tv Key Capitol Hill Hearings CSPAN July 22, 2014 7:00am-9:01am EDT
website and provide feedback, finally complaint can see that you did a great job and it goes to the top of the command chain. they bring it over to the va to be able to put it on our website. right now we are in discussions about what is the mechanism. it means to be high and the organization. i yield back the balance of my time mr. chairman. with the whistleblower case load whistleblowers can you tell us what the congres congress can dp alleviate the amount of time on the activities that you can continue to take care of the needs of the va whistleblowers?
i want to start by noting that the committee has been particularly supportive as the staff and the oversight investigation subcommittee for their work on this issue and their work with our agency we consider it to be a real partnership and we are very grateful for this committee's support. we have received a number of referrals from this committee and we appreciate your confidence and ability to work with the employees that your office refers. so that's one thing. it's already happening. we are doing everything that we possibly can. we've set up a priority system and we free allocated staff to handle the va employee claims. but as the numbers increase its
a very hard to keep up. we were at capacity before. in the retaliation cases now it exceeds 130, and the number as i mentioned continues to increase pretty much daily. we are an agency that has 120 employees more or less. we have jurisdiction for the statute for the reemployment rights act and we are working now on a demonstration for the committee provided to us. we also handle disclosures over 1200 as year and this will be a record with the va disclosures and we also handle prohibited personnel practices, so we are stretched pretty thin. >> please continue to let us know what we can do.
some whistleblowers have provided some limited patient information such is allowed through special channels through what they proceed. with the privacy violations what can we do about this? how do we get the va to stop the charges of the privacy violations when the whistleblowers go through the proper steps to this? >> i am aware of one instance where that happened. the employee in my opinion an appropriately was put on
administrative leave while the investigation is being done. over concerns that the person to patient information and data violate hippa. the leadership now knows that people have the right to have information and can share that information with congress and it isn't a violation. we need to do a better job of making sure that people across the organization understand this issue clearly and i wish i could say that it would never happen again. that would certainly be our intention to make sure that people are more aware and more cautious about what they do. >> we will continue to try to put that message out. i yield back.
>> thank you very much mr. chairman and in all of you for coming this evening. i wanted to ask in the private sector they have a process of quality assurance committee because the quality assurance committee where information that is shared in reviewing the cases with that kennedy is typically by statute protected from the medical malpractice lawsuit. and as an attorney i want to get to the bottom of whether part of the behavior that we are hearing about tonight and throughout the testimony from the whistleblowers has to do with the va trying to protect the agency from medical malpractice lawsuits and if that's the case, is there something that we could
do such of early this is something i worked on at the state level many, many years ago in the statute that protected the quality assurance so that you can have a quality improvement process going forward without all this behavior covering their backs and blaming people that are bringing these issues forward. can you comment on that? >> i think we have quite frankly adequate protections in place for quality assurance documents that are covered statutorily. i don't -- i can't say. we are in organization of 300,000 people. i don't know what everybody thinks when they go out and do something. but i can tell you that i don't -- i would be surprised if they concerned about the release of quality information is part of what might be a motivating some of the concerns and the recovery
behavior about the whistleblowers. i think that clearly managing those situations is difficult for the local management. i think that we need clearly to do a better job of informing and educating. i was appalled by the stories i heard tonight. we as an organization should tolerate that. i don't think that you should let us tolerate that. >> on another issue entirely, another level of shock for me was the information in the record that we have about the doctor and the very clear pattern, disturbing pattern of racial prejudice.
can you tell me in the organization first up hell does that exist in this day and age and second coming is there some way to cope with that and make sure that that's not -- in this day and age honestly with the progress that we have made in our country and in all aspects of diversity, gender, race, religion, ethnic backgrounds i can't imagine with this many employees that we would even begin to be tolerated the type of behavior. it's in the other slide and it is even more important and it's astounding that it happened at the ucla medical school among
the highly educated professionals. i don't get it. i just don't get it. again in an organization with 300,000 people where people do stupid things and we can't always control that. >> would there be a procedure -- would there be any kind of protocol or process if that was reported up the chain? >> absolutely. and in my 20 somethin twentysoms i can tell you i think that this organization has been for a long time one of the most inclusive and supportive of the diversity organizations. we train people in the workplace for asthma issues. we have programs to support cultural diversity and cultural competency.
i'm just astounded quite frankly and quite frankly i learned about three of the whistleblowers first time reading about it in the paper. i think that we need to do a better job of making sure that people can communicate their concerns. there are a lot of avenues. they have the process. they can come to you all. but my dismay is they don't feel like they can come to us within the organization because that's where it has to start. if we really want an organization that is dedicated to the safety and the quality and integrity it has to start with our employees being engaged on the front line into taking a meaningfuand taking ameaningfule they can fix those things within their sphere of influence.
if we can't do that -- >> as far as i'm concerned there are people that their position over this. >> thank you for letting me go over. you are recognized for five minutes. >> thank you mr. chairman. doctor mitchell in the previous panel talked about the peer review process. have you seen anything like that in your investigations? >> we have seen that in some of our investigations and we are taking a very close look at those when we see them. those types of investigations can be difficult to prove sometimes that we are seeing that as an emerging trend, and
it's something that we are focusing on and making sure that we are gathering all the evidence that we can to see exactly why it was a peer review undertaken. >> are you aware of this program that was started called the stop the line safety initiative that we talked about are you aware of the program? >> i am not sure i know exactly what program you're talking about because there are -- stop the line is part of the clean technology process. there are many -- >> as i understand it was a way to encourage them to step forward when you have something going on that i think we would expect. >> many of our facilities have implemented an as part of our national patient safety program, we have a stop the line timeout process so any employee, and
this is true in the procedure based area any employee who feels like something isn't right before something is about to happen to the patient can call a timeout, stop the line and say i disagree with that. it could be the doctor doctor, e nurse caught the housekeeper in the operating room because they feel something isn't right and the line stops until it is a result so that is a part of our national patient safety. >> does the va keep track of how many times the initiative is invoked? >> not to my knowledge. >> are reports collected? >> is part of the business process. >> i was aware of this incident where we have a report on the anesthesia within the va along the country i into formal communication to the va with the stop the line initiative regarding the policy that would change how surgical care was
delivered into the chiefs of communication was sent to the va secretary and the undersecretary for health and the principal deputy undersecretary for health october 1. >> that would be the former. >> about despite being told otherwise by the va officials they haven't received a response. >> i can't comment i'm happy to take that back and find out. >> we were briefed they did get a response and then subsequent we were told they didn't so i would like to know what the response is and can you please geget back to the? >> i have no idea but i will get a response for you and for them if they didn't get one. >> do you know how often they get a letter for more than 60 of
the department heads? >> i don't. >> would that be worth a response? >> it would seem atypical, yes. >> those are the things you are having to explain and actually we appreciate your apology to veterans in the country. >> is a huge problem that we are trying to deal with severe emotion and it's hard for us to even sit here without going what is going on and how do we fix this and you are in the same boat. we need a dramatic change we hope this will make a dramatic
change because i looked at the va for 20 years and i -- the comments that you made earlier about these being isolated incidents but it's not isolated. i went to the meeting in the va and there's a whole mess of them telling me this. it's a systemic problem and we need to deal with it. >> i appreciate your sentiments. >> you are recognized for five minutes. >> thank you mr. chairman and all of you for being here. i agree and that so often is the case i concur. it may be something. it doesn't appear people have come to grips with. that's how i feel and how my veterans feel.
