[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
LEGISLATIVE PROPOSALS
TO PUT THE POSTAL SERVICE ON
SUSTAINABLE FINANCIAL FOOTING
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
OVERSIGHT AND REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 24, 2021
__________
Serial No. 117-4
__________
Printed for the use of the Committee on Oversight and Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov,
oversight.house.gov or
docs.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
43-780 PDF WASHINGTON : 2021
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COMMITTEE ON OVERSIGHT AND REFORM
CAROLYN B. MALONEY, New York, Chairwoman
Eleanor Holmes Norton, District of James Comer, Kentucky, Ranking
Columbia Minority Member
Stephen F. Lynch, Massachusetts Jim Jordan, Ohio
Jim Cooper, Tennessee Paul A. Gosar, Arizona
Gerald E. Connolly, Virginia Virginia Foxx, North Carolina
Raja Krishnamoorthi, Illinois Jody B. Hice, Georgia
Jamie Raskin, Maryland Glenn Grothman, Wisconsin
Ro Khanna, California Michael Cloud, Texas
Kweisi Mfume, Maryland Bob Gibbs, Ohio
Alexandria Ocasio-Cortez, New York Clay Higgins, Louisiana
Rashida Tlaib, Michigan Ralph Norman, South Carolina
Katie Porter, California Pete Sessions, Texas
Cori Bush, Missouri Fred Keller, Pennsylvania
Danny K. Davis, Illinois Andy Biggs, Arizona
Debbie Wasserman Schultz, Florida Andrew Clyde, Georgia
Peter Welch, Vermont Nancy Mace, South Carolina
Henry C. ``Hank'' Johnson, Jr., Scott Franklin, Florida
Georgia Jake LaTurner, Kansas
John P. Sarbanes, Maryland Pat Fallon, Texas
Jackie Speier, California Yvette Herrell, New Mexico
Robin L. Kelly, Illinois Byron Donalds, Florida
Brenda L. Lawrence, Michigan
Mark DeSaulnier, California
Jimmy Gomez, California
Ayanna Pressley, Massachusetts
Vacancy
David Rapallo, Staff Director
Mark Stephenson, Director of Legislation
Ethan VanNess, Professional Staff
Elisa LaNier, Chief Clerk
Contact Number: 202-225-5051
Mark Marin, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on February 24, 2021................................
Witnesses
The Honorable Ron Bloom, Chairman, United States Postal Service
Board of Governors
Oral Statement............................................... 10
Mr. Louis DeJoy, Postmaster General, United States Postal Service
Oral Statement............................................... 11
Ms. Tammy Whitcomb, Inspector General, United States Postal
Service
Oral Statement............................................... 13
Mr. Mark Dimondstein, President, American Postal Workers Union,
AFL-CIO
Oral Statement............................................... 15
Mr. Joel Quadracci, Chairman, President, and Chief Executive
Officer, Quad/Graphics
Oral Statement............................................... 16
Mr. Kevin Kosar, Resident Scholar, American Enterprise Institute
Oral Statement............................................... 18
Written opening statements and the written statements of the
witnesses are available on the U.S. House of Representatives
Document Repository at: docs.house.gov.
INDEX OF DOCUMENTS
----------
* Rep. Connolly's Statement for the Record.
* Rep. Lynch's Statement for the Record.
* Rep. Lawrence's Statement for the Record.
* Letter, Peters and Portman Letter of Support; submitted by
Chairwoman Maloney.
* ``How to Fix the US Postal Service,'' article, Roll Call;
submitted by Chairwoman Maloney.
* Letter, National Association of Postal Supervisors; submitted
by Chairwoman Maloney.
* Letter, Alliance of Nonprofit Mailers; submitted by
Chairwoman Maloney.
* Letter, Federal Law Enforcement Officers Association;
submitted by Chairwoman Maloney.
* Letter, Postal Regulatory Commission; submitted by Chairwoman
Maloney.
* Letter, United Postmasters and Managers of America; submitted
by Chairwoman Maloney.
* Letter, MPA-The Association of Magazine Media; submitted by
Chairwoman Maloney.
* Letter, National Active and Retired Federal Employees
Association; submitted by Chairwoman Maloney.
* Letter, The Association for Postal Commerce; submitted by
Chairwoman Maloney.
* ``Protestors Gather Outside of Postmaster General DeJoy's
Home,'' article, WUSA 9; submitted by Rep. Biggs.
* ``Burned Post Offices Destroyed in Minneapolis Unrest Leave a
Void,'' article, StarTribune; submitted by Rep. Biggs.
* Statement, National Association of Letter Carriers; submitted
by Rep. Biggs.
* ``USPS Shuts Down Mail Delivery at 7 Post Offices in Twin
Cities for Friday,'' article, Fox 9; submitted by Rep. Biggs.
* ``Reward Offered for Details in Post Office Looting,''
article, Chicago Sun Times; submitted by Rep. Biggs.
* ``Rep. Ayanna Pressley Calls for `Unrest in the Streets' Over
the Failures of the Trump Administration,'' article, Black
Enterprise; submitted by Rep. Biggs.
* ``Antifa Lay Siege to Lancaster Police Precinct Following
Latest Officer-Involved Shooting,'' article, RT.com.usa;
submitted by Rep. Biggs.
* ``Kenosha's Main Post Office Closes Indefinitely Due to
Violent Riots,'' article, Breitbart; submitted by Rep. Biggs.
* ``US Postal Service Vans Stolen and Torched by Rioting
Minneapolis Protestors,'' article, The Gateway Pundit;
submitted by Rep. Biggs.
* Testimony, American Catalog Mailers Association (ACMA);
submitted by Rep. Comer.
* USPS IG Report, Mail Delivery and Customer Service Issues -
Select Chicago Stations, Chicago, IL; submitted by Rep. Davis.
* Letter, Chicago Delegation USPS Inquiry; submitted by Rep.
Davis.
* National Association of Letter Carriers PAC Profile;
submitted by Rep. Foxx.
* American Postal Workers Union PAC Profile; submitted by Rep.
Foxx.
* National Postal Mail Handlers Union Profile; submitted by
Rep. Foxx.
* Letter, Postal Operations Response Letter; submitted by Rep.
Gibbs.
* Questions for the Record: to Mr. Bloom; submitted by
Chairwoman Maloney.
* Questions for the Record: to Mr. Quadracci; submitted by
Chairwoman Maloney.
* Questions for the Record: to Mr. DeJoy; submitted by
Chairwoman Maloney.
The documents listed above are available at: docs.house.gov.
LEGISLATIVE PROPOSALS.
TO PUT THE POSTAL SERVICE ON
SUSTAINABLE FINANCIAL FOOTING
----------
Wednesday, February 24, 2021
House of Representatives,
Committee on Oversight and Reform,
Washington, D.C.
The committee met, pursuant to notice, at 10:13 a.m., 2154
Rayburn House Office Building, Hon. Carolyn Maloney [chairwoman
of the committee] presiding.
Present: Representatives Maloney, Norton, Lynch, Cooper,
Connolly, Krishnamoorthi, Raskin, Mfume, Porter, Tlaib, Bush,
Davis, Wasserman Schultz, Welch, Sarbanes, Speier, Kelly,
Lawrence, DeSaulnier, Gomez, Pressley, Comer, Jordan, Foxx,
Hice, Grothman, Cloud, Gibbs, Higgins, Keller, Sessions, Biggs,
Donalds, Herrell, LaTurner, Fallon, and Clyde.
Chairwoman Maloney. The committee will come to order.
Without objection, the chair is authorized to declare a recess
of the committee at any time. I now recognize myself for an
opening statement.
Good morning, and I want to welcome all of our witnesses
and thank everyone for participating in this important hearing
on the future of the Postal Service.
The Postal Service is one of our Nation's most vital and
respected institutions. It provides service across the country
to every single address and it adds over a million new delivery
points every year. It binds our Nation together in the way that
no other agency or organization does.
Unfortunately, the Postal Service is facing a dire
financial situation that requires us to act. On Friday, we
circulated draft legislation with proposals to address some of
the most important factors driving up costs for the Postal
Service.
I will address one of those proposals, Medicare
integration, and some of my colleagues will address the other
provisions.
First, while all postal employees pay into Medicare through
their careers, not all retirees enroll when they reach age 65.
Approximately 73 percent of retirees are enrolled, but the
other 27 percent are not.
The Postal Service has paid about $35 billion dollars into
Medicare since 1983. The draft bill would require current
employees to enroll in Medicare when they reach 65. Retirees
who are already over 65 would be given a three-month period to
enroll with no penalty.
While employees and retirees would keep Federal health
benefits through a new health plan, Medicare would be the
primary payer.
Keep in mind that these employees have already paid into
the system. This reform, known as Medicare integration, would
cut long-term costs by reducing copays and other medical costs
for retirees.
It would also save the Postal Service about $10 billion
over 10 years. These are critical savings that will help the
Postal Service become more financially sustainable.
In addition to Medicare integration, my colleagues will
discuss how the bill would eliminate the unfair requirement
that the Postal Service prefund retiree health benefits for 75
years into the future.
Eliminating this unfair provision would take approximately
$35 billion off of the Postal Service's books. They will also
discuss how the bill would increase transparency to ensure that
service standards are met.
On that note, we all know the Postal Service implemented a
number of changes last year that resulted in widespread service
deterioration across the country. Part of that was caused by
the coronavirus pandemic, and postal employees who are on the
front lines have been hit especially hard.
But the other part of the problem was, really, Postmaster
General DeJoy's actions. As the Inspector General concluded, he
did not adequately assess the impacts of his changes on service
and he did not adequately consult with Congress and others
before doing so.
Many people across the country and on this panel have grave
concerns, and recent events have aggravated them. For example,
we have been trying to get information about the new strategic
plan, which has yet to be made public.
Of course, my own views of Mr. DeJoy are a matter of public
record, and all members of our committee are entitled to
express their own views.
However, even as our committee continues conducting
vigorous oversight of current postal operations, we will not be
delayed or deterred from our North Star. We need to pass
meaningful reforms and, hopefully, bipartisan reforms to put
the Postal Service on more sustainable financial footing for
years to come.
With that, I now recognize the distinguished chairman of
the Government Operations Subcommittee, Mr. Connolly, for his
opening statement.
Mr. Connolly. Thank you, Madam Chairwoman, and thank you
for your leadership in focusing on the long-term success of the
Postal Service at one of the first hearings of this committee
during the 117th Congress.
I am committed to working with you and our colleagues to
pass a bill through this Congress that finally fixes the long-
standing financial problems of the Postal Service.
Postal Service has been a critical lynchpin of the American
fabric since 1775. It employs 650,000 people and is the
foundation for a more than $1.7 trillion mailing industry that
employs more than 7= million people.
Today's hearing serves to inform Congress of the reforms
necessary to return the Postal Service to viability, financial
health, and to ensure that Postal Services survive well into
the future.
These efforts are not new, certainly, not new to me. I was
elected to Congress shortly after the lame duck session of 2006
in which the Postal Accountability and Enhancement Act was
passed into law under the guise of being a reform bill.
I believe, however, that that bill is the root cause of
much of the Postal Service's financial difficulty and decline.
For nearly 15 years, the Postal Service has struggled to comply
with that law, especially the prepayment requirement, a unique
obligation no other entity in the world is required to meet.
Congress has an obligation, having created this problem in
its own legislation, to fix it, and that is what the USPS
Fairness Act provision does. The prefunding requirement
requires the Postal Service to pay between $5.4 billion and
$5.8 billion each year for 10 years into the health benefits
fund.
But a decrease in revenue starting around 2006,
coincidentally, forced the Postal Service to forgo the required
prepayment since 2010.
Postal Service currently has, roughly, $35 billion in
unfunded retiree health care benefits because of Congress'
last-minute decision in 2006 to require an onerous prefunding.
The money sits in the Treasury account waiting to fund the
health benefits of those not yet born even when it could be
used to fortify a struggling Postal Service to replace
vehicles, for example, that are now on average 25 years or
older, that literally explode and endanger the work force in
the second largest vehicular fleet in the country.
The language of the USPS Fairness Act would remove a
manufactured yet real liability from the books, wiping the $35
billion of debt from the Postal Service's ledger books.
The provision is not a panacea but it is a critical pillar
of the bipartisan comprehensive reform plan that we are focused
on today. This provision removes the distraction of a
multibillion dollar debt of Congress' own creation and gives
the Postal Service time to build a practical business model
that will--can be adjusted to the changes in technology in the
marketplace.
We have a moral obligation to fix the problem Congress
created. Most importantly, the provision will allow the Postal
Service to focus on serving the American people and delivering
their mail and packages every single day, especially during a
pandemic.
I have been working for 12 years since I entered Congress
to build broad coalitions of multifarious stakeholders who rely
on the Postal Service for their businesses and nonprofits, and
for veterans who get their prescription medications through the
mail, rural Americans who rely on package delivery to make it
through the pandemic and individuals who pay their bills and
businesses who use the mail for their commercial transactions.
I am prepared to meet this moment and join with you, Madam
Chairwoman, and my colleagues on the committee to enact
meaningful reforms to deliver for this Nation. Congress cannot
afford to miss this moment.
Thank you again for your leadership, and I yield back.
Chairwoman Maloney. Thank you.
Mr. Lynch--I now recognize the distinguished
representative, Mr. Lynch, for your opening statement.
Mr. Lynch. Thank you, Madam Chair.
First of all, I would like to commend you and Ranking
Member Comer for your continued leadership in addressing the
urgent challenges facing the United States Postal Service.
I would also like to thank Chairman Gerry Connolly, Ranking
Member Jody Hice, and Representative Brenda Lawrence for their
work on this important issue.
Beginning with the draft text of the Postal Service Reform
Act of 2021, we now have an opportunity to take a viable path
toward enhancing the financial viability of our most trusted
government institution.
This legislation is strictly reflective of a fundamental
reform need that are the subject of bipartisan and stakeholder
consensus. It is also--its sole purpose is to ensure that the
Postal Service and its dedicated work force are equipped to
carry out the vital public service mission in the long term.
And as Chairman Connolly pointed out, the strength of the
U.S. Postal Service really rests with the more than 650,000
letter carriers, clerks, mail handlers, supervisors, and
postmasters who work to process and deliver the mail to every
home and business in America, six and even sometimes seven days
a week, and any meaningful effort that we undertake to enact
postal reform must reflect the commitment and the sacrifice of
the American postal workers.
As Chairwoman Maloney stated earlier, the integration of
postal retiree benefits--health benefit plans with Medicare is
one of the core reforms included in this draft.
This proposal comes down to a basic question of fairness.
To date, our postal workers have been required to pay nearly
$35 billion into Medicare since 1983, and it remains the second
largest Federal work force Medicare contributor after the
Defense Department.
Meanwhile, one quarter of postal employees never receive
any Medicare benefits. Yet, all postal employees bear the cost
of resulting higher retiree premiums.
So with that, I strongly support our committee's efforts to
enact common sense and bipartisan reform legislation. This is
extremely important to a lot of rural communities that rely
heavily on the Postal Service.
And with that, I urge my colleagues on both sides of the
aisle to get behind a good reform bill and I yield back the
balance of my time. Thank you.
Chairwoman Maloney. Thank you, Mr. Lynch.
And I now recognize the distinguished Representative
Lawrence, who was a postal worker for 30 years and has been a
great partner in our work to save the Postal Service.
Mrs. Lawrence, you are now recognized for your opening
statement.
Mrs. Lawrence. I want to begin by thanking our Chairwoman
Maloney and Chairs Connolly and Lynch for your partnership as
we work to craft this postal reform legislation.
For years, the financial situation facing the Postal
Service has grown more and more dire, due in part to factors
outside of their own control.
I am thrilled that this committee is prioritizing postal
reform as one of its major initiatives during the 117th
Congress. Our reform provisions would provide the Postal
Service with desperately needed financial assistance.
I want to focus on another important aspect of this
package, which are service standards and accountability.
During my near 30-year career with the Postal Service, I
and other postal workers took great pride in our efforts to
meet our service standards and performance targets. It is what
drove our work ethic.
The agency's unofficial motto best sums up the work force
commitment to achieving those goals: neither snow nor rain nor
heat nor gloom of night stays these couriers from the swift
completion of their appointed rounds.
For a large period of the last year, the Postal Service was
in the news for the wrong reasons, consistently delayed mail
delivery, while more than 600,000 employees of the Postal
Service has heroically continued to uphold their mission to
deliver mail in the midst of a global pandemic.
Questionable operational changes implemented by Postmaster
DeJoy has hindered their work and caused the Postal Service to
miss that mark. Congress must include language to emphasize the
need for service performance targets.
While we have only heard reports of this at this time, I am
critically concerned about any proposal to alter the Postal
Service first class mail system. Anything that will reduce the
agency's ability to meet its standards--its service standards.
After months of persistently low delivery times and those
concerning reports mandating targets for service performance,
it is absolutely necessary to hold the agency accountable.
Last year, 91 percent of Americans had a favorable opinion
on Postal Service, even though we were struggling with the
pandemic in our service. That number is based on the agency's
more than two centuries of robust service standards, something
that the American people have come to expect.
If we do not make every effort to affirm that commitment to
the service standards and accountability, it will chip away at
the foundation of what makes this agency so great.
While this legislation provides the agency with financial
reforms it needs, we cannot allow flawed operational changes to
be a drop in our commitment to its timely service to compromise
our mission.
We must pair these reforms with strong language to repair
and to require robust service standards.
At this time, Madam Chair, during a pandemic is not the
time to weaken our service standards. Thank you so much, and I
yield back.
Chairwoman Maloney. Thank you. And I will now turn to
Ranking Member Comer. But before I do, I would like to extend
my sincere thanks for his graciousness and for his willingness
to consider working with us in a bipartisan way.
And with that, I now recognize Ranking Member Comer.
Mr. Comer. Well, thank you, Madam Chair, for holding this
hearing. Thank you for allowing this hearing to be hybrid and
thank you for what I think is your sincere desire for
bipartisan postal reform.
After all the talk about the Postal Service over the past
year, I am very happy we are finally doing something that has
the potential to address the real issues facing the Postal
Service and improve service and delivery for the American
people.
But I must add that last year in this committee, Democrats
spun wild conspiracy theories about Postmaster DeJoy's plan to
steal the election by removing unnecessary blue postal boxes
and underused mail sorting machines.
History has already shown that baseless conspiracy theory
to be untrue, and it will go down in history with other
baseless conspiracy theories like the ones Adam Schiff spun in
the Intelligence Committee.
