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tv   Politics and Public Policy Today  CSPAN  May 18, 2016 3:00pm-5:01pm EDT

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mr. duran? >> yes. >> yes. >> so just to be clear, for instance, former sec tar of state colin powell he's called the verification regime vigorous in the agreement. these are remarkable changes in quotes and so we've stopped this highway race that they were going down and i think that's very, very important. would any of you agree with secretary powell's quote and his view of this agreement? >> it reminds of the statements of the support of the agreed framework with north korea which we now know did not merit the endorsements. >> so, you do not agree with it. >> no, i do not. >> brent scowcroft, to turn our back on this accomplishment would be an abdication of the united states' unique role and responsibility incurring justified dismay among our allies and friends. you would disagree with that quote as well. mr. duran, do you have any comment? >> yes, i disagree with it.
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>> mr. hanna, it strikes me in your response to some of my colleagues on this side of the aisle, comments with your role about vice president cheney and the agreement -- or the decision to invade iraq is -- it was a mistake and you apologize for that in your own way. but we should just move on from that. is that a misrepresentation of how you view your actions? >> it's senate more complicated than that. >> of course. >> and too long to explain. that, yes, if the case depended on weapons of mass destruction in iraq, that was false. and the american people didn't understand the grounds on which we were going to war to take out a guy who is a horrible dictator and a major strategic threat to american interests that the american congress in 1998 passed a law almost unanimously saying the iraq liberation act saying we've got to doing? to get rid of this guy. didn't say war necessarily but it says we've got a big problem with iraq, we need to doing? about it. >> but it was based, wouldn't you say, on the assumption that there were weapons of mass destruction and the mobile
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biological labs? >> no. in 1998 it was the clinton administration, you had secretary of defense cohen standing up and holding up a bag of sugar and saying if saddam had this much biological weapons he would kill thousands upon thousands of people that he represents a major threat to the united states. that was the basis -- >> that wasn't the part of the discussion we were having as a nation in order to commit ourselves to send young americans to war in iraq. it was the weapons of mass destruction which you admit now was a mistake. >> yes. that intelligence clearly was false, bipartisan commission looked at it and said most of that was wrong. >> so, on balance comparing these two processes whether you think it's spin or not, the consequences strike me as being much more significant obviously than the decision to tell people we were going to invade iraq not because we didn't like saddam hussein, although that was the case as well, but that were biological weapons and weapons of mass destruction versus what
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we see with the iran nuclear deal. you can assume as experts that this is not going to turn out well, but to this point they're not equal in terms of negative consequences to this country and the stability of the peace in the middle east, would you say? i mean, how could you possibly say at this point? >> i would say that you're right, that war and the death of -- and injury of american soldiers is a terrible, terrible price to pay. we haven't seen a lot of americans dying, but just take a look at the middle east right now after eight years of this administration, it's hard to say it's better because of americans aren't dying but half a million syrians have died, chemical weapons are being used, rushen and iranian influence -- >> but that was all because of a decision you were very much a part of to get the country to go to war in iraq. >> it's much more complicated than that. >> no, it isn't. i've gone to funerals of constituents who are dead in their 20s and their teens because you and vice president cheney encouraged an invasion of
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iraq. >> it was because iranian ieds -- iranian efps that killed americans not a narrative. and that is why it's -- not understandable -- >> how did our invading iraq stop those other actions? you sat here and testified that continued to support terrorists in the region. >> we didn't invade the gaza strip, we didn't invade syria and yet we see iran on the warpath all over and what this agreement did was take -- was take the budget of islamic revolutionary guard corps the hard currency available to it and increase it by an order of magnitude. >> doing that before that's why we went into iraq is what you're saying. yes? no? it seems like revisionist history. >> we are trying to blame -- according to the u.s. department of state since 1984 and to try to somehow distract from that and distract from a false mod -- a narrative of false moderation
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is counterproductive i would argue. >> i have to tell you i feel like a replay of dr. strangelove here. and it would be nice to have a balanced discussion. >> i agree. that's why we invited mr. rhodes and we invited the participation of senator cotton who is the other end of the spectrum, but when the white house refuses to make them available and democrats call no witnesses, we can't have that discussion. that's what's a shame about today's hearing. now recognize the gentleman from oklahoma, mr. russell, for five minutes. >> thank you, mr. chairman. in dealing with the iran nuclear issue, i'm saddened that rather than look forward to how to best secure the united states from a real nuclear threat, we see a progressive attack on our entry into iraq to cloud the issue. it is almost like the classic page from the communist playbook that advises admit nothing, deny everything and make counteraccusation. i take exception to the twisted narrative that our entry into
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iraq was based upon bad faith and false pretense. if an abusive neighbor attacks everyone in his neighborhood and then threatens them with total destruction, are we to believe as progressives seem to that we should sit idly by and not take action to secure ourselves from such threat? the truth of the matter is that saddam had technical capacity to develop a bomb. in the summer of 2003 i have firsthand knowledge that the 1st battalion 36th infantry along with special operations forces they secured a zippy centrifuge which is of the highest order for refinement of nuclear material and it was smuggled out of europe, they obtained technical hardware from saddam's nuclear physicist. his account of saddam's threat is well documented in his book "the bomb in my garden" an account the cia describes as largely accurate and balanced.
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i remember as i served in iraq during that time as we were hunting for saddam that this would be major news as the zippy centrifuge and technical drawings would come to light. instead it is largely hidden to this day. it is also interesting to note that senior leaders and one in particular who relayed to me that during a major syrian flood he was directed by saddam to move material to an eastern syrian site. this was material of both a nuclear and a chemical nature. it is interesting that that very site was attacked during "operation orchard" by the israeli air force and that site was completely destroyed because they were making a nuclear reactor. again, the silence on these issues is deafening. as one of the commanders that helped track down and capture saddam hussein, it is very emotional for me to hear members of this congress condemn our efforts, but it is not
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surprising. from day one as we sacrificed in the field, progressives in this congress condemned our efforts with progressive leaders even going so far as to declare that the war was lost while we buried our friends in the field. that steady drumbeat forced us to bury friends not only there but ship them home and put them in section 60 of arlington and then we come home to watch politicians, many still in office, destroy what we fought for. they persist even today, mr. chairman. i will never regret bringing a dictator to justice. and i am proud to have played a part in it. history should we even allow it will judge our efforts in iraq kindly. i'm not sure the same can be said of congress. now, we turn to yet another nuclear threat with iran. dr. obidi in reflecting on our security stated that to succeed,
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quote, illicit nuclear programs share a common weak spot. they need international complicity, end quote. and mr. rhodes and this administration it appears they provided all of it to iran. mr. rubin, how and how early did the administration start talking about minimizing congressional oversight of the iran deal? >> i am not privy to the internal discussions within the administration. but it appears from second hand sources almost from the beginning. >> i have passed the iran terror financier act, the only real effort to oppose the nuclear deal, which now sits in the senate, and with mr. rhodes' exposure the need for congressional oversight there are key provisions in my measure and it sits in the senate. that language even today could be acted upon by the senate that would provide us key oversight
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on on any decisions. the president acted unconstitutionally while he is free to make agreements and have negotiation, he is not free to bind us with treaty-like obligation. do you think that if we passed the key provisions out of the measure that currently sits in senate that would increase that oversight as was noted last week by politico, do ul think it would make what we do have better? >> yes. and very briefly, the strongest, most effective actions that have been taken by iran both under the clinton administration with executive orders and under the bush and obama administrations have been the unilateral american sanctions rather than the watered-down united nations security council resolutions even though the bush administration achieved a number of those as well. >> thank you, sir. and thank you, gentlemen, for your service, and thank you for being here today. mr. chairman, i yield back. >> mr. russell, we thank you for
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your service and your sacrifice and your time serving this country. and we're better for you. thank you. now recognize the gentle woman from new mexico, ms. grisham for five minutes. >> thank you, mr. chairman. and thanks for the opportunity to talk about what i think's really important in this agreement and issue, which is making sure that we're holding iran accountable, that we're clear about what those accountability issues and measures are and not just how that's being communicated but how that's being verified. and my only disappointment in the hearing today, mr. chairman, is that we are having conversations about what-ifs but we're not talking to the folks, with no disrespect to the panel members, about really who's enforcing, who's accountable and certainly for my constituents and a number of individuals that i spoke with expertise in this area, either as concerned
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citizens or organizations and the administration and people outside of the administration, that's my core focus. and, in fact, as part of the hearing of this nature, i was more concerned and more -- i would like information about the reductions in the uranium stockpile, the status of the centrifuges in iran, the monitoring and detection measures that the u.s. has and that are allies have also been doing. does anyone on the panel have any specific authority or expertise on any of these issues? because you're directly involved in that accountability. >> are we serving in government right now or in the iaea, the answer to that is no, however, we've dedicated years to the study of these issues and so could give suggestions if you would like. >> well, and i appreciate that. for example, i've spent 30 years in the health care industry and i have a variety i think of very credible opinions but at the end