a generation of good work has been raised and i think you understand that. very very difficult because this is about care and getting the trust and getting them in the system and working on things like seamless transitions and making sure blinded veterans are there and all the things we worked on. for 24 years prior in the data from trying to prove to be a good actor on this one but the question i have is that again what's going to change. what is your definition of unacceptable? >> the bottom line from the time i went to medical school until today has the patient gotten what he or she believed they needed and it has to be quality, it has to be safe and effective. to me that's the bottom line. >> as we try to find what the fix is we are going to sit here and i agree we have to diagnose first before we can find the
treatment. but we have to move forward on how to get it fixed. today the letter comes out of the office of the medical inspector and it's clear that the acting secretary made it clear that as i told the work force intimidation and retaliation against whistleblowers or any employee who makes a suggestion or reports with maybe the violation absolutely unacceptable was it not unacceptable to the secretary? was there any way that you copy and oppression that it was acceptable then but not now? what changed today? >> what changed today is we do have new leadership. the acting secretary has stepped up. he is hel out in the field goino medical centers. he has in fact pulled the process of the whistleblower investigations to the level that he can personally supervise it. his engagement is phenomenal. one of the complaints about how the va works is that there is a
belief that they can outlive people. they are going to outlive mr. gibson and the and they migk in november is coming around. he will be gone. i have to tell you and this pains me more than anything this breach of faith and i sat up here for eight years and i am the staunchest supporter but i will be the hardest critic i've listened to this today and it floors me that i don't believe with one fiber of my being that you are going to get that right and it's disturbing which makes me then come back and say if i were you sitting there asking what are you going to do about it that's what i'm asking for. i want us to take this back. i want us to pull this back and and know that the data is true. so i ask you is there a way to do this? is there a way to have the third-party validation to have that accountability? we can be the most accountable because we have to stand in front of the voters that are the constituents every two years.
they are never going to see my veterans ever. so how do we restructure this and are we trying to fix a broken system beyond repair on trying to fix this? >> i said before i'm an optimist. >> i supervised a high school lunchroom. >> and you're very brave as well. i am the ultimate optimist and i have been shaken by this, so that's why i asked you what proof is there? to her reputation is on the line if you say that it's going to be fixed by this. >> my job is to shed light because that is the best disinfectant on a broken system and the whistleblowers are shedding light on where the problems are. the next step is to actually see some action. what we have heard in the last several weeks from the leadership ivy league is encouraging. >> i asked what is the problem with the rochester va and you
said your right you deserve an answer right away. so here i said i am off the reservation on this one. why has there not been an answer on that one? a member of congress was told they would get an answer about what is wrong with the local da in the place i spent much time with my veterans and i haven't gotten an answer. >> i'm not here to defend the va. i've had a pretty ringing indictment of what has been going on. but i think that there are steps that can be take in expediting the review of the whistleblower complaints when people believe they are being retaliated against if we can get that review in place and the whistleblowers can see quick action that sends a very powerful message not just to the individuals involved but the facilities there is disciplinary action when someone retaliates against someone we need to have actions that back up the positive words and -- >> you think we can get them.
>> i'm going to do my best to follow up on the promises made to me. we are continuing to do oversight. that's our job. i'm happy to come back and report what actions we have actually seen taken. but one of the problems i think has been that we have gotten the warnings from the whistleblowers about where the problems are that they have been sort of hitting from the va leadership because they've been saying no harm, no foul. there's no violation here or regulation that's been violated. whatever replaces it will have the same issue. there are certain steps that can be taken.
whatever the entity is that it's investigating, there needs to number one has a review triggered whenever there is a finding of a problem it has to go higher. i think the second thing is there has to be the look to see whether the actual harm has occurred because what we are -- what we have been seeing is yes the allegations are true but there is no harm but they don't look to see whether they have been harmed or not. in the case they only looked at the three patients to psychiatrists reported on. the psychiatrist said this is a widespread problem for both a facility that the only looked at those three patients into good and look to see if there was a more widespread problem. >> i am beyond my time. thank you researcher in. i apologize. >> you are recognized for five minutes. >> i would like to g to give
testimony that we heard in the first question would be for the doctor. in the testimony doctor matthews stated that when you repeatedly brought up the problems with doctors only doing three and a half hours work during any workday the consistent explanation he received his the va. for the doctors there were only a portion of the time they are being paid for? >> that isn't a common practice. that is an expectation. i think -- >> can you tell me how you know whether that is true or not? >> writing there was a briefing on capacity and the organization -- >> they said the data was no good. the second question is reference to mr. davis and if you could shed some light on this but you indicated that folks from your association met with white house deputy chief of staff ron neighbors and secretary gibson.
were you in those meetings? >> i was. >> i would like to ask because he does know he believes the deputy chief of staff of the white house leaked his complaint. did you know about this possibility and what the penalties might be for doing such an action? >> by meeting it didn't focus on this matter. i don't know anything about it quite frankly. my guess -- and i'm just guessing he was trying to intervene to help and not leak someone's name in a vindictive kind of way. >> this goes to the highest level. the allegation is the folks at
the highest level that we were relying on were violating their own law. how do you inform the employees about the rights? >> we have trained employees that have taken the system so there's online training available to all employees in a supervisory training -- >> is it mandatory? >> yes. >> how often do they take the training? >> i believe it is annually. >> and you will certify everyone takes this training >> we do track it and the system. >> if you can provide evidence to that as well. >> following up a few more things. in the fiscal year 2013 the director of the va healthcare system received an 8,985-dollar bonus. based on the testimony from the doctor tonight including the
continued retaliation will there be any effort to rescind her bonus? >> i can't comment. i don't know. >> let me ask you about another one then. the director in the phoenix va healthcare system to director susan bowers received an 8,985-dollar bonus in fiscal year 2013 as well. would there be any efforts to rescind bonus? >> typically we have performance awards that are tied to the performance evaluation, the performance evaluation was done based upon the knowledge at the time that that was completed and we don't really believe we have the authority to go back once those are done and change the prior performance evaluation. >> and thoroughly in the
testimony to folks about him receiving 8,052-dollar bonus from the member service they received a bonus of over $7,600. we wouldn't normally go back and change valuations once they are completed. >> zero in on the patient records that were also tied. how many records do you have to falsify to be fired as an employee? >> i would hope you don't have to falsify any. >> apparently that wasn't enough. >> one would be unacceptable. >> i can't comment on the specifics of the case. >> but you said it's one end you verified to put up 41 times and they are still working serving veterans when they falsified the data and your response is they
started to keep their job. >> i would be happy to arrange a time to share that with you. >> i would be happy to hear that. but what i think the public needs to know is are you really serious about that? with the 130 complaints still continuing to be investigated. >> the va has come and briefed our staff and said that the va believes they have up to one year to be able to apply the bonus back. is it your testimony that even though the fraud was committed that a bonus is still something that individuals should receive based on the information that was known at the time? >> you are getting out of my swim lane. i don't know the technical answer to the question. but i am happy to go back and
get that for you. >> it's called fraud and it is it legal. -- illegal. >> i want to continue the line of questioning about montgomery and highlight some of what was included in her testimony that in 2012 a whistleblower that was the insurgent was first alerted to the misconduct by an anesthesiologist during the veterans alternative so that is the danger to the threat and potentially a bad outcome for the better in. we don't have the right information for the anesthesiologist in this case. a whistleblower reports are to the alabama va management in 2012 to put him at work or on disk e. valuation and during
that evaluation, he cuts and pastes information onto the veteran's medical records. then the review determines that they engage as others have said in the 1241 separate patient records. so a couple things. you keep saying you can't comment on this but it defies common sense and what all of us would expect from anyone that you would say this person will be fired. i don't know why ms. lerner can tell us all these details and this is now public record and you can't tell us -- you can't tell the people in alabama more importantly the veterans what's happening. and also, if we are talking about creating a culture of accountability, what does it say
to the surgeon who is a whistleblower -- what does it say to the anesthesiologist at this pulmonologist is still working on this and you have the courage to take the risk to stand up and alert your superiors to malpractice or malfeasance in the va. the signal that you send to everybody tonight is don't take that risk. we aren't going to do anything. the sun couldn't be more glaring than that documented by ms. lerner. is there anything that you can say? what will it cost you were the va or the federal government to go out on a limb and say he or she shouldn't be working for us. >> as i said earlier there are reasons i feel i cannot come into details here. there are still active
investigations going on to a lot of these issues by the oig. there are -- if i put enough details out there somebody can make connections. these are complicated issues. >> i don't know how it's complicated. >> let me ask this complicated question. in the testimony related in the case, you say that they requested and have not yet received information to determine if the 1241 instances of copy and paste resulted in the adverse patient outcomes. when did they request that? >> i don't know the exact date >> more than a week or a month? >> yes i'm quite sure. i still don't understand why you can't answer the questions about why this pulmonologist is still working but certainly you can
answer the question about responding to the request to understand how this has affected the patient outcomes i don't know where the response is that i can find out why the response hasn't been received. i can say to you that i think that it is our intention. i am committed in the job i'm now acted to try to address these issues. >> i'm not convinced that you're going to do it and i don't know you so you can't take this personally but it's been reflected in the testimony from almost every representative as i've been here which hasn't been a long time but long enough to know that we have a major problem with accountability and performance and i'm not convinced we are going to be able to turn around. everything would wind up
beautifully by the previous panel about the kind of problems and for how long it existed and what is needed to change this and then we hear from the va the non- answer that sends the message to us and every employee that you don't take this seriously. you can see that you are appalled and outraged and disappointed and that's been said before but what we need now is this is what we have done. this is what we are currently doing. this is what we will do and i haven't heard that tonight. quickly mr. chairman previous hand when we alerted to him to these outrageous problems with 36% of the veterans not being able to obtain one, huge growth discrepancies between what we are reporting and what we finally learned the audit was the truth. the response was let's not get into the assigning blame.