Postmaster General DeJoy was attacked for trying to tackle
two glaring problems with postal operations that must be
addressed: having the trucks leave on time and reducing the
massive amounts of overtime postal workers accumulate.
Again, Republicans debunked the Democrats' mailbox myths
and said repeatedly we should devote our energies toward fixing
the Postal Service's broken business model.
With election year politics behind us, I am thankful,
again, Chairman Maloney has agreed to take on the important but
difficult task of postal reform.
Preserving and shaping the U.S. Postal Service is one of
the most fundamental and important jobs of this committee. The
core issues that plague the Postal Service is relatively
straightforward.
Demand for first class mail has plunged and costs have
stayed the same. No business could be expected to survive in
such a scenario without making tough decisions.
A second core issue is emerging. Demand for packages has
exploded and the Postal Service isn't equipped to deal with
this massive demand increase.
There are other issues, foremost of which should be the
needs of the American public, which together create a very
complex challenge to address. One issue likely to be front and
center today, how to pay for the benefits the Postal Service
promises to its employees, which now make up well over $100
billion, $100 billion, in unfunded liabilities.
As of now, there is no plan for how to pay for these
promises. Funding by some estimates will be depleted by the
year 2030.
The Postal Service cannot be left to default on its
retirees. It will require creative solutions and sacrifices
from all interested parties, and there are many to make, this
work.
We cannot ignore this problem. There are realities we must
confront and address. Hard decisions must be made. This
challenge calls for bipartisanship, and I am thankful
Chairwoman Maloney has made the offer to work together on this
effort.
Like all Americans, I am deeply concerned about the
performance of the Postal Service over the past year. The
delays in mail delivery across the country hurt small
businesses, prevented the timely delivery of medication,
hindered bills from being delivered on time, and presented
numerous other problems for the American people.
I have spoken to Postmaster DeJoy about these delays and I
am eager to learn more today about how this issue is being
addressed and what needs to be done to prevent it from
happening again.
But I will say this. Mr. DeJoy is finalizing a business
reform plan. The last Postmaster General, if you will remember,
promised us to deliver a plan back in 2019. But it never
arrived.
Most of you will remember that hearing when Elijah Cummings
and Mark Meadows grilled the former Postmaster General, ``Why
haven't you brought a plan?'' That plan never arrived.
The status quo at the Postal Service is not sustainable.
Postmaster General DeJoy should be commended for doing the hard
work to confront the realities facing the Postal Service.
I am eager to work with both my Republican and Democratic
colleagues to reform the Postal Service, ensure its fiscal
sustainability, and improve service to the American people. We
must tackle and address the real issues facing the Postal
Service.
I look forward to hearing from today's witnesses on their
ideas to improve the Postal Service.
Now I would like to yield to the ranking member of the
Government Operation Subcommittee, Ranking Member Hice from
Georgia.
Mr. Hice. I thank the ranking member and, Chairwoman
Maloney, thank you for calling this hearing today, and we all
agree that the Postal Service is critical for our country and
it calls for serious debate.
But I would agree with the ranking member that for this
past year, Democrats spread false information and really blamed
Republicans and the previous administration and the Post Office
for an attempt to co-opt the 2020 elections. And we are dealing
with that.
And just by way of remembrance, I have got some quotes that
were made right here in this very room.
Quote, ``An attack on our Postal Service and an attempt to
dismantle our Postal Service out of a selfish desire to
sabotage our democracy and maintain grip on power is an attack
on all of us.''
So somehow, last year, we were all in here, us being
accused and Mr. DeJoy in the Postal Service of sabotaging our
democracy.
The speaker said, ``The president, his cronies, and the
Republicans in Congress continue to wage their all out assault
on the Postal Service and its role in ensuring the integrity of
the 2020 election.''
So, somehow we were all involved in an attempt to destroy
the election.
Then there was another member of this committee. Mr. DeJoy,
you will probably remember this. You sat here in this room and
had to hear this straight up.
He said to you, quote, ``How dare you disenfranchise so
many voters? You know that it is a felony for a Postal Service
officer or employee to delay delivery of mail. Somehow you can
delay all the mail and get away with it. They can be
prosecuted. You can't, even if your actions are a million times
worse.'' And then he said, ``Mr. DeJoy, is your backup plan to
be pardoned, like Roger Stone?''
How unfair to make those kinds of unbelievable accusations
and allegations. That same representative went on and suggested
that we may need to arrest you in order to have you show up
here for a hearing, which, of course, was unnecessary. You did
it voluntarily.
Then there was a picture that went online, like this one
here, of a member chained to a mailbox. This did nothing but
create fear in the American people. This did nothing but put
distrust in the American people with the Postal Service.
And I bring all this up because we endured all this last
year, all year long. But let us remember what Mr. DeJoy
actually did with the Postal Service.
First, he removed the blue mailbox drop boxes. But in so
doing, was that an attempt to sabotage the election? Absolutely
not. It is a routine process.
In fact, over the last couple of decades, 35,000 of those
drop boxes had been removed, some 12,000 under President
Obama's watch. We didn't hear anything about it then. It was
only when Mr. DeJoy continues the process of scaling down.
One of the other things he did was take out mail sorting
machines. Perhaps that had something to do with the fact that
mail volume has drastically declined and these machines take up
a lot of room, space needed for packaging processing.
He also reduced overtime. Well, let us just by remembrance
bring to mind that the Postal Inspector General is the one who
documented rampant overtime use and abuse, the cost of which
was over $1.1 billion in 2018 alone.
If that much overtime is the norm in the operating
procedures of the Postal Service then, yes, there is a serious
problem with overtime.
Now, perhaps all of this that I am saying is water under
the bridge at this point. I certainly hope so. Maybe now we can
get back to the real issue at hand, which is authentic reform
of the Postal Service.
And maybe the efforts of Postmaster DeJoy will be put
behind us and at this point that the election is over perhaps
things will calm down as it relates to the rhetoric that has
been so consistent this past year from the Democrats. Or maybe
it won't. I don't know. We will see.
But as we roll into this debate, as Chairwoman Maloney has
said, she hopes this to be a bipartisan movement. But, again, I
would say just yesterday another member of this committee made
the following quote: ``Louis DeJoy is a political hack, a crony
of Donald Trump and a massive Republican donor. He is taking a
wrecking ball to the U.S. Postal Service.''
So, I don't know that we are going to get over some of the
rhetoric or not and, quite frankly, I would venture to raise
the question with that kind of statement made just yesterday,
are we now to assume that the Biden administration is not going
to have anyone in any position appointed who has not giving
money to Democrats?
Are we to assume from that kind of statement that now
Republicans have the green light to day in and day out
relentlessly go after any member of the Biden administration
who has donated in the past to Democrats?
Well, today's hearing is about the Postal Service. It is
not supposed to be about Louis DeJoy. But I doubt if that is
going to be the case. And why does all this matter?
Well, at the end of the day, I, like the ranking member,
have many concerns about the poor performance of the Postal
Service in recent months. Our office has been covered up with
complaints. And Mr. DeJoy is the captain of the ship. The buck
stops with him.
But the important thing at the end of the day is that the
Postal Service have strong leadership and that they have a plan
to improve rather than sit back and wait for more taxpayer
bailouts and assistance.
But if we are going to demand reform, which we should, why
should we believe that there is not going to be more of the
insane damaging rhetoric in the past? And I hope I am wrong
with that.
Why should we believe that any steps other than those in
the draft bill here, which really erases tens of billions of
dollars in misplaced payments and unfunded liabilities, which,
frankly, I support those basic concepts in this draft bill. But
those things are not enough.
But why should we believe that the rabid resistance is not
going to continue? If moving blue boxes and mail sorters and
trying to bring sanity to overtime usage is somehow viewed as
criminal activity by the postmaster, then what in the world is
going to happen to the business plan that he comes up with and
what is any postmaster general, be it Mr. DeJoy or someone
else, going to do to try to right the ship of the Postal
Service?
I will be very much interested in hearing some of these
questions answered today. We have got to get input and deal
seriously with reform issues and get beyond nonsensical,
insane, rabid rhetoric that has been coming for the past year.
And I hope we will be able to do that Madam Chairwoman. I
yield back.
Chairwoman Maloney. OK. Now I will introduce our witnesses.
Our first witness today is Postal Service Board of
Governors Chairman, Ron Bloom. Then we will hear from
Postmaster General Louis DeJoy.
Next we will hear from Postal Service Inspector General
Tammy Whitcomb. Next we will hear from the president of the
American Postal Workers Union, Mark Dimondstein.
Next we will hear from Joel Quadracci, president and
chairman and CEO of Quad, and finally we will hear from Dr.
Kevin Kosar, a resident scholar at the American Enterprise
Institute.
The witnesses will be unmuted so we can swear them in.
Please raise your right hand.
Do you swear or affirm that the testimony you are about to
give is the truth, the whole truth, and nothing but the truth,
so help you God?
[Witnesses are sworn.]
Chairwoman Maloney. Let the record show that the witnesses
answered in the affirmative. Thank you.
And without objection, your written statements will be made
part of the record. And with that, Chairman Bloom, you are now
recognized for your testimony.
STATEMENT OF RON BLOOM, CHAIRMAN, UNITED STATES POSTAL SERVICE
BOARD OF GOVERNORS
Mr. Bloom. Chairwoman Maloney, Ranking Member Comer, and
members of the committee, thank you for inviting me to appear
before you today.
My name is Ron Bloom and I am honored to chair the Board of
Governors of the United States Postal Service. This is not my
first involvement in public service.
I served in the Obama Administration, first, as a member of
the Auto Task Force helping to lead the restructuring of GM and
Chrysler, and later on the White House staff.
In my 40-plus-year career, I have held leadership roles in
both labor unions and financial institutions, specializing in
restructuring and revitalizing large complex organizations.
In addition to the Postmaster General, I am joined on the
board by five other Governors, each of whom brings significant
relevant experience to our task.
My involvement with the Postal Service began a decade ago
as an advisor to its largest union, the National Association of
Letter Carriers. That experience, along with my work on the
board, has only deepened my appreciation for the extraordinary
dedication of the more than 645,000 women and men of the United
States Postal Service.
Throughout this pandemic, Postal Service employees
performed with distinction. This was most evident during last
November's election, as they delivered 4.6 billion pieces of
election and political mail and ensured that 99.89 percent of
mail ballots were sent back to election officials within our
guidance to voters.
Our peak season began immediately thereafter, and while the
Postal Service delivered 1.1 billion packages over the
holidays, we fell far short of our service targets. With COVID
sidelining thousands of our employees, many Americans,
including your constituents, experienced significant delays in
the delivery of mail and packages.
This level of service is acceptable to no one at the Postal
Service, and we are working to urgently address this challenge.
But as we improve service, and we are and we will, we must face
some hard truths.
As presently constituted, the Postal Service's ability to
serve its twin mandate, to bind the Nation together and remain
financially self-sufficient, is profoundly threatened.
For too long the Postal Service has been burdened with
unsustainable liabilities and its own failure to adapt to the
changing needs of its customers. As we look ahead, if we
continue on our current path we are projected to lose $160
billion over the next 10 years.
But for the Postal Service to succeed in the long term, we
can't just throw money at the problem. We must address the
systemic issues plaguing its outdated model.
For these reasons, the Postmaster General and postal
management have been working with the Board of Governors on a
comprehensive plan to invest in and revitalize the Postal
Service.
This plan is still being finalized, so I am not in a
position to reveal any specifics today. But I can tell you that
its focus is on ensuring that the Postal Service is able to
perform its essential public service mission and meet our
universal service obligation in a reliable and affordable
manner to 160 million American--161 million American households
six and seven days each week.
This plan will require tough choices. As I mentioned
earlier, I have significant experience in revitalizing and
restructuring large complex enterprises, including the
integrated steel industry, GM and Chrysler, and dozens in
between.
Now, and if I have learned one thing it is that the single
largest impediment to achieving a successful outcome is that
stakeholders will support the abstract need for change, but
will seek to avoid any change that impacts their particular
interest.
Successful restructuring simply cannot work that way. We
must be ready--we must all be ready to do our part. Congress
has a vital role to play.
Our plan will ask you to give the Postal Service relief
from its current requirement to prefund its retiree health
benefits, and that we be allowed to fully integrate our retiree
health plans with Medicare.
These changes will save us more than $40 billion, or 25
percent of the hole we are trying to fill. We will also be
asking the Biden administration to calculate our obligation to
the CSRS pension plan using modern actuarial principles, which
will save an additional $12 billion.
Today, the Postal Service stands at a crossroad facing
enormous challenges and significant opportunities. What happens
next is up to us.
We can continue to ignore these challenges and demand that
nothing changes while this great organization slowly dies, or
we can come together and do something really important for the
United States Postal Service and the people we serve. Thank
you.
Chairwoman Maloney. Thank you.
Postmaster General DeJoy, you are now recognized for your
testimony.
STATEMENT OF LOUIS DEJOY, POSTMASTER GENERAL, UNITED STATES
POSTAL SERVICE
Mr. DeJoy. Good morning, Chairwoman Maloney, Ranking Member
Comber, and members of the committee.
I want to applaud the subject of the hearing, legislative
proposals to place the Postal Service on a more sustainable
path while addressing performance. You have put your finger on
the precise combination of success factors that the Postal
Service leadership and I have been focused on for the past
eight months--building a financially sustainable organization
that fulfills our responsibility to the American people and to
our employees, and that enables excellent reliable service that
meets the expectations of our customers.
There is difficult work that is ahead of us to fix the
systemic problems that have plagued the Postal Service. But I
am confident that together these problems can be solved and I
see a bright future ahead for the Postal Service and the public
we serve if we have the collective courage to act.
A tangible reflection of our optimism for the long term
viability of the Postal Service is our award yesterday of a
production contract for the next-generation delivery vehicles.
Let me say at the outset that we must acknowledge that
during this peak season we fell far short of meeting our
service targets. Too many Americans were left waiting for weeks
for important deliveries of mail and packages. This is
unacceptable and I apologize to those customers who felt the
impact of our delays.
All of us at the Postal Service from our board, to our
leadership team, to our union association leadership, to every
employee strive to do better in our service to the American
people, and we will do better.
That said, the fundamental challenges that the Postal
Service confronted in 2020 made the urgent change that we need
to pursue even more evident.
The years of financial stress, under investment,
unachievable service standards, and lack of operational
precision have resulted in a system that does not have adequate
resiliency to adjust and adapt to changing circumstances.
I am proud of the dedication of our employees who work
tirelessly to meet our public service mission during the most
trying of circumstances.
While our performance during the election was tremendous,
the service performance issues that we otherwise experienced
during much of the year demonstrate why we must make
fundamental changes to provide our customers with the service
they expect and deserve.
We need to frankly confront the problems we face, be candid
and realistic about the magnitude of the solutions we require,
and embrace the few crucial elements of legislative help we
need from Congress.
Above all, my message is that the status quo is acceptable
to no one because the solutions are within reach if we can
agree to work together. Our dire financial trajectory,
operational and network misalignment to mail trends, outdated
pricing, infrastructure underinvestment, inadequate people
engagement, and an insufficient growth strategy all demand
immediate action.
We have a detailed plan for such action, which we will
finalize soon, and with your help we can restore a Postal
Service to the American people that they truly deserve.
To confront these urgent issues, our team has been working
on a 10-year strategy that will reinforce the Postal Service's
obvious strengths and address our obvious weaknesses.
The key commitments of this plan will include, one, a
commitment to six and seven day week delivery service to every
address in the Nation, not just because it is the law but
because it is the key ingredient to our future success; two, a
commitment to stabilizing and strengthening our work force,
especially for our associates who are not yet in a career
position.
We want every postal employee to have tools, training, and
supportive environment necessary to enjoy a long-term career
with us. And three, a commitment to investing in our network
infrastructure, including vehicles, technology, and package
sortation equipment.
We demonstrated this commitment with our award yesterday
and look forward to working with Congress to determine if our
electric vehicle goals can be accelerated.
In the weeks ahead, I look forward to sharing more
information and engaging in discussions about this strategy
with public policymakers, our unions, and management
associations, our employees, our stakeholders, and with the
American people.
To be self-sufficient, we also need targeted legislation. I
thank you for your leadership and renewed interest in
addressing our unfair and unaffordable employee retirement
health benefit costs. That will give us a fighting chance when
combined with other elements of our plan for financial
sustainability.
Importantly, these funding changes can be made while
sustaining and improving these value benefits to our employees.
Our board and I, our management team, our union associations,
and association leadership look forward to working with you and
the administration to revitalize the Postal Service.
Thank you.
Chairwoman Maloney. Thank you.
Inspector General Whitcomb, you are now recognized for your
testimony.
STATEMENT OF TAMMY WHITCOMB, INSPECTOR GENERAL, UNITED STATES
POSTAL SERVICE
Ms. Whitcomb. Thank you.
Good morning, Chairwoman Maloney, Ranking Member Comer, and
members of the committee. Thank you for inviting me here today
to discuss the Postal Service's recent service issues as they
relate to potential reform efforts.
The mission of the OIG is to ensure the efficiency,
accountability, and integrity of our Nation's Postal Service
through independent oversight under the authority of the
Inspector General Act of 1978.
We take our mission very seriously. The ability of the
Postal Service to meet its service standards is always
important, especially during the current pandemic when
Americans are relying so heavily on it to deliver critical
items like checks, medicines, packages, and ballots.
Even before the pandemic, the processing network was not
operating at optimal efficiency. The Postal Service's drive to
push mail through its network to meet its service goals
actually led to costly inefficiencies due to lack of
coordination and integration between the mail processing,
transportation, and delivery operations.
Additionally, it routinely used the transportation networks
and high levels of overtime to mitigate delays, causing late
and extra trips and further increasing costs. When the pandemic
hit, it brought a perfect storm of postal challenges, declines
in mail volume and revenue, a surge in parcel volume which
offset the revenue loss from mail but required costly
operational shifts, and reduced employee availability due to
illness and quarantine.
In the beginning of the pandemic, the Postal Service was
able to modify operations to generally mitigate the impact and
meet its obligation of universal service.
However, starting in early summer, the Postal Service
introduced various operational and organizational changes. When
deployed on top of employee absences due to COVID-19, these
changes negatively impacted quality and timeliness of mail
delivery. Some areas were hit harder than others.
The pandemic impacted the Postal Service in other ways. The
2020 primaries and general election saw record numbers of
people voting by mail. In addition to our planned election mail
readiness work, we devoted significant resources to monitoring
how mail-in ballots were processed.