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of the day i'm not your physician. so, i can't talk to you about your specific health. what i really think is important with, again, no disrespect, gentlemen, and i -- one of the things i appreciate about this hearing is that we tackle tough subjects. i expect that of this committee. i expect that of the chairman, particularly on this issue, keeping america safe, being clear that we will -- that we will make sure that everyone is accountable, that we're clear about what the risks are. i think those are all incredibly valuable things for us to be paying attention to, and i can tell you that my constituents back home in addition to the country expect that from me. but to know exactly where we are, more than opining based on, again -- no disrespect to your credentials far better than mine on these specific issues directly. but, again, i think, mr. chairman, we ought to be talking to the individuals who are absolutely responsible for
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assuring, verifying these issues so that we know exactly what we're dealing with because they're actually doing it. what could we be doing better to make sure we're getting that our information and that our accountability enforcement efforts are what they ought to be and that we have a way, bipartisan, to weigh in to reshape them productively if need be? anyone? >> i totally agree with you. i agree with everything you've said. and i think that i would like to have a discussion with those people, but the administration has worked to obfuscate the entire agreement and all of the processes around it. and i think that's one of my main messages here is not that i'm the expert on centrifuges or that i'm the expert on sanctions and so on. it's that those of us who would like to understand what is happening are not being given the information we need. we can't have an open and honest debate because we don't have the
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key facts. i think if you read my prepared statement you'll see that i've made i think a pretty cogent argument to that fact. >> anyone else? >> well, what i would say is when surgery goes awry, oftentimes the doctors will conduct an after-action study about what went wrong. likewise in the private sector. businessmen will practice negotiations and look at what they might have done better. in the u.s. military, sergeants, major and chiefs will berate soldiers for making mistakes not for a political ax to grind but to make them better soldiers and sailors. what the state department has not done in the last 60 years is conduct an after-action report about high profile diplomacy. this goes across administrations. yes, we can say that this is what the iaea needs to be looking for, that they need to not only be looking at declared nuclear facilities but undelairld nuclear facilities, that there has to be geindependt
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testing of work being done on iranian nuclear military sites and that there has to be extra-territoriality in the inspections in case iran takes some of its lab work to north korea. those are all specific things that could be done but we have to go broader and look at why diplomacy hasn't worked. let's have the state department be introspective if they're not going to do the due diligence, the congress should. >> i appreciate those points and my time is up. but in response, again, without having that expertise in this hearing, we don't have a debate based on facts and i might disagree with you about our efforts in what i'm going to call complex and high-level diplomacy and maybe on some points i'm not. but without having those individuals before this committee, we're ill equipped to do that. i yield back. >> i concur with the gentle woman that's when mr. rhodes as of monday was going to appear
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and suddenly executive privilege is claimed and all of a sudden they decide not to have him. congress is kept in the dark. >> the chairman is very patient with me and this is not a place to debate that and i appreciate the chairman more than he knows and i mean that earnestly. but, again, i'm not sure that mr. rhodes is the right person but we do, we need to continue to have an effort to get facts so that we're not speculating about where we are in enforcing this agreement. and that's all of our responsibilities. so, thank you, mr. chairman, for, again, giving me maybe the last word and thank you for being patient with me today, sir. >> now recognize the gentleman from wisconsin for five minutes. microphone, please. microphone. >> could we have slide three. okay. better read it over here. the easiest way for the -- okay. this is a quote from "the new york times" article. the easiest way for the white
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house to shape the news is from the briefing podiums each of which has its own dedicated press corps, but then there are sort of these force multipliemu, adding that we have our compadres. i will reach out to a couple of people and, you know, i wouldn't want to name them, i'll say, hey, some people are spinning this narrative that this is a sign of american weakness. well, since he won't name them, mr. doran, you want to take a shot at who he's speaking of when they talk about the administration's compadres in the press spin the white house narrative and who in the press he's kind of referring to there. >> i wouldn't want to speculate on individuals. i would just note that in general the major -- the major newspapers and the major networks have supported the line coming out of the white house and one of the things that mr. rhodes drew our attention to,
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and i think it's important to focus on, is the blurring -- as a result of the fact that newspapers and networks are reporting foreign news from washington, we have this blurring now of opinion and news. so that the line that mr. rhodes is putting out finds its way into news articles and then it also finds its way into opinion columns at the same time, and mutually reinforcing effect. but we also find at the same time that only about 13% of americans actually believe what they're hearing anymore and i think we can draw our own conclusions about that. >> well, having been here for 14 months i don't believe anything i read in the paper around here. but major papers, do you believe, like, "the new york times," "the washington post," would you consider those the major papers you're talking about? >> yes. you can see -- i'll give you an example, you know, recently the saudis put together -- put to death this cleric, a shiite, the
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line that you got universally in the newspapers, in the newspapers, in the news articles and in the opinion pieces and then on the networks was that there's a huge saudi sectarian escalation which is destroying relations with iran. all of the things that iran is doing around the region, flexing muscles like dr. rubin described, we're not hearing about. and i believe that that was news reported out of the -- reported out of the white house. i'll just say one more thing about this, too, because of the rise of the internet we have all these -- we have all these nontraditional news sources now that people go to. and it puts enormous pressure on the serious reporters that are out there. i mean, i'm thinking of people like david sanger and michael gordon of "the new york times," these are very serious reporters, right? but they know and if they don't know it and they're not thinking about it directly in their own minds their editors know if they take a line that is hostile to
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what the white house is saying, the white house can go to vox or buzzfeed and give the story. even reporters that i think we would all agree are extremely serious reporters under pressure i think not to report a story that's going to -- that's going to harm their access to the white house. >> okay. and just so we understand, we mentioned "the new york times" and "washington post" by name, but because they feed the associated press, just because i don't get "the new york times" and "washington post" doesn't mean that that's not the article that i'm getting, say, in almost any other major newspaper around the country, correct? >> yeah. it is replicates itself immediately. >> okay. now, when it takes about the compad compadres, do you think he's talking about anybody in the think tank or policy world? >> the two mentioned in the article were the plowshares fund and nyac. but it's not hard, you know, if you followed what happened on twitter when this article came
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out, the friends of the white house and the friends of the -- of the echo chamber, you could identify the echo chamber by seeing how they pounced immediately on the article, picked out one or two little facts that they could criticize and build the whole i think specious argument that the author had a political agenda in this, and then that narrative, then, was spun out of social media and into the mainstream media. >> if i may say very quickly, sir, i don't know david samuels, the author of the article, but to criticize him for not being supportive of the iran deal illustrates the problem of an echo chamber because journalists saying only sympathetic journalists can cover the administration that itself is a sign of a much greater problem. >> huge problem. >> thank you. >> can i play a video here or are we done with our time? >> let me go to mr. palmer and
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if you want to come back, we'll come back. now we'll recognize the gentleman from alabama, mr. palmer. >> thank you, mr. chairman. i think we've about worn this out, we've covered everything from iraq the fact that i think has been established very clearly that we were lied to by this administration perhaps even to contempt. but i want to go toing? else that i think is really at the core of what we ought to be talking about, and that is a key promise from the administration is that the iran nuclear deal would provide the public and lawmakers with assurance that iran was meeting its obligation and iran's ability to engage in proliferation would be substantially mitigated. i mean, we can go back to the rhodes' statement it would be the strongest inspection regime that any country faces in the world. we could go to what the state department posted on the website, that the international atomic energy agency would have regular access to all of iran's nuclear facilities, that they
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would be providing the iaea with much greater access, that it would require -- that they be granted access to investigate suspicious sites or allegations of covert enrichment. but that's not what's actually happened. i want to share with you that after the deal was implemented the international atomic energy agency published its report on iran. i believe it came out in february. the report contained less information than the iaea had regularly provided by iran before the deal was in place. in fact, when asked about these gaps, iaea director said, in fact, the deal restricted the iaea's ability to report publicly about iran's nuclear program. mr. rubin, given that, how much confidence do you have in this deal? >> i have very little confidence in this deal for reasons that i've outlined in my written testimony. it falls far short of the most
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rigorous inspection regime ever and the danger isn't just in iran very briefly, the danger is that it permanently dilutes the standard by which other potential proliferators are held. >> would you agree that general amano's statement validates the concerns that you expressed about the deal from the very beginning? >> yes, i would. >> would you also say that given this statement from general amano that the exaggerated concessions that this administration claims that they obtained might be called into question as well? >> yes, i would. >> you know, we've been talking about echo chambers. we talked about misrepresentations. i go back to the statement that secretary of state kerry made that he was the chief negotiator. we know that the framework of the deal was already in place before he really got involved.