in other words let's not hold anybody accountable, what's there not be consequences. let's not change anything we are doing. >> i have to register the deep profound disappointment you've heard from so many others today. and i would ask the acting secretary to change the culture now and change the responses we are getting. it appears the same tactics are occurring and numerous medical centers across the country this would seem to indicate that there is a universal policy in place against whistleblowers that is well known among all of the supervisors throughout the country. do you have an explanation to
this? >> i don't belief there is any policy collusion to suppress the whistleblowers among the top leadership in the organization. in fact secretary gibson says we intend to do something about that. the message has gone out to everybody in that june 13 letter that there are consequences for retaliation. we have to go through a process when those complaints come in i think of investigating them so that we treat people fairly and we know both sides of the story and we have the facts before we take action. but i think the organization, the secretary speaks for the organization and i think that commitment is there and i have to take him at his word. it's clear to me tonight from all the comments here and all of you we have an enormous problem and we are a huge organization.
it isn't going to change overnight. we are all inpatient but it's going to take some time to fix some of these fundamental issues. it's good to start with leadership and we have a new acting undersecretary. and i hope the new principal deputy undersecretary. and i hope that the organization that's the kind of change we need in the organization to get back on the right track. >> you've been a part of the leadership for quite some time. how long have you been a part of the leadership -- >> over 20 years. >> and you testified tonight that this is the first time that you have become aware of the problems that were brought forward by the whistleblowers tonight isn't it correct that was your previous testimony? >> i learned about these whistleblowers by reading them in the paper, yes. >> 720 years -- here's the
problem you've been in the leadership with the va and you've been in the leadership for 20 years and you're just totally oblivious to what is occurring around you and all of the problems and it wasn't until it's become a national story that's now you're suddenly aware and i think that's -- that speaks to the culture of the problem that if not for the whistleblowers who have come forward, we would never be aware of the magnitude of the problems that exist today because the leadership or the lack thereof never brought these issues forward. are you a header in your self? >> no i'm not. >> i've got to tell you if the military action for this is i don't think that you can read starving troops to the town hall i have to tell you that if the
new secretary confirmed by the senate and i believe he will pass folks like you and senior leadership he is sending a message to us that he's not serious about change. i yield back. >> you are recognized for five minutes. >> thank you mr. chairman. i would like to go back to what i mentioned earlier and that is my concern about the new las vegas hospital. they came and spoke with me at my invitation and talk about the problems there and the lack of leadership and manipulation of schedules and those that work for the va directly versus those that are contracted from the private sector who get special treatment and i just don't want them to get in trouble because of my initiating the invitation to learn more about what was going on earlier, so i would ask you if you can't provide it here
you can let me know if they are among those cases that have been filed if anything has come out of las vegas. >> i can't speak to any of the specifics but we haven't received any complaints from the las vegas facility. >> i'm glad to hear that. i would also like to ask you -- we heard mr. davis was saying different things are comfortable for different people. some go to the press. some are lawyers and some go to a veterans advocacy groups and some go to their members of congress. well, i think a lot of them come to me. this is our biggest constituent kind of service that we do in the district with veterans. if someone that works at the hospital, some doctor or somebody that works out there feels like they want to be a whistleblower and they come to me tell me what practical advice i give them.
here's what you should do. here's how you are protected and who you call into the form you fill out. what advice do i give them? >> this is the number one priority in our office right now. we are throwing everything we have at this. we've dedicated over half of our program staff to dealing with these whistleblower retaliation complaints into so that would be the first step and went we get in contact with them we can find out what their issues are in it for some reason we are unable to help we can point them in the wrong direction. >> and they would come to you here in washington and not in nevada. >> thank you mr. chairman. i yield back. >> thank you mr. chairman and i will be brief. i would like to note for the record the conversation is important.
it was presented at my local hospital something that was the end all and be all for accountability to step up and make a comment and yet we have for whistleblowers with the courage to come forward but haven't heard of the program and it's not a question other than just i recognize the importance of the program and it hasn't penetrated to the level that at least was presented to me during my meeting. it's an important question and i'm going to give you the rest of the time to answer. you've apologized tonight and you've spoken of accountability and you've passed your cell phone number and you impressed me by publishing and referring to the crisis of integrity. i noticed as a member of congresnew member ofcongress wee in the tone under the acting
secretary and i will say that for the witness who two weeks ago said the system was dishonest which i think was a different responsibility but by and large i think we have seen a change in the tone. you've been with the va for more than 20 years. here is the softball. have you noticed a change in the past six or eight weeks as a result? how we got here is a question do you believe that we are entering the leadership regardless of who steps into the position and the time is yours on that one. >> i think there are many places around the system that are phenomenal have the care that exists in the private sector.
we have places that have outstanding access. i agree with you absolutely we have a crisis of integrity. how we restore that is going to be a slow and painful process. the clinical issues i think our biggest issue is that we do not have a uniform systematic approach to these things and so we have pockets of excellence and places that are not performing so well. the amount of activity in the weeks that i've been in this job and have had the opportunity to be aware of these problems has been outstanding. the secretaries out there, we are sending teams into the facilities and i think we have sent the teams now three or four times to help them and ask them what do they need a. i practiced as a clinician in the intensive care unit.
i practiced there. i knew what was going on in my facility. i've walked the halls. my values i wore on my short sleeves and people knew where i stood on issues around integrity, around bringing problems forward, around people coming together. there was no doubt in my mind about what it took to make sure the patient wa patient was the d be-all of what we took care of and that's why we were all there and if you were not there for that purpose and you better takr take a hike. that was clear to everybody. i spent many nights sitting in bed wondering what i could have done differently. but i personally could have done differently. when i have raised my hand. could i have pushed back harder. could i not have known that i would have known many sleepless
nights. not just at the undersecretary level tha that although we don'o the service chief. i have a lot of people in this organization that wil that was o the plate and i'm confident that we are going to bring people into the organization today to help solve those problems. the long-term plan of intended actions in the target date that would determine what actions take against the va managers with reprisals. measuring the effectiveness of
such actions as a periodic survey of employees and designing and implementing a system for tracking overall whistleblower complaints. in addition, we recommend the va analyzed the data periodically to ascertain whether additional steps are needed to ensure that of reprisal is not tolerated. we have five legislative days to extend remarks and include any extraneous materials without objection. i want to thank both panels of witnesses and the audience for joining us at tonight's critical hearing on the importance of whistleblowers and effective oversight investigations and one last question. is ms. helmand still on the
thinking until you and eddie showed up. it will be a close call now. see if we can't get it through. try to get it done. senator markey, i don't know what kind of time frame you're on. if you can give me something, i want to be respectful of your time. i'm going to give a statement for probably the next 45 minutes. probably the next five or six minutes and then introduce our witnesses, our nominees and at some point in time if you'd like, you can go first in introducing ms. kennedy or you can go later. what works for you? >> whatever is most convenient for you, mr. chairman. honestly. i'm here at your discretion. >> all right. that was very senatorial. all righty. let me give my statement and senator coburn is flying in from oklahoma. i think his plane will be in around, a little before 3:30 and he'll join us as quickly as he
can. but we're meeting today to consider four nominations to fill vacancies in the postal service's board of governors. important positions. we're considering these nominations at what is a very challenging time for the postal service. i would like to quote albert einstein who used to say inadversity lies opportunity. while there's adversity for the post office, there's great opportunity as well. and we'll talk a little bit about that when we get under way. the postal service operates at the center of a massive printing, delivery and logistics industry that employs millions of people. i've heard as many as 7 mill io or 8 million. even greetsing cards and wedding invitations are lost to many other forms of communication, i think the future is bright in many ways. advertising mail is still a popular and effective opt kwn for mailers. i'm reminded every day when we check our mail. e-commerce and package delivery are booming make 7 postal
service a vital partner for businesses both large and small. even the postal service's traditional competitors rely on it to carry out the last five miles or the last ten miles or even further to rural communities around our country. for many -- for years, many people have questioned whether the postal service has a future. these developments i've mentioned tell me at least that it does. and potentially a very bright one. but all of this is at risk if those of us here in congress continue to prove incapable of making the kind of tough decisions necessary to make the postal service competitive in the years to come. as important as the board of governors is, congress holds the keys to the postal service's future. the men and women on the board, including those before us today, should they be confirmed have little chance of success unless we do our jobs and pass comprehensive postal reform legislation. the postal service today carries barely enough cash to make