In the weeks leading up to November 3, we sent 500 OIG
employees to over 2,000 postal facilities nationwide. Our
fieldwork is now complete and, generally, the Postal Service
effectively prioritized and delivered ballots during the
election season.
We will soon release our work on service performance during
the general election and the subsequent runoffs.
After the election and throughout the peak holiday mailing
season, service performance was severely challenged. While
there are signs of improvement, concerns about service
performance remain. We are currently focused on broad service
issues as well as specific areas where concerns have been
raised.
In response to a request from members of this committee and
others, we are looking at service performance in a number of
low-performing districts including Atlanta, Georgia,
Charleston, South Carolina, and Detroit, Michigan.
In addition, we are evaluating recent embargoes where the
Postal Service stopped accepting mail at certain overwhelmed
facilities. We are currently finalizing a project specifically
focused on the Cleveland, Ohio, plant, where commercial drivers
experienced excessive wait times.
Finally, we are studying the development of service
performance targets and measurements and looking broadly at
reasons why they are challenging for the Postal Service to
meet.
Any discussion about service must be put in the context of
the Postal Service's difficult financial condition. The
combination of declining first class mail volume and revenue,
an ever growing number of delivery points, and large
retirement-related payments has resulted in the Postal Service
reporting a net loss annually for almost 15 years.
While there are no easy answers, there are potential
reforms that can help move toward financial solvency. Our work
supports various measures that could reduce the unfunded
retirement liabilities including Medicare integration,
alternative assessment strategies, and addressing the
prefunding requirement.
We also identified a more equitable way to distribute the
responsibility for CSRS-covered postal employees whose career
spanned both the Post Office department and the Postal Service.
Another way to address the financial problems is exploring
opportunities for new revenue. The Postal Service has
historically played an important role in supporting and
expanding the country's infrastructure, from building roads to
developing the zip code system to providing nonpostal
government services.
We believe there are opportunities to provide additional
services that align with this historical role. For example, it
could partner with internet providers to improve broadband
connectivity, utilize its vast network to improve access to
government services, or provide nonbank financial services.
By leveraging its extensive reach, the Postal Service can
both increase revenue and provide valuable services to the
American public.
Thank you for the opportunity to discuss our work. I am
happy to answer any questions.
Chairwoman Maloney. Thank you.
And, Mr. Dimondstein, you are now recognized for your
testimony.
STATEMENT OF MARK DIMONDSTEIN, PRESIDENT, AMERICAN POSTAL
WORKERS UNION, AFL-CIO
Mr. Dimondstein. Thank you, Madam Chairwoman Maloney,
Ranking Member Comer, and committee members. I welcome this
opportunity to testify.
I am the president of the American Postal Workers Union,
representing 200,000 of the 630,000 postal workers who proudly
accept, process, sort, transport, and deliver mail to 161
million addresses a day.
Over the years, we have worked closely with the other three
postal unions, all equally dedicated to the postal mission of
providing universal service at affordable rates, and working
with Congress to build consensus on legislation.
The pandemic has underscored the vital role of the Postal
Service enshrined in the Constitution and overwhelmingly
supported by the public. Our mission to bind the Nation
together is carried out by moving critical information,
necessary goods, lifesaving medicine, and on a nonpartisan
basis, providing voters access to the ballot box.
Like other front line workers, postal workers have been
nothing short of courageous in these dangerous and stressful
times. The last year has brought a new appreciation for the
Postal Service and also exposed the need to address its long-
term stability.
The system is suffering under the strains of the pandemic,
decades of understaffing and under investment, and, at times,
misguided policies. Service has fallen to unprecedented and
unacceptable lows.
This committee, we believe, can help right the ship, and we
propose the following legislative pillars.
First, repeal the unprecedented and draconian 2006 mandate
to prefund retiree health benefits decades in advance. This
mandate accounts for over 84 percent of reported postal losses
since the passage of the Postal Accountability Enhancement Act.
We were encouraged by the strong bipartisan support for
prefunding repeal in the last Congress and look forward to its
swift passage.
Second, the $45 billion currently in the postal Retiree
Health Benefit Fund is invested solely in low yield Treasury
bonds and is being far outpaced by rising medical costs.
The Postal Service is forced to make up the difference of
billions in lost growth and revenue. We suggest a minimum of 50
percent invested in well proven TSP life funds with strong
oversight.
Third, and only as a companion to the first two pillars,
integrate on a prospective basis future postal retirees into
the Medicare system, thereby reducing the Postal Service's cost
and, in many cases, the employees' cost.
It will have to be carefully designed as a postal plan
under the Federal employee health benefit umbrella to ensure
that the health benefits retirees have earned through their
dedicated service are not sacrificed, and appropriate
exceptions need to be crafted.
These proposals have all earned to one degree or another
bipartisan support in the past and should form the foundation
of new legislation. There is also no question that your
oversight and legislative efforts are needed to address the
current chaos of mail delays.
The goal should be to improve the service, not reduce the
standards. In fact, we support a restoration of the July 2012
service standards. And this is certainly no time to shutter or
further consolidate mail processing facilities and undermine
the network.
The law requires the people deserve and postal workers are
committed to providing the, quote, ``prompt, reliable, and
efficient services under the Postal Reorganization Act.''
Furthermore, our experience of the last year calls for
bolder action as well, in our view. The bipartisan Board of
Governors called for $25 billion In emergency COVID relief last
spring. This body twice passed such a provision.
The December relief package included $10 billion as a down
payment. Emerging COVID legislation should include the
additional $15 billion to help stabilize the Postal Service
during this crisis.
We also urge Congress to pass an additional $25 billion of
what is called a modernization grant, also requested on a
bipartisan and unanimous basis by the Postal Board of
Governors.
This proposal was passed by the House in the last Congress
as part of H.R. 2. This order would allow the Postal Service to
upgrade its fleet and facilities, and expand and enhance Postal
Services.
Postal Service is a national treasure and trusted
cornerstone of our country. The American Postal Workers Union
looks forward to working with this committee on a nonpartisan
and bipartisan basis to ensure the long-term sustainability of
the people's Postal Service.
And I welcome any questions. Thank you, Madam Chairperson.
Chairwoman Maloney. Thank you.
Mr. Quadracci, you are now recognized for your testimony.
STATEMENT OF JOEL QUADRACCI, CHAIRMAN, PRESIDENT, AND CHIEF
EXECUTIVE OFFICER, QUAD/GRAPHICS
Mr. Quadracci. Good morning, Madam Chairwoman, Ranking
Member Comer, and distinguished members of the committee. Thank
you for your leadership in pursuing bipartisan postal reform
legislation and for holding this hearing.
If ever the country needed a reminder of just how important
USPS is to our way of life, we got it in 2020. We all relied on
the Postal Service to deliver groceries, medications, online
purchases, and other basic goods, which have sustained the
economy throughout the pandemic.
We are grateful to the postal workers bravely serving on
the front lines, and now is the time to support those workers
by enacting meaningful postal reform legislation, and we are so
pleased to support the chairwoman's discussion draft.
I have the good fortune to lead an outstanding company in a
critical industry. At Quad each year, over 8 billion pieces of
mail originates from one of our plants. This accounts for just
over 12 percent of the overall marketing mail in the country.
It means that our industry and the USPS are intrinsically
linked.
I am also here on behalf of the Coalition for a 21st
Century Postal Service. With mailers and shippers of every kind
in members of our supply chain, C-21 represents a broad cross-
section of an industry that in 2019, in partnership with the
USPS, generated $1.6 trillion in sales and employed 7.3 million
workers.
Given the accommodation of service and pricing
circumstances over the past year, our coalition and the
industry as a whole are alarmed and question the continued
ability of the Postal Service to provide affordable universal
service.
We firmly believe that raising prices and/or reducing
service will only exacerbate the problem of retaining volume.
The Postal Service stands on the precipice of another step down
in its volumes and revenues.
The combination of crushing mail rate increases authorized
by the PRC and the recent chaos in delivery has shaken the
confidence of the industry in the postal system.
Postage is now more than 60 percent of the cost of mailing
a piece, and with the PRC proposed rate increases that number
will jump to nearly 70 percent or more, disproportionately
impacting mail decisions every day.
Quad turns 50 this year, and while many aspects of being a
printer have changed, one remains the same. Serving our
customers is paramount. The same holds true for the USPS.
Mailing in the digital world requires that all aspects of
the effort work together, as now more than ever we live in a
real-time world and service delays hurt. USPS is a vital
partner serving the American public, and missing delivery and
in-home dates reduces or even eliminates the value of the
catalog from our favorite store, the greeting card from
Grandma, your hometown newspaper, the magazine you have been
waiting for, and we all know how frustrated we get when our e-
commerce deliveries are delayed.
Missed deadlines erode the confidence in the mail and the
volume declines. The chairwoman's discussion draft is an
important step forward that our coalition supports
wholeheartedly.
But we believe more is necessary. First, the unsustainable
rate increases authorized by the PRC, which will equal three or
four times inflation, must be avoided. We recommend that the
committee direct the PRC to conduct a second time-limited
review in order to recalculate rates based on the events of
2020, the impact of the bill and other postal developments,
none of which are considered in this initial review.
Second, if at least some of the USPS retirement assets were
invested in instruments outside of government, the expected
high-yield returns would net the USPS billions of dollars. The
thrift savings plan in which most Federal retirements funds are
safely invested is one of those options.
Third, the time has come to codify the mandate for delivery
six days per week and combine it with a directive that the
postal network remain an integrated whole. We also want to
bring your attention to overcharges imposed on the Postal
Service for the Civil Service Retirement System, which total
anywhere from $50 billion to $111 billion. They should be
returned to the USPS.
The Postal Service is at a tipping point. The impacts of
COVID are exacerbating its financial situation. Maintaining its
self-funded status is critical to the American public.
If business mailers, which generate 90 percent of USPS
revenue, are priced over the mail, taxpayers will be forced to
pay the costs. The USPS can have its deficit closed, remain
self-funded, and a valuable partner by enacting the common
sense reforms proposed in the chairwoman's bill, along with the
additional reforms I have laid out for you.
But we must act now. Thank you.
Chairwoman Maloney. Thank you, and, Mr. Quadracci, you are
breaking up a little bit. We are going to have the staff
contact you and try to correct it for the questioning period.
Mr. Quadracci. Thank you. My apologies.
Chairwoman Maloney. OK. Thank you.
And, Dr. Kosar, you are now recognized for your testimony.
Dr. Kosar?
STATEMENT OF KEVIN KOSAR, RESIDENT SCHOLAR, AMERICAN ENTERPRISE
INSTITUTE
Mr. Kosar. Thank you, Chairperson Maloney. Am I coming
through clearly?
Chairwoman Maloney. You are breaking up a little bit, too.
Mr. Kosar. Oh. All right. I will do my best.
Chairperson Maloney, Ranking Member Comer, thank you for
inviting me to testify, and thank you for devoting your
valuable time and energy to this critical issue.
As many of you know, I have been studying the Postal
Service a long time. I was a nonpartisan analyst at the
congressional Research Service from 2003 to 2014, and I worked
with this committee a lot over that period.
In subsequent years, I have continued to work on Postal
Service challenges. I thank you for having me back to the
committee. This is very, very important stuff.
With time limited and so much for the committee to discuss,
I am going to limit my comments to the issue of the Postal
Service's troubled business model.
As last year demonstrated, the USPS is an essential public
service. Americans trapped at home relied on it to deliver both
parcels and absentee ballots, and this is to say nothing of the
billions and billions of other pieces of mail the Postal
Service delivered, everything from catalogs to jury summons to
prescription drugs.
Americans think quite highly of the agency. In the middle
of 2020, Gallup found the Postal Service was the Nation's most
popular Federal agency, and this is not surprising.
A big reason the public likes the Postal Service is the
model. It is a self-funding government agency. This model means
that the public pays no taxes to support the Postal Service,
and everyone in America receives mail free of charge.
Now, the Postal Service's self-funding model worked pretty
well from 1970 to around 2007 because mail volume grew every
year. But in 2007, then Postmaster General John Potter came to
Congress and said, ``Our business model is broken.''
He noted that the Postal Service's revenues were not going
to increase enough to cover the agency's growing operating
costs. What PMG Potter could not have known was that the very
next year mail volume would plunge with the onset of the Great
Recession, and since 2008, mail volume declined almost 40
percent.
Last year in 2020, the Postal Service's revenues were $73
billion, which is actually a little less than the agency's
revenues were in 2008. But last year, it is operating for $5
billion higher than they were in 2008.
And I should note those figures exclude the cost related to
the Retiree Health Benefits Fund prefunding. If we threw those
RHBF costs in the losses would be worse.
In 2020, the Postal Service lost $4.4 billion dollars. If
you put in the retiree health benefits costs, it would be more
than $9 billion.
So, a critical question I hope Congress grapples with is
what reforms are needed so that the agency's costs and revenues
can be made to better align? Or put more bluntly, how can we
make the Postal Service's self-funding model work in the 21st
century?
Speaking to the revenue side, the Postal Service was set up
in Congress to do paper mail. This main line of business is
atrophying and there is little reason to believe that paper
mail volumes are going to start growing again.
So, you might ask, what about parcels? There, the picture
is unclear. Postal Service's parcel revenues have tripled since
2010. It is far from clear if parcel revenues will continue to
increase. Once COVID-19 passes, presumably some Americans will
shift some of their purchases from online to going back in
person to stores.
I should also mention the Postal Service regularly warns in
its financial statements that most of the parcels it delivers
come from a few big companies and those companies are building
out their own delivery networks, which creates the alarming
possibility of parcel volume and revenue decreasing for the
Postal Service.
This is a really tough situation and I think Congress needs
from the Postal Service an estimate of what revenues likely are
going to be over the next five years.
And then Congress should probably have the Postal
Regulatory Commission, the Inspector General, and mailing and
shipping companies all get together and look these figures over
and provide feedback to Congress.
Then there is the cost side. Last year, the Postal
Service's costs actually went up to an all-time high and only
about $700 million of that has been attributed to COVID-19. As
my testimony notes, the Postal Service had some success in cost
control over the last 10 years. But it is an uphill battle.
As former PMG Potter alluded to, there are natural upward
pressures on the Postal Service's costs. The delivery network
is ever expanding. More Americans make for more delivery
points. And collective bargaining also produces upward
pressures on costs. Healthcare costs for postal workers at all
Americans tend to trend upward, et cetera.
So, I think Congress should consider a variety of means to
empower and encourage the Postal Service to better control its
costs so they can be better aligned with revenues.
With that I will conclude my remarks, and I would be happy
to respond to any of your questions. Thank you.
Chairwoman Maloney. Thank you. I understand we are having
some connection problems. So, we are going to take a very brief
break for five minutes to see if we can get them corrected.
Some of our witnesses are breaking up and the delivery
really from members in this room is breaking up, too. So, we
will be very brief. Five minutes of brief recess to try to
correct this.
[Recess.]
Chairwoman Maloney. Thank you. I think we have improved it
so we can communicate better. Thank you, and the chair now
recognizes herself for five minutes for questions.
I would like to ask about one of the critical provisions in
our draft bill, the integration of postal retirees into
Medicare and get our witnesses' view.
Postmaster General, why don't we start with you? Right now,
postal employees pay into the Medicare program. Is that
correct?
Mr. DeJoy. Yes, ma'am.
Chairwoman Maloney. My understanding is that they have
already paid in about $35 billion since 1983. Is that correct?
Mr. DeJoy. That is correct.
Chairwoman Maloney. But not all retirees are enrolled.
Based on our information, about 73 percent of retirees are
enrolled but the other 27 percent are not. Is that correct?
Mr. DeJoy. That is correct.
Chairwoman Maloney. The provision in our draft bill would
require current employees to enroll in Medicare when they reach
65 and retirees who are already over 65 would be able--would be
given a three-month period to enroll with no penalty.
Postmaster DeJoy, do you support Medicare integration?
Mr. DeJoy. Yes, Madam Chair. We support that Medicare
integration as you described it.
Chairwoman Maloney. Thank you. Not only will Medicare
integration reduce copays and other medical costs for retirees,
but the Congressional Budget Office reports that it will save
the Postal Service nearly $10 billion over 10 years.
Is that correct, Mr. DeJoy?
Mr. DeJoy. I believe it is a little more than that, ma'am.
The Medicare integration projections that we have are at least
$30 billion over 10 years.
Chairwoman Maloney. Thirty billion?
Mr. DeJoy. Mm-hmm.
Chairwoman Maloney. Well, we need to get the right number.
So, we will work with you on that. Thank you.
Let me go down the list of the witnesses. Mr. Bloom, you
are the chair of the Postal Service Board of Governors. Do you
support Medicare integration?
Mr. Bloom. Yes, Madam Chair. We do.
Chairwoman Maloney. Mr. Dimondstein, as the representative
of postal workers, APWU also supports Medicare integration. Is
that correct?
Mr. Dimondstein. Madam Chair, we certainly do as part of a
comprehensive package. So yes, we do. We think it would be good
for workers, good for the Postal Service, and good for the
future.
But it has to be crafted carefully and we are happy to work
with you and the committee on that. But yes, we are in support
as part of comprehensive postal reform and the pillars I
testified about.
Chairwoman Maloney. Thank you.
Mr. Quadracci, as an industry stakeholder, do you support
Medicare integration?
Mr. Quadracci. We absolutely do. It is common sense and it
should be done.
Chairwoman Maloney. And, Ms. Whitcomb, as inspector
general, I know you don't typically take positions on policy
proposals. But would you agree that this would significantly
help the Postal Service's financial picture long term?
Ms. Whitcomb. Yes. Our work supports the fact that this
would be very beneficial to the Postal Service's financial
situation.
Chairwoman Maloney. Dr. Kosar, would you agree that
Medicare integration would help the Postal Service's financial
picture?
Mr. Kosar. It is not something I have looked at closely,
but I get the impression it will. One thing where I could use
some more clarity is whether in the course of doing it, it
creates any sort of negative spillovers upon the financial
health of Medicare itself or on the Federal Employees Health
Benefits Program.
Chairwoman Maloney. Thank you.
This is important because the Government Accountability
Office reports that without reforms like Medicare integration,
the Postal Service Retiree Health Benefit Fund could become
insolvent by 2030, and it appears that we have widespread
support for this provision among the Postal Service, the
workers, the industry, and stakeholders.