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these statements that have been brought out in "the new york times" magazine article. but what we really haven't talked about is the fact that the deal is a fraud. and iran could be on a path to a nuclear weapon. and here's something else that we really haven't discussed that i think we need to be talking about, too, is that according to ben rhodes, that this deal also is part of a plan to abandon our friends and allies in the middle east. does that give you some concern, mr. rubin? >> yes, it does. >> how about you, mr. doran? >> absolutely. >> how about, mr. hanna? >> yes, very much so. >> do you believe that the obama administration withheld information from congress about the deal intentionally? >> yes, i do. >> do you believe that was in violation of the corker/cardin agreement, the law that he signed into law himself? >> it absolutely was and on top of which the corker/cardin
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amendment was written in such a way to prevent this from happening and unfortunately the administration simply broke the law. >> i couldn't agree more. peter roskom a gentleman from illinois introduced a house resolution and argued that very point. the house passed that resolution that this deal was illegal. from the get-go because the corker/cardin law required that all information be provided to congress including the side agreements. and it clearly wasn't. i think there's one issue really one question that we need to k ask, and i'll ask each one of you to answer this. do you believe this deal has actually assured iran a path to developing a nuclear weapon? >> yes. at the very least it leaves iran with an industrial-scale nuclear program upon the expiration of the controls and the administration went into this knowing that the iranian regime
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was not moderate. >> mr. doran? >> i agree with all that. >> mr. hanna? >> yes, i agree with michael's conclusion. >> mr. chairman, i'm not sure it's the jurisdiction of this committee to look into the ramifications of that possibility, but i do think that's essentially what we should have been talking about this entire time. and the fact that this administration misled congress is one issue that i think we need to pursue. but i think at some point congress needs to look at what our positions ought to be going forward with regard to iran. i yield back. >> i totally agree with the gentleman and i appreciate his perspective. that is right, that's the ultimate fear that we have, iran not a friend of the united states, not a friendly partner within the world community, that they are even more so on a pathway to develop a nuclear weapon and that is what's scary. we'll go one more time to the gentleman from wisconsin. >> we'll go one more time to ben rhodes, not ben rhodes, michael
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doran. ben rhodes commented on the white house's desire to avoid scrutiny. i'd like to look at video clip "d" and ask you a question about it. >> and we're already kind of picking through how do we structure a deal so we don't necessarily require legislative action anyway. is there a way to do this? >> okay. how do you feel the process circumvented the transparency with congress? >> they structured the deal so that they could take it to the security council and effectively move out on it before congress ever really got to look at it. there's a second dimension to what we just heard that's disturbing. that was ben rhodes talking to a group of progressive activists and telling them what was coming down the line and giving them the talking points about -- about how to -- about how to support it.
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i mean, what you just heard was ben rhodes talking to the foot soldiers that are going to create -- that are going to -- in his echo chamber. >> tell us again who those foot soldiers are. >> i'm sorry? >> tell us again what you described those foot soldiers. >> in this case these are progressive groups. i don't know the exact. they regularly briefed dozens of progressive groups. i'm not talking about -- i'm not talking about pseudoexperts on nuclear proliferation and things like that. i'm talking about just grassroots progressive organizations to get -- to help them carry the water politically. but it's one of these blurring of the lines between roles that i don't think we saw in previous administrations, where you have somebody who is in charge of communications, but yet sitting at the table with the secretary of defense and sometimes telling the secretary of defense that he's wrong and then going out and talking to domestic
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political groups and telling them how to go -- how to go militate in favor of the foreign policy of the administration. >> okay. thank you. >> thank the gentleman. i thank you all for you attendance here, your participation and expertise in illuminating what is a very disturbing situation. the committee stands adjourned.
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on "american history tv" on c-span3, this september marks the opening of the smithsonian national museum of african-american history and culture and on saturday morning beginning at 8:30 "american history tv" is live for an
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all-day conference with scholars across the country discussing african-american religion and culture and historic preservation and interpretation. at 10:00 p.m. eastern on "real america" the 1975 church committee hearings convened to investigate the intelligence activities of the cia, fbi, irs, and nsa. the commission hears testimony from two fbi formants mary joe cook at how she penetrated an anti-vietnam war organization and gary thomas rowe who infiltrated the klan and participated in violence against civil rights activists. >> you mean the birmingham policemen set up the beating of the freedom riders and you told the fbi that? >> that's correct, sir. >> and then were they beaten? >> they were beaten very badly, yes. >> and did the birmingham police give you the time that they'd promised to give you to do the beating? >> we were given 15 minutes without intervention.
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>> then at 8:00 at "lectures in history" -- >> what that opportunity gave them was an opportunity to go to college. they saved some of that money. they sent themselves through college. they sent siblings through college. they became doctors and lawyers. one became the first female manager of any department at northrop airlines. they became principals. surgeons. politicians. pilots. and they were able to do that because they had access to professional baseball. >> marshall university professor cat williams on how women id aided the war effort and the rise of women's baseball leagues, including the all-american girls professional baseball league that was featured in the movie "a league of their own" sunday at 10:00 on
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"road to the white house rewind" -- >> my name is gerald deine ferr, i stand before you to proclaim tonight america is the land where dreams can come true for all of us. >> the 1984 vice president acceptance speech of congresswoman ferraro at the democratic national convention in san francisco. she was the first woman to be nominated for vice president by a major party. for the complete "american history tv" weekend schedule go to c-spspan.orcspan.org. this sunday night on "q & a" "slate" magazine founder talks about his book "old age a
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beginner's guide on living with parkinson's disease." >> it is a brain disease so that was a nonsensical question, but what i really meant obviously was thinking, is it going to affect my thinking and thinking is how i earn a living so that became pretty important. and i asked this neurologist what's going to happen. and he says -- he was trying to tell me it wasn't such a big deal. he said you may lose your edge, as if that was just nothing, and i thought, gee, my edge is how i earn a living. it's why i have my friends. it may be why i have my wife. >> sunday night at 8:00 eastern and pacific on c-span's "q & a." sunday night on c-span the state opening of the british
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parliament. queen elizabeth delivered a speech on the british government's priorities on the coming year sunday night at 9:00 eastern we'll show you a simulcast of bbc parliament's coverage of the state opening of the british parliament. postmaster general megan brennan testified before the house oversight committee recently about the postal service's financial problems. at the hearing committee chairman jason chaffetz provided an update on the panel's progress in drafting legislation bringing structural and institutional changes to the postal service. >> committee on oversight and government reform to come to order and without objection the chair is authorized to declare a recess at any time. good morning, and thank you for being here. this is an important topic that affects every american. it's a vital part of our commerce in the united states of america. we're here to discuss the future
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of the united states postal service and to address options for ensuring its long-term viability. each year more than 40% of the world's mail volume is carried through the united states postal service. the postal service employs more than 400,000 full-time workers spread throughout the country. it is also the backbone of more than a $1 trillion mailing industry that employs more than 7.5 million people. however, due to the ongoing changes in the way americans use the mail, the postal service faces an unprecedented financial crisis. in 2006, mail volume had declined more than -- or since 2006, mail volume has declined more than 25% or about 60 billion pieces of mail annually. as a result the postal service has lost money for nine straight years. with nearly a decade of ready behind the postal service faces mounting long-term financial challenges. the agency has $125 billion in unfunded liabilities, including $54 billion for retiree health
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care and has exhausted its $15 billion statutory debt limit. further, the postal service lacks the funds it needs for critical infrastructure investments. chief among those is the purchase of a delivery fleet projected to cost roughly $6 billion. think about all those millions and millions of postal boxes that need somebody to come actually deliver the mail to them. it is a miraculous thing i think in this country that for less than 50 cents you can put a stam o an envelope and a day or two or three days later that's going to show up at another address within the country. it really is truly amazing. but, if you're going to purchase new delivery vehicles and prepare for the next decade or two, you're going to need some money and it's something that the postal service does not have. in the meantime, they must manage a delivery fleet of vehicles which on average is 24 years old and cost $1 billion a year in maintenance. that's just the maintenance
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cost. the postal service has made efforts to cut cost and stream line its operations it's not enough. i think it's important to note that many of the unions have been very helpful in actually working with the postal service and making cuts, but they don't want to keep continuing to cut number of personnel. neither do i. we want to see a growing, vibrant, thriving postal service. so today we're going to hear from representatives of five key stakeholders within the postal community including the postmaster general, the postal regulatory commission, the government accountability office, private industry and one of the more important postal unions. there are a number of postal unions. i wish we could have them up all at the same time but we have one here with us today. the witnesses will discuss reforms as needed as well as how certain reform proposals would work. one of the things that is most critical in dealing with this has to do with medicare.
