Senator, but I think it is
fair to say, we had looked forward to a significant change in
the behavior of the sweepstakes folks. So we need to know from
you whether or not our law made a difference.
If this is the kind of junk that is going to continue to
bombard our mails, with these kinds of misleading statements
that are going to deceive too many of our people, especially
seniors, then we are going to get back to the drawing board. So
please let us know on that.
Now there have been some changes, however, which I think we
want to acknowledge. That is in a Reader's Digest notice that
went out, and there is a copy of that in front of you.
This one does show a real change in the approach of the
Reader's Digest. Instead of saying, ``You have won,'' it says
it is a ``winners selection process.'' That is a lot different
from saying that you have won. This is done a lot more
carefully, in a number of respects.
However, if you will look at the fine print down on the
back, you will see it says, ``No purchase or payment necessary
to enter or win.'' That was required by our new law to be
prominently displayed.
We need your folks to tell us whether or not that tiny
little print is prominently displayed, in your judgment. I must
say, it is not in mine; but let us know.
Then it is interesting, because one of the things that we
fought very hard to get into the new law was a very prominently
displayed statement that says, ``A purchase will not improve an
entry's chance of winning.'' That statement is even in smaller
print, not as bold, and further down.
Mr. Henderson. Yes, I found it.
Senator Levin. You found it?
Mr. Henderson. Yes.
Senator Levin. You have your magnifiers on, then.
[Laughter.]
So if you could have your experts take a look at both of
those statements, and tell us whether or not, in your judgment,
they comply with the new law, that would be very helpful to us.
If you would comment, I would be happy to just stop there,
and let you have a chance to respond.
Mr. Henderson. Well, as you know, we supported the
legislation. We think things had gotten out of hand. Hopefully,
the new law will curb these industry practices, and the
industry has been cooperating. To date, we have only received
three requests for subpoenas to look at the information.
Senator Levin. When you say you have received subpoenas,
what do you mean?
Mr. Henderson. Our General Counsel has issued three
administrative subpoenas.
We will look at this and get back to you tomorrow.
Senator Levin. That would be great.
The number of complaints, then, has gone down since the new
law had gone into effect?
Mr. Henderson. Yes, and I would add that the industry, from
my perspective, has really cooperated in trying to stamp out
those deceptive practices.
Senator Levin. Have you had any information sessions with
sweepstakes promoters, to educate them about the new law?
Mr. Henderson. Yes, we have.
Senator Levin. Do you know anything about the status of the
requirement to allow persons to be asked to be taken off the
mailing lists of sweepstakes promotions?
Mr. Henderson. Not off the top of my head, but I will be
happy to supply that for the record.
Responses to Senator Levin's Question on the Sweepstakes 1-800 Number
and the McCall's and Readers' Digest Mailings
1-800 Number
Regarding the status of the 1-800 number for sweepstakes,
Title 39, U.S.C. 3017, Nonmailable Skill Contests and
Sweepstakes Matter, requires that the sweepstakes promoters
establish and maintain a notification system to include an 1-
800 number. The requirement is to provide individuals the
opportunity to request that their name be removed from
sweepstakes and contest mailing lists. The requirement is not
mandatory until December 12, 2000.
The Postal Inspection Service will monitor mailings in an
effort to ensure companies are providing a notification system
as required by Sec. 3017.
Readers' Digest and McCall's Mailings
Postal Inspection Service officials have contacted McCall's
magazine and the Reader's Digest to obtain copies of the
complete mailings. Postal Service lawyers are reviewing the
mailings to ensure compliance with the Deceptive Mail
Prevention and Enforcement Act. The mailings are still under
review. Also, Inspection Service officials are arranging
meetings with officials from both publications to discuss their
compliance with the law. I understand Inspection Service
officials have been in regular contact with Senator Levin's
staff on the status of this review.
Senator Levin. Has the volume of sweepstakes solicitations
that go through the mail been affected by the new law, if you
know?
Mr. Henderson. Yes, it has. I cannot give you a hard
number, but sweepstakes have dropped off dramatically. I might
add, that is not just necessarily because of the law. It is
because of the publicity that surrounded deceptive practices.