I believe we should go forward with this provision when we
introduce this bill and mark it up at our business meeting, and
I hope there is significant bipartisan support for it.
I now yield to the distinguished gentleman from Kentucky,
Mr. Comer, is recognized for his questioning.
Mr. Comer. Thank you, Madam Chair.
Postmaster DeJoy, you have seen the provisions in the draft
bill, mainly, the Medicare integration and prefunding ones. If
we pass just that, just that part, does that put the Postal
Service back in good financial state over the long term?
Mr. DeJoy. No, it does not, sir. We look at this bill, the
components of this bill for Medicare integration and
elimination of the prefunding benefit about totaling somewhere
between $40 billion and $50 billion, and we are projecting $160
billion loss over the same period the next 10 years.
So, in our plan, it is a part of our solution and it is
necessary, and we have experienced, you know, unfair treatment
in this. But it doesn't solve the problem.
Mr. Comer. Do all the provisions in the bill do anything to
address your changing business environment, namely, the
decrease in mail and increase in packages?
Mr. DeJoy. No. No. Those are--but these--there are self-
help plans that we have, you know, moving forward, that will
help address that, and in fact, our strategy, when released,
will--combined with this legislation should bring us to nearly
break even. It is a break even plan over the next 10 years.
Mr. Comer. So, you believe that your plan will be enough to
provide the structural reform necessary to fix the Postal
Service?
Mr. DeJoy. I think absent this legislation that the chair
proposes there is no path to totally eliminating our loss. But
in combination with this and other action--other good
strategies for the American people and for the Postal Service,
we see a path forward to sustainability and good service.
Mr. Comer. What happened the last time you tried to
implement some reforms?
Mr. DeJoy. Well, you know, I think the word ``reforms'' is
exaggerated and what I am--what I am accredited with doing is
also, you know, not accurate.
But a simple thing that I did engage in was setting--you
know, we had an organization with a COO and seven, eight area
vice presidents and an OIG report that said our trucks weren't
running on time and we were running extra trips, and it was
substantially costly and deteriorating service.
And I asked them to go--to make--you know, put a plan
together to do what I felt was a pretty simple task in most
other places. After about three weeks, they came back with a
plan that guided to run--you know, run transportation on time
and it really had, you know, a negative impact on service for
about two or three weeks when we began to recover.
It should have been something that we were--would be able
to resolve within a couple of days. But it took us longer but,
in fact, recover prior to--you know, prior to within about a
month we had gotten back.
All the other things on closing boxes--collection boxes,
reducing overtime never happened, from my standpoint. Those
were internal--it may have been through a meeting where they
briefed me on something, but I was there for three weeks. It
was an--it was an operations team that did it.
In fact, overtime since I have been there is through the
roof, much more than it has ever been, you know, in the Postal
Service.
Mr. Comer. Right. Well, I appreciate the reform efforts and
look forward to looking more into your reform and working with
you.
Mr. DeJoy. If I can just add, the plan that we are talking
about now has been eight months of work with an extensive part
of management team, with dedicated long-term postal employees,
with very, very sensitive--great sensitivity to their service,
their historical service to the American people.
This is a balanced plan when it comes forward. Together
with the chair's legislation, we should be able to, you know,
have a sustainable Postal Service.
Mr. Comer. Right. Look forward to that.
My next question is for Chairman Bloom. Do you support
Postmaster DeJoy's plan?
Mr. Bloom. The plan hasn't been finalized. But the Board of
Governors has been involved with the Postmaster General as the
plan has been developed. Yes.
Mr. Comer. Well, Madam Chair, I will conclude with that. It
is important to note that Chairman Bloom is working closely
with Postmaster DeJoy. Chairman Bloom is a Democrat, former
Obama Administration person, and I think that that is what it
is going to take to reform the Postal Service.
Real reforms, tough decisions. And it is going to have to
be done in a bipartisan way, and I look forward, Madam Chair,
to working with you to see that that happens.
So, I yield back the balance of my time.
Chairwoman Maloney. Thank you.
The gentlewoman from the District of Columbia, Ms. Norton,
is recognized for five minutes.
Ms. Norton. Thank you very much, Madam Chair.
And I really appreciate this hearing because we have been
talking about the prefunding mandate ever since I have been a
Member of Congress, and perhaps we can do something about it
now, Mr. DeJoy.
Only this agency requires full prefunding of health care
for future retirees. Only the Postal Service, and this
prefunding has to be in advance for 75 years. That is a lot of
money, particularly for an agency which is succumbing to new
technology. Employees even many years away from retirement, we
are required to prefund it--to prefund.
Now, the idea was, of course, responsible to ensure the
availability of future health benefits for retirees.
Postal--Postmaster DeJoy, how much money is currently saved
in the Retiree Health Benefits Fund?
Mr. DeJoy. I think the original combination of the postal
contributions and the transition is somewhere around $40
billion to $45 billion.
Ms. Norton. Consider that amount of numbers. If other
Federal agencies were required to prefund the cost of retirees'
health care coverage.
Or let me ask you, do you know of any other agency required
to prefund in this way or is the Postal Service alone?
Mr. DeJoy. I am not an expert on any other agency. But from
the standpoint of the comparisons that I received, no, I don't
think I know of any that does.
Ms. Norton. Well, let me ask Mr. Quadracci about private
sector firms. Are they required to prefund the cost of retiree
health coverage--health care coverage?
Mr. Quadracci. I don't know anybody who does and I think,
in fact, if we had to, I am not sure my business would be here
today.
Ms. Norton. I understand that.
And finally, the Federal Government understood it couldn't
keep refunding and so in 2006 the Postal Service or since that
time has simply refused to prefund $35 billion, I think,
outstanding.
And I think it is fair to say that there is no expectation
that this money will be repaid. In fact, the Congressional
Budget Office, when I cite an authoritative reference, does not
even score any longer the elimination of the prefunding mandate
because it does not believe that these unpaid funds will ever
be repaid.
Chairman Bloom, does the board support eliminating the
prefunding mandate?
Mr. Bloom. We do, Congresswoman.
Ms. Norton. President Dimondstein, your statement
supporting Chairman DeFazio's bipartisan legislation to
eliminate prefunding mandate that was included in this
discussion draft, as you stated, this legislation is a
necessary step to solving the disastrous prefunding mandate
that is dragging down the Postal Service.
Do you stand by that statement here today?
Mr. Dimondstein. Absolutely. It is unfair. It is draconian.
It is unprecedented, and it really has choked the Postal
Service from needed investment and moneys over the years. So,
we absolutely stand by a repeal of the unfair prefunding
mandate.
Ms. Norton. Finally, how would eliminating the prefunding
mandate help your members?
Mr. Dimondstein. The eliminating of the prefunding mandate
would--No. 1, it would take a lot of financial pressure off of
the Postal Service, and anytime there is undue and unnecessary
financial pressure we cannot carry out our mission as
effectively as postal workers believe in and are dedicated to.
And so it would, certainly, enable the workers to provide
better benefits and it would certainly enable the workers,
going forward, to be more secure in their jobs, to be more
secure in their mission.
And I don't know any postal worker that doesn't think that
it is the right thing to do away with this prefunding mandate.
It will make our jobs easier and it would improve the service
to the people of this country, and that is what we are about.
Ms. Norton. Madam Chair, I think it is unanimous from all
parties that prefunding should be eliminated. I certainly hope
we do so in this Congress.
Thank you very much, and I yield back.
Chairwoman Maloney. The gentleman from Georgia, Mr. Hice,
is now recognized for five minutes.
Mr. Hice. Thank you, Madam Chairwoman.
Chairman Bloom, let me begin with you, and I don't want you
to take offense at this first question. It is just a matter of
fact that the ranking member brought it up.
But which political party do you affiliate with?
Mr. Bloom. I am a registered Democrat.
Mr. Hice. OK. So, from that perspective, let me just ask
you, last year did you believe that Postmaster DeJoy was trying
to sway the election against your party's nominee?
Mr. Bloom. No.
Mr. Hice. So, do you believe that or did you believe that
he was somehow removing the blue boxes for the purpose of
preventing people from mailing in ballots?
Mr. Bloom. No.
Mr. Hice. Did you believe that he was trying to remove the
mail sorting machines for the purpose of slowing down election
mail?
Mr. Bloom. No.
Mr. Hice. OK, thank you.
Let me go--Inspector General, let me ask you along the
similar line of thought. Did your office, the Inspector
General's Office, find any sign whatsoever, any evidence of a
plan by Postmaster General DeJoy to hinder vote by mail?
Ms. Whitcomb. No, we did not.
Mr. Hice. All right. Did the Postal Service perform--well,
let me ask you this. Did you look into how well they performed
when it came to delivering election mail?
Ms. Whitcomb. Yes. We have wrapped up that work. Our work
has not--a report has not yet been released, but generally
found that that the Postal Service prioritized ballots
effectively during the election.
Mr. Hice. OK. Well, then let me go to the Postmaster
General himself. How was the performance in delivering election
mail?
Mr. DeJoy. Very proud of the performance of the 640,000 men
and women of the Postal Service, and they--we did the usual
thing that we do every election, performed extraordinary
measures.
We delivered 99.7 percent--we have a report out that is on
our website--99.7 percent of ballots within two days. Some
very, very, extremely high numbers. I have it written down
someplace here.
But everything was in the 99 percent. Ballots to election--
from voters to election boards were 1.7 days, the average time
across 135 million ballots.
Mr. Hice. Well, and I know that is specific to election
mail. We have issues with first class and other types of mail.
But you can't improve a great deal on those kind of statistics
when it comes to election mail.
So, let me come back to you again, Chairman Bloom. Just
again, in your opinion, where the attacks last year against
Postmaster General DeJoy warranted?
Mr. Bloom. Congressman, I would say that they weren't. I
will say, in my humble opinion, that the politicization of the
Postal Service was a bipartisan affair. But on your question, I
think those particular attacks were not fair.
Mr. Hice. OK. Well, thank you for your honest answers. And
quite frankly, it is with that spirit that I believe the
potential of bipartisan solutions is within reach.
We have got to get away from the attacks and allegations
that are unfounded, and I am pleased to hear that you, as a
admitted Democrat, understand that the allegations against Mr.
DeJoy were unwarranted, and I appreciate that.
And so it is my hopes, Madam Chairwoman, that we will be
able to proceed in getting some genuine solutions as we move
forward here, and the allegations that came forth from many in
this committee, that he was attempting to alter, co-op, the
elections. If those were true allegations, he miserably failed.
There was a record-setting 135 million mail-in ballots with
almost perfect delivery with those. And so I am hopeful that
with this information cleared, we will be able to move forward
in a bipartisan manner.
I thank the Madam Chair, and I yield back.
Chairwoman Maloney. Thank you for your bipartisan comments.
And now to the gentleman from Massachusetts, Mr. Lynch, is
recognized for five minutes.
Mr. Lynch. Thank you very much, Madam Chair.
Let me followup on the gentleman from Georgia's questions
then. To the two previous witnesses, would you say with the
near--excuse me, let me quote the gentleman from Georgia--the
almost perfect delivery of ballots in the previous election,
given that fact, would you say that it was unconscionable that
someone would dispute and vote to undo the results of that
almost perfect delivery of ballots in the previous election?
To either of the two previous witnesses. Let me--let me
just recount the facts. The gentleman from Georgia voted to
undo the elections in two separate states, and so he has just
spent about five minutes reminding us, in his own words, that
the delivery of ballots was almost perfect by the United States
Postal Service in that election that he voted to undo.
So, I am asking you whether you--the evidence that you have
supports that.
Anytime now. OK. Reclaiming my time. I didn't think so.
Postmaster General, I am indeed very happy to see you here
today and I am very pleased that in your testimony you have
agreed that the onerous burden on the Post Office to prefund
their retiree benefits by 75 years in advance should be
corrected, should be eliminated, and also that you support the
integration of Medicare, which, depending on whose estimate,
yours or Chairwoman Maloney's, it is going to save about $10
billion for the Post Office over the next 10 years. I am glad
we are in agreement on that.
Let me ask you, there was a story in the Washington Post
that--and I need to be careful about this--it talked about your
yet to be released strategic plan and the change in the
delivery frequency of first class mail and that it may be
reduced from the existing one to two days or 1.7 days, I think
you quoted, to three to five days.
Is that something that you are anticipating or that might
be part of your strategic plan?
Mr. DeJoy. As Chairman Bloom said, we are not finalized. We
are getting very close to finalized, and we have taken eight
months to do a diagnostic on just about every aspect of our
operation to identify what the significant ails in our
performance and cost are.
And we have put together a comprehensive balanced solution
that moves forward in service--of service standards, which have
not been met for the last eight or nine years, and which, as
the OIG has stated, drive significant cost and lack of process
to do Herculean efforts to meet some of the--some of the
considerations we have.
Now, I have----
Mr. Lynch. Let me just--let me reclaim my time, and I
appreciate your answer. I do.
Let me just say we, on this committee, have confronted this
issue before about reducing delivery standards. You know, we
are a little bit concerned right now with the numbers we have
from December, the Christmas rush, where I think 38 percent--
only 38 percent of the local first class delivery was on time,
and that is down from 91 percent in the previous year.
So, let me--let me just say this.
Mr. DeJoy. I would just say--I would say that is not
accurate information.
Mr. Lynch. Well, that is the information we have from the
Post Office. So, that is all I got to work with.
All I got to say is this. If the business plan for the Post
Office is to deliver an inferior product, and we are in
competition with FedEx and UPS and Amazon, that spells trouble.
That leads me to believe that we would be going into a downward
spiral.
The solution can't be to not deliver the mail or to deliver
it three to five days. You know, instead of next day delivery,
when we can get around to it delivery. That won't work. Just
like, you know, going to five days did not work because that is
not what the customer wanted.
You know, the customer wants seven days delivery, not five
days, and thankfully, my colleagues on the other side of the
aisle finally agreed with that and dropped their proposal.
So, for what it is worth, that is my sense of it. I thank
you again for your willingness to attend the committee and I
yield back the balance of my time.
Chairwoman Maloney. Thank you.
The gentlewoman from North Carolina, Ms. Foxx, is
recognized for five minutes.
Ms. Foxx. Thank you, Madam Chair, for holding this hearing.
All of us are affected by the Post Office. All of us use
the Post Office. All of us want the Post Office to be
efficient. I want the Post Office to be self-funded as it was
planned to be many, many years ago. I use the Post Office a
lot. The local folks in my area are great and I enjoy talking
with them.
And I want to thank our witnesses for being here today. Mr.
Dimondstein, I have a question of you. My understanding is you
represent 200,000 of the 600,000, postal union workers. I want
to ask you how your union and the others are going to help
assure the success of the Postal Service operational reform
efforts that the Board of Governors and the Postmaster General
have jointly designed.
And I don't want you to mention more money. What are you
all going to do better than you have done before? Because you
have a real self-interest in this issue.
Mr. Dimondstein. Well, better than we have done before. I
think the postal workers do a great job and I think the postal
workers--and we have seen that in a pandemic, underscored in
these stressful and dangerous times.
The postal workers themselves and the unions that represent
them actually have done a lot to try to deal with the staffing
issues, to try to deal with the overtime issues, and, in fact,
have addressed questions of pay rates and benefits in a way
before my time, I should say. But----
Ms. Foxx. But my understanding is that benefits are
climbing as mail volume is decreasing----
Mr. Dimondstein. Well----
Ms. Foxx [continuing]. Even though there may be a very
slight decline in employees. So, the number of employees is not
going down commensurate with the mail volume going down. But
your benefits are going up.
Mr. Dimondstein. Our benefits--look, we--obviously, the
union believes that all workers should have decent living wages
and good benefits. The unions have given up a lot of wages and
including some of our benefits structure over time.
Ms. Foxx. Name an example, one specific example.
Mr. Dimondstein. OK. In 2011, the Postal Board of Governors
chair testified before Congress that the American Postal
Workers Union gave up $4 billion of wages and benefits in that
one contract for the life of the contract, and that keeps
giving, going forward.
We have increased the contribution, unfortunately, from our
point of view, but the contribution that workers pay for their
health care premiums have tremendously increased to the
detriment of the worker, all for----
Ms. Foxx. But, Mr. Dimondstein----
Mr. Dimondstein. That is an example.
Ms. Foxx [continuing]. Don't most people in the private
sector pay some on their health care benefits? I think most
people in the private sector do pay for their health care
benefits.
Mr. Dimondstein. But I am--again, I don't want to argue. I
am sure you are aware that postal workers paid 28 percent of
their premiums for a family health plan. That is over $6,000 a
year that the postal worker pays out of their pocket. It is
over----
Ms. Foxx. OK. What--do you want the Post Office to be self-
funded? Do you want to be self-funded, self-sufficient, and not
have to keep coming back to Congress to ask for money?
Mr. Dimondstein. I don't know anytime outside of the COVID,
in my history as the president and a union activist before
that--I know of none--no time outside of the COVID emergency
relief that taxpayer dollars since the--since it changed under
the law in 1970 that taxpayer dollars have been used to going
to the Postal Service nor has the Post Office, as far as I
know, come before this body seeking money. I am not sure where
all this bailout idea comes from when it is the opposite.
Ms. Foxx. OK. Should the Postal Service give incentives for
the retirement of older employees and hire new employees?
Mr. Dimondstein. That is a decision that management makes.
If you are if you are asking about early outs, Congresswoman,
while there has been history at times----
Ms. Foxx. Just yes or no. Just yes or no.
Mr. Dimondstein. The question is--that is a Postal Service
decision. Yes.
Ms. Foxx. OK. Thank you.
Mr. Dimondstein. Sure.
Ms. Foxx. OK. IG Whitcomb, I have a question. According to
CBO, the Medicare trust fund will run out of money as early as
2023. Integrating postal retirees will expedite the collapse of
the Medicare program. What happens to postal retirees then?
Ms. Whitcomb. That is--if the Medicare trust fund runs out
of money, is that what you are asking?
Ms. Foxx. Yes, and the employees are put into Medicare as
opposed to their own health care fund.
Ms. Whitcomb. Yes. I am sure that is a bigger challenge
than the postal employees. But it is not work that we have done
at this point.
Ms. Foxx. But that is the--they want to get into the
Medicare plan, knowing that it is going to run into trouble
before your own medical plan is going to run into trouble. So,
what does that say about the approach to this?
Ms. Whitcomb. Again, that is something that is a bigger
challenge than the Postal Service and not one that our work
addresses or that I am prepared to address. But we can get back
to you if you are interested in us doing some work in that
area.