payroll. its line of credit with the treasury is maxed out at $15 billion. and has been incapable for years of making capital investments. including the technological investments necessary to compete with a u.p.s. or a fedex. things are so bad, that the postal service has letter carriers an the streets today driving inefficient, sometimes unsafe vehicles that guzzle gas, that break down and are older than a lot of members of my staff. that's just -- that is just not acceptable. some observers point to the boom and package delivery in thed fact the postal service occasionally makes a small operating profit and say things are okay. they argue that tough decisions aren't necessary and that we should be happy with the postal service that just limps along. for me, that's not acceptable. for dr. coburn, far be it for me to speak from him, that's not acceptable to him either. postal service is not acceptable to a majority of this committee
either. postal service is just one major international crisis, one recession or one big spike in gas prices away from failure. on top of that, with a few tools at their disposal and efforts to keep the postal service afloat, postal management announced just the other week that it would be closing an additional 82 mail processing plants across our country and further slowing down mail delivery in every community in the country. this comes after the loss of about half the postal service's mail processing capacity in recent years. at a time when the future holds so much promise for the postal service, this is a potentially devastating blow that will further sap the confidence, the public has in the postal service and its ability to remain relevant. if we a postal service that our constituents can rely on, that families can rely on, that businesses can rely on, and one that has a chance of continued progress we see in package delivery, we need to pass a
bill. not just any bill. a bill that looks like the one that's been reported out by a strong margin in this committee and sent to the full senate. i think our committee has done its work on this issue to date. in february, we sent a bill to the full committee that would save the postal service billions of dollars in pension and health care costs, including by allowing it to take full advantage of the investment in its employers have made over the years in medicare. postal service pays more money into medicare than i think any employer in the country. they don't get full value for that. and it's not fair. there's a serious equity problem there. our legislation would also give -- provide the postal service with immediate cash infusion through refund of its overpayment in the federal employee retiree system and free it to compete in new lines of business. more important lie, our legislation would preserve existing service standards, including the 82 plants and saturday mail delivery for the time being to allow the reforms to bear fruit, to raise revenues and hopefully provide a
profitable future for the postal service. i think our legislation is solid, comprehensive and realistic response to a very real crisis. in my opinion it's the only one introduced in the house or senate in recent years that would actually work. and dr. coburn and i, i think a majority of our committee, are interested, are committed to fixing this problem. this is one that can be fixed. and we're determined to do that. working with all the key stakeholders in -- who care about this issue. the postal service indicated there would give the legislation would give it the cash needed to pay down debt. account for its pension and health care obligations, sflft capital and still have as much as $7 billion in -- or more in cash on hand after ten years. i think that's a huge step forward. huge step forward. especially when you are thinking about a fleet of vehicles across the country. a couple hundred thousand vehicles in the fleet. the average age is over 20 years.
they are energy inefficient. not configured to be able to carry a lot of packages and parcels. the mail processing equipment, a lot of mail processing centers, it's not well suited for packages and parcels. we need to help recapitalize the postal service. and the legislation we've reported out of here would do that with $30 billion available in capital investments for the next ten years or so. i look forward to -- we look ford talk with our nominees today about what they think needs to be done to address the challenges facing the postal service and the skills they think they bring to the table. if confirmed, this group of nomes would nearly double the size of the current board. there's an opportunity with this new injection of title combined with the enact of a postal reform bill to make significant process in the very near future. and that having been said, what i think i'll do is just introduce mr. miller, dr. miller. and go first with him and steven crawford and then when i come to ms. kennedy, we'll ask you to
introduce her and make a couple of ad libs and audibles on top of what you already say. let me start off by just saying thanks very much for your willingness to take on this important responsibility. james miller is currently a senior adviser at the international firm of -- hush, blackwell. he's a member of the board of americans for prosperity and a senior fellow at the hoover institution at the stanford university. earlier in his career he was the director of omb and the first administrator of omb's office of information and regulatory affairs. for you know purgatory. straight to heaven. mr. miller has eight years of prior experience in the field he's nominated for today. he's itching to get back into the game. i don't know that. he's willing to get back into the game.
steven crawford, nice to see you. how are you? he's a research professor at george washington institute of public policy at gwu and previously served as vice president at the corporation for enterprise development. from 2008 to 2009 he stefshed as deputy director of the metropolitan policy program at the brookings institution. mr. crawford is a u.s. army veteran. received a bronze star for his service as an infantry officer in vietnam. somebody who has been a couple years over there myself, a naval flight officer, welcome home. thanks for that service and for your willingness to serve us in this capacity. david michael bennett usenior vice president of information management and chief information officer of bae systems. a position he's held since 2010. previously practiced law in various positions with northrup grumman and the u.s. department of commerce. 2012 he received minority business leader award from the washington business journal. great to see you.
thanks for your willingness to be with us today and assume this responsibility if confirmed. and to introduce our fourth nominee, victoria reggie kennedy, is my friend, my colleague, senator ed markey. >> thank you, mr. chairman. and thank you for allowing me to introduce my great friend, the incredibly talented victoria reggie kennedy. who has been nominated by president obama to serve on the board of governors of the united states postal service. vickie kennedy is a public service powerhouse for our country. a brilliant, gifted attorney, adviser and public servant. vickie will be an outstanding member of the postal service board of governors. she will bring intellectual rigor, innovative and ideas, leadership and her endless energy to this post. indeed, vickie's career is singularly suited to the postal service board at a time when it
needs public servants as dedicated and creative as vickie. from our first postmaster benjamin franck lynn to today, the postal service has been an integral part of our democracy. it pushes the frontiers of communication, rain or shine through war time and peace. vickie will bring that same steadfast service to the board and a wealth of expertise. when she was a partner at a major law firm, she helped banks reorganize and recapitalize. at a time when efficiency n funding are both issues for the usps, her experience will be invaluable. today, vickie helps organizations develop strategies to resolve complex issues and today's postal service has no durth of similar business matters to resolve. like her husband, our beloved colleague the legendary senator ted kennedy, vickie believes in the importance of helping
government work at its best to serve the american people. and that's why she is the president of the board and co-founder of the edward m. condition kennedy institute. under vickie's leadership, this innovative hub of industry will open next year adjacent to the john f. kennedy library. the institute will provide visitors a state of the art high-tech interactive opportunity to learn lessons from america's past and develop new ideas that can help shape a better future. she can do the same thing for the united states postal service. she is also a trustee of the kennedy center for the performing arts, a member of the board of overseers of the museum of fine arts in boston and a member of the board of directors of the national leadership roundtable on church management. she is a soumah cum laude graduate of tulane university school of law. a five beta kappa graduate of
tulane and she's received honorary degrees from boston university, northeastern, university of massachusetts, suffolk university, on and on, and that is an impressive list of accolades and a test toomt her intelligence. her character and her accomplishments. the postal service needs vickie kennedy. the board needs talented proven leaders who can assess the problems facing the usps and help the postal service resolve those challenges. that's exactly who vickie kennedy is. we all greatly admire vickie and have complete confidence in her. vickie kennedy will shine on the board of governors and our country will be the better for her service. i thank you, mr. chairman. >> thank you, senator markey. all i can say is after listening to that introduction to our nominees, whenever i'm nominated by some president some day, i want ed markey to introduce me,
too. i think even i could get confirmed with an introduction like that. senator markey, thank you so much. it's great to see you. and over to your left shoulder, my old friend crise. tha chris. thanks for joining us. i always feel like i should ask you to come and sit here, senator dodd. i'm told it's against the rules. that's where my shattheart is. senator markey if you need to leave, we should be done here by 9:00 tonight, but if you need to slip out before then, feel free to do that. before we proceed with your statements, we have this thing about committee rules. committee rules require that all witnesses at nomination hearings like this one give their testimony under oath. i'm going to ask if you would all please stand and raise your right hand. here we go. do you swear the testimony you will give before this
subcommittee, this committee will be the truth, the whole truths and nothing but the truth, so help you god? >> i do. >> please be seated. is it dr. miller? >> yes it is. >> dr. miller. my staff keeps wanting to call you mr. miller. we're going to call you doctor. but you are welcome to proceed with your statement. and if you want to introduce any family or friends here with you today, i would -- i invite you to do that. please feel free. we're delighted you are here and willing to serve once more in this capacity. thank you.