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and i look forward to hearing from the postmaster general brennan and the nalc union president rolando about a joint proposal to require the postal service retirees to fully enroll in medicare in order to receive federal health care benefits in their retirement. since 1983 postal workers have paid some $29 billion -- $29 billion they've paid into medicare. but currently postal retirees have a choice in enrolling in medicare. as federal retirees they can continue their sole enrollment in the federal employee health care plans or they can enroll in both the federal plan and medicare. while three-quarters of retirees enroll in both medicare and the federal plan, the postal service and its retirees could see significant savings if all retirees were duly enrolled. i look forward to hearing more about this proposal.
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it is one of the most key elements, biggest elements, in our drafting and coming forward with a reform package that has a vibrant and sustainable postal service. and let me just say, i think it's important to note the approach that we're taking here. are there costs to be cut, yes. are the things we can do to become more effective, more efficient, yes. but i also do believe that the postal service is a vital tool of commerce. and a thriving, vibrant, productive postal service is essential to our economy. we cannot ignore this. think about the world of the internet. think about the way commerce is moving. think of the way we communicate. think of how we send bills and communicate as a nation. you have to have a vibrant, thriving postal service in order
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to achieve all of that. that's why i think so many people are here today. and it's one of the most important things that our committee will be addressing and taking care of. and that's the goal, and that's what we're trying to achieve. and i thank you all for being here. we should have a good hearing today. with that i'll now recognize the ranking member, good friend, mr. cummins of maryland. >> thank you very much, mr. chairman. first of all, i want to thank you, mr. chairman, for your hard work and staff on both sides working so hard for a long time to try to resolve the many complex issues that the postal service face. and i want to thank the postal service community. and all of those affected by it, because there is a genuine effort to try to come to some type of resolution that is a win/win/win/win for everybody and i express my appreciation because it helps us as we move along.
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i also want to thank our witnesses for being here to discuss ideas for addressing the significant challenges facing this very critical institution. since its establishment more than 240 years ago the postal service has served as the critical link that touches each one of our lives, it connects us all together, our families, our businesses, and our communities. through more than 32,000 post offices and staffed by more than 600,000 people, the postal service delivers more than 150 billion pieces of mail a year, to more than $150 million addresses. since the last postal reform legislation was enacted, some ten years ago the postal service has encountered deepening financial challenges.
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as a result of the increasing popularity of one-line communications and transactions, the volume of mail handled by the postal service has fallen by more than 25% since 2006. and this trend is expected to continue. the costs of the postal service's operations have also risen. in part because the postal service is required to provide universal delivery service to every address in the united states. every year about 900,000 new addresses are created in this country. and the postal service's network and facilities, our letter carriers and workers, must expand to deliver to every single new address. congress has also imposed substantial burdens on the postal service that have nothing
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to do with providing universal service. the postal accountability and enhancement act of 2006 required the postal service to fully prefund its liabilities for retiree health care costs, a requirement that no other federal agency or private sector company faces. these liabilities together with unfunded pension liabilities currently amount to about $125 billion, which is almost double the agency's annual revenues. since 2006 the postal service has instituted many cost-saving measures including the following -- cutting 200,000 positions through attrition. cutting work hours by 331 million. consolidating more than 360 facilities and 20,000 delivery routes. and changing retail operation hours in approximately 13,000 post offices to match customer
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demand and reducing the number of administrative areas and districts. and let me say this, that i've said it to their faces, i said it behind their backs, i think the unions have bent over backwards trying to work with the postal service. and have done -- i mean, of all the committees i've sat on and dealt with, i think here we have a genuine effort by unions to understand what's going on, to make sure that they do right by their members and at the same time make sure that we have a viable and strong postal system, and i want to thank them. the postal service reports that these initiatives have saved the agency some $15 billion a year. however, there are significant legal restrictions that limit the postal service's ability to cut costs and introduce new
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products to counteract its deteriorating financial condition. as a result defight its diligent efforts, the postal service has reported a net loss of $5.1 billion for fiscal year 2015, it's ninth consecutive year of losses. the postal service projects $5.9 billion in net losses for fiscal year 2016. only congress can modify the nature and the structure of the funding obligations imposed by statute on the postal service's health care and pension programs. of course, these problems are not new. and we have gone far down the road of developing reform legislation in previous congresses. but congress has been unable to reach a final bill. the time now is to act. i want to, again, thank you, mr. chairman, for your commitment to working on a bipartisan basis,
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and it truly has been bipartisan with me and other colleagues, to develop a realistic reform proposal. i'm encouraged by our discussions and hopeful that we will be able to help put the postal service on a viable and sustainable path. i believe that any postal reform legislation that this committee considers should do the following, as i close. alleviate the burdensome requirement for prefunding retirei health benefits. allow the postal service to have straight postal-only health plans that integrate fully with medicare. allow the postal service to offer nonpostal financial services such as post office-to-post office money orders and certain types of gift cards. and require the postal service to create a new chief innovation officer charged with developing new innovative products as any other business. and so we need to work together to address the problems facing
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the postal service. we need to treat the employees of the postal service fairly and compassionately. waiting until the postal service runs out of cash is simply not an option. postal service runs h is simply not an option. finally i want to thank mr. connelly and mr. link for their hard work on this effort. we med many trying tries to be through this. we simply cannot kick the can down the road. time to act is now, and i do believe we are well on the road to accomplishing that. with that, he yield back. >> i thank the gentleman. i do -- i think it's important to note the good works that mr. meadow of north carolina, mr. lynch and mr. connelly have put into this, and i concur with my colleague mr. cummings if we're
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going to do this and pass it all the way to the president's desk, it does need to be a bipartisan bill. that's the goal and that's the intention. i will hold at the record open for five days, but we would like to welcome or witnesses. we have the hoon rachelle robert taub. we have ms. lori retan is, the director of physical structure issues it is united states government accountability office. ms. jessica lawrence, executive vice president of the association for postal commerce. mr. frederick rolando. pursuant to committee rules, all witnesses been tore sworn before
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they testify. you will please rise and raise your right hands. do you solemnly swear or affirm the testimony you're being to give will be the truth, the whole truth and nothing but the truth? thank you. let the report reflect that all witnesses answered in the affirmative. we would appreciate it if you limit your oral comments to no more than five minutes. your entire written statement will be made part of the record. we thank you for your participation. we'll now recognize the postmaster general for five minutes. >> thank you. good morning, mr. chairman. i'm proud to be here on behalf of the dedicated men and women who work hard every day to serve the american public. the postal service currently operates with a business model that is unsustainable.