Chairwoman Maloney. The gentlewoman's time has expired.
Ms. Foxx. Thank you. Madam Chair, one more quick question.
Not a question. I have some material I would like to enter into
the record with----
Chairwoman Maloney. Without objection.
Chairwoman Maloney. Thank you.
Ms. Foxx. Thank you.
Chairwoman Maloney. The gentleman from Tennessee, Mr.
Cooper, is recognized for five minutes.
Mr. Cooper. Thank you, Madam Chair.
Many of our colleagues have mentioned the goal of self-
funding for the Post Office, and it is a worthy goal.
But, Mr. DeJoy, it is not a goal that you pursued in your
private sector companies, right, self-funding of health
benefits over 75 years? That would have been disastrous for
your company, right?
Mr. DeJoy. Well, we had self-funding plans, but they were
not advanced the way--you know, actuarially for the rest of
everybody's life. So no, we would not have had that.
Mr. Cooper. And no other Federal agency has this
requirement?
Mr. DeJoy. Not that--not that I am aware of, sir.
Mr. Cooper. So here, we are putting a burden on the Post
Office that is extraordinary and, perhaps, fatal and this
Congress is, hopefully, going to lighten that burden.
But this self-funding requirement, I think, has more
implications. I think it would be better if we all agreed that
we need to minimize the subsidies because the cost of
delivering mail in Alaska is, clearly, higher than in a more
urbanized state, right?
Mr. DeJoy. It costs more to get to Alaska and that is a
different question than----
Mr. Cooper. But Alaska is a part of the United States, just
as rural citizens are part of the United States, and it costs
more to deliver the mail the last mile to those people.
Mr. DeJoy. It does, but there is a process.
Mr. Cooper. It is a largely unacknowledged cost because the
price of the stamp is the same everywhere.
Mr. DeJoy. But that is the intent of universal service,
sir.
Mr. Cooper. But that implies a hidden subsidy and a hidden
tax within each stamp because some people pay more, some
people--everybody pays the same.
Mr. DeJoy. It implies a cost for the service as designed by
the Congress. It is a service. You have--it is not a tax. You
have a choice not to mail something.
Mr. Cooper. Well, most people rely on communication, and
the private competition that you face is much more flexible at
varying their rates. The Post Office has a flat fee pretty much
for everybody, even though the costs vary widely.
Mr. DeJoy. That is, again, the design of the system. I
think the problem is we have not been able to address that
pricing over--for 14 years until just recently. That has been
most of the damage that has been done to the organization.
Mr. Cooper. But puts the Post Office at a systematic
disadvantage, right? Because of the design of the program. It
is flat rate postage, and it goes anywhere--Alaska, Hawaii, the
territories. Same price.
Mr. DeJoy. Well, we talk about market-dominant mail
products, which we--that is what you are speaking about now,
which we really don't have other, you know, competition in that
area other than digital communications and our failure to
evolve over the last 10 years.
So, I don't really--I really don't understand what you are
getting at.
Mr. Cooper. Would FedEx, Amazon, UPS be doing as well if
they didn't rely on the Post Office so heavily for last mile
coverage?
Mr. DeJoy. FedEx, that is a competitive product, which we
need to get better at doing. We have operational--we have not
evolved.
Mr. Cooper. But they rely heavily on our last mile coverage
because we are the only people who provide that.
Mr. DeJoy. That is not really true. Right. FedEx actually
doesn't do--their last mile delivery with us has been
significantly reduced over the last year.
Mr. Cooper. But they still rely on the Post Office to
deliver and you have actually been making money on the increase
in package deliveries that have been sent the Post Office
direction, right?
Mr. DeJoy. Package volume has been up significantly.
Mr. Cooper. And that has been a silver lining in the cloud.
Mr. DeJoy. Well, the cost coverage on competitive package
volume is different than the cost coverage on mail, as the
pricing is designed. And it is important--it is important that
we recognize the difference in what it is you are identifying
here, package delivery versus mail delivery, going to every
address versus going to where we can price competitively,
because that is a big part of the problem that we are
attempting to solve with our new plan.
Mr. Cooper. I think Mr. Dimondstein mentioned that $45
billion that has been saved up for health benefits for
employees. Now it is only invested in low-yield Treasury bonds.
It would be interesting if that money had been invested in
the stock of Amazon, FedEx, and UPS. Would the employees be
doing a whole lot better today than they are now with the low-
yield Treasury bonds?
Mr. DeJoy. Yes, sir.
Mr. Cooper. How much better?
Mr. DeJoy. Bazillions of dollars.
Mr. Cooper. Bazillions of dollars. So, again----
Mr. DeJoy. We are all familiar with the investment strategy
of Federal Government's and Social Security investment
strategy, as it is--that has been long debated is you give up
risk, you know, for a price. I mean, that is a whole another
discussion that you all have had for years.
Mr. Cooper. Finally, Mr. DeJoy, you are a political
appointee, a holdover. No one knows how much longer you are----
Mr. DeJoy. That is incorrect. I am not a political
appointee. I was selected by a bipartisan Board of Governors,
and I would really appreciate if you would get that straight.
Mr. Cooper. Well, how much longer are you planning to stay?
Mr. DeJoy. A long time. Get used to me.
Mr. Cooper. As long as the board approves your staying?
Mr. DeJoy. That is the--as far as my commitment to see our
plan through, I am here until I can see it tangibly produced
the results we intended to. I believe the board is committed to
that----
Mr. Cooper. But that is not determined by you. It is
determined by the board.
Mr. DeJoy. Well, it could be determined by--I could resign,
right?
Chairwoman Maloney. The gentleman's time has expired. The
gentleman's time has----
Mr. DeJoy. I could get tired of it. I have other things I
can do.
Chairwoman Maloney. The gentleman's time has expired.
Mr. Jordan from Ohio is recognized for five minutes.
Mr. Jordan. Thank you, Madam Chair.
Mr. DeJoy, did you have any protesters at your house last
night?
Mr. DeJoy. Not last night.
Mr. Jordan. President Biden called for you to resign, Mr.
DeJoy?
Mr. DeJoy. No, the president has not called for me to
resign.
Mr. Jordan. Any member of your board called for you to
resign?
Mr. DeJoy. No, sir.
Mr. Jordan. None of the Democrat and Republicans on the
board haven't called--any of the Democrats called for it?
Mr. DeJoy. We have--you know, it is hard to tell in our
board meetings because we all very much act in a bipartisan
manner focused on postal issues. But there are two gentlemen
that--you know, the chair identified that he is a registered
Democrat and I think there is another gentleman on the board.
Mr. Jordan. Mr. Bloom is a Democrat, right? He supports
you.
Mr. DeJoy. Yes, he is a Democrat. Yes.
Mr. Jordan. Has the chair--the chair of this committee, has
she called for you to resign this Congress?
Mr. DeJoy. She has not.
Mr. Jordan. She called for you to be suspended last
Congress. I don't think she has called for you to resign in
this Congress, has she?
Mr. DeJoy. We have had good conversations on a variety of--
--
Mr. Jordan. Yes. And I know where Mr. Connolly's at and
some of the Democrats. But, I mean, last time you were here you
had protesters banging on pots and pans outside your house. You
had 90 some people calling for you to resign. You were the
worst guy on the planet last time you were here. I just want to
know what has changed.
Mr. DeJoy. Maybe--that is not for me to answer.
Mr. Jordan. I mean, they were so ticked last time, Mr.
DeJoy, they passed a bill--they called us in on a Saturday in
August to pass a bill, and then they had a hearing on the bill
they passed two days later. Do you remember that?
Mr. DeJoy. So, it was an unfortunate set of circumstances
for me, for my family, for the postal employees, for the postal
board. None of it was based in any type of fact. It was
sensationalization.
But we are through--I am through that. The board is through
that. We are just trying to get our plan--get this legislation
passed and get on with the improvements we need----
Mr. Jordan. They passed a bill on Saturday, August 22, a
bill they know had no chance of becoming law, a bill that was
not even taken up in the Senate. Then they had a hearing on the
bill they already passed two days later. Normally, you do it
the other way around.
Normally, you actually have a committee get together, look
at the legislation, debate it, discuss it, have witnesses, get
expert testimony, all that stuff. And then you maybe pass it
out of committee and go to the floor and do it.
They called us in special to pass a bill on a Saturday, and
then had a hearing on Monday and all that weekend they had
protesters at your house, disrupting your family and, frankly,
your neighbors as well.
And now you are telling me you got no one on the Board of
Governors asking you to resign, no protesters at your house.
The president hasn't asked you to resign, the chairwoman hasn't
asked you to resign, and I want to know what has happened.
What is different between February 24, 2021, and August 24,
2020? What happened in those six months? What could--what could
explain the Democrats' difference in attitude?
Mr. DeJoy. Mr. Congressman, I don't want to participate
in----
Mr. Jordan. What do you mean you don't want to--I am asking
you a question----
Mr. DeJoy. I believe--I believe there is----
Mr. Jordan. Can you hazard a guess as what might have
happened between August 24, 2020, when they passed a bill----
Mr. DeJoy. I am--I am hoping----
Mr. Jordan [continuing]. And then had a hearing on it? What
may have happened between August 24th, 2020, and February 24th,
2021? What could have happened in the interim there that would
change the attitude of Democrats?
Mr. DeJoy. One of two things. Either everyone is anxious to
hear our new strategic plan or we had an election. One of the--
--
Mr. Jordan. I am sure that is it. I am sure that is it.
[Laughter.]
Mr. Jordan. Still waiting for an answer. I did this to you
when you were here last time, Mr. DeJoy. I asked you, you know,
to comment on something. You wouldn't do it then either.
What happened between August and February? What important
event happened?
Mr. DeJoy. We had an election.
Mr. Jordan. We had an election. It was all a charade. You
don't have to take my word for it. The Wall Street Journal
called it a giant conspiracy theory. Called us back in.
It was all to--it was all part of the predicate for laying
the groundwork for the mail-in balloting and all the chaos and
confusion the Democrats wanted, and the laws that I think they
passed in so many states, frankly, in an unconstitutional
fashion, it was all about politics.
It was all about the election. Do you agree with that, Mr.
DeJoy?
Mr. DeJoy. It was a very sensitive time for the Nation and
there was a lot of activity----
Mr. Jordan. They accused you of things--that they said you
were--you were restricting overtime. False. They told you, oh,
you were taking the collection boxes, doing something that had
never been done before, even though it had been done by every
previous Postmaster General.
Twelve thousand of them had been moved by the Obama
Administration Postmaster General. But, oh, somehow you were
the worst. Again, all under the guise of creating this crazy
chaos that they wanted around the election relative to mail-in
balloting and you were the guy they used to launch it all, to
start it all in the summer, when everyone was calling saying
all kinds of--you were--I mean, you were--like I said, they had
you as the worst guy on the planet back then. And now
everything, oh, it seems to be so much better now.
Chairwoman Maloney. The gentleman's time has expired.
Mr. Jordan. Thank you, Madam Chair.
Chairwoman Maloney. The gentleman from Virginia, Mr.
Connolly, is now recognized for five minutes.
Mr. Connolly. Thank you, Madam Chairwoman. And all the
gaslighting that we just heard does not change facts. Mr.
Dimondstein, please move the mic close to your mouth. Thank
you.
Am I--am I making this up, as Mr. Jordan apparently would
have you believe? That the president of the United States last
summer, Donald J. Trump, publicly said voting by mail would
lead to massive fraud. Did he say that or is that--am I
imagining that, Mr. Dimondstein?
Mr. Dimondstein. I don't think you are imagining it. What I
recall him saying at one point is he was going to make sure
that the Postal Service got no financial COVID emergency relief
because then they would be able to more effectively deliver
value----
Mr. Connolly. Thank you. But the point is, it was Donald
Trump, the Republican nominee, who was planting the idea, aided
and abetted by disruptive changes proposed by a new Postmaster
General and a compliant Board of Governors, that actually
eroded public confidence in the ability to vote by mail. That
wasn't a Democratic narrative. That was a Republican narrative
by the president of the United States and his enablers.
And oh, by the way, inconvenient fact. Mr. Hice would have
you believe that it was partisans on this committee, and he
quoted a number of Democrats--by the way, admitted Democrats.
For the record, I am an admitted Democrat and damn proud of it.
I didn't vote to overturn an election and I will not be
lectured by people who did about partisanship. The facts are
stubborn things. It wasn't--the idea that it was complete
fiction, that the changes proposed by Mr.--in fact, implemented
by Mr. DeJoy with a compliant board, led by, now, Chairman--Mr.
Bloom, who has admitted he went along with them.
It was a Federal judge who found it politically motivated,
not a Democratic critic. I refer you to a Reuters story last
September. U.S. District Judge Stanley Bastian in Yakima,
Washington, upheld a challenge by 14 states and enjoined the
Postmaster General to stop what he was doing, and said the
states have demonstrated that the defendants are involved--the
defendants being listed DeJoy and company--they are involved in
a politically motivated attack on the efficiency of the Postal
Service.
That is not some partisan Democrat. That is a Federal
judge, and that wasn't the only ruling that provided the
injunction to stop the deliberate disruption of the Postal
Service that was contributing to erosion of confidence in the
ability of people to vote by mail.
That wasn't a Democratic plot, and all of the gaslighting
we are listening to here doesn't change the facts.
Mr. Bloom, you have admitted that--in fact, you supported
and do support the changes that Mr. DeJoy undertook that were
widely criticized not just by Democrats but by actual American
people who received the mail or didn't, by businesses, by
stakeholders, by the media. That didn't just originate in this
room.
Somehow, people were bothered by it because one of the most
sacred institutions in America that still works during the
pandemic, warts at all, was actually being threatened in the
public mind by these changes and that the reason was political.
We didn't make that up. A Federal judge confirmed it.
Mr. Bloom, you agreed with those changes. You agreed to
hire Mr. DeJoy because you found him qualified. You had--you
were--according to one of your colleagues, you were all tickled
pink with the performance of the Postmaster General in the
height of the controversy during a pandemic. Are you still
tickled pink with his performance?
Mr. Bloom. The board supports the Postmaster General.
Mr. Connolly. Do you--your colleague said 100 percent of
the board were tickled pink and had complete support. Was he
speaking for you that you were tickled pink? Just wanted to get
it in the record that you are tickled pink.
Mr. Bloom. I am generally not tickled--I am generally not
tickled pink by things. But as I said, the Board of Governors
believes the Postmaster General, in very difficult
circumstances, is doing a good job and we have been involved
with the development of the plan that we think will make the
Postal Service much stronger and much better over time.
Mr. Connolly. I appreciate your candor. I am running out of
time. Respectfully, I disagree, and I hope President Biden
disagrees as well and that we take action to replace the Board
of Governors with people who care about the Postal Service and
are going to be committed to their job of oversight and
accountability.
I yield back.
Mr. Comer. Madam Chair, point of order.
Chairwoman Maloney. The gentleman is recognized for a point
of order.
Mr. Comer. I just wanted to state for the record Mr.
Connolly pointed over about voting to object in the election. I
have never--ranking member, I have never voted to object to a
Presidential election. But I will tell you who has. Nancy
Pelosi in 2004. So, I just wanted to state that for the record.
I yield back.
Chairwoman Maloney. The gentleman yields back.
Mr. Connolly. Madam Chairwoman, I would--if I may, I
appreciate the distinguished gentleman's comment. I did not
name anybody who voted to overturn the election. Certainly did
not mean to include Mr. Comer if he didn't do it.
Chairwoman Maloney. The gentleman yields back.
The gentleman from Wisconsin, Mr. Grothman, is recognized
for five minutes.
Mr. Grothman. Thank you. First of all, I would like to
just, in general, thank you for getting out the contracts with
regard to the new delivery vehicles. I think you did a great
job in selecting new vehicles and I am sure that they are going
to be a great asset to the Postal Service.
Mr. DeJoy. Thank you, sir.
Mr. Grothman. Next, I have kind of a technical question
here, and I guess it could be either one of you. I know a lot
goes--you know, a lot of--there is a lot of controversy about
this prefunding the pension plan, and I have talked to people
back in my district who are very emotional about it.
But they don't know how it works. So, I figure between the
two of you folks up here today, you should know how it works.
If we have three different individuals, and they began this
prefunding in the first decade here, 2006 or 2----
Mr. DeJoy. Can you speak--I can't hear you.
Mr. Grothman. OK. I believe they began the prefunding in
around 2006, 2005, around then?
Mr. DeJoy. Yes, sir.
Mr. Grothman. OK. If I have three different employees, one
employee began working at the Postal Service in 1975 and ended
in 2005. So, he entirely worked before the new mandate came in.
We got another employee who began work in 2000. He is going
to retire in 2030. So, he kind of straddles the period before
the prefunding and the brief period after. We have got another
employee who starts working in 2010 and winds up retiring in
2040. So, his entire tenure is part of the prefunding.
When we calculate the prefunding, how is it calculated,
first of all, on the guy who retires before the prefunding
begins? Is that pay as you go for his pension?
Mr. DeJoy. His--the fellow who retires before prefunding
began, the cost of his retirement benefits would actuarially be
calculated in being in our underlying costs. So--but he would
not have the prefund.
There is two elements. There is the liability, the
projected liability, and then there is the prefunding mandate
of that projected liability.
Mr. Grothman. OK. But the guy who retires before the
prefunding starts, do we operate, and the union president jump
in here too, is that pay as you go then? Are they--is that----
Mr. DeJoy. No. If they retire--the prefunding aspect of it
is--I believe the way tabulation works is we take all employees
that are in Postal Service employ, whether they are there for
three years or four years and they got another 30 years ahead
of them, and we start calculating what their future retirement
benefit would be and amortizing that over some period of time.
Mr. Grothman. Right. I understand. But so the person who
already retired he hit--the way we pay for his pension or
medical is unrelated to what happened in 2005, 2006, right?
Mr. DeJoy. If he retired before--you are right on that.
Yes.
Mr. Grothman. Right. So, he goes--OK. And the person who
starts after that, when we calculate that that is an entirely
amortized thing and, you know, we calculate how much money we
got to put in there so when he retires, we are ready to go,
right? The guy in the middle, the guy who, say, starts working
in 2000 and retires in 2020 or something, so that is a hybrid.
Mr. DeJoy. Yes.
Mr. Grothman. We prefund some but not all?
Mr. DeJoy. No, we would prefund--once the prefunding
mandate came in, you would calculate what--whoever was on the
rolls you would calculate what that liability was, and then
that would be amortized in terms of part of the prefunding.