make sure your mike is on. >> i should point out that mr. jefferson once said there's no higher honor you can pay a man but to call him mister and mean it. so, mr. chairman, thank you for inviting us here today. i have a prepared statement. i asked to be included in the record. >> without objection. >> one of my other favorite jefferson quotes is, if the people know the truth, they won't make a mistake. isn't that good? that's good for these days. if people know the truth they won't make a mistake. >> thank you for holding this hearing. thank you for your interest in the postal service. as you point out, the stress of the postal service brings forth opportunities. and the things you can do with this committee and the senate can do and the house can do can make the difference between restoring the postal service to a solid footing and seeing it become a very expensive ward of
the state. and i commend you for the progress on s-1486. it's a very large step forward toward the goal of restoring the postal service. and if you confirm me, i will work to obtain that end. i hope the house will pass a bill and that a conference bill will become law. i want to thank president obama for nominating me. thank majority leader -- minority leader mcconnell for recommending me. >> you are getting ahead of yourself just a little bit. >> and i would like to acknowledge the three distinguished individuals with whom i share this table, whom i've gotten to know in the last several months and admire. they will make splendid
additions to the board. as budget director for president reagan, i think i knew the hill pretty well, and i think almost -- or most members of congress knew me or knew of me. but that was over a quarter of a century ago. so let me tell you a little bit about myself. and i have pursued, since graduate school, i've pursued really four different careers. sometimes at the same time. the first was academic. i was trained as a college professor. i taught at two major universities. taught full time. then part time at several other universities. i've been associated with major think tanks, as you noted, the hoover institution but also brookings and the american enterprise institute. i was on the boards of the air force academy and also the board
of george mason university. along the way, i have written nine books and over 100 articles in professional journals. the second career was in the federal government. at the department of transportation, i contributed to airline regulatory reform. at the council of economic advisers, i wrote the chapter on regulation in the 1974 economic report of the president. at the council on wage and price stability, i made transparent the cost and benefits of regulation. back to your quote, mr. chairman. at the beginning of the reagan administration, i co-authored executive order 12291 which established the regulatory review program. i went turnover the federal trade commission, chaired the federal trade commission for four years and we put that agency back on the traditional path of law enforcement. i came back to chair -- to be the director of omb and member of the president's cabinet.
helped negotiate graham ruddman hollings which brought the deficit down significantly. and did other things there as well. as you know, as you mentioned, i did serve a term at the board of governors, the u.s. postal service, where during the three years of my chairmanship, my colleagues and i -- my colleagues and i produced the forever stamp which i think has been a great success. i had a career in effected politics that was not particularly successful. i ran for the senate, u.s. senate in virginia in 1994 and 1996. and i helped my wife's campaign for the house of representatives for the 8th district of virginia in 1998 and the year 2000. i have had a career in business. i have been on several boards of directors of companies. i have had a consulting practice of my own. i headed a consulting firm for
a -- consulting group for a major law firm. i'm on the boards of three major neutral funds. i'm on the board of clean energy fuels, the largest provider of natural gas for vehicles in america. i am in the audit -- chairman of the audit committee and designated financial expert for those firms. i am, as you mentioned, here with hush blackwell and also chairman of the executive committee of the u.s. tax and investment center. today i ask you to confirm me for this port of post. my wife of more than 50 years, demarus miller, asked me, why are you doing this? you've been there, done that. the answer is, it's unfinished business. when i was at the board of governors, i worked very hard trying to obtain the kinds of reform that you have outlined that are needed. but without success.
and i would like to go back and working with you, working with other members of congress, working with management, working with the stakeholders of this great institution, make those kinds of changes happen and restore the financial integrity and the viability of this important organization. thank you, mr. chairman. >> dr. miller, mr. miller, i sat here listening to you talk about your -- what you've been involved in in your life. what a life. what a life. and still going strong. >> thank you, sir. >> thanks for your willingness to take this on and hups fix this problem. steven crawford, mr. crawford, you were in the army, right? >> i was. >> go ahead and turn on your mike if you will. >> and tell us about your service, just very briefly, please. >> i served for 3 and a quarter years, the last of which i served in vietnam as an infantry officer. as an adviser to an arvin infantry battalion in the delta.
lost a good friend in the tet offensive. so i think we all have mixed feelings about difficult years there. but certainly a learning experience. >> i have been back a number of times since then. led a congressional delegation back there in '91 to find out what happened to a lot of our men. mostly men. some women. senator mccain, senator kerry were involved in that effort in the senate. and i feel very good about that. and have been back a couple eof times since. every time i talk to those who served, i ask them if they've been back. most haven't. >> i applaud that. my wife and i adopted a child from vietnam who is now 14. and she's off at summer camp or she would be here today cheering for uand i could introduce her to you. but, yes, we went back to get her and then we went back to visit with her family when she was about 9. >> that's great. >> it's been a good experience.
>> thank you for that service. and if there's anyone in the audience you'd like to introduce, feel free and then proceed. thanks so much. >> so good afternoon, chairman carper and thank you for the opportunity to testify today. and to second what jim, a hard act to follow, but what jim -- >> i wouldn't want to have to follow that statement. i would say skip over me. >> yeah, right. thank you for your leadership on postal reform legislation. it's been a long, hard struggle, but we are -- i am excited about as 1486 and commend the committee for advancing it this far. i'm truly honored to be nominated by president obama to serve on the board of governors of the united states postal service. and i am pleased to share with the committee how, if confirmed, i would approach the responsibilities involved. as you know, the postal service faces enormous challenges. it is in these dire straits i
believe for three main reasons. one, the growth of electronic communications and the resulting diversion of first-class mail. two, the recent recession and lingering impact. and three, and perhaps most importantly, the unique regulatory environment in which it operates. while there seems to be broad agreement anesthes causes of the postal service's problems and deficits there is considerably disagreement about how to fix them. some emphasize cutting costs by consolidating facilities, reducing delivery frequency and changing service standards. some emphasize increasing revenues by adding new products and services. some call for adjusting the price cap and many call for changing the current requirements for prefunding the health benefits of future retirees. i believe that the challenges are so severe that the postal
service should explore all the above and i applaud the committee for crafting and passing a bill that does so. i believe that my prior experience has prepared me to serve well on the board and to make a distinctive and significant contributions. to be sure, i have never managed an organization of more than 50,000 employees. however, i have advised and worked closely with the top leaders of such organizations, especially state governors, but also corporate ceos and university presidents. i have also served on various boards and commissions and at present, i am a member of the board of directors of the american national standards institute. whose nearly 1,000 members include trade associations, professional societies, unions, consumer organizations, universities, government
agencies and such companies as apple, ibm, caterpillar, exxonmobil, netflix, verizon, et cetera. firms and organizations that represent more than 3.5 million professionals. finally, as a member of the obama/biden transition team and later as a consultant to the postal service, i had exceptional opportunities to get acquainted with the problems and potential solutions facing the postal service. the mailing industry and such related agencies as the prc and the inspector general's office. in closing, i would like to thank the committee for its efforts to -- over many years to provide the policy framework needed to enable the postal service to accomplish its vital mission. it is clearly a difficult task in today's rapidly and changing environment. but i am optimistic that good solutions are within reach. i look forward, if confirmed, to working with you and all the
postal services' stakeholders on crafting and implementing such solutions. i appreciate the opportunity to testify today and welcome your questions. >> thank you, very, very much. that's a very strong resume as well. and different from that of dr. miller, but you all have different backgrounds. i think all of you do. bringing different strengths to the board. thank you for all of that. david, is it michael? >> david michael bennett. and mr. bennett -- great to see you. >> we have a guy named michael bennett here. serves in the u.s. senate from colorado. i don't think he spells it with two ts. his family could only afford one. but -- >> well, i brought the t in my e-mail address. >> it's good to know. >> nice to see you. nice for your willingness to serve. thank you. >> i think my son michael