Sweepstakes took a hit to their brand. I use that word as
people begin to look at them in a different light, and they
have not recovered today.
Senator Levin. Well, in my judgment, I would have said that
it was a well-deserved hit. If they comply with the law, its
letter and its spirit, that will be fine.
If we see that key information, that a purchase does not
improve your chances of winning, if that is prominently
displayed, as the law requires, it seems to me then, and only
then, can the sweepstakes solicitations be justified.
Otherwise, it seems to me, they are deceptive. But more
important, you are the experts. We need you to tell us whether
or not the examples I gave you fit or violate the prohibitions,
in your judgment.
If so, if they do violate them, then take proper
enforcement. If they do not, let us know, because I think then
we are going to have to tighten up the law, again.
Should I keep going, Mr. Chairman? I have just a couple
more questions.
Senator Cochran. Sure, please proceed.
Senator Levin. I do not want to go beyond my allotted time.
I just have a couple of questions about semipostals.
We have had a lot of discussion about this issue. We have
seen some data on the breast cancer research semipostal stamp
and we still need some of the cost information, which you are
working on.
But the fundamental question which the Congress really has
to face is whether or not we should be authorizing
semipostals--additional stamps that raise funds for various
charities. We have had about 15 semipostal bills now introduced
to raise funds for various charities and groups.
By the way, although I voted against it in the first place,
I think it is clear that we should reauthorize the breast
cancer stamp, because we have a huge number apparently printed.
It has already been authorized once. Although I don't think
we should be issuing these stamps as a matter of principle. It
would make sense to utilize all the balance of the stamps that
are printed.
Putting aside that issue, the reauthorization of the breast
cancer research stamp, should either we or you, through your
Citizens Stamp Advisory Committee, be issuing or recommending
to the Postal Service, additional semipostals? If the answer is
yes, in your judgment then, should we be doing this?
This gets us into all kinds of political issues as to which
of the very important charitable causes we should favor,
politically. Should your Citizens Stamp Advisory Committee be
doing it? Who should be doing it, if we should do more of this
at all?
Mr. Henderson. First, let me say that the breast cancer
stamp has been something that has created just an incredibly
positive view towards the Postal Service, but I think that is
unique.
Senator Levin. When you say the view, you mean that
particular cause?
Mr. Henderson. Yes. We are not in favor of semipostals.
They are very difficult to select. I do not know what criteria
you would use.
The Citizens Stamp Advisory Committee does not want any
part in that, and you know they are volunteers. They want no
part of trying to select which charity over another ought to
receive the support of the Postal Service. We are not
interested in administering that, or being a part of that at
all.
I do not know what the reaction would be of the Citizens
Stamp Advisory Committee if they were forced to do it, but I
suspect it would be very negative. I know today, they are just
not equipped, and we are not equipped. I am in the business of
running the Postal Service. I am not in the business of trying
to figure out which charity over which charity, or which cause
over another cause.
Our job, in my view, is if the Congress feels that a
semipostal ought to be issued, that it directs the Postal
Service, as it did with the breast cancer stamp. Then we will
do the best job we possibly can at making the intent of
Congress a raving success.
Absent that, we do not want to be in a position to issue
one semipostal a year or two or whatever. We just think that
would be a disaster for our organization. I will not attempt to
tell the Congress what I think they ought to do. But I do not
believe semipostals ought to be issued.
I think it is very difficult. I think you raised a very
valid point. How do you select them? I mean, they are all good
causes. Prostate cancer is a very legitimate cause. It affects
millions of males. There are just a thousand subjects that
really are worthy. What screening you do to put them on a stamp
and raise money for them, I just do not have a clue.
Senator Levin. When you say that you should not be issuing,
what you are saying is, you do not want to do the selection,
your Citizen Stamp Advisory Committee. But is it not also a
fair statement that you hope that Congress does not authorize
additional ones. Is that right?
Mr. Henderson. That is right. That is exactly right.
Senator Levin. Thank you.
Senator Cochran. Thank you very much, Senator.
Postmaster General Henderson, you have mentioned the
possibility of expanding the products and services of the
Postal Service, and getting into the e-commerce area, as well.