Mr. Grothman. So, do we--this is the question. So, do we
try to catch up or not? Because if we have a postal employee
who began working before the mandate but retires after the
mandate, when he retires we still--then we still have some of
that liability unfunded. Is that correct?
So, when he retires part of it should be the money we have
set aside, which we haven't, but part of the money is set aside
and part pay as you go. Is that the way it works?
Mr. DeJoy. Yes, well, the overall liability is calculated
based on every everybody that is on the payroll, right, and
retirees. That is the overall liability. That actuarially gets
adjusted, you know, every year.
The prefunding portion was to--the prefunding portion was
to advance--to put more money into the--into the fund for the
future retirement benefit of everybody that is on the work
force.
So, some may retire--may never get--they are not vested.
They may never get to a retirement status with the Postal
Service. Yet, we are prefunding their liability.
Mr. Grothman. OK. I guess I used up all my time. Too bad.
No fun. Sounds like I confused him.
Chairwoman Maloney. Yes. The gentleman from Illinois, Mr.
Krishnamoorthi, is recognized for five minutes.
Mr. Krishnamoorthi. Thank you. Good morning, Mr. DeJoy.
I just want to clear up a couple of things. As you said at
your testimony at page nine, the USPS' performance in the
election in delivering millions of mail-in ballots was quote,
unquote, ``a great success story,'' correct?
Mr. DeJoy. Yes, sir.
Mr. Krishnamoorthi. And as you detail in your testimony,
you provided, quote/unquote, ``secure and timely delivery'' of
the ballots that were entrusted to you, right?
Mr. DeJoy. Yes, sir.
Mr. Krishnamoorthi. You did everything possible to prevent
fraud in mail-in balloting, correct?
Mr. DeJoy. I don't know that we were in--we are in charge
of fraud. I don't know what you are referring to.
Mr. Krishnamoorthi. You did everything to prevent fraud
with regard to the mail-in ballots in your custody, correct?
Mr. DeJoy. Within our custody, we protected the security of
the mail. Yes.
Mr. Krishnamoorthi. And you are not aware of any fraud with
regard to the mail-in ballots that you delivered?
Mr. DeJoy. No.
Mr. Krishnamoorthi. Joe Biden won the election, right?
Mr. DeJoy. Yes, sir.
Mr. Krishnamoorthi. Let me turn you to a chart that the
Washington Post produced on February 6. It talks about the
delivery--the on-time performance of the delivery of two-day
and three-to five-day first class mail and, basically, it
charts what has occurred with regard to this on-time delivery
from January 2020 through December 2020.
And at the top it, basically, says that on--in January
2020, on-time delivery was, roughly, around 90 percent and on-
time delivery for three-to-five-day mail was, roughly, 80
percent. So, 90 percent for two-day delivery, 80 percent for
three-to-five-day delivery of first class mail.
You took office around the end of July, around June 20,
right?
Mr. DeJoy. Mm-hmm. June 15.
Mr. Krishnamoorthi. June 15. Fair enough. And after you
took direction or leadership at USPS, what happened with regard
to two-day delivery is it went from, roughly, the 90's all the
way down to around 70 percent toward the end of the year, and
with regard to three-to-five-day it went from, roughly, 80
percent when you took charge of USPS down to approximately 40
percent, and that is according to the data from the USPS.
So, sir, when you get to 40 percent, basically, what you
are telling your customers is, you have a, roughly, four in 10
chance that their three-to-five-day delivery standard is going
to be met, and that is starting to sound like Vegas.
And the problem is that sending a letter through the USPS
should not be a game of chance, and that is why my constituents
are so outraged.
But let me talk to you about two-day mail for one second.
According to the February 12 Washington Post, there is an
article in there that says that you have quote, unquote,
``discussed plans to eliminate two-day delivery for first class
mail.'' You don't dispute that you are considering as part of
your 10-year plan the elimination of the two-day delivery first
class mail standard, are you?
Mr. DeJoy. We are evaluating all service standards.
Mr. Krishnamoorthi. Sir, will you commit to keeping two-day
delivery of first class mail locally?
Mr. DeJoy. I will--there will be two-day mail class in our
plan. Some percentage of that, where the reach is right now,
may change.
Mr. Krishnamoorthi. So, you are--but what you are saying is
that for local mail, first class----
Mr. DeJoy. You need to define local and I don't--second, I
don't agree with any of your premise about my--are you trying
to suggest----
Mr. Krishnamoorthi. You can take that up with the--you can
take that up with the Washington Post, sir. Let me--let me
direct you----
Mr. DeJoy. Well, it is unfortunate that that is where you
get your information, because it is going to take more than
that to fix the Postal Service.
Mr. Krishnamoorthi. Well, sir, The Washington Post sourced
it from the USPS, so you can talk to your data source at the
USPS, sir.
Mr. DeJoy. The Washington Post is like many members here.
Really don't know what is going on within----
Mr. Krishnamoorthi. Let me turn your attention to another
issue, sir, which is this. According to your own testimony, you
said that the first step in your reorganization or your
operational changes is we became more disciplined by running
our trucks on time and on schedule, according to page 14 of
your testimony.
The L.A. Times ran a story and investigation showing that
trucks that ran on time left half empty and left mail at their
processing facility.
So, Mr. Dimondstein, let me just ask you this. To the
constituent who comes to me complaining that their medications
haven't arrived on time, I shouldn't tell them that the trucks
were on time, should I?
Mr. Dimondstein. Our position has always been that it is
called----
Mr. Krishnamoorthi. Sir, just a yes or no question.
Chairwoman Maloney. The gentleman's time has expired.
Mr. Dimondstein. You should not have to----
Chairwoman Maloney. The gentleman may answer the question.
Mr. Dimondstein. I am sorry.
Mr. Krishnamoorthi. Go ahead.
Mr. Dimondstein. The question----
Mr. Krishnamoorthi. To the constituent who complains that
their medications haven't arrived on time, I should not go to
them and just say the trucks ran on time. Don't worry, the
trucks ran on time.
Mr. Dimondstein. You are correct and we agree with you.
Mr. Krishnamoorthi. Thank you. I yield back.
Chairwoman Maloney. The gentleman from Texas, Mr. Cloud, is
recognized for five minutes.
Mr. Cloud. Thank you, witnesses, for being here today. Can
you hear me? Thank you for being here today. Really appreciate
the opportunity to address what is this important topic.
Certainly, the Postal Service has been on the high risk
list, I think, since 2009, the previous Obama/Biden
administration. So, it is time for we--for us to address it for
sure.
I want to especially welcome back Postmaster DeJoy. It is
great to have you back here in what hopefully is a more
substantive conversation than the last time you were here. Last
time it was, unfortunately, in such a hyper-politicized
environment that it seemed impossible to really get anything
done in the ways of conversation.
Now, Chairman Bloom, could you remind us as to how
Postmaster DeJoy became the postmaster? Was this a political
appointee? Was this a partisan standard? Could you--could you
remind us of that, please?
Mr. Bloom. Sure. The end of last year, the then existing
Postmaster General indicated that she intended to retire and
the board embarked on a search process, a rather traditional
search process. Hired an outside firm who specializes in
search. We wound up identifying 200 people who were potentials.
That list was then winnowed. There were--and a number of people
interviewed, and finally the board came to a decision.
Mr. Cloud. And this is a partisan board? A bipartisan
board?
Mr. Bloom. The board at the time and today has both
Democrats and Republicans on it.
Mr. Cloud. And that vote was a partisan vote or how did
that vote come down?
Mr. Bloom. The vote was unanimous.
Mr. Cloud. OK. That is what I recalled, and that was part
because of your great logistics experience in the private
sector. And it seemed to me that you came into the position and
began to make some systemic changes.
I know one of the things that my colleague just mentioned
was the fact that one of the things you looked at was that
overtime costs were going up. Meanwhile, our bulk delivery was
going down.
How much mail we were delivering was going down, and so you
began to look at that as, hey, here is a way we can maybe save
some money for the American taxpayer.
Maybe you didn't understand the political environment that
we were in at the moment, but it seemed like that has been the
case that the attempts have been to address some of the
systemic issues.
The GOA, the Government--the GAO, I should say, put out a
report in May 2020 that said that the United States Postal
Service's current business model is not financially sustainable
due to the declining mail volumes, increased compensation and
benefits costs, and increased unfunded liabilities and debt.
We have known for a long time that the USPS is not in a
sustainable business model, especially with the competitors we
see and the changing dynamics of how we communicate and how we
ship and do mail.
Does this bill address any of these issues?
Mr. DeJoy. Sir, in our plan, there are three to four
different elements, segments of it, that bring us to
sustainability and growth in serving the American people.
And this is an important part of it. This is about a third
of--gets us a third of the way where we need to be in the plan
that we have put together. So, it is very important to the
future sustainability, which I believe we, with our design, we
have a sustainable and viable Postal Service.
Mr. Cloud. OK. But that is in--that is in your report to be
given to us in short order, right? That has not been presented
yet?
Those proposals aren't in this bill?
Mr. DeJoy. They are not but, really, it is the only
legislative ask where we are proceeding within our plan.
Mr. Cloud. OK.
Mr. DeJoy. So, if you want a viable Postal Service and can
trust that we have a plan to move forward, this is--this is,
you know, a good way to help.
Mr. Cloud. OK. Could you talk about some of the logistics?
Do you believe that the rise in third-party logistics companies
offers opportunities for the Postal Service to increase work
sharing?
Mr. DeJoy. I am not a fan of evaluating work share. I think
it is--in many ways it has done--it has enabled people to run
around and network and it is part of the reason we have a
hollowed out network, and a network is the biggest part of our
problem.
But I do see third-party logistics companies, they have
customers and customers need to get to the American people, and
it is part of our long-term plan. We think we need to have a
stronger marketing and product-oriented type of service that
attracts all types of companies to put more--mail is becoming--
you know, packages is mail.
We saw that during the pandemic a big--you know, our
competitors stopped delivering to many different areas. We
continued to deliver to 160 million addresses a day. We only
deliver 35 percent of the packages to the American community
right now.
I think we have an opportunity to grow that and serve the
people, and having partnerships with commercial businesses and
being fully integrated with them, as third-party organizations
really know how to do, is a big--is a big opportunity for us.
Mr. Cloud. Thank you.
Chairwoman Maloney. The gentleman's time has expired.
The gentleman from Maryland, Mr. Raskin, is recognized for
five minutes.
Mr. Raskin. Thank you very much, Madam Chair, and I want to
first thank Mr. Connolly for his devastating refutation of the
propaganda that we were treated to today.
But I want to talk about the future.
Chairman Bloom, do you and the board agree with Mr. DeJoy's
contemplated elimination of first class mail currently
delivered in two days?
Is this something that you and the board have discussed and
do you think that this would improve the public's satisfaction
with current delivery performance?
Mr. Bloom. Congressman, as I said earlier, the plan has not
been finalized. But so I have to simply rely upon my broad
statement, which is the plan--and you will obviously have a lot
of opportunity to diligence it--but the plan is committed to
revitalizing and strengthening and growing the Postal Service.
There will be elements of it, I suspect, that some don't
like and there will be elements that others do. But I guess I
would ask, Congressman, that when you evaluate it, you look at
it in its totality, and ask whether in its totality it moves
the Postal Service forward.
Mr. Raskin. Well, then, Mr. DeJoy, let me come to you.
In terms of the totality of this idea, which you seem to
have some buy-in from Chairman Bloom about, what is the logic
of eliminating first class service, which generally delivers
the mail in, roughly, two days and moving instead to a three-
to-five-day window? How will that improve the appeal and
resiliency of the Post Office?
Mr. DeJoy. Well, the--we believe that the appeal of the
Postal--this change--we feel that the Postal Service will
survive these minor changes that we are making.
Not coming up with an operating model that can get out of
losing $10 billion a year will--you know, somebody mentioned,
you know, a debt--a future death spiral. I would suggest that
we are on a death spiral. We cannot--even with this
legislation, we cannot continue to lose money.
Now, local, what we are looking at with regard to--we are
not--first class is still a very, very big part of our service
to the American people and it is a very, very big part of our
model.
We have--in order to meet first class standards----
Mr. Raskin. Let me--let me interrupt you there, sir,
because--let me just pursue that for one second. Do you plan to
prevent first class mail from being--reclaiming my time, Mr.
DeJoy.
Mr. DeJoy. In order to meet first class standards, we have
operated many, many different networks that cost us
significantly and have not made performance.
Chairwoman Maloney. OK. The time belongs to----
Mr. Raskin. Do you plan to prevent first class mail from
being shipped by airplane?
Mr. DeJoy. I am sorry?
Mr. Raskin. Do you plan to prevent first class mail from
being shipped by airplane?
Mr. DeJoy. In our strategy, if we, in fact, get the relief
that we need in terms of time, we will put more mail on the
ground? And I will tell you that a big, big reason for our
service performance failures this peak season had to do that
our air carriers performed at 50 to 60 percent, and----
Mr. Raskin. Well, oh, so if you would just explain the
philosophy behind this contemplated change. How does changing
the standards to lengthen delivery times to double or triple
delivery times successfully address service problems?
Mr. DeJoy. Well, you can't--you cannot--when you--do you
want--you really--you want me to answer that? I will talk about
mail, for instance.
Mr. Raskin. I do. I think America wants to know what you
mean getting rid of first class delivery.
Mr. DeJoy. Well, we can talk about mail. We can talk about
three days to get from New York to California. We can talk
about that. We can't do that on a truck. And if you look at
what happens, right, we have to--we take mail.
We process it in an originating plant. We load it on a
truck. We take it to an air terminal. A terminal will handle,
loads it on a plane. Then we fly it to some other location
somewhere around the country to be sorted by somebody else,
then to maybe get on another plane to fly to the other
location, right, to go to a terminal handling charge station,
to go load it on a truck to go to an area mail distribution
center, to go to a destination plant, to go to a DDU to get
delivered by a carrier, and we got three days to do that.
And that network--that network, sir, over the last year has
been performing at about a 55 to 60 to 70 percent rate, right,
and that is a big, big reason for a lot of our failure,
especially through the Christmas holiday.
We have had packages, first class packages, not even in
that--in that statistic being held up at air belt facilities
across the country. It is not reliable. It has grown
inconsistently reliable.
Mr. Raskin. One question that we have all heard from our
constituents, it sounds like--it sounds like your solution to
the problems you have identified is just surrender. You are,
basically, saying because the mail has been late under your
leadership, we are just going to change the standards and build
it into the system that it will be late.
Mr. DeJoy. Sir, the standards have not been met--the three-
to-five-day standards have been running at 80 percent for
years. It is not reliable. You can--you could sit here and
think that I am bringing all this damage to the Postal Service.
But as I said earlier, the place was operationally faulty
because of lack of investment and lack of ability to move
forward, which is what we are trying to do.
Chairwoman Maloney. The gentleman's time has expired. The
gentleman's time has expired.
Mr. Raskin. With that, I would yield. Thank you.
Chairwoman Maloney. The gentleman from Ohio, Mr. Gibbs, is
recognized for five minutes.
Mr. Gibbs. Thank you, Madam Chair.
First, I want to try to clear up a little discussion that
happened to my friend from Ohio, Jim Jordan, being accused of
gaslighting from my colleague from Virginia.
And, you know, I don't think it is the Post Office issue.
They deliver the mail. When election boards were--in certain
states were mailing out universal mail-out ballots with no
verification, that wasn't your problem. That was the election
board problem and to take this, as my gentleman--my colleague
from Virginia did, took it out of context.
You know, you guys deliver the mail. You know, what the
election boards put out, that is what they put out and you mail
it--you deliver it. And so that was--I think that is just taken
out of context and it is, really, playing politics.
Obviously, we are here at this hearing for the financial
condition of the Postal Service and, you know, in my
experience, there is generally two types of businesses:
businesses that make things and businesses that provide
services.
You know, if you make a--if you make a crappy product, you
go out of business. You perform a crappy service, you go out of
business.
And, unfortunately, what I have seen happen and I hear from
my constituents and my own experience, the service is really
bad. I am going to give just a couple of examples because I
think it has actually gotten worse since the holiday period.
I just talked to my CPA yesterday. He mailed a 10'' by 12''
envelope with the proper postage from Cleveland to Columbus
mailed on January 5, 166 miles, approximately. It arrived
yesterday.
I have a local county veterans service center that sent a
five-figure check certified mail with return receipt, mailed on
December 9 to Falls Church, Virginia. It was delivered on
January 7.
On January 21, they did another package, another envelope,
and it took them a month again. I have--a constituent reported
a five-week delay to send an envelope five miles in my district
from Navarre to Massillon.
These examples go on and on. My personal examples, you
know, it is pretty embarrassing when you have to call up a
local retailer, in this case it was J.C. Penney, because I
received a J.C. Penney bill last week that was due on January
25, and the next day I got the J.C. Penney bill that is due on
February 25.
And so I, personally, I have lost all confidence in the
postal system. I get mail that doesn't arrive. Last week, I
signed up--earlier I signed up where you--they take the
photographs, and last week I get the email I had to first class
pieces of mail. One showed up. The other one hasn't showed up
yet.
So, personally, I am doing everything I can to--I won't
send payments through the mail anymore. That is how much
confidence I have lost in the system.
And so, Mr. DeJoy, you have a huge challenge ahead of you
because, you know, I am a baby boomer. I have confidence in the
mail. I am not Generation Z or a Millennial. I had confidence
and I have completely lost it.
Right now, personally, my goal is to be able to get to the
point where I put my mailbox in the garbage can. So, that is
how I feel about the service that has been--it has just been
deplorable.
Medicaid--Medicare integration, I think I fully support
that. I see in some of my background notes here a typical
retiree from the Post Office service does not enter into
Medicare because their monthly premium would be normally $148 a
month and they are getting a better deal by not doing that, and
I think that is, you know, unbelievable how that happened in
the past.
I think, as far as I can tell, I know Postal Service
workers are different than Federal employees. It is kind of
like an arm of government, we want to say. I think they are the
only ones that don't have to sign up into Medicare.
Mr. DeJoy and Bloom, I am curious, when you talk about the
$160 billion loss over 10 years projected, obviously--we fixed
Medicare integration and the prepayment and all that--are you
also--what are you factoring in for volume?
Are you factoring losing more volume or do you think you
are going to be able to get this ship reckoned up to the point
where you will be able to compete with your two big competitors
and, of course, the Amazons of the world? And, you know, we are
seeing what is happening there. So, what do you think on the
volume in that 10-year projection?