bennett is here. where? >> he's back there. >> he looks like he might be pretty tall. is he? >> he's pretty fast. he's a track guy. >> really? what are his events? >> he's a 400 hurdler. tough race. >> what level. is he college? >> he's out of college. he's a personal trainer now. and coaching track. just got back from his certification of coaching. and my mom jonny evans is here. >> where? >> right here. >> hi. how are you? nice to see you, ma'am. >> my pleasure. >> and my partner pam jackson is here. >> is it pam? >> yes. >> hi, pam. >> which one is your mom? >> good joke today. >> i'll hear about that when i get home. >> you are both -- thank you for
coming in. thank you for being here to have your dad's back. it's great. >> well, i will say good afternoon, chairman carper and also one of your staff said the other day at the end their session with me said, well, we have four very different nominees. and that's true. and all four of us have had a chance to get to know one another. i am the corporate guy. i'm the guy who spent 95% of his career in corporate america, even in the years i was practicing law, i was inside of a corporation. but let me say good afternoon to you chairman carper and a good afternoon also to dr. coburn when he arrives. so i have a prepared statement i'd like to go through if i may. >> each of your entire statement will be made part of the record. feel free to summarize as you wish. >> it is my pleasure to be here before you this afternoon. i want to thank president obama for his decision to nominate me to become a member of the united states postal service board of
governors. i believe that the board of governors is a critical role in our postal service and ultimately to the american people. so with integrity, pride and diligence, will i serve on the board. i'm committed to exercising every aspect of my legal, business and technology experience to help the united states postal service continue to evolve with america. a long time resident of our nation's capital and native north carolinian, proud -- >> native north carolinian? >> yes. >> where? >> charlotte. >> ever hear of boone? >> yes. >> my wife is from there. >> okay. so i'm a north carolinian, prior graduate of duke university and the george washington university law school, which my colleague is a professor. and most importantly, i'm someone who uses mail services an a very regular basis. i still pay all my bills by mail
n send cards out and letters. i believe in the mission of the post service. my previous experience of 100,000 multinational company of course specifically gives me the skills necessary to drive change in our ever-changing world. i'm honored to have an opportunity to serve my fellow citizens through one of the most important institutions in america. some of the changes in our culture have caused many to question the intrinsic value of the postal service. i believe that our postal service is an essential part of the fabric of our nation. a vital part of our economy and material force in our personal lives. it is sometimes a sole option for businesses in remote areas to receive products that are essential to maintain manufacturing machinery or state a product for resale. postal services have personal impact for many who are unable to travel to a pharmacy, for instance. for various reasons. and essential medications are delivered to their doorsteps by united states postal service
carrier. it is the only institution in this country that can touch every single american every day. that's an incredible national asset. and that turns me on for some reason. i find that incredible that you have an institution that can touch 300 million people every single day. there is probably no other country on the planet that has an institution with the capabilities of our united states postal service. unfortunately some take this 200-plus-year-old national treasure for granted. i recognize this treasure and want to be a part of creating even more value in it for the american people. i'm honored, yes, but i'm also excited about what is possible for the postal service. i am eager to explore all of the various ways this institution can serve the american people through a vast network of facilities, distribution networks and most importantly the employees. i think about how many companies have transformed themselves over the past decade to drive
eofficieffi efficiency in and solve challenging business problems, i get excited thinking about the possibleities for transformination the united states postal service. transformation is driven by innovation. i look forward to working with the board -- with other board members and challenging management on various innovative ideas to drive value throughout the enterprise. throughout my career i have led transformational business programs which have led to cost savings, streamlined business processes and ultmaltly greater value to customers, employees and shareholders alike. i look forward to sharing my experience as a result of leading large technology centered innovation initiatives to create greater value for america. and finally, we should continue to look for ways to leverage the knowledge and skills of our incredible workforce. our people are our largest and most valuable asset. when i was growing up, my stepfather was a postal service mail carrier in charlotte, north carolina. there wasn't anything he didn't
know about locations and getting around charlotte. we can leverage these human cape ibls to continue transforming the post office to be the business current and future america needs and wants. i want to get started. thank you for this opportunity. i look forward to your questions. >> i like that. i want to get started. that's good. we have a fellow who is a u.s. secretary of department of transportation who is a former mayor of charlotte. anthony gay fox. fox with two xs. >> i do. in fact, he used to go to the doctor that my mother was the receptionist for when he was a little kid. >> no kidding. >> so he knows my mother well. >> so your mom was a director of first impressions at that office? >> absolutely. >> that's great. so thanks for your testimony. ms. kennedy, great to see you. thank you for your willingness to serve and please proceed. your entire statement will be made part of the record. >> i'm pleased to join james mill esteven crawford and
michael bennet to appear before you this afternoon as president obama's nominees to the board of governors of the united states postal service. and i am honored and humbled by the confidence and trust that president obama has placed in me. i look forward to answering your questions and hearing firsthand your thoughts and concerns about the postal service. and if confirmed, i look forward to working with the committee and with other members of congress to strengthen the postal service in a long-term and comprehensive way. i would also like to thank my family for their support. and some of them are here today. my mother doris reggie, my son -- >> your mom is here? >> my mom is here. doris reggie. my son kern rackland. my son patrick kennedy and his wife amy and their two little ones were also here but they've stepped out for a few minutes. they are very tiny. >> do they realize they are missing your testimony? >> yes, i think that food has won out. and my daughter caroline rackland is working in the
philippines and ted kennedy jr. has a campaign in connecticut but they are here in spirit. >> i call those excused absences. >> i want to thank in a very personal way, my senator ed markey for such a gracious and warm introduction and my friend senator chris dodd for being here. it really means the world to me that they are here. and i have other dear friends in the audience. >> let the record show, i can barely see chris dodd's lips moving when senator markey was speaking. >> so the postal service is a vital public asset. as my friend michael bennett said it has near daily contact with every american household and business. there are more than 31,000 post offices, stations and branches across this country, many of which serve as a focal point of local identity. and a center of community interaction. with 500,000 hard-working and dedicated employees earning a solid middle class income, the postal service is an essential
part of the fabric of american life. because of the governing principle of universal severance, no matter where you live in the united states, you are entitled to the same postal service as every other american. and without a doubt, as our founding fathers understood when they included the postal clause in article 1 of the constitution, universal service unifies us as a nation. as we meet today, however, and as we've been discussing, the postal service is facing a serious financial crisis. if confirmed, i would work with my fellow board members to look at comprehensive ways to address this crisis. i would likewise work with them to listen to the concerns and ideas of key constituency groups to craft long-term solutions to long-term problems. to position the postal service to be nimble and ready to take advantage of opportunities for growth in its core business, letter and package delivery, and not to undermine its essential
strengths. i think it also important to look at the possibility of expanding and into related business lines while always maintaining timely, universal service and protecting and nurturing the core business of the postal service. the mailing industry in this country generates $800 billion in economic activity and the postal service is a key part of the distribution network for that activity. its comtet pors even rely on its exceptional distribution infrastructure for the key last mile delivery to connect the smallest towns and rural areas to e-commerce. a recent inspector general report has concluded that preserving that infrastructure could allow the postal service to reap as much as $500 million of additional revenue in the near future because of private sector manufacturing innovations such as 3d printing that will need the sophisticated full-service delivery infrastructure that the postal service has in place. i believe that the postal
service can and should be at the leading edge of innovation and envisioning the new ways that americans communicate with each other and with the rest of the world. i also believe it should have the regulatory flexibility to take advantage of opportunity and innovation when it is in the public interest. if confirmed, i believe that my skills and experience can make a positive contribution. i would keep always paramount if confirmed a focus on the public interest, the board of governors should set policy to ensure the long-term financial well-being of the postal service and it should assure that senior management follows and executes that policy. i believe in a full airing of the issues and a robust dialogue with all interested parties. as we seek in the public interest the best way to return the postal service to a safe and secure financial footing. i look ford discussing these and other issues with this committee today and, if confirmed, with the committee and congress in the future.