How does offering e-commerce products promote the core mission
of the Postal Service?
Mr. Henderson. Well, e-commerce becomes another channel for
customers of business and consumers to get at postal products.
It can be as simple as looking up a ZIP code or ordering a
priority label; or in the case of the private companies, where
PC postage is offered, getting postage off a computer.
It is true that the activities we have taken to date relate
to our information platform, which we are building for internal
reasons to enable us to cut real time costs, to build an
activity based accounting system, and to offer our customers a
window into the mail stream, so they can see where their mail
is; that is the major driver, and simply for convenience.
We have an electronic bill payment offering: We carry bills
today, and they are in the mail. You have got your bill, you
mail it back. We are offering a service to do that
electronically. We have had about 75,000 people go to that
link. About 10 percent of them have actually signed up. But
that is just a service we are offering our consumers.
So we see this as really an extension of our core products.
Just another analogy is, we used to move mail exclusively on
trains. Now we use airplanes and trucks and other things. But
we are not getting out there into areas that are completely
foreign to us. It is all tangential to the mail.
Senator Cochran. You mentioned the e-bill payment program.
Are there any other new initiatives that are considered
important for the Postal Service, and what do you expect to
achieve in these areas?\1\
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\1\ List of the Postal Service's electronic commerce initiatives
requested by Senator Cochran appears in the Appendix on page 29.
---------------------------------------------------------------------------
Mr. Henderson. Well, they are very similar to what we do
today, as a matter of our core mission. For example, we have
PosteCS, which is a secure document transmission system, that
is a partnership between the Canada post, the French post, and
the United States post. It is a service that we offer around
the world. It is just the ability to send a secure document.
The reason for my market research that folks will chose
the Postal Service, is because they have trusted the Postal
Service with their documents forever. This is just a natural
extension.
But we have several things that we are looking at. I will
be happy to supply for you a listing of the products and an
explanation of them, and how they relate to our business.
Senator Cochran. Do you expect these products and services
will cover their costs and make a contribution to the overhead
of the Postal Service?
Mr. Henderson. Absolutely, but we do not think that they
will substitute for the $65 billion business that we manage on
a day-to-day basis. In many instances, they are conveniences
for our customers. It is just another way to access the Postal
Service.
Senator Cochran. Last year, you announced the service you
referred to, PC postage, as an innovative way for customers to
purchase and print postage, through their personal computers.
Is this a program that is gaining in popularity? What is the
status of it? How many customers are using it?
Mr. Henderson. They have purchased about $26 million worth
of postage. There are currently, I believe, 16 organizations.
When I testified before, there were four. Now it has grown. It
gets mixed reviews in the marketplace, but customers are going
to PC postage.
Senator Cochran. In the current rate case, the providers of
PC postage are seeking a discount for consumers who use PC
postage to prepare their mail, because it provides cost savings
to the Postal Service. What is the Postal Service's position on
this request?
Mr. Henderson. We do not agree with that. To think that we
could incrementally take the costs out of one stamp being
purchased at a retail unit or vending machine versus a computer
is not understanding the Postal Service's business model.
It is just an added convenience, but it has not, as of yet,
made any difference. We have 7 million people a day that walk
into postal lobbies. So it has not really had an impact. They
just handed me the numbers. There are 302,293 customers using
PC postage today in the United States.
Senator Cochran. The Postal Service is also developing a
program to provide a secure electronic mailbox for every
American household. What is the status of this program, and can
you tell us how the service would work?
Mr. Henderson. It is on the drafting board. Essentially, it
would allow you to access the Postal Service and some of its
special products through a secure mailbox. You could go in and
you could click on, for example, a post office.
Then electronically, you could confirm where a letter
happened to be, if it had been read through one of our sorting
machines. You can buy special services. It is an opportunity
for you to visit an environment that is secure in a Postal
Service.
Senator Cochran. Do you have to go to the Board of
Governors to get permission for each individual new e-commerce
type activity, or do you get a blanket kind of approval? What
is the process that you use in interfacing with the Board of
Governors on this?