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in the past decade, total mail volume decline by 28%, and first-class mail has declined by 35%. to put this in per spect stitch as a result of this volume decline, never the postal service is required to maintain an extensive network necessary to process and deliver the mail to every address six days a week. the cost of that network is largely fixed or growing, regardless of volume. and fund other costs imposed upon us by law. we continue to makebut necessary decisions within the constraints of our business model to adapt to a rapidly changing marketplace. we have improved productivity for six consecutive years. as a result of these efforts we
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achieved cost saves of nearly $15 billion each year. which together enable america's e-commerce. however, all of these actions cannot offset the negative impacts caused by the continued decline. our suppliers or to deliver the mail. with that legislative and regulatory reform, or net losses will continue to grow, regardless of our ongoing efforts to grow revenue and improve operational efficiencies. if allowed to continue, this will have a devastating impact on the future of the organization and customers we
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serve. mr. chairman, we need legislation now. over the past year, we've been working to identify key reforms capable of achieving broad support and which would return the postal service to financial stability. the legislation we are seeking as a result of the discussion enact mchbt of these provisions, favorable change to our rate-setting system, and our
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aggressive efficiency and revenue initiatives will return the postal service to financial stability. medication integration is the most important of the electricive provisions we recommend. as the second largest contributor to medicare, our proposal allowed the postal service and our employees to fully utilize the benefits for which we have already paid. by require full medicare integration for postal service retires, we will essentially eliminate the current unfunded liability for retiree health benefits. we're also seeking to restore the exigent rate increase. in april, the postal service was required by the prc to eliminate the exigent surcharge and reduce our prices. this will reduce our revenues this year by $1 billion and by approximately $2 billion annually, further worsening our financial condition. reinstating the exigent surcharge is critical to the postal service's financial stability. mr. chairman, our financial
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challenges are serious but solvable. the proposals we are advancing today are fiscally responsibility. they enable the postal service to invest in the future and continue to provide affordable and reliability delivery service. mr. chairman, i look forward to working with this committee and our stakeholders to restore the function health of the postal service. i welcome any questions that you and the commit meal may have. thank you. mr. chairman todd, you are recognized. in to 15 total necessary loss of $5.1 billion chez an improvement from 2014, this is the consecutive net loss since 2007 and has been increased the cumulative net deficit to $56.8 billion. these continuing losses have negatively impacted liquidity,
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requiring the postal service to use all of the statutory bar and capacity, and causing total liability to far exceed total assets by $50.4 billion. the has skewed the postal service's current liabilities in relation to the assets. to reduce the dead ratio to historic averaging, the postal service would have to significantly increase the current cash position or investments in capital.assets, to the retiree health benefit fund.
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dropped to levels not seen in more than 27 years. the postal service anticipate furling reductions in total volumes for 2016. the continuous decline in first-class mail seriously jeopardizeses the postal service's ability to cover its fixed overhead costs. recent increases in revenues and subsequent higher liquidity are largely due to the temporary market dominant product exigent surcharge form the additional revenue which are mainly parcels, is not sufficient to offset the future revenue loss resulting from the termination which was removed april 10th. in order to maintain the operating net income it's currently achieving, the postal service would have to make up the loss of that revenue.
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and continued loss of high marges, the important task of improving the finance condition is daunting. despite the financial news, there is still strength in the system. the postal service is the one government agency that touches every american on a daily basis. it is an organization that literally serves 155 million american households and businesses on a typical day. it facilitates trillions in commerce, the fundamental problem is that the postal service cannot currentlies generate sufficient funds to cover the mandated investments and also invest in critically deferred capital needs. where can we look for answers? i would argue the starting point is to look at ourselves.
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what do knee need as a nation, and what is its cost? what exactly is universal mail service in the united states? the commission has determined that the u.s.o. is largely undefined and instead is combined of a brought said of policy statements with only a few legislative prescriptions. the commission estimates the cost of providing university service to be more than $4 billion annually. when assessing the current state of the postal service, policymakers should look at this fundamental issue and decide exactly what we as a nation need from the postal service and most importantly how those expectations are supposed ton -- thank you for holding this hear today i know you deeply appreciate the importance of these issues. there are no easy answers, but answer we must.
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the commission stands ready to help you in the search for of solution on behalf of all four commissioners and the entire agency staff, thank you for the opportunity to testify today. good morning, i'm pleased to be here today to discuss the postal service's financial challenges. the post after service a critical part of the nation's communication system, but the situation is dire. we placed the postal service on the high-risk list in 2009, and it remains there today. condition, the status of unfunded liabilities and choices congress faces to address they financial challenges. the postal service's financial struggles are well documented. beginning in 2007, expenses began consistent wli outgrowing
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revenues. it has lost over $56 billion since then. this is primarily caused by mail volume is commensurate with expenses. in fiscal year 2016, the gap between revenue and costs continues, despite the significant efficiency initiatives undertaken by the postal service. regarding unfunded liability and cost, they a largely a purpose on the postal service. at the end of fiscal 2015, the postal service had about $125 billion in unfinisheded liabilities in outstanding debt which account fold 182% of its revenues. retiree health benefits account for 55 billion of the unfunded liability due in part because the postal service stopped making requirements payments in 2011 and does expect to make the
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required to 16 payment. given this history and future events, it is not likely that the postal service will be able to make the retiree health and pension payments in the near future. beginning in fiscal year 2017, the postal service will be required to start making annual payments for health benefits on top of annual pension payments, using available data, we determined these payments could total about $11 billion. though this is less than what was required in fiscal to 15, it is about 4.6 billion more than what the postal service paid that year. the expiration and lack of major cost savings initiatives will further stress the postal service's ability to make these payments. versus large unfunded liabilities for postal retiree health and pension benefits places taxpayers and employees, retires and the postal service it will have at risk. if the postal service does not adequately fund these benefits
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and congress wants these benefits to continue, the treasury and hence the taxpayer, may need to step in. alternatively unfunded benefits could lead to pressure in reduction or benefits and pay. for the postal service that endangers the future liability by saddles it those later. postal service actions alone under the existing authority i insufficient to achieve financial solvency. in doing this, congress faces several difficult decisions and tradeoffs in key areas. first, what is the level of postal services needed in the 21st century? and what are we willing to pay for those service congress should consider, and the best way to provide those services. second, what is the appropriate left of compensation and benefits that should be paid in an environment of revenue
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pressures? congress could considering rear vising the statutory framework for collective bargaining to ensure that the postal service's financial condition is considered in binding arbitration. and third, what is the continued viability of the postal service's dual role of providing affordable universal service while remainingself sufficient in in assessing any alternatives, congress should consider costs that might be transferred from the postal service, which is financed by ratepayers to the federal government, funded by taxpayers. in conclusion, we must take a hard look at what level of postal services we need in the future and what we can afford. the status quo is not sustainable. this concludes my prepared statements. members of the committee, i would be pleased to answer any questions you have. >> thank you. ms. lowrance? >> thank you for the opportunity
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to speak about postal-related issues. the mailing industry provides over 7.5 billion jobs and accounts for 1.4 trilli$1.4 tri economic activity. it is not only are there policies, that balance the infrastructural needs. maybe in the american economy and the manner in which the nation communicates and does business. despite all of that, market from over or 97% of the postal service's business. it's a -- as volume continues to decline, hoump, the postal service is pressed to find, from our perspective there are
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several fundamental matters that need immediate attention, including the need for predictable, affordable mail services. complete, accurate and costing of products and services, and reliability, consistent mail service. we'll be wee views the occurrence system. the cpi-based cap has operated substantially as intended to the benefit of all post all customers, and the general public. for business customers, the cap provides customers with an assurance of postal rate stability and predictability, which is key as to the decision to whether to continue to investment in mail as a commercial vehicle. for the years it's been in effect, the inflation-based price cap has served as an effective restraint against abuse on the monopoly power, to focus more costly on the
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elimination of postal waste, instead a manner that would not have happened in the absence of a cap. unfortunately there are obligation such as the prefunding mandates that has made operating until such a cap a challenge. it's never been so apparent as it is today. the mailing instrument has consistently called for greater clarity and transparency in the reporting of postal costs. this lack of transparency has related in other postal decisions that have imposed additional costs on mailers without contrarying corresponding efficiencies in the postal network. the postal service, the customers and postal regulatory commission would benefit greatly. the postal service should move without dispatch for an informed at the visibility-based system the quality of mail delivery is
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a key component of the value of mail. timeliness, consistency and reliability are frees -- the postal service's inable to provide consistent and reliable service is causing many better prices to look to other means for the preferred method legislative reform is just one of the many tools that would need to be leveraged in order for the postal service to remain fiscally viable. one, fix the mandated prefunding requirement and two, allow for fuller participation in med case. with the upcoming ten-year review, mailers need an accurate accounting and understanding of the costs of the products and service they received from the postal service. the commit should not be required to judge the performance of the existing system on the basis of data that are inadequate. it's imperative that the postal
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service be directed to use the many data-driven tools and inform visibility to supply the data that the commission so sorely needs about the current system of rate regulation and how to move forward in its review. it is end of the day mailers need reliability and consistent in order to continue to investment in mail for business communication and commerce. chairman chaffetz, ranking member cummings, this concludes my prepared statement. i can answer any questions. >> you've asked me to focus on the urgent need for postal reform legislation and the provisions that we believe are necessary. i'm pleased to do that today, but before i do, it's important that we take a moment to recognize the current reality of the postal service.