in closing, i again want to thank you for considering my nomination, and i look forward to answering your questions. thank you. >> you know, you used exactly five minutes. that doesn't happen every day. >> thank you. >> it was good. >> thank you. thank you all. now i am supposed to start, i usually forget this, but i'm supposed to start my questioning with three standard questions that we ask of all nominees. and i am going to ask if you would just please answer after each question. is there anything that you are aware of in your background that might present a conflict of interest with the duties of the office to which you've been nominated. dr. miller? >> nothing other than what i indicated in response to the questions to this committee. >> thank you, mr. crawford. >> nothing. >> mr. bennett? >> no, mr. chairman. >> mr. kennedy? >> no, mr. chairman, i'm not aware of anything. >> number two, do you know of anything personal or otherwise that would prevent you from fully and honorably discharging
your responsibilities of the office to which you've been nominated? dr. miller? >> no, sir. >> no, sir, mr. chairman. >> no, mr. chairman. >> ms. kennedy? >> no, mr. chairman. >> and do you agree with our reservation to respond to any reasonable summons to appear and testify before any duly constituted committee if you are confirmed? dr. miller? >> absolutely. >> i do. >> yes, i will. >> yes, i will. >> great. thank you. thanks for your testimony. interesting testimony. very well prepared. well presented. i just want to start off by saying, mr. bennett said about he still sends, pays his bills by mail. he still sends out cards and letters. so do i. and you are probably better at technology than i am. but i'm not bad and i have two sons, 24 and 25 who coach me so i can get even better over time. but i was reminded of the
service, the u.s. postal service on saturday. i was home for a bit. and the post -- the letter carrier delivers our mail. delivered our mail just a little before 5:00 p.m. sometimes it's later if he has a whole lot to deliver and sometimes not quite that late. but it's 95 degrees outside and he was delivering mail, cheerful, going about his work. and he's there when it's 95 degrees. he's there when it's 5 degrees. he's there when the sun is shining as it was on saturday and he's there when it's raining, sleeting, snowing and we're grateful for his service and those of hundreds of thousands of postal employees across the country who have served us for years, served us today and will serve us for a whole lot longer time to come. we had sitting right here, i think, ms. kennedy, where you were sitting, a couple years ooh
was a fellow from -- was it wisconsin, john? a very successful business person from wisconsin. he runs a company called quad graphics. and he sat before us that day and he talked about his business which was -- is it a paper business? or printing business? paper and printing business, if you will. and he talked about how they ou when a lot of businesses in that industry had closed, had fallen and eventually been ended and how he talked about his business sort of just the opposite and instead of failing, faltering, going out of business, they've gotten stronger over time. and what has happened is they've taken a legacy business, paper, printing business, and figured out how to be successful in the digital age. that's what they've done. and what i've been hoping for
with respect to the postal service is the ability to do something like that. find that intersect between maybe one of the longest lived organizations, living organizations in our country, that's our postal service, and how to make an operation like that not just relevant in the digital age but significant. it's not that we'll make them successful but we'll enable them to be successful. i think we can do that. we've had testimony here before when folks have come in from different stakeholders, people like you, and they said to us in terms of the things we need to do, one of the things we need to do is to focus on the main thing. an old methodist minister in a town called seaford, passed away
a couple of years ago. when i was governor, before that congressman, now later in the senate, he's always given me great advice when i was down in sussex county. let me be a lay speaker in his church. it was a special treat. he used to say this. he used to say the main thing is to keep the main thing the main thing. that's what he would say. the main thing is to keep the main thing the main thing. for some of the folks that have testified before us, they've said in terms of -- i don't know if it's a main thing, but a big thing for us to consider is health care costs of retirees. when we worked on legislation in 2006-2007 senator collins and i and others, one of the requirements, if you will, from the administration, president george w. bush was to not only recognize there's a large
liability that's owed by the postal service and the liability is for retired health care costs. some people think that's not liability, something we don't need to be mindful of. when i was elected state treasurer at the age of 29, just a pup, the state of delaware had the worst credit rating in the country. we were the best at over estimating revenues and underestimating spending. think about that. we were the best in the country in overestimating revenues and underestimating spending. we had no cash management system. we had no pension fund. and we had a lot of state banks about to go under. we were the lowest startup of new businesses of any state in the country. and in fact we used to sell revenue anticipation notes. revenue anticipation notes in order to meet payroll and pay pension checks. we were not a model of financial respectability. and nobody else wanted to run
for straight treasurer. we won. pete dupont was elected governor. he did a great job. mike cassill after him and i succeeded mike cassill. we started off with the worst credit rating in the country in 1977 and we ended up in my second term as governor with aaas across the board, aaas. i'll never forget that. the rating agencies told us what they had done and why. they said, you've got a big liability out there that you've not recognized, you've not addressed at all. we said, what is that? they said you have a lot of pensioners. i said, well, we have a strong pension fund. it's admired for how fully invested it is. they said, no, no, that's not it. they said, your problem is all the pension ners out there, they have enormous health care costs attached to it, each of them, and you've not recognized that and you've not set money aside for that.
they still gave us an aaa rating. we addressed that. we acknowledged it as a liability and we started to address that. the problem from our 2006-2007 legislation is we agreed with george w. bush in order to get the president to sign the bill we had to agree to i think a very aggressive schedule to pay down debt liability for retired health care costs. what we found out in the years since then is that the postal service pays more into medicare than any employer in the country. nobody else. my wife retired from dupont. hard to believe to look at it. she just turned 65 and when she turned 65 the dupont company said to her, martha, we love you but for now on you have to sign up for medicare, part a, part b, maybe part d and we'll provide wrap-around coverage for you. they expected that for all
employees -- retirees, rather. there are thousands of companies in this country who say that's what we expect. they'll do the wrap-around but they expect retirees to sign up for a, b, maybe part d. medicare, postal service competes with fedex, ups. postal service pays more money to medicare than anybody else. they don't get equal value and it's not fair. it's not fair. and as one of the chief provisions in our bill is we call it medicare integration. medicare integration. it's -- it enables the postal service to pay down this obligation in a more timely way. let me just ask, we'll start off with dr. miller. this probably sounds familiar to you. may or may not sound familiar to our other nominees. in terms of the main thing, if we don't do this, if we somehow don't do this, i think we're going to be very disappointed in
our inability to get anything done. dr. miller. >> mr. chairman, i -- actually i thought maybe mr. marky might say a few words on my behalf. i need that kind of help. mr. chairman, i am not surprised at your insightful analysis because i know you have a degree in economics from the ohio state -- >> i tell people i studied economics at ohio state. my professors would say not nearly enough. >> you're spot on in my judgment. >> thank you. mr. cart wright. >> yes, i wholeheartedly endorse the plan in s 1486 to have -- require postal retirees once they reach 65 and are eligible for medicare to make medicare their primary coverage. as you say, it's almost universal in the corporate world and my understanding is that 10% of postal retirees who are eligible don't take part a and
24% don't take part b and i haven't done the numbers to figure out sort of what the cost implications are but those are especially that second number, that's huge. >> all right. thank you. mr. bennett? >> senator, i agree. i think, one, you're right. the main thing needs to stay the main thing. in my company and in the previous company i was with, norfolk grummond that's the route we've done. there's no way you can continue on this path. the postal service can't continue on this path. large companies have decided to do that a long time ago. i would agree completely. >> miss kennedy, please, will you react to this? >> yes, certainly. obviously the issue of health care and health care costs is something that's a great concern. it's my understanding that there's widespread support, both with the collective bargaining units and with management at the postal service, for the plan that you describe and it's something that i look forward to
learning a lot more about. it seems to make a lot of sense but i'd like to understand it in more depth as we go forward. >> fair enough. let's talk a little bit about this intersection between the, if you will, analog -- i'll use analog as an example of what we do at the postal service today, we deliver packages, parcels, pieces of mail. we do it door to door, five to six days a week, do it all over the country. use vehicles to do it. meanwhile, you have a lot of folks that are ordering stuff today as we speak that they want to have delivered tomorrow. they'll look for somebody to deliver it, there are some good business opportunities there, including on sundays. and the postal service is starting to take advantage of this. i don't know if it's miss kennedy, somebody mentioned innovation in our legislation. ironically one of the provisions in the legislation that we have is it was legislation lifted
