Excerpts from the House Oversight and Government Reform hearing on the Postal Service

The following are paraphrases from speakers' remarks. It is strongly recommended that you consult the actual written statements from each of the witnesses as well.

Rep. Darryl Issa, Chairman, House Oversight and Government Reform

• No Congress has ever said there was no need for a Postal Service. No such recommendation will be made by this committee.

• There is a need to maintain service, six days if possible.

• The issue of paying disability payments to people who should have been moved to retirement needs to be addressed. We need to be fair to all those affected by such a transition.

• This is not easy. Most areas of government have expanding missions. Not for the Postal Service

Rep. Eleanor Holmes Norton

• The Postal Service gets no money from the government. Nor does it have the flexibility to function like a business.

• We haven't even discussed whether the issue of six-day delivery is essential to all areas of the nation.

• The Postal Service has been under a perpetual "looming crisis." What have we been waiting for?

• The whole issue of what we need from a Postal Service may need to be redefined.

Patrick Donahoe, Postmaster General, U.S. Postal Service

• We've trimmed our costs, and we're planning to trim more. Workforce reductions have been done by attrition.

• We've increased productivity without sacrificing service.

• We're striving to become leaner, faster, and smarter.

• Without some important changes to the law, we cannot survive as a functioning entity.

• Our losses are the result of an inflexible business model, particularly the burden to recovery pre-funding retirement health costs.

• The effects of pre-funding have been profound. Without the requirement, the USPS would have been in much better fiscal shape.

• We will reach our borrowing limit, and liquidity will be a crisis. We won't be able to make the pre-funding payment this year.

• We need to move to five-day delivery to eliminate costs.

In response to questions from Rep. Dennis Ross, Subcommittee chairman

• There need to be some adjustments to the assumptions that underlay the USPS' retirement related obligations. The work force has diminished. This needs to be taken into account.

• The CSRS overpayments should be used to make retirement insurance repayments.

• We think there is an upside to our revenue. We see areas of potential growth (Standard Mail and the package market).

• We think we can slow down the pace of change through the use of NSAs.

• We believe there may be a role for the Postal Service in a digital arena.

In response to questions from Rep. Stephen Lynch, Subcommittee ranking minority member

• I'm not sure I buy into the idea that we'll be able to increase volume.

• The estimate for pre-payment is much larger than what really is needed. We're pre-paying at a rate that is unmatched by anyone else.

• At the end of this fiscal year, I'm out of cash. People and suppliers will be paid, but not the federal government.

In response to questions from Rep. Connie Mack

• We will not need a bail-out to continue to exist.

• Adjustments to postal employees' pay and benefits could help.

• We need to adjust the employee health care contribution. It will take four years to get postal contributions equal to other federal employee obligations.

• We are too big to fail. We're too important to the economy and society.

In response to questions from Rep. Eleanor Holmes Norton

• With proper adjustments to our payment obligations and the ability to delivery five days a week would sustain the viability of the Postal Service's model, but there are other things that have to happen (adjustments to network and employee-related compensation).

• If we were not required to overpay on our retirement-related obligations we'd be operating at break-even.

• The increases in mail volume we've been reporting has been with Standard Mail.

In response to a question from Rep. Justin Amash

• We believe OPM is wrong in its belief that the Postal Service has no overpayment.

In response to questions from Rep. Danny Davis

• I believe the Postal Service is still relevant today, despite all the changes that already have taken place in the way we communicate and do business. The nation has enduring postal needs.

• There are costs we need to address. Our unions understand this.

• I am 100% positive that there are real values to the Postal Service.

• We need to get all this uncertainty behind us to ensure customers stability and confidence in the mail.

Ruth Goldway, Chairman, Postal Regulatory Commission

• PAEA has been a positive force for change.
• The price cap is a powerful incentive to improve efficiency.
• The requirement to measure service ensures service does not suffer.
• Incongruences in the current law: All products must cover attributable costs, but no increase can be greater than inflation.
• Without the RHBF, the Postal Service would be in much better shape. These payments have brought the USPS deep into debt and on the brink of insolvency.
• The Postal Service has been overcharged regarding its employee retirement obligations.
• The PRC will guard against service cuts.
• The request to review six-day delivery has been complicated. We expect to complete our opinion shortly.
• The PRC is undertaking its five-year review of PAEA.