Mr. Henderson. It is actually both. We have a by-law that
requires us to go to the governors on anything that, in their
view, would be controversial. So we have chosen to take these
initiatives, either in writing or in person, to the governors,
and they decide whether or not they want to vote, or whether
they just want to let us continue.
We keep them apprised, on a regular basis. We have a
strategic planning committee, which is a sub-group of the
governors, in which we discuss on a monthly basis all of our
initiatives and what progress we have made.
Some we get on the drawing boards, and if we decide they
will not fly, we scratch them. But we have a group of people
looking, as is every business, I think, in America, and every
institution, looking at how this new channel of the Internet,
what it means to your business, and how it can affect your
business. So we have a group that is just doing that.
Senator Cochran. The Postal Rate Commission is called on to
approve any requests and changes or increases in postal rates.
Are any of these initiatives in the e-commerce area subject to
the approval of the Postal Rate Commission?
Mr. Henderson. Some have been mailing online for example,
and it was subject to the Postal Rate Commission's review.
Others are not. Traditionally, some services have gone to the
Postal Rate Commission for setting rates. Some, we have set
fees, independently of the Postal Rate Commission. It varies.
If it's a core product, all of them go to the Postal Rate
Commission.
Senator Cochran. Senator Akaka, do you have any other
questions?
Senator Akaka. Yes, Mr. Chairman, I do.
I would like to ask the Postmaster General about the
selling of postal collectibles on E-Bay, one of the most
popular Internet auction site.\1\
---------------------------------------------------------------------------
\1\ E-Bay website pages submitted by Senator Akaka for the record
appears in the Appendix on page 31.
---------------------------------------------------------------------------
There are currently 34 items that have been put online by
the Postal Service, as of this afternoon.
For instance, one of the items says that the auction starts
on July 7 and ends July 17. The price is $500. The item is a
Barbie stamp. I have a list here of the 34 items.
Mr. Henderson, who in the Postal Service approves putting
postal products up on E-Bay? Was the Board of Governors
involved in this decision or consulted?
Mr. Henderson. I do not know. I think we told the governors
about it, but they would not approve something like that. We
would do that in management.
We are using E-Bay as a part of World Stamp Expo, which is
going on in Anaheim, California, where we have 150 foreign
postal administrations displaying stamps. We have collectors
from all over the world, and we put collectibles on E-Bay.
But from time to time, we have gone on these home shopping
networks, and have sold postal collectibles. It has been
everything from stamps signed by astronauts, and so on.
It really is a way of keeping that kind of item that we
have, that people are interested in buying, out of the post
office, so that it does not interfere with the people who want
to come in and mail packages. I think most of these are stamp-
related items or in connection with that. This particular E-Bay
site is in connection with the World Stamp Expo.
Senator Akaka. As the Postal Service looks at an eventual
downturn of revenues, you have said that the Postal Service
will work with the Office of Personnel Management on early
retirement procedures. I have several questions relating to
that issue.
Is the Postal Service talking to OPM now about procedures,
and do you have any timeframe as to when the cuts will actually
take place? Also, will the Postal Service target specific
categories of employees or specific geographic locations?
Mr. Henderson. The answer to the first part of the question
is yes, we have talked to OPM, and we are talking to them now.
We will be targeting functions, not categories of employees,
but functions. As I said, 700 positions is the beginning. We
are looking at redesigning the work that we do to make it more
efficient. To the degree that we have to run a reduction in
force, we are prepared to do that.
At the present time, I see the impact as not being
significant. However, we have 771,000 career employees, and 700
is not much of a dent. Later on, down the road, we are looking
at a longer term process, as I said, of trying to change all
the work. I can just give you an example.
Every employee on travel has to submit a voucher. That
travel voucher is in writing, or in some instances, it is done
by a secretary. There is no reason to have that piece of paper
floating around.
The subject of requisitions, a form that we have to ask for
supplies, in today's world, you should not have to write that
on a piece of paper. You ought to be able to use the Internet
to communicate.
I was talking to Lou Gersner at IBM. He said that in their
purchasing department alone, which is about the size of ours,
that over a 4-year period of time, by taking paper out, he
saved a billion dollars.
So that is the kind of thing that we are looking at, just
practices that we have kind of taken for granted for 30 years.