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it is no longer 2009 when the great recession sent mail volume plummetling in the prefunding mandate crushed the postal service's finances, raising doubts in some quarters about the viability of the agency. postal employees never doubted the viability of the postal service, but we worked hard to help the service to adapt and survive as it shed more than 200,000 jobs, and we boosted productivity dramatically. the postal service's return to operational profitability. now earning $4.4 billion over the past 2 1/2 years. our pension funds are healthy and better funded at 92% than most private sector pensions, and we have set aside some $50 billion for retiree health when most large private companies have not set aside a dime thanks
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to the growth of direct mail, stabilized in 2015, increasing the postal service's revenue to $69 billion. there's no question that the postal service remains a vital part of the nation's economic infrastructure. in 2015, we delivered more than 150 billion letters, magazines and packages, six, even seven days a week. the postal service's revenue is just a small part of the 1.4 trillion of gdp accounted for, which now employs 7.5 million americans. with an 84% approval rating for the american people, we believe the postal service can thrive in the 21st century with the right public policies. now is not the time to weaken this treasured agency through service and delivery reductions, especially those that have failed to attract congressional
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support in the past. instead, this committee should offer sensible and targeted reforms that would provide financial stability and allow the postal service to innovate. specifically it should address three specific legislative and regulatory burdening that severely hinder the postal service. first the postal service is required to massively fund premiums decades in advance regardless of financial conditions facing the agency or the country. no other public or private enterprise faces seven a mandate and most firms don't prefund at all. this mandate by itself accounts for nearly 90% of all reported losses since 2007. nlc has suggested numerous ways suggested many waits to aids the prefunding. articles part of an overall reform that doesn't weaking our network to maximize participate
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in medication among eligible retires. this would almost eliminate the 50 billion unfunded liability for future retirees health. gfb 29 million have been contributed to medicare, this approach is fair and appropriate. second congress should consider the policy that requires 100 of postal retirement funds be investmented in low-yielding treasury bonds. together, the civil service and first postal pension accounts, along with the postal retiree health fund hold nearly $350 billion in treasury securities. that makes the postal service and its employees the third largest creditors in the u.s. federal government just behind china and japan. no other company in america would invest the retirement
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assets in such an unsophisticated way, especially during a period when treasuries are yielding 2 to 4% annually. starting with the retiree health fund we should apply best practice by investing in well-diverse fitted stock portfolios, as well as government bonds. current polly forces the mail instrument to give uncle sam a low-cost loan instead of sensibly investing. it makes no financial sense to invest in assets that yield less than the rising cost of care. by changing the investment policy, congress could raise the return, redouse the burden of prefunding, offset the cost of
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postal medication integration, relieve upward pressure on postal rates, and reduce the misguided impulse to slash service. third and my full testimony, i address the postage rate-making process which the prc will formally review in 2017. there's a remarkable degree of stakeholder consensus these principles were outlined in a her sent to the chairman yesterday. it urged legislation that would mandate postal service assumption, satisfy -- not eliminate but satisfy by reforming fee but to max mild medicare participate, invest the retiree health fund sensibly, permit the postal service to provide nonpostal products in limited circumstances, and adjust the market-dominant rate
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base to ensure adequate revenue through the prc review form the coalition's recommendations are grounded in common sense and best practice. they represent the measures we could agree. while remaining -- allowing it to innovation to meet the evolving needs of our country. nlc and our sister the postal he at the time unions remain committed to help this commit toy if find a path forward that does not damage the network or the employees that make that network special. thank you very much for the opportunity to toffee, and i'm happy to answer any questions. thank you all. wield start by recognizing the gentleman from tennessee, mr. duncan, for fire minutes. >> thank you very much, mr. chairman. general brennan, you have an article from "los angeles times" that says after peaking in 2006, total mail handled by the postal
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service has declined 27%. is that fairly accurate? and it mail volume still slowly declining? and have you taken he -- do you feel like you've taken every step you can do thus far to adjust to that decline? >> congressman duncan, you're correct in terms of the decline in total mail volume. the challenge for us is the continued decline particularly in first-class mail, which pays the bills, defines or network requirements, hence our actions to right-size the infrastructure and take costs out of the system. there are still opportunities, but i think as noted, we have reduced our annual cost base by $15 billion. >> i tell you a little story. about four years ago they had an article about me and my dad in the knoxville news sentinel. i got the nicest letter from
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peyton manning about that article. he said he could tell i have the same relationship with my dad as he did. two or three months later my chief of staff saw peyton manning and told me how much i appreciated that. he said that peyton manning told him that his mother told him once, if you want to really make an impression on people nowadays, send them a handwritten note or letter. maybe you should try to get more people to follow the peyton manning method of impressing people, because it made a big impress on me. i can tell you. >> i would agree with that i want maybe you should get him to do an ad for you or something. [ laughter ] how much of a dimples would it make if you went to five day a week service? >> we've spent the better parse of the past year congressman on trying to build consensus with key stakeholders, a narrower
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group of provisions that will generate more than $32 billion in cost reductions and savings over the next five years. the reality is, in my discussions with public the officials, member of this committee, there's no congressional consensus for moving to fired-sdwla delivery. the postal service is looking at how do we leverage infrastructure, grow profit revenue, and fill the trucks. that's what we're focused on. >> many companies in the private sector that have pension plans that they saul they couldn't afford anymore, they stopped giving those pensions to their new hires. have you considered doing something like, reducing the pension benefits for new hires? would that make any difference? >> congressman duncan, i would say that we have a plan forward.
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there is a way to resolve these legacy costs and these liabilities. that's by permitting the postal service to integrate with medicare. it's a universal practice. other employees as noted by the charm and ravening member, have paid more than $29 billion in medicare taxes, and we should benefit from that opportunity. there's a way forward without looking at diminishing benefits to either current or future employees. when you looked at this, these figures are so staggering i saw some figure of 56 billion of total losses -- what did you find or consider to be the most troubling aspect of the entire financial conditions of the postal service?
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>> fundamentally what we have found is the postal service that relies -- is no longer working certainly the unfunded liabilities have contribute to do that, but there is a broader problem. that's the fundamental business model of mail volume that the postal service has been using isn't working anymore. >> what we would argue is that it's even beyond the unfunded liabilities. they just don't have the ability to do that right now without comprehensive reform. the controllability was less than in fills wall 14, even though in fiscal 15, and that's just an example of even when there is an influx of money, the
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operating costs are still growing. it's harder and harder for them to get ahead of their costs. >> thank you, mr. chairman. >> thank you. recognize mr. cummings for five minutes. >> i've always been concerned about making sure that we save as much money as possible at the same time was hoping we could find ways to bring in more money. >> so do you agree that in order to be financially viability,
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long term it's important to develop innovative products and services? >> we do support the continued ability to be innovative and development products and resources that people need. the challenge is finding that sweet spot to be profitable, but you don't want them to be able to compete unfair ly. >> so you end up in a no spot? >> it's kind of heart. on the one hand we want them to bring in more money, but then we tie their hands and shackle their feet, saying we don't want you to do this and that. what do you recommend they do? >> i'd like to hear what you all have to say. it's very from you traiting for the postal service and for us.
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enchts i would say the first -- >> i'm talking about things that will be profitable. i don't want anything that's not profitable, so let's take that off the table. we're talking about profitable things. >> the 2006 law took a very hard line. that the postal service could only offer -- the law would have to open that aperture if you're going to go beyond that. in a report to congress and the president laid out a variety of recommendations. one was to suggest if that aperture were to be opened, the commission that is this experience as the regulator to call balls and strikes and ensure fair competition issue, ensure that cost coverage is there. i would note as i indicated in my opening statement that this also is part of that larger
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question of what is it the united states postal service should do as a governmental institution. if the financial issue if that fire can be put out and we can start rear building it. aim just wonder, talk about what you all have been trying to do, and how that's worked out. with a more perfect situation, what you would like to do. >> if i may just say, sir, we are innovating at the core, in the mail by giving mail a digital reflection to stabilize it and look to grow advertising mail. in the package arena we have parnelled with large e-commerce
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he, same day, next day, sunday delivery, delivery of other products, groceries as an example. as commissioner toll -- our core competency is delivery. we did a pilot test in arizona. we think there's some opportunity for us in the if ultimate with other government agencies to do i.d. verification, whether at a local retail or on the doorstep with the enhanced technology we have embedded in our mobile delivery devices. >> i visited the amazon plant in maryland. it was amazing to hear them talk about the last mile and how much they couldn't do their job unless the postal service was a part of it.