Mr. DeJoy. This is--the plan that we are putting forward
does have a growth--does have a growth plan in it for--as I
discussed, we tried to have a balanced plan of legislation,
cost improvements, and revenue growth and we are preparing the
organization.
Mr. Gibbs. So, you are that--are you basing that on
increased volume or decreased volume?
Mr. DeJoy. Increased volume mostly in the package business
and some mail--excuse me.
Mr. Gibbs. Well, I hope--I hope you are right. I guess I
would just challenge a little bit because what I am seeing, you
know, I bought some stuff through, like, Amazon. I get the
stuff two days later. They tell me when it is coming. No
shipping costs because----
Mr. DeJoy. A lot of it comes through us.
Mr. Gibbs. What is that?
Mr. DeJoy. A lot of it comes through us----
Mr. Gibbs. And that is why I am letting you make that
point.
Mr. DeJoy [continuing]. Because it gets emptied to our
delivery unit----
Chairwoman Maloney. The gentleman's time has expired. The
gentleman may answer his question.
Mr. Gibbs. You can answer.
Mr. DeJoy. First of all, on your first point about this
being, you know, about the service, I have to remind this
committee that the Postal Service is living in a nation where
the pandemic exists also, OK, and that has a significant impact
on us.
But if product got--if mail and packages got to our
delivery units, we deliver to 161 million addresses six days a
week at over 90--over 96 percent of the time. That is through
the--all those service things through--even through peak.
The problem was getting mail and packages through our--
through our network. Significant air capacity was lost.
Significant transportation capacity was lost.
Forty percent package volume over any peak plan that we
had, right, which--a truckload of mail is 500,000 pieces. A
truckload of packages is 5,000, right. It is significantly
different.
And then we had a huge--and this is America. This is not
Amazon in the network. This is American consumers. Nobody in
our network volume took up more than two or three, four percent
of the volume, right.
Then we had nonmachinables, which were 100 percent more.
Big boxes that our workers have no machinery, nothing to deal
with, right. This was the environment.
We had--we had a 650,000-person organization that hired
200,000 people last year, right, and the numbers didn't go up.
That was turnover, turnover because of the environment and the
stress and historical lack of good tactical procedures with
regard to our work force.
So, this is the culmination of what happened to your
service, right, and this is--this is the plan that we are going
to address and try and fix, going forward, and it does have
growth in it. It has significant growth in it and we need the
support for this bill.
Mr. Gibbs. I appreciate it. Thank you.
Chairwoman Maloney. Thank you. The gentleman's time has
expired.
The gentleman from Maryland, Mr. Mfume, is recognized for
five minutes.
Mr. Mfume?
Mr. Mfume. Yes, Madam Chair, thank you very much. Thanks
for calling this hearing. Like you and so many other members of
this committee, I am grateful that we are having an opportunity
to put in place a process whereby the Postal Service would be
in a position that guarantees its sustainability well into the
future.
Last August, I sat with many of you on this committee and
inquired about the changes implemented under the leadership of
Mr. DeJoy and that of the Postal Service and Board of
Governors.
Chairwoman Maloney. Mr. Mfume, can you center your mic or
your computer so we can see your face? By law we have to show
you during the questioning, and we can't see you right now.
Mr. Mfume. I did not know, Madam Chair, that you could not.
My----
Chairwoman Maloney. OK. Yes. Fine now. Thanks.
Mr. Mfume. Sorry about that.
I questioned the relationship during that meeting between
the accelerate--or about the accelerated removal of sorting
machines and collection boxes, and the decreases in mail
arrival times.
I also asked Mr. DeJoy and the chairman if they were aware
that the expedited street to afternoon sortation program
implemented in July had a
[inaudible] across the United States and was opposed by the
National Association of Letter Carriers and opposed by postal
workers across the board.
Now, the people on this committee and citizens across the
country are free to ascribe whatever definition they choose to
the response I got. But in my opinion, the response was empty
words, and worse yet, empty words that continued to lead to
empty mailboxes.
I appreciate the ranking member's previous line of
questioning to the witnesses, but he asked each one of them if,
in fact, they thought that Mr. DeJoy's intent was to slow down
the delivery of mail prior to the election, and I would say to
the gentleman and remind myself that unless one is a heart
surgeon or a brain surgeon that it is almost impossible for a
third-party witness to accurately determine what a person's
intent is in their heart or in their brain.
But, Madam Chair, when we take that question and turn it
around and ask instead about what was the effect, perhaps the
better questions to the witnesses wouldn't have been did Mr. De
Joy's actions have the effect of slowing down the mail. The
disassembling of sorting machines, the removal of mailboxes
from communities, and the denial of many overtime requests--did
they have the effect of slowing down the mail, and I would dare
venture to say that most, if not all, would say yes, that is
the effect and that was the effect.
My office, like many of yours, receives a daily significant
number of complaints from constituents who have gone days, some
weeks, without receiving their mail and receiving it on time.
In Baltimore City, Baltimore County, and Howard County,
Maryland, that has been the case now for months. It is very
difficult, and I don't want this lost. I know we are talking
about trying to find a way to create and craft new legislation.
But I don't want it lost on the fact that there are a lot
of people who have suffered and had to pay extra money, late
fees for bills that were not late but, rather, delivered late.
And there were many of those who missed out on their medication
schedules because their medications were not on time.
These delays have had harmful impacts on the lives of our
constituents and, yet they continue to worsen. And so like my
colleagues, I am grateful that the chairwoman has decided to
hold this hearing because now we will have the opportunity to
construct and review legislative proposals to place the Postal
Service on a sustainable footing.
But let us not rewrite history. The good was what happened
between then and now was that we had a free and fair election,
in which we owe a debt of gratitude to postal workers all over
this country who, against great odds, delivered the mail as
essential workers on time. They delivered ballots on time.
The bad news is that we are still left with the effects of
the cuts. Not the intent, the effects. So, the Postal Service's
financial condition, as we all know, has deteriorated over the
years due to a number of factors. We don't need to get into
finger pointing.
I do believe that these proposed legislative opportunities
can reinstate service standards and implement the kind of
protections for postal workers if we can get away from casting
aspersions in the very first hearing that has been set up to
find a way out of this problem.
So on that, Mr.--Madam Chairman, I would yield back, Mr.
DeJoy, thank you for coming back again. I would ask, though,
before I yield back my time, can you tell us when your
strategic plan will be revealed and will you commit here today,
if it is the pleasure of the chair, to come back before this
committee to explain it in detail and to receive the critique
and the questions and, perhaps, the support even the members of
this committee?
Mr. DeJoy. Sir, we--probably within the next two weeks we
should be ready with our plans, and I am always happy to come
before this committee and explain it.
Chairwoman Maloney. Thank you.
Mr. Mfume. Thank you, Madam Chair. I yield back
Chairwoman Maloney. The gentlewoman from Missouri, Ms.
Bush, is recognized for five minutes.
[No response.]
Chairwoman Maloney. Ms. Bush, would you please unmute?
Ms. Bush. I am having some technical difficulties here. I
am having some technical difficulties.
Chairwoman Maloney. We are going to--we are having some
technical problems. We are going to go to the gentleman from
Florida, Mr. Donalds. You are recognized for five minutes.
Mr. Donalds. Thank you--thank you, Madam Chair.
I am going to just--there has been a lot of speeches in
this hearing so I am going to just get to questions.
Mr. Kosar, my number-one question is can you describe the
legislative reforms that Congress can explore to assure that
work force costs do not unnecessarily increase, going into the
future?
Mr. Kosar. Sure. Thank you, sir, for asking.
You know, one thing is there was a bill that I very much
like introduced by Representative Lynch which would address the
Retiree Health Benefits Fund through a method that is a little
different than what was being discussed today, and what it
would do is take the approximately $42 billion in the Retiree
Health Benefits Fund and authorize a portion of it, 25 to 33
percent, to be invested in index funds the same way that
Federal workers have a TSP which is able to be invested in
index funds. And the result of that is rather than getting low
yields from Treasuries in the RHBF, the money would grow
faster.
And the Postal Service Inspector General did a study on
that and it is the best strategy out there, as far as I can
tell. I think my feeling is that the Postal Service in general
needs operational freedom to figure out ways to drive down
costs.
I know Congress likes to mandate every year that six-day
paper mail delivery continue. They dropped this in the Annual
Appropriations Act. But I don't know why that needs to be
mandated. If the Postal Service and the public truly demand it,
then why not remove the mandate and let the Postal Service
adjust accordingly?
I think the Postal Service also needs to be empowered to or
encouraged to solve the overtime issue. In 2019, the Postal
Service use something like $5 billion--spent $5 billion in
overtime.
Whether that means they need to hire more employees or
temporary employees so that they are not having to have people
run extra overtime costs, or through some other solution, I
think that is worth exploring. And I have also noted that an
idea kicked around for a very long time is collective
bargaining.
Right now, when--the Postal Service bargains with its four
unions, and if it can't come to agreement, it goes to
mediation, and in the course of that the Postal Service's
financial condition is not explicitly required to be
considered.
And so putting it in a statute that it at least be a factor
considered, not a determining factor for the results but at
least considered explicitly, could possibly bend cost curves
over the long term.
Mr. Donalds. Thank you, Mr. Kosar.
Ms. Whitcomb, my question for you is can you expand on your
testimony and describe how big of an impact to the Postal
Service's current financial crisis, the documented overreliance
on overtime work, has been?
Ms. Whitcomb. Yes. We did that work and released it last
summer, and found that there were significant increases from
Fiscal Year 2014 to 2019 in overtime. I believe Mr. Kosar just
mentioned that work as well.
Obviously, we were in a different time period. COVID had
not been in consideration at that point. So, I think there is
maybe some different considerations now. But overtime had grown
considerably during that six-year period.
Mr. Donalds. Thank you so much.
Postmaster General Mr. DeJoy, I am going to give you the
rest of my time to answer this one. Would you actually support
shifting the divine benefit pension--the defined benefit
pension to a defined contribution more in line with the private
sector?
Mr. DeJoy. I didn't hear you, sir.
Mr. Donalds. Would you support shifting the defined benefit
pension to a defined contribution more in line with the private
sector?
Mr. DeJoy. No, I think the compensation and benefit plans
that are in the Postal Service right now have been negotiated
over a number of years and I am not prepared--that is not
anything that we are looking at.
We respect the--we work with the union leadership and the
plans as the way they are right now is not--not changing them.
It is not part of our--you know, is not part of our strategy.
We think there are better ways. There are many, many, many
ideas about what to do with the Postal Service. I will submit
that we have spent eight months with a couple hundred
leadership people in leadership at the Postal Service in
defining what the best solution, holistic solution, was to
serve the American people and we have come up with a plan that
I will release soon, and messing around with employee benefit
plans is not part of what--you know, what I am interested in
right now.
Mr. Donalds. All right. Thank you.
Thank you, Madam Chair. I yield back.
Chairwoman Maloney. The gentleman yields back.
The gentlewoman from Michigan, Ms. Tlaib, is recognized for
five minutes.
Ms. Tlaib. Thank you, Chairwoman. Thank you so much for
this hearing. I truly appreciate it.
I would like to spend some time here addressing a serious
concern that I have heard from my residents about ongoing
service issues in my district.
So, Postmaster DeJoy, I want to bring your attention to the
photo on the screen, and I will give the committee some time to
post it.
[Photo is shown.]
Ms. Tlaib. So, Postmaster DeJoy, this is a delivery barcode
sorter machine, correct?
Mr. DeJoy. Yes, ma'am.
Ms. Tlaib. OK, so thank you for that. And these machines
can process, roughly, what, 35,000 pieces of mail per hour,
correct?
Mr. DeJoy. I would--I don't know exactly. But let us
assume--seems like you know, so I will accept that.
Ms. Tlaib. I appreciate that. So yesterday, just yesterday,
I spoke to our local Detroit American Postal Workers Union
president, Keith Combs, about the ongoing service issues in
southeastern Michigan.
He made me aware that four delivery barcode sorter machines
that were removed prior to the 2020 election have actually been
reinstalled in the USPS facility in Detroit. So, I thank you
for that.
However, which is very odd, these machines have actually
sat idle for months, apparently, because the USPS' central
region has not given the Detroit facility permission to use
them. So, I find this really concerning since my residents are
still experiencing significant delays or receiving their--in
receiving their mail.
For example, I spoke with one elderly veteran recently, you
know, one of the block club presidents in my community, who had
not gotten any mail, was, I think, getting it once a week.
So, this is not an isolated incident, as you know, so I am
just really interested, Mr. DeJoy, were you aware that the
central region had not given the Detroit facility a directive
to start using these machines?
Mr. DeJoy. I am not but--and as I can attest, communication
within the organization is sometimes not accurate. So, I would
have to check if that is----
Ms. Tlaib. That is a huge--I don't know, Postmaster. That
is a huge miscommunication. I mean, do you commit to
immediately begin working with the central region staff to get
the Detroit facility the directive to use these four sorting
machines that will get 35,000 pieces of mail sorted in an hour
and go out the door.
Mr. DeJoy. Well, you are assuming your information--let me
just be clear. You are assuming your information is accurate.
What I am saying is that----
Ms. Tlaib. OK. So----
Mr. DeJoy [continuing]. You know, that that--I don't know.
Ms. Tlaib. OK. So, reclaiming my time. Is it good to see--
it is good to see that you are at least consistent about
targeting--you know, basically, addressing not knowing and
having these issues and struggles within the agency.
So, we have four sorting machines in Detroit and somebody
needs to get permission to use the machines. I mean, why bother
putting them in there last year, reinstalling them in there if
you are not going to be able to use them?
I mean, so do you agree that that is an issue?
Mr. DeJoy. So, I would have--no, I don't agree. I don't
know what the issue is. There are 650,000 people, thousands of
machines, 50,000 truckloads of that moving down in a day.
Ms. Tlaib. Postmaster DeJoy, I am asking you for a
partnership here.
Mr. DeJoy. You are asking me about an area which has
historically had significant delivery problems.
Ms. Tlaib. Mr. DeJoy, I am not giving you a narrative. I am
telling you--DeJoy, I am reclaiming my time.
I am really sincere here. I am asking you for a
partnership.
Mr. DeJoy. As am I.
Chairwoman Maloney. The gentlelady reclaims the time.
Ms. Tlaib. OK. I am telling you there is four machines that
were used for taxpayer dollars installed in Detroit to help get
mail out the door. They haven't given the green light to use
them.
So, I need you to do your due diligence as the Postmaster
General. We just heard from a Member of Congress asking you to
go investigate, check it out, find out where the
miscommunication is, and get these machines up and running. Do
you want to at least commit that you will look into this?
Mr. DeJoy. I will--first of all, I want to--I would like
to--we don't receive taxpayer dollars. But I will look into
what the story is on this machine and my office will get back
to you.
Ms. Tlaib. OK. Well, the machines are there. Somebody spent
money on these machines, reinstalled them there, Mr. DeJoy. I
am just asking you to do your job and find out why they haven't
started using those machines.
You know, just acknowledge that the information I am giving
you, at least in very good faith, that something is wrong when
four machines are sitting idly by.
So, I would like to close by really looking to the future
here and really wanting, again, to help you.
I want to ask President Dimondstein, given all these
ongoing issues, what do you think needs to really truly happen
you with UPS' service standards, going forward, to better serve
the American people?
Mr. Dimondstein. Congresswoman, we--the union believes in
the--in the law, of prompt, reliable and efficient services,
and it breaks our heart. It frustrates the employees. It angers
the employees, because we treat the mail as our own and we want
to treat it as if it was coming to our family members and our
friends, and you have heard many other things today.
So, going forward, legislation is a key part. Helping to
provide the financial support by getting rid of this burden of
prefunding by the Medicare integration and by the investment of
some of the funds in the retiree plans.
But the Postal Service, they have taken a positive step on
this. They need to deal with the chronic understaffing. They
have agreed recently to hire about 11,000 more people around
the country in mail processing. That will help.
They should look at expanding services such as financial
services and charging stations for electric vehicles in front
of Post Offices. There are all sorts of things that can be done
that just make the Post Office that much more relevant in
people's lives.
But there is no getting around it. This situation is
deplorable with the mail, and you heard a Congressman here
say--and it breaks our heart because I have friends saying, I
have family members saying the same thing--how can I trust the
Postal Service to get the work done and serve me as a person of
this country.
Ms. Tlaib. Thank you. Thank you so much.
Mr. Dimondstein. But, going forward, Congress can really
help. I urge you all to keep it tight. I know my time is up. I
went on too long. I am sorry, Madame Chairman.
Chairwoman Maloney. The gentlewoman's time has expired.
Thank you.
The gentleman from Louisiana, Mr. Higgins, is recognized
for five minutes.
Ms. Tlaib. Chairwoman--Chairwoman, before you move on--if I
may, Chairwoman, please
[inaudible].
Chairwoman Maloney. Without objection.
Mr. Higgins. Madam Chair, was I recognized?
Chairwoman Maloney. Yes, you were recognized.
Mr. Higgins. Thank you, Madam Chair, and thank you for
holding this hearing and I thank both the
[inaudible]. I am sorry, Madam Chair. This is Congressman
Higgins.
Chairwoman Maloney. We are having a communications problem.
We can't hear you, Mr. Higgins. OK. OK.
Mr. Higgins. I am sorry, Madam Chair.
Chairwoman Maloney. OK.
Mr. Higgins. This is Congressman Higgins.
Chairwoman Maloney. OK. We are having a communications
challenge.
Mr. Higgins. I see that we are having technical
difficulties. I am unmuted. You will have to move on, Madam
Chair.
Chairwoman Maloney. OK. Mr. Keller is now recognized for
five minutes.
Mr. Keller. Thank you, Madam Chair.
Based on testimony in today's hearing, the Postal Service
is in the process of finalizing its long-term business plan.
Mr. Higgins. Madam Chair, I am unmuted. OK. Good.
Chairwoman Maloney. Mr. Keller has now been recognized,
unless he yields back to you.
Mr. Keller. Well, I will just continue to go and maybe we
can figure out Mr. Higgins' problem.
Chairwoman Maloney. OK. He is going to--the time is his
now. He was recognized. OK.
Mr. Keller. As I was saying, the Postal Service is in its
process of finalizing its long-term business plan, some high-
level summaries of which are included in today's testimony.
While I would like to take the promise of its release at
face value, this committee has been waiting on a comprehensive
long-term business reform plan for several years.