I am very familiar with a form that is called 7381, that you
requisition supplies on. I might be lost if I did not have one.
But nonetheless, there is no reason to do that anymore.
So we are trying to be more modern. That reduces
administrative jobs. We feel we have too much administrative
overhead, given the communication channels that we have
available to us on the Internet.
We are not trying to slash and burn. This is not about
saying that a person who is sitting at a desk doing a job, that
suddenly we are going to get rid of them because we do not like
them. We are trying to really affect the work that is being
done.
Senator Akaka. Senator Lieberman, the Ranking Member of the
Full Committee, is unable to join us today. However, he has
asked me to pose the following question relating to the Postal
Service e-commerce initiatives.
The question is, how can the Postal Service ensure that it
does not use its governmental authority to provide a
competitive advantage; not just to its own products, but also
to the products of its marketing partners? The second question
is, how can Congress ensure the Postal Service does not
regulate and compete with the private sector?
Mr. Henderson. I think that we would say to the last part
that we absolutely do not believe that you can regulate and
compete in the same business, and we would not do that.
To the part about being competitive, if you look at our
competitors, and a playing field that is not level, we are on
the bottom side of that playing field, not on the upper side of
it. If you are in the business of selling products, and you do
not have pricing freedoms, which we do not on packages, and we
do not on Express Mail, you are at a disadvantage.
It is like selling cars. Every other dealer can negotiate a
price and you cannot. You know which dealer, for the most part,
that people are going to flock to. So we are all for this
concept of a level playing field. We think that begins by
giving us some pricing freedoms.
Senator Akaka. Mr. Henderson, I would like to focus on
diversity within the Postal Service. I know there is a
commitment by management to ensure that the diversity within
our communities are reflected within the Postal Service.
I am sure you are familiar with the just-released GAO
supplement to its 1999 report about the representation of women
and minorities in the Executive and Administrative Schedule of
management positions in the Postal Service.
The supplement focuses on employees in EAS levels, 16
through 26 positions, including postmasters and managers of
customer service and managers of postal operations.
Hawaii and Puerto Rico were not included in the GAO
reports, since these districts have a more specific
classification system.
Because the GAO report only compared women and minorities
with white males, in preparation for this hearing, I asked for
a breakdown, based on aggregate percentages for White, Black,
Hispanic, Asian, Indian/Alaskan males; and White, Black,
Hispanic, Asian, Indian/Alaskan females. Hawaii and Puerto Rico
Postal Districts are not included in these aggregate
percentages.
The figures worked out by GAO indicate that White males
make up 50 percent of the EAS levels 16 through 26, and White
females comprise 18.5 percent.
When African males and females were added, these four
groups comprised a cumulative 90.9 percent of all EAS levels 16
through 26 employees. The remaining 9.1 percent are Hispanic,
Asian and Indian/Alaskan EAS employees.
Overall, the Postal Service is doing a good job to ensure
that the Postal Service better reflects the communities it
serves. However, as the Postal Service continues to reduce its
labor force, I want to make sure that the commitment to
diversity is not diminished, and that the Postal Service does
not lose sight of the progress made over the past decade.
I want to ensure that appropriate training programs are in
place to further career development and bolster recruitment
efforts for all minority groups, including Asian/Pacific
Americans, American Indians, and Alaskan Natives.
My question is: Do you have any comments on either the GAO
report or what steps the Postal Service is taking to train the
diverse populations within the communities it serves?
Mr. Henderson. Well, the Postal Service, for some time, has
considered its diversity a very distinct, competitive advantage
in the market place. It has worked very hard to continue its
diversity.
As you may know, it was recently recognized. Fortune
Magazine published the 50 best companies in America, or
organizations in America. They said companies, but they
included us. We ranked ninth for all minorities in terms of the
best place to work. We ranked fourth on that same list for
African Americans.
We also received a Hammer award for our efforts in
affirmative action, and were recognized as one of the best in
class in government.
So we take diversity seriously. As we go through
reductions, we are very mindful of the fact that when our
employees and our community look at the Postal Service, they
want to see a reflection of themselves. To the degree that that
is humanly possible, we are committed to that.