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how much is that helping financially? >> very much. i would say this. the growth in package volume, congressman cummings over the past year, or past five years i'll say 49% growth in package volume. the postal system now delivers roughly 30% of all packages. credit to president rolando and president of the association, who worked with us to enable us to have greater flexibility with the workforce to be responsive to the customer rirmtsds of 578 zone and others that we're working with. dodds an expansion of that? >> it seems like this online shopping, i go to the mall myself, but apparently that's
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old-fashioned now. >> absolutely. hyper-growth, hyper growth, but the challenge is it's a competitive delivery space. we speed -- competent it i have pricing. we need to rebel nice that while our strength is last-mile delivery, we're challenged there. the so-called uber-ization is very competitive. the challenge ultimately for you, it won't offset the loss it is in first-class involving. >> pine you, mr. chairman.
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>> i want to follow up on a couple things. you used the phrase give mail a digital reflection. what does that mean? >> yes, we created a catalog called irresistible mail that embeds in the catalog new technologies, well beyond qr codes, to augmented reality near-field, so if you open the catalog, it comes to life. >> i think you touched on the amount of work. who spend their day at amazon, looking for ways to deliver packages faster and more efficiently. for instance here in washington, d.c., i've got about an hour and five minutes to order something
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that will be waiting for me when i get home tonight. if that isn't y'all doing the last-mile delivery on that. i work in the transportation committee. amazon is talking about developing drones to develop packaging, one day in the not-too-distant future they're going to say bye-bye to you guys. how do you prepare for that? >> congressman, i would say this as i noted, it is a very competitive delivery space. we have to compete for that position. can comes down to and that includes service a price. >> let's talk about service and flight. we were the unfortunate victims
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neighbor across the street and having it processed corpus christi, it's trucked to san antonio, processed, and maybe delivered in three days. at the same price. at some point, you know, companies like amazon want it there quicker. you cut the quality of your service, especially on your lead program or lead product, first-class mail, it starts to become less liability. >> the service standard changed did not impact the delivery of packages, which is the growth product. we did the responsible thing, which was right-size the infrastructure, address the latent capacity. now, service is foundational,
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and it's key to growth. we recognize that. >> we also spent time -- i think almost everything had a wizard list, on whichly shifting to -- instead of a post at responsibility mail kick, and i it's so by anything, we're talking a lot of dallas, but postal reform has include other thing lights cluster boxes, usualside mail instead of delivery to the door, no junk mail on saturdays, but maybe the higher revenue packages and the like. why aren't we still -- >> why are we not talking about thought? why did they make sense a year
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ago, why the not is bringing them up today? >> again, my approach was to try to build consensus around provisions, high value, likely to generate brought support. also, there was something about it would be -- we'll take my family, for example, if we don't have the money to do anything, it's hard to generate consensus about not taking a vacation, but we're not taking a vacation because we don't have the money. that's just an example. at some point you're going to have to make, i think, some hard choices. you're not going to walk away with everyone happy. i think that's what we were eselected to do here in congress. >> contingentman, we have made
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the -- you noted one, the consolidation, the accelerated -- >> but y'all have stopped the consolidations now and are looking at other things. >> congressman, we deferred the consolidation until we stabilized the network. service it our mission, and service was not where it needed to be. it has since improved, and we're showing positive trends in that regard. i would -- your comment about mode conversion, cluster boxes, for all new delivery, based on the delivery characteristics, we either effect delivery through box on post or centralized delivery. more than 900,000 new possibility deliver yes, sir that we added last year, over 70% were centralized or box in post, so we're making the right business decisions. >> i see i'm out of time. thank you. we'll now recognize the gentleman from massachusetts,
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mr. lynch. >> and mr. meadows, who for all their wore, we're done a lot of work to coordinate or everyone. and i'm glasses to see the same thing is happening. we have the post master general and so it just -- it troubles me that we could move this ball forward. i do want to focus on one key aspect of this. that is the coordination of
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benefits, between the fehpp -- i hate these acroy nips, but the federal employees help plan and medicare, post master gen brennan, the situation we have right now, as noted by the chairman, and the chairman deserves a lot of credit, because he's been the one who brought us all together with the ranking member, and it has been completely bipartisan, and really we do a lot of work up here. this effort has been really bipartisan the way this works, and the second -- and as the chair noted, your people -- the postal employees paid in $29 billion so far to medicare. the largest group is dod, i believe, and they have a tricare
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wraparound with medicare. they're the largest, but they require, when folks come out of the military and go on benefits, they're required to it -- to use medicare as their primary insurer. so that's a good way to reduce their costs. we don't do that at the postal service the they are not using, as they could, they're not using medication as their primary insurer. i think they mentioned this basically out of that 50 billion in unfunded liability, you jug limb nailed all of it. is that correct? >> that's right. >> i've been listening closely, because you have difficult groups out there.
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the only criticism i have heard so far is that postal employees who pay into medicare might actually use it. and some people see that as a negati negative, but i think it's entirely fair and reasonable that people paid in $29 billion might actually use those benefits. and you've done a great job with this proposal, and i think it ought to be adopted, and we ought to move this as quickly as possible in the form of legislation, move this forward. i really do think -- and i realize we can't fix everything, but just because you can't fix everything doesn't mean you shouldn't fix something, and we can help. we can help up here with a major piece of legislation, we could help the post office immediately.
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we have other problems to deal with, but that's for another day. >> president rho loanedo, you mentioned the corpus of our health benefit trust fund. you believe we are required to hold that in treasuries, which for the past few years has been dis mall in terms of what it returns, you know, to the fund. part of the proposal suggests that maybe 50% of that fund might be managed by a commission. can you talk about that a little bit? >> yes. we are talking about up to 75%, and we looked at the period going back to 2007, where we
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were earning, i don't know, where about 4% with treasuries, securities, had it been invested in a life cycle fund. again, keep in mind this would have been through the worst recession in 0 year, somewhere about 7% which would have raised the fund another $10 billion just as an example. >> i think we have to be careful with that, but i think that's a reasonability compromise. i think my time is expired, and i will yield back. thank you, and i appreciate mr. lynch's work and passion, and i look forward to continuing to work with him on it. >> now recognize mr. meadows for five minutes. i have to start out by saying thank you for your work. it was good to visit with the prc and all the dedicated employ crease that work there. mr. rolando, i want to say i was
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not on your christmas card list. i do appreciate the fact you have been willing to work with me in an open-minded way. that was your commitment to me, my commitment to you, and i want to thank you. ms. brennan, thank you so much for being here. obviously as we look at this, this is an interesting time and so for all the post all workers, i want to say thank you. >> i've been a secret shopper. in spruce pine just the other day, i went into a place -- actually i sent my wife in, because now i start to be recognized in some of these -- and the service that debby calloway gave my wife was nothing less than spectacular. she doesn't know who she was, so i went back in to thank her for herself, and that's what we need to do in terms of service
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standards. one of the things you're asking me to do sways going receipt of a prefinding requirement, so why should i do that? make a short, compelling case on why i should do that? >> first it's the right thing to do. it was the ache sell rated pace of that funding that created a large part of that challenge. and, again, going back to -- we've paid more than $29 billion into the fund, our employees should benefit. >> so you're saying you paid $29 billion, we ought to do that, so i'm willing to take the leap. we've heard all kinds of different testimony. that doesn't get us where we need to go, does it?
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it indicates we're just going to raise rates. $69 billion is not just a revenue problem. it's a management problem, so how do we take this without raising rates as being the ultimate answer are you in support of safe and secure delivery through cluster box? is that something you would support? >> depending on the characteristic, yes, we currently do effect delivery. >> would you support expanding that in meaningful way?
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who we're looking for is safe and dliry, and you may get some pushback, but we've all got to come together to figure it out. are you supportive of that? yes or no. >> yes. sir, if i may, the comment i made earlier about, what we would not recommend is mandatory of which kef over 37.5 million businesses and residences. i've been working with mr. lynch in an area that is very different than mine. if we work through that. you're asking me to go ahead with the prefunding and jump off the cliff. i'm ask you you, are you willing to work with us to make scherr kell implement delivery in a edge mooful way? >> yes. if i may comment, management has democrat straited a willings in to reduce costs, and we'll
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continue to do that. ms. rectanis mentioned -- we do have more than $5 billion cost reductions embedded, and we continue to look at opportunities to drive operating efficiencies. that's our responsibilities. >> but most of our tunes have been trying to increase a portfolio, whether it's banking or anything else. that just doesn't hunt. s here's my concern. we're talking about all of this, and we're missing out on service standards. it's the number one thing i get calls about. why is my mail not delivered? why are we having a problem? you said first-class mail is your bread and butter. this first-class mail actually is all post-marked in december. i got it in april.