In response to a question from Rep. Dennis Ross, Subcommittee chairman

• If the underlying funding assumptions are properly adjusted could reduce the USPS' obligation and its funding burden could be reduced to about $2 billion a year (down from $5 billion).

In response to a question from Rep. Justin Amash

• Our objective review to the over-funding matter clearly has indicated that OPM is wrong and that a substantial over-funding of CSRS exists.

Phillip Herr, Director, Physical Infrastructure Issues, U.S. Government Accountability Office

• While mail use has been declining, the Postal Service's high fixed costs remain.
• Unfunded obligations have pushed the Postal Service to the tipping point.
• Service needs to be realigned to match changes in demand.
• Postal operations and networks need to be realigned to reduce excess capacity. Efforts to do so have been too slow.
• Compensation and benefits costs need to be addressed. The statutory framework for collective bargaining needs to be addressed.
• The USPS needs to generate revenue from new products and services.
• The funding structure for postal retirement needs to be addressed.
• The pre-funding should still be made to the fullest extent of the USPS' ability.
• The USPS needs to clarify its improvement plans.

In response to a question from Rep. Justin Amash

• We've been consistent in our statement that the Postal Service needs some relief from its retirement-related obligations.

In response to a question from Rep. Gerald Connolly

• GAO has not looked at the issue of USPS retirement-related overpayments.

Jim Sampey, Executive Vice President and COO, Valpak

• We're not only big in mail; we're also entering the digital space.
• The USPS has done a remarkable job downsizing the Postal Service while retaining service.
• Without the PAEA pre-funding requirement, the USPS would be in the black.
• The Postal Service is constantly getting caught up in congression's own political battles.
• OPM should be required to recalculate the USPS' obligations.
• The USPS needs to move to five-day delivery.
• The USPS should be allowed to close money-losing post offices while providing services through other venues.
• The USPS should not continue to provide services that lose money.
• The USPS should not go into competition with the private sector, such as Marketing Mail Made Easy.
• Industry confidence in the Postal Service could be adversely affected by congressional inaction.

Arthur Sackler, Coalition for a 21st Century Postal Service

• There is far more at stake than just the Postal Service itself. An entire industry is at risk.
• USPS fiscal insolvency will have great, negative implications.
• The CSRS and FERS overfundings should be used to fund the pre-funding requirement.
• There is no "bailout" at issue here.
• Is this going to be the first loose thread in unraveling a key facet of government.
• Default on pre-funding payment would increase an obligation Congress ultimately will have to face.
• Mail remains an important communication channel.

In response to questions from Rep. Dennis Ross, Subcommittee chairman

• The Postal Service has cut costs, but it hasn't done enough. More needs to be done. There is excess capacity.
• If the USPS defaults on its obligation, it will create an aura of suspicion regarding the viability of an arm of the U.S. government.

Fredric Rolando, President, National Association of Letter Carriers

• The Postal Service remains a vital part of our society and economy.
• The USPS provides the only universal communication network
• It benefits from public trust.
• It's a key faciltator of businesses and communications.
• Annual transactions through the mail exceed $30 trillion.
• Despite all the communication transformation and recession, the USPS has been operating at a profit (except for the pre-funding obligation).
• The CSRS and FERS overpayments could easily cover the USPS' pre-funding requirements.
• Eliminating Saturday delivery would be disastrous.
• The Postal Service has a bright future despite today's challenges.

In response to questions from Rep. Dennis Ross, Subcommittee chairman

• The financial condition of the Postal Service is already considered in arbitration.
• The USPS should continue to work with employee groups to come up with win-win solutions.

Rep. Stephen Lynch, Subcommittee ranking minority member

• OPM has a long history of miscalculations regarding federal obligations. This should not be overlooked.
• In every single case, OPM has overcharged the Postal Service.
• OPM pre-funds its own obligations by 40%, as opposed to the 100% expected of the USPS.