Senator Akaka. Thank you.
Mr. Chairman, may I ask one more question?
Senator Cochran. Yes, go ahead.
Senator Akaka. Mr. Henderson, in addition to the challenges
that the Postal Service is facing on the domestic front, I know
that the international mail scene is providing challenges, as
well.
In testimony before the House Postal Subcommittee, you
expressed support for H.R. 22, Representative McHugh's Postal
Reform bill, based in part on your belief that it could have an
impact on the Postal Service's international mail business. How
would postal reform address the Postal Service's concerns
relating to competition and international business?
Mr. Henderson. Well, let me preface my comment. H.R. 22, we
are supportive of it, but it is a compromise. You cannot take
just pieces of it. In the case of international, it is re-
regulated in H.R. 22, more like the domestic. But in the
domestic mail, we had pricing freedoms in H.R. 22, which we do
not have today.
We are opposed, individually, to putting us again on a
lower playing field by regulating our international activity. I
think I have testified in this hearing on that. We have
committed to not having a cross-subsidy. While H.R. 22 does re-
regulate international mail, it has to be taken in the context
of that total bill.
We realize that in order to get pricing freedoms, in order
to have product freedoms, in order to have investment freedoms,
you have got to give up something. That is the nature of the
beast that we understand. But we do not get anything if you
just regulate international mail.
Senator Akaka. Well, thank you very much, Mr. Chairman.
Senator Cochran. Mr. Postmaster General, I have heard from
some who mail periodicals that they are very concerned about
the proposed double digit rate increase. Is this something that
is planned? Can you tell us more about it?
Mr. Henderson. Well, the process that exists today is that
once you select the price for First-Class mail, and in this
case, the rate increase is a penny, which is a modest 3.6
percent, then a costing study that has been going on throughout
the year is finalized and validated. That is looking backward.
That is one of the problems.
Obviously, each class and category of mail, each class of
mail, must cover its cost. In the case of periodicals, the
coverage was 92 percent, so there was a big increase. It has a
one point mark-up, which means that it ranges from 13 to 15
percent, which is a lot different from 3.6 percent for First-
Class mailers.
When we saw those cost studies, we began working with the
magazine publishers, to try to identify strategies to reduce
costs. We think we have been successful with about $150 million
in costs identified.
But there is a problem for the future, if we do not figure
out a way to eliminate those costs. These costs are going to
recur. So it is not over with just lowering the rates in this
rate case. It has to be what I would describe as a Herculean
joint effort, or it is not going to happen.
By law, all categories or classes of mail are required to
cover their costs. Unless we have pricing reform, that is going
to be the future.
Senator Cochran. There are a couple of issues that have
been brought to my attention from my State. I wanted to mention
them to you.
At Mississippi State University, for example, they have had
two Postal Service Centers on the campus. They want to
consolidate those into one facility.
I received a letter just recently on this issue, and a
matter of fact, this is e-commerce, it was faxed to me. Anyway,
they want to relocate and expand the post office. Is this going
to be caught in the moratorium that you talked about, closings
and relocations?
Mr. Henderson. No, sir.
Senator Cochran. Is this going to be a problem for
Mississippi State University?
Mr. Henderson. No.
Senator Cochran. Well, I hope somebody will look at this
and see if they can help expedite it. The State of Mississippi,
as I understand it, has already appropriated some money that
the university is authorized to use to plan how they are going
to do this.
This is on state property. They will use that money to
compliment any Federal funding that is needed to support the
post office relocation and renovation of these facilities. They
require the students to have a post office address. They cannot
deliver mail to everybody's dorm room.
Mr. Henderson. It is expensive to do that.
Senator Cochran. It would be a tough challenge.
So they have, it seems to me, a meritorious suggestion. If
we pass this on to you, I hope you will have somebody in your
organization look at it, and try to be responsive to their
request.
Mr. Henderson. Absolutely.
Senator Cochran. One other thing, just to pass on, the
tenth largest city in my State is a relatively small community
near Jackson, Mississippi, called Pearl. I used to think it was
a small community. Now it has become the tenth largest town in
the State of Mississippi.