from senator bernie sanders and most people wouldn't think of bernie as the chief innovation officer or the guy to be the most entrepreneurial guy in the senate. marky, you're smiling. he's right on -- spot on when it comes to the postal service. how do you figure out, how do we help enable the postal service to use this legacy organization to find new ways to generate revenues and provide a service that's needed without stepping on the toes in an inappropriate way in the private sector? there's a call in our legislation the creation of what i'll call a chief innovation officer. we call for a summit with all kinds of people, including people from the digital world to come in and say to the postal service, have you ever thought of doing this or that or the other? we're going to do a similar kind of approach with the census. the next time we do the census we won't be doing it with a pen and paper, smarter, less expensively and hopefully more effectively. talk to us about innovation and
things that you'd like to see the post office or you think might be good ways for them to provide a service and make some money while they're doing it. again, i'll ask dr. miller if you would just lead off with this please. >> mr. chairman, the movement to the digital -- the digital revolution has cost the postal service inasmuch as first class mail has diminished. on the other hand, it's created opportunities as well. that's the major reason you see the growth in the packaging. people ordering through ebay and other ways, that has generated a great deal of increase in mail volume. i think that mr. bennett's becoming a member of the board would be a very positive thing to stimulate a lot of thinking at the postal service because he has the kinds of -- those kinds of responsibilities at bae. and there are other opportunities, i think steve has talked about it and vicky have talked about it as well. i think there are many opportunities there that need to be explored -- that are being
explored, frankly, at the postal service but i think there are many opportunities as you have identified. >> thank you. mr. crawford? >> mr. chairman, i'm -- i enjoy reading the white papers at that the inspector general's office produces. some of them are simply stimulating. i'm not sure that they're politically or otherwise always going to survive and be implemented, but i would like to see the postal service have the flexibility to run pilots and experiments and tryout. let's take non-bank financial services. we see a lot of foreign postal services make some money on that. whether it makes sense for the u.s. postal service to get into that is a huge question. the issue though it seems to me
is to have the opportunity to experiment, whether it's that, whether it's the implications for 3-d printing. there is just so much in the world of technology that's unfolding now. and this can't be all or nothing. we're now going to implement this. now the postal service, to be fair, already does do some studies and trials. i just -- i -- if i were on the board, that's an area that i would give special attention to. >> what about the -- well, let me let you finish and i'll throw out a couple of ideas and let you react to them. thank you. mr. bennett? >> this is really, mr. chairman, my sweet spot. i have led a number of innovation initiatives in my company, particularly from a technology perspective, but i really get excited thinking about the different things that you can do with this incredible infrastructure that we have, with all these people, with all
this logistics that we deal with as a postal service every single day that nobody else knows how to do. imagine if you start partnering with a company like sysco and take the kinds of things that they do from a networking perspective and connect those to our postal infrastructure. we've talked about 3-d printing. imagine being able to have the companies who produce these 3-d printers, at no cost to the postal service, put those printers in various locations in the postal service and have opportunities where they're able to fax, if you will, the model of a shoe and they want that to get to a particular customer in an hour. the postal service says, great, we'll get that there within an hour. there are so many different things and opportunities. the moment i was nominated i had the coo of sysco, senior executive at microsoft, various
people from different technology companies talk to me about things they would like to consider and to talk to the u.s. postal service about but haven't had an opportunity to get in. this is -- i mean, this is just right in the area that i would love to have an opportunity to help the postal service evolve and do a number of different innovative things over the course of the next decade. >> did you say fax someone a pair of shoes? >> yeah. absolutely. absolutely. the technology exists. it's there. >> i -- let me just say before you speak, vicky. i don't know if they have like the boy has a committee or subcommittee on innovation, but if you get confirmed, mr. bennett, i sure hope they put you on that committee. that would be good. thanks. miss kennedy. >> i understand there are athletic shoe manufacturers that are going to be taking orders for athletic shoes with your
specifications and doing 3-d printing of your shoes in your exact size and with your specs and they're going to want to distribute them. the distribution network that exists right now for the united states postal service is an incredible asset. that's something that i believe we have to maintain to be able to take advantage of that kind of innovation, to be able to reach people. when you talk about doing what we do, that's what the postal service does. it knows how to deliver. it has an infrastructure and that's why one of the wonderful things in the last few months of waiting for this hearing is that we've all gotten to know each other, all of the nominees here. >> how did you -- if you don't mind, how have you all gotten to know each other? >> we've had lunch. it's a great thing. talking. regular lunch, talking, e-mailing. so we've gotten to know each other. >> facebook? >> no. no, not facebook, but it's been a very good thing. you know, collegiality and
sharing ideas. it's been a very positive thing. so if we're confirmed, i think we'll hit the ground running. and, you know, talking about, you know, what's out there in the future, being able to take advantage of that kind of innovation. one of the things that steve crawford just said in his opening statement though is will the regulatory structure restrict your being able to take advantage of innovation in other ways? there might be some 18-year-old in a garage right now who's coming up with some great new innovation. will the postal service be able to take advantage of that or will it not? i believe we need to be nimble and able to take advantage of innovations that we don't know about as we're sitting at this table right now and be reg gu la tore rally nimble while building
on the strength. >> that's very encouraging testimony. i want to turn, if i cohere for a little bit, to the pricing for postage. as you know, the postal service current inflation base postal rate structure was set in place seven years ago. and before the beginning of the drastic drop in mail volume that continues today. you saw that, dr. miller, firsthand. late last year the postal regulatory commission allowed the postal service to temporarily increase its pricing for postage above that normally allowed to make up for the losses in mail volume attributable to the great recession. an increase is a 4%. we call it an exigent rate increase. the prc said let's put that in place interim, a period of time. dr. coburn and i in our proposal to the committee said let's make that the new base and then we'll
worry about other increases as we go or not increases to go as we go forward. in light of the postal services current financial difficulties, let me just ask, again i don't want to pick on you, dr. miller, but let me just start with you. your thoughts on the postal rate structure as we have it currently and how it would be under our bill. >> as i said in my response to question from the committee, i think that the inflation adjusted cap needs to be liberalized a great deal, if not eliminated entirely because it just means that the postal service will start searching for ways to change, alter the rate structure to try to raise additional revenue and that further perverts the structure prices. there's an analogy with how the railroads performed under the
interstate commerce act and squeezing revenue here and there. give the postal service the discretion to make rate changes. there is a natural limit to how much a postal service would want to increase certain rates because of the falloff in volume so it's not as though it's going to change the stamp price from 49 cents or 55 cents to $1.80 or something like that. it really is an impediment. there are other ways in which the postal rate commission, despite having some very good people who work the . . . . . . . . . . . . . spirited as we are where it inevitably slows down the process of introducing innovations and changes and experiments of the sort that steve was talking about. so we need to have that kind of freedom to have the postal regulatory system intervene when
they see a real danger of the postal service violating the law or about to violate the law. that and you've addressed that in s 1486 and i hope that provision prevails in any conference bill. >> thank you, sir. mr. cartwright? >> thank you, mr. chairman. i agree with dr. miller's analysis. i think the mail volume, especially for the standard mail, is so sensitive to prices that the postal service is not about to try to jack up that price. you know, the notion of a monopoly position is -- it's not as much, it's not as hard a monopoly as some monopolies are. i applaud s 1486 for the reforms in the price cap. i'm on record in previous writings for lifting the price cap and making adjustments. i think the postal service needs that flexibility. i think the postal regulatory
commission has a role to play in reviewing the reasonableness of those, but to do it ahead of time is just, as vicky kennedy was saying, we need to be nimble enough, the postal service does, to make the adjustments. fuel costs can go up. we saw surcharges put on fed ex and ups when there was a spike in gasoline prices. the postal service doesn't have that flexibility. i think they need it. i think it's fine to review it after the fact and i think the new legislation has that exactly right. >> thank you, sir. mr. brennan? >> i won't repeat what my colleagues have said, but i do agree with the provision in s 1486 relative to rates. one of the things that came up in the session with your staff last thursday was there was a comment in the private sector that you can -- you know, you don't have any caps on pricing. well, that's really not true, i
mean, because if you price yourself out of the market and you don't sell anything, then you're out of business. i think the postal service needs the same level of flexibility that you have in the private sector. the kind of flexibility that will allow us to be market driven. in fact, when that happens i think oftentimes prices ind up going down because you're not driving volume up and you end up driving prices down and you increase value in that institution and increasing value for the american public. i agree with that particular section. i agree with my colleagues. they have more flex bimt. think, is on the ground. dr. coburn had an incredible career. he was a very successful businessperson, he did that for a number of years, and then he decided, i'd like to become a doctor. he became an ob/gyn and de