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now, that is a funding problem. that is a management problem. and it's not just here. it's not just in my district, because in peachtree city, we have the same thing, where we mail actually wedding invitations for my son that took eight weeks to get to another member of congress. so what we have to do is put this together and make sure we have a service standard that doesn't increase costs. i'm willing to work in a bipartisan way to do that, but we have to make sure we do it in a way that serves the best interests of the public? are you committed to do that? >> i am, and you give me -- >> i don't want to get somebody fired. >> congressman -- >> i'll give them to you. actually i had about 40 different pieces of mail that came to me with the same problem. i'll yield back. >> mr. chairman, i want to know now i know why my wedding invitation --
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>> you're always invited there, mr. connelly. >> now recognize the gentle democrat woman. >> every time we have a postal hear, i ask my brother, because he works for the postal service, and i always ask him if he has questions. one thing as far as the consolidations, i'm glad that you thought enough, even though they might be necessary to slow it down, because service does come first. that's some of the things that he's spoken about, because of the all the closed stations, the long lines, and not enough clerks in the windows. so i'm glad that you are still putting service first, taking that into consideration, because people will go other places if they don't feel like they're getting good service. we definitely want the post office to thrive. ms. brennan. one of the else of the proposal
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put forward by the postal service, the postal unions, the certain elements of the mailing instrument is a use of postal specifies demographic sumpses when calculation the pension liabilities. also require any surplus resulting from those calculations to be used to pay down the postal service's debt to the u.s. treasury. intuitively it makes sense to use the demographic and salary growth statistics of the postal workforce when calculating the postal service pension's lee liabilities. what is it about the postal workforce compared to the government's entire workforce that you believe will result in lower cost? >> specifically, congresswoman, the salary wage growth. and we estimate over a five-year period that to be valued at roughly $3.2 billion. >> has the postal service calculated how much in savings would result in use of the demographic assumptions?
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>> roughly $2.3 billion over a 5-year period. >> gao has done a significant amount of work on postal pension funding issues in recent years. in 2014 the gao supported the use of the most accurate actuarial assumptions for postal pension liability calculations. do you agree with ms. brennan that the postal service should use postal-specific demographics when calculating pension liability? >> yes, we support it because it is the most accurate data and it should be used to get a better number of what the liability is. >> do you have any views on the amount of potential savings that may be available? do you agree? >> we have not done the calculation, so i can't -- and we haven't looked at the postal service's data so i can't comment on that. >> okay. thank you and i yield back my time. >> thank you. >> would the gentle lady yield? >> i yield. >> i thank my friend. i want to thank you all for being here. and i got to say, postmaster
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general brennan, you represent a breath of enormous fresh air. i mean, i want to say publicly how much i appreciate working with you. we have been able to forge a bipartisan coalition, mr. chairman. thank you for your leadership bringing us together to do that. and i share the sentiments of my friend from massachusetts and i am very helpful we are going to get postal reform. not everything but a big chunk of what we need to be addressing, so thank you. ms. brennan, what does it mean for the postal service to lose the exigent rate which expired i think in april, right? >> yes, congressman connolly. this year we estimate that impact to be up to a billion dollars this fiscal year and roughly $2.1 billion going forward. worsening our financial situation. >> and in your testimony you state postal service's financial
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condition continues to deteriorate and you say it's growing mail volume and increasing spensincrease ing expenses, is that correct? >> yes. >> do you believe some of the reforms we've been talking about bringing up the postal service to, you know, engage in other lines of business that may be profitable like other postal services around the world do, soliciting some of those restrictions, lifting the burden of a unique prepayment requirement as mr. rolan rolando pointed out unique to the postal service, no other corporation in america is held to that standard in terms of prepayment, whatever it is, $5 billion plus, plus the medicare reform i think we've been talking about, which i wish mr. ferenhol was still here, that's not a giveaway.
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those things could they turn around that financial description you've offered in your report? >> gao has not taken a position on specific elements in that proposal. however, we have supported appropriate restructuring of the retiree -- >> i'm running out of time. i'm not asking for your position. i'm asking for your analysis. if those things were adopted, would your numbers and your prognosis change? >> certainly they would benefit the postal service. what we would not want to see, however, is not an equal focus on cost reduction and right sizing and trying to get the house in order so that whatever revenue is generated is appropriate and people understand that solutions are trying to be gotten in both areas. >> if the chairman will allow the postmaster general to comment on that as well and then i'll be done. >> thank you, congressman connolly, it relates to the questions from congressman meadows, we need the legislative
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reform and a favorable resolve of the rate-setting process and management actions need to continue to drive operational efficiencies and grow profitable revenue. all of the above would put us on firmer financial footing and have manageable debt and have the ability to invest. >> thank you. thank you, mr. chairman. >> thank you. >> thank you, ms. kelly. >> we'll now recognize the gentleman from georgia for five minutes. >> thank you, mr. chairman. ms. brennan, how many -- i think i heard this. i just want to clarify. how many employees at the postal service total? >> we have 498,000 career and 136,000 flexible or noncareer employees. >> okay. what was the 7.5 million referred to? >> it includes private sector as well as the postal service. >> okay, so more or less, what,
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550,000, 600,000? >> roughly 634,000. >> 634, okay. and yet we all understand we've got a declining industry as a whole through -- because of a variety of factors, digital and so forth. does the postal service have too many employees? >> we have a requirement, our universal service obligation, to deliver to all 155 million delivery points, 135 million of which are physical delivery points, the other 20 are post office boxes, so that requires an extensive network and that network includes employees, facilities, vehicles and -- >> i understand that, but is it top heavy? do we have too many employees? >> no. i would say that we consistently look at how to rebalance and where there are opportunities, and if you look at the reduction in overall complement, we've reduced more than 168,000
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employees over the last decade. >> so we have 634,000 employees. we have a declining business, but you don't think we have too many employees still? >> the challenge, sir, is the workload content associated with package delivery as an example. >> i understand that. but that problem is why we have a declining business. the result of a declining business -- what would a private company do? if a private company is losing money month after month year after year quarter after quarter, what would they do? >> what we did, sir, in terms of rationalizing the network, consolidating facilities, adjusting retail hours at post offices to match customer demand, some of the same management actions that i've been recently criticized for. >> but we're still losing money. and my -- i'll go on. you said that the goal -- you said a few moments ago that your goal is to fill mailboxes and trucks. is that your strategy to turn this thing around?
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>> our strategy is far more complex than that, congressman. >> i would hope so. >> i was trying to simplify. >> but that's what you said was your goal. >> you can't cost cut your way to prosperity. there are opportunities for us to certainly drive efficiencies. there are opportunities for us to look at overall operating expense. we do that every day. but we also need to look at opportunities to grow. there are opportunities to grow. mail still works. we delivered 154 billion pieces of mail last year and 150 billion was mail. >> you continue to lose money. that is t issue and it seems rather unrealistic when you have a declining industry to think that somehow the goal of simply filling mailboxes and trucks is going to be successful in the long run. you mentioned earlier that the postal service has been on high risk since 2009. and you summarized the reason
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for -- two basic reasons, less mail and higher salaries. do you see an opportunity, without cutting, be it the workforce or whatever, for the postal service to turn this around? >> we have proposed that it's really got to be a balancing act between generating revenue and aligning costs. we do believe there's more right sizing that the postal service can do, and that's addressing where they have excess capacity but putting it where they do need capacity. certainly exploring some of the workforce issues that they have. and ms. brennan's right, they've done a great job over the past several years to manage their workforce, but we're starting to see it creep up again in fiscal '15. and looking at the delivery mechanisms, again, you need to do that by also looking at the revenue, but you have to look at both of them. and part of it is what does the mail picture look like today and in the future and what kind of services are going to be
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required and how do we want to require those services which we would like to see through comprehensive postal reform. >> let me springboard off that and come back to you, ms. brennan. what is the postal service's long-term plan for addressing the declining industry? >> let me first, if i may congressman, address your comment earlier about the losses. the majority of the losses are tied to the prefunding mandate. in terms of our long-term plan, it is addressing infrastructure, how to leverage that, repurpose that to support the growth. address the latent capacity -- >> support what growth? >> package growth, sir. we've grown our packages 49% over the past 5 years. we will right size the infrastructure as we've been doing with where we need to consolidate with the decline in letter volume. we'll continue to look at every opportunity to improve operating efficiencies. we have a number, as i mentioned, over $5 billion of cost reductions

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