They have been wanting their own ZIP code, because they
have had this Jackson, Mississippi ZIP code all these years.
They are independent and they are doing well.
So I bring this to your attention, and ask for your help. I
think I was going to ask for your help. Maybe I am just
thanking you. Let me look to be sure I have got the right piece
of paper.
Mr. Henderson. I hope you are thanking me. [Laughter.]
Senator Cochran. Do you get many complaints from
communities like this, that are unhappy with their ZIP code
boundary? Do you have a criteria that you use to establish ZIP
codes for neighboring cities? How does that work?
Mr. Henderson. Well, it is a density criteria. In other
words, you have to have so much mail in order for us to allow a
ZIP code to be used.
There is an ongoing issue in every region in the United
States over prestige ZIP codes. For example ``90210'' in
Beverly Hills is prestige ZIP code. Every community has one,
and property values are affected. They want this street moved
or that street moved. It is one of the things that makes life
difficult, if you are in a line management position in the
Postal Service.
But when ZIP codes were carved out, they were not perfect.
Nobody had a crystal ball and would know economically what was
going to change. So it naturally creates problems.
Senator Cochran. Well, the good news about this was that
the Mayor of Pearl is happy with the efforts of the local
Postal Service officials so far. They have been cooperative and
responsive to the concerns of the people of Pearl, Mississippi.
[Laughter.]
So we wanted to bring this to your attention, and let you
know we were not just going to complain. [Laughter.]
We are going to congratulate you when things go right, as
well. So we thank you for the good work you are doing.
Is there anything further, Senator Akaka?
Senator Akaka. Yes, Mr. Chairman, may I ask my final
question?
Senator Cochran. Sure.
Senator Akaka. And I also ask that I may be able to submit
additional questions for the record.\1\
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\1\ Questions and responses for Mr. Henderson from Senators
Cochran, Domenici, Lieberman, and Akaka appear in the Appendix on pages
38-50 respectively.
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Senator Cochran. Absolutely, without objection, it is so
ordered.
Senator Akaka. I understand the Customs Service and the
Postal Service are working together on several issues relating
to international mail. The cooperative efforts in stopping the
illegal shipment of contraband across our borders is
commendable. However, I know that the lack of an electronic
manifest system by the Postal Service is of concern to the
Customs Service.
My question is, what steps are being taken to implement
automated manifest information in the interest of greater
enforcement efforts?
Mr. Henderson. If it is an outbound piece, and the shipper
is known, they do a manifest now. If it is an inbound package,
which is part of what the controversy has been around, we do
not have any requirement for a manifest, because we are not the
shipper. We do not have any control over it.
We are working with Customs. I think the issue of
contraband in the mail is a significant one. We are working
with Customs to see if we can figure out a compromise so that
we can assure that the Postal Service is not a shipper of
contraband.
Senator Akaka. I want to thank the Postmaster General for
his responses, and thank you for being with us today.
Thank you, Mr. Chairman.
Senator Cochran. Thank you, Senator.
We do appreciate very much your cooperation with our
Subcommittee, and your attention to our concerns and our
questions. We congratulate you on the excellent job you are
doing as Postmaster General of the United States.
Mr. Henderson. Thank you.
Senator Cochran. Thank you very much.
The hearing is adjourned.
[Whereupon, at 3:28 p.m., the Subcommittee was adjourned,
to reconvene at the call of the Chair.]
A P P E N D I X
----------
PREPARED STATEMENT OF SENATOR CLELAND
Thank you Mr. Chairman for giving me the opportunity to speak at
today's hearing and address the Postmaster General, Mr. William
Henderson. As you know, the U.S. Postal Service (USPS) was established
by the Postal Reorganization Act of 1970 and replaced the U.S. Post
Office Department. The USPS was chartered to perform as a business
enterprise, with sufficient market freedom, including providing ``non-
postal services,'' that it could deliver the mail to all parts of the
country as reliably, quickly, and inexpensively as possible. In that
same reform legislation, the USPS was mandated to operate on a self-
supporting, break-even basis, with particular emphasis on restraining
postal rate increases and providing ``honest, efficient, and economical
management.''
During the past year, the U.S. Postal Service has delivered more
than 200 billion pieces of mail to 130 million households and
businesses, the most in their history. Everyone from America's
established business community to its emerging dotconis continues to
rely on USPS' ubiquitous presence and universal service to promote
their images, improve their sales, and secure their revenues.
Competition from small businesses that prepare mail for delivery,
office supply companies, and increased use of the Internet has had a
significant impact upon the revenues generated by USPS. Mr. Postmaster
General, I am extremely concerned that despite improved performance and
customer satisfaction, the introduction of technology and automation,
and the availability of products and services in modem retail outlets,
you forecast a potential shortfall of $700-$800 million in total
operating revenue for the year.
I would like to address a couple of challenges facing the U.S.
Postal Service in the coming years and hope that you can offer feasible
and practical solutions during your remarks to this committee. First,
the Postal Service must address the issues that are most important to
your customers, the ones who utilize your services and buy your
products on a daily basis. Sure, the price of a first class stamp is
important to them and yes, they care about whether the Postal Service
makes a profit. However, the one issue relating to the Postal Service
that I hear about more than any other is the lack of customer service
and how long it takes for USPS to respond to customer inquiries on
numerous topics from the long lines at post offices to the time of day
that mail is delivered to homes and businesses.
In addition, you may or may not be surprised to know that I receive
hundreds of telephone calls and letters each year regarding the
location of postal facilities in my state. Prompt responses from the
Postal Service would certainly go a long way in settling some of the
issues surrounding location of facilities and would increase consumer
confidence in USPS. Therefore, I would like some assurances from you as
Postmaster General that the Postal Service will re-commit itself to
serving the needs of its customers by acting promptly on matters
involving postal facilities. For example, among the most critical
current postal issues in Georgia is the proposed facility in Perry,
Georgia due to the length of time that it has taken for completion of
the building's construction. Perry and the Postal Service have been
trying to build a facility since the days of my predecessor, Senator
Sam Nunn. Construction has been continuously delayed due to breach of
contract by two separate contractors and little progress has taken
place. The current date for completion of the project is Summer 2001. 1
would like to receive assurances from you that your office will monitor
the status of this post office and keep in constant contact with local
USPS officials in order to prevent any further delays.
Other Georgia postal issues that I wish to bring to your attention
include Rome, which needs additional space to sort the mail; Hartwell
and Monroe, which have experienced delays in the placement of new
facilities; Blackshear and Pine Mountain, which are in the process of
determining adequate locations for their facilities; and Euharlee, Fort
Oglethorpe, Stilson, and Centerville, which have requested postal
facilities for their growing communities. I would hope that these
issues, which are important to me and my constituents, receive prompt
attention from your office and swift resolution in the near future.
Secondly, it is important that the postal service provide high-
quality, low-cost products and services. I understand the financial and
economic pressures faced by the Postal Service but, I also realize that
you must adhere to your basic mission which is to deliver letter mail
to all parts of the country at reasonable and uniform postal rates. I
think the Postal Service does a great job especially considering the
volume of mail that it handles each year, every day in fact and with
the price of first-class stamp at only 33 cents. Remarkable! However, I
would like some assurances that postal rate increases will be
restrained and not always considered first, before other options, as a
means to increase revenue.
Recently, USPS started to diversify its services and products in
order to raise revenue from ``non-traditional'' sources. Currently, the
Postal Service sells money orders, packaging supplies, phone cards, and
retail merchandise. As long as these services do not interfere with
your primary mission to deliver mail, keep postal products and services
affordable for the public, and secure jobs for your workers, the idea
of expanding revenues without increasing taxpayer subsidies is a good
one. The Postal Service has acknowledged that this becomes more
challenging as the revenue base from traditional first class mail
service faces increasingly effective competition from electronic
messageing, fax, electronic funds transfer, and bill payment, as well
as other telecommunications methods. Therefore, postal merchandising
programs must be well-managed, subject to a system of accountability,
and above all, must contribute in a logical manner to the success of
USPS's basic mission.
Thank you for the opportunity to speak to you about my concerns. I
look forward to your report and working with you in the future on these
and other important issues.
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