Mr. Bloom, when will this committee be in receipt of the
plan? Mr. DeJoy can answer to help out. When will we have the
plan?
Mr. DeJoy. We are--we are a couple of weeks away from the
mission plan.
Mr. Keller. Can you give me a date? What day--what date
will we have it? What is the date? I mean, if you are working
on the plan----
Mr. DeJoy. In March. I will tell you in March. You will
see----
Mr. Keller. By the end of March we will have the plan?
Mr. DeJoy. Yes, by the end of March. Yes.
Mr. Keller. OK.
I am struggling to understand why a hearing has been called
on reforming the Postal Service and their long-term business
plan has yet to be finalized. It is my expectation that a
followup hearing will be conducted to fully examine this plan
and its suggested reforms.
When I was in private industry, the first step we took
toward fixing something that was broken was the first measure
where we were as an organization and only then develop a
strategy to improve. Bailouts or other unrestricted assistance
for the Postal Service would be irresponsible and ineffective.
For the United States Postal Service, reform starts with
the universal service obligation and overall mission to provide
trusted, safe, and secure communications between our government
and the American people, businesses and their customers, and
the American people with each other.
I appreciate the hard work of our postal workers and letter
carriers. They are the ones who get the job done every day, and
any frustration with the lack of progress we have seen is
directed at the organization's leadership.
Mr. DeJoy, you mentioned in your testimony that service
performance cannot improve in an environment where costs are
increasing, the network needs attention, customers expect more,
and revenues are declining. It seems to me that as a 2018 White
House Task Force recommended, we may need to more narrowly
define what the universal service obligation requires.
In other words, we may want to better define the Postal
Service's mission in order to move forward toward solvency.
What are your thoughts on that?
Mr. DeJoy. Sir, I think our plan addresses the two
fundamental things that are in legislation right now,
continuing to deliver six days a week and be--get to be self-
sustaining.
In that process, when we talk about narrowing the mission,
I think we could--our plan sticks with the mission. It makes
some adjustments to unachievable hurdles. It makes some
adjustments for things that we are asked to do that that are
extremely costly.
But still, at the end of the day, we are delivering--in
this plan, we are delivering six days a week to every household
in America and we are--we are growing our business by aligning
to the new economy and positioning our organization to--you
know, to fulfill its obligations.
We depend--our network depends on a series of, you know,
transportation contractors that drive up our costs and have
significant--have had significant impacts on our delivery
schedule, and our operating plans are not integrated from our
plans into our transportation.
There are billions of dollars in this network that we that
we plan--in our own self-help plans that we try to achieve. It
is not consequential, you know, to employees. It is not
consequential to the American public. It is just better
operational management of what we are doing.
Mr. Keller. And we will see that--we will see that in the
plan?
Mr. DeJoy. Yes, you will.
Mr. Keller. And there is one thing I would like to clear
up. We have a post-employment benefit plan for our--for our
postal workers, which we need to keep the promise of and that
is funding the retirement plan or the pensions.
And we do that as we go. That is currently funded, correct?
Mr. DeJoy. Yes, that is----
Mr. Keller. That is just a yes or no. It is currently
funded?
Mr. DeJoy. Yes.
Mr. Keller. And we pay that as we go. We should do the same
thing with the health care. It is not prefunding, and we need--
we need to talk about this so we can keep the promise to the
people that do the work every day. It is not prefunding. It is
paying as you go.
In other words, they are earning that post-retirement
benefit, and to think that just the money is going to appear
the day they retire is irresponsible.
So, let us really have the honest discussion of if we have
to catch up because we didn't make payments in the past, that
is one thing. The other thing is we need to--we need to make
sure we catch that up and that we pay as we go.
So, the terminology is very, very clear. As a private
individual, when you have a retirement account and you expect
to be able to afford things when you retire, you make the
contributions over a series of years. The contribution plus the
investment equals the necessary cash to fund that benefit.
So, it is not prefunding. It is paying as you go. And I
realized I have run over but I wanted to make that important
part, and that is how we need to do it.
Mr. DeJoy. But so we can have--we do have significant
balances, much more than the Federal Government does, in all
our retirement accounts, and the issue before us here right now
is Medicare integration for our retirees.
We have $35 billion that we have paid in to Medicare and 27
percent or 25 percent of retirees do not take advantage of it.
And the prefunding that we do is based on a requirement by the
Congress to have inputs in it for the actuarial calculations
that will never--may never--people may never need those
benefits they will not retire. So, I think--I think----
Mr. Keller. But if we don't make the contribution--excuse
me.
Mr. DeJoy. I agree with you. I agree with you how you
classified it. But I still think this is--that this is an
unfair treatment of the Postal Service and it is something that
needs to be corrected.
Mr. Keller. Well, I think in order to make sure we protect
the benefits that the people are earning----
Mr. DeJoy. This is all about that.
Mr. Keller [continuing]. It would be responsible of us to
make sure we call it pay as you go, not prefunding. Thank you.
Mr. Lynch. [Presiding.] The gentleman's time has expired.
The chair now recognizes the gentleman from Illinois, Mr.
Davis, for five minutes.
Mr. Davis. Thank you, Mr. Chairman, and I also want to
thank Chairwoman Maloney for calling this hearing. I am very
pleased to know that everybody who have indicated or asked have
indicated that they are in favor of getting rid of the
prepayment of retiree benefits.
Matter of fact, I recall being on the committee when we
passed that legislation, and I didn't like it then and but we
voted it in and that is what was voted.
Mr. Postmaster, I am sure that you and--not you, some of
the members of your staff have seen some of the news reports of
the tremendous problems that we have had in the Chicagoland
area.
Everything that has been mentioned, of course, have been
our problems and our issues. In addition to the traditional
Chicago climate, the weather in the winter time gets pretty
bad.
The people have been screaming, crying, climbing up the
wall, wanting to know when they are going to be able to get a
delivery or wanting to know when there is going to be some
relief.
I know we are talking primarily futuristically in terms of
the future direction of the Postal Service. But could you tell
me what is being done to bring some relief to the Chicagoland
area right now?
Mr. DeJoy. So most of--a number of our urban areas have
been hit hard for--a number, beginning with COVID and
beginning--and also with the recent weather.
We have worked, you know, within--without--as volume has
come down, because we were overwhelmed with volume up and
through the second--up until almost the third week of January.
We were still clearing out for the holiday season. We are
beginning to see, you know, relief in that area and it is just
really not--I mean, we are working hard, working plants
overtime, adding people.
But the real relief is coming from the volume coming down
and that enables us to use our capacity to get out and deliver.
In certain areas--I mentioned a statistic earlier--we, a
650,000, 660,000-person organization with hiring 200,000 people
and that moving the needle up. That means that is tremendous
turnover within the ranks that we have had this year, and it
magnifies itself in our urban areas. It really----
Mr. Davis. Let me ask you, are you hiring new carriers?
Mr. DeJoy. We have been hiring across the board. Yes, sir.
Fifty thousand people just in the last two months of last year,
200,000 over the year.
As President Dimondstein just said, we converted 10,000
into December and I am very committed to working to stabilize
the work force. I think that has been a real, real big issue
for us with our noncareer turnover rate, trying to stabilize
that and give long-term career opportunities for most of the--
--
Mr. Davis. Let me ask you an operational question.
Mr. DeJoy. Mm-hmm.
Mr. Davis. How much authority or autonomy do local
management teams have in budgeting and in making decisions
relative to personnel needs?
Mr. DeJoy. Mm-hmm. So, we are doing a lot of work on the
organization for a variety of reasons, and that was one of the
big changes I made. We had a big area. We divided the country
up into seven areas in all the different operations.
Every aspect of the organization were in those seven areas
that reported up to one, you know, chief operating officer, and
it was--the organization itself, not the people, the
organizational strategy itself had too many broad functional
aspects for individual teams to actually manage any kind of
impact.
We have begun to flatten the organization, spread it out,
have more functional lines from corporate headquarters right
down to the--to the local Post Office and have really started
to work on process. We needed a lot of process improvement.
When you don't have a lot of committed process, then you
have a lot of people second guessing everything, which is what
I think you are leading to. We are working very, very hard to
clean that--to clean--make--bring a lot of clarity to everybody
from, you know, a senior executive right down to a delivery
unit, a mail carrier. I have good people on it. We are moving
forward.
Thank you.
Mr. Davis. Thank you. Thank you very much, Mr. Chairman,
and could I submit for the record two items, one, a audit
report titled ``Mail Delivery and Customer Service Issues
Select Chicago Stations,'' and a letter from seven Members of
Congress who represent that area to the Postmaster General,
inquiring about services and delivery?
Mr. Lynch. Without objection, so ordered.
Mr. Davis. I yield back. Thank you.
Mr. Lynch. The gentleman's time has expired. The gentleman
from Louisiana, Mr. Higgins, is now recognized for five
minutes.
Mr. Higgins. Thank you, Mr. Chairman. We had some technical
difficulties earlier.
Mr. Lynch. I think those have been resolved. OK.
Mr. Higgins. Yes, sir. So, I can be heard at this time, Mr.
Chairman?
Mr. Lynch. Yes, sir. Go right ahead.
Mr. Higgins. Thank you, my friend. I thank the Postmaster
General DeJoy for appearing before us today to discuss the
current status and challenges of the Post Office.
Additionally, I very much appreciate the letter you
distributed to members of the committee on February 18,
Postmaster DeJoy, and I will refer to that in a moment.
Let me say that I love the Post Office. I support the Post
Office and employees. It is an indelible part of American
history. It is arguable that we could--we could never have
formed a solid republic, a representative republic of the many
sovereign states, without a reliable Post Office. We might not
have an America to discuss without a solid Post Office.
So, you know, my support for the Post Office is reflective
of my love for country. And, yet, you know, we have to admit
some serious challenges there. So, I would like to jump into
that, Mr. DeJoy.
The COVID-19 pandemic placed burdens on every aspect of
business across America. Would you concur that the combination
of massive quantities of mail-in ballots for the election cycle
occurring at the beginning of the holiday season and COVID
protocols that the USPS had to deal with, like every other
business across the United States, would you agree that that
was, generally, the root cause for increased inefficiencies at
the Post Office?
Mr. DeJoy. Sir, I believe that that just dramatically
increased the consequence of a continuous erosion that was
happening anyway, right. So I think----
Mr. Higgins. But it was in--it was in rough shape. We all
know that. Listen, but this is not news. It should all get
fixed now. My colleagues across the aisle, they have the White
House, the House, and the Senate. So, we should get the Post
Office fixed pretty quick.
But, historically, it has been an issue. When I was in high
school, my history teacher drew a map of the United States and
asked us all to name a city in the United States, and we did.
And at the time, there was great debate of the price of a stamp
going from 13 cents to 15 cents.
And once we all identified a city, he asked any one of us
who could drive there for 15 cents--who could go and deliver a
letter for 15 cents.
Of course, none of us could, and this is a lesson that has
stuck with me, and that now a stamp is 55 cents. The point is
that, of course, historically, the Post Office has always gone
through struggles and now is no exception. We have to find a
way past it.
And I am going to leave my remaining time to you,
Postmaster DeJoy, to answer the following question. You will
have about a minute and 45 seconds.
In your letter, you said we can improve and strengthen this
institution for future generations, that much work needs to be
done by all of us. But with your support, you said, I am
confident in our plan and optimistic about our future.
Postmaster DeJoy, please tell America why they should be
confident and optimistic in the future of the Post Office. I
will leave you my remaining minute and 20 seconds.
Mr. DeJoy. Sir, what I have found at the, you know, Postal
Service is 633,000 committed employees that believe in the
mission and commit to the mission under relatively--sometimes
extreme circumstances like as demonstrated during the COVID,
during the pandemic, and also when you see when we have
hurricanes or forest fires, they are usually the first part of
getting back to normalcy when you see people come back into the
communities.
The thing--the number-one fundamental reason I am an
optimist in terms of the plan moving forward is you look at in
all the pressure the organization has been under the last eight
months.
We still--if we got mail and packages to delivery units,
delivered to every household, over 98 percent of the time and
that is--that is an advantage. That is a--that is the tool that
we plan to use in our plan, you know, moving forward to get
mail and packages to that--those delivery units in the most
efficient manner, least cost manner, yet timely manner, and
then use that delivery network to address the new economy as it
moves forward to, you know, grow--you know, grow our business.
This is about not----
Mr. Higgins. I thank the gentleman. I thank the gentleman
for his dedication. My time has expired, and Mr. Chairman, I
yield.
Mr. Lynch. The gentleman's time has expired. The gentleman
yields.
The chair now recognizes the gentlewoman from California,
Ms. Porter, for five minutes.
Ms. Porter. Thank you very much.
Mr. DeJoy, do you know how big the Postal Service's deficit
is?
Mr. DeJoy. So, we lost $9.2 billion last year. Is that what
you are asking? Or if you are asking about the $40 billion net
equity?
Ms. Porter. Yes. Also the unfunded liabilities and debt.
Mr. DeJoy. I am sorry?
Ms. Porter. The unfunded liabilities and debt, please.
Mr. DeJoy. Total is about $80 billion right now.
Ms. Porter. OK. When was the last time the Postal Service
recorded a net profit?
Mr. DeJoy. Seven years ago. Six or seven years ago, eight
years ago.
Ms. Porter. I believe it was 2006. Mr. DeJoy, how much
longer until the Postal Service runs out of cash?
Mr. DeJoy. We could run out of cash tomorrow if I pay our
bills.
Ms. Porter. OK. And so at current levels, we can agree that
2021, now, soon. So, my question for you is you developed--last
time we talked, you made some changes to the Postal Service in
the summer and the fall, and according to the USPS inspector
general, the last time you made changes you did not do any
analysis of if those changes would save money.
This is according to the USPS Inspector General. You are an
executive and you did no analysis? Now, I have heard that you
have a new strategic plan. But I am really concerned that this
plan may neither be strategic nor a plan.
Have you figured out if this new plan would save money and
improve performance?
Mr. DeJoy. First of all, I will--while I respected the
Inspector General, I disagree with your--the premise of the
conclusion that you have reached and if that was in the report,
I disagree with that also.
But having said that, we have extensive studies over the
last eight months to improve reliability, reliability of
service and reduce costs and grow that----
Ms. Porter. Wonderful. Mr. DeJoy, will you provide those
analyses to this committee?
Mr. DeJoy. When we announced that when we announce the
plan, we will--we will produce a certain amount of information
with regard to how we came about, you know, what our solutions
are.
But the committee has its powers to request whatever it is
that it needs and it will go through the process. And, you
know, we are not--we are not embarrassed by the work we did. We
are actually quite proud of it.
Ms. Porter. OK. So, we will look forward to requesting
those analyses and those extensive studies you just referenced.
Did you hire any consultants to help with these studies?
Mr. DeJoy. So, the organization has had embedded
consultants for a long time, and to the extent that the
management team use consultants to support----
Ms. Porter. Reclaiming my time.
Mr. DeJoy, are those consultants employed by the Postal
Service or by outside organizations and hired on a contract?
Mr. DeJoy. I consider all consultants--when you say the
word consultant, I am thinking they are outside organizations
that are--that are hired by, you know, by the Postal Service.
Ms. Porter. Reclaiming my time.
Mr. DeJoy, who are those consultants?
Mr. DeJoy. We have hundreds of consultants, ma'am. I
couldn't----
Ms. Porter. Would you please provide a list to the
committee of the consultants that were involved in this
strategic plan?
Mr. DeJoy. I can provide you whatever information we have.
What I was about to tell you, if you will let me finish, was
that most of this plan was designed by about 150 people within
the organization.
It was a Postal-produced analysis, and to the extent that
any of those groups had consultants working within the
organization, they may or may not have used that. But this is a
Postal leadership plan that was--you know, that was put
together.
Ms. Porter. Thank you.
Mr. DeJoy, you have said you are committed to managing the
U.S. Postal Service with excellence.
With that in mind, what are the aspects of the Postal
Service today that you view as most critical, that you treasure
the most, building a little bit on what my colleague from
across the aisle, Mr. Higgins, just asked you?
You mentioned the employees. But what do you value about
what the Post Office does? What are you not willing to change
just to make a buck?
[Laughter.]
Mr. DeJoy. I think the, as I said earlier, one of the key
attributes of the Postal Service that I think is very
important, both from the standpoint of what it--what it does
for the Nation and also for its viability, because this
Congress, as previous Congresses, say it needs to remain self-
sustaining. And until that law changes----
Ms. Porter. Mr. DeJoy--reclaiming my time.
Mr. DeJoy, what is it that the----
Mr. Lynch. The gentlelady----
Ms. Porter [continuing]. Post Office does that you
treasure?
Mr. Lynch. The gentlelady's time has expired, and I think
the gentleman has tried to answer the question.
Thank you very much. The chair now recognizes the gentleman
from Texas, Mr. Sessions, for five minutes.
[No response.]
Mr. Lynch. Mr. Sessions, you might be muted. I am not sure.
Can't hear you. Are you there? OK.
Mr. Sessions. Chairman, is that better?
Mr. Lynch. I can hear you now. Yes.
We should give that gal a raise.
Voice. Hey, let us try this one.
Mr. Sessions. Tell him to--tell him to move on to another
witness
Mr. Lynch. No. No. You are on. You are on. Go ahead.
Mr. Sessions. Oh, we are on now? OK.
Mr. Lynch. We didn't take out any time. Go ahead. Give
minutes.
Mr. Sessions. Thank you, Chairman.
Chairman, thank you very much and I appreciate you and the
chairwoman having this committee hearing today.
Mr. DeJoy, I would like to tell you how much I appreciate
and respect you and your colleagues coming today to the hearing
in Washington, up on the Hill. That is important for the
American people to hear as well as Members of Congress.
I previously served on the last Postal Subcommittee back in
1997, 1998, 1999, and 2000, whenever it was, and we recognized
how important the Postal Service was--the employees, the
service they provided to the country, and debated vigorously
just as we are today, not just the usefulness but the use of
and about the employees. We owe you a lot. You are out every
day. Your men and women are in rain, sleet, snow, everything
that the saying goes by. And I recognize that there are Members
of Congress who are frustrated.
But I think that you and the entire team today, including
those that are union members but still postal employees, have
talked about as trying to get it together the best way you see
fit to run the operation.
And I wish we would have given you more credit for that
instead of trying to second guess you and trying to nitpick and
micromanage you. But that is also our job.
What I would say to you, sir, is that I would like to have
your answer when you come up with it about what the long-term
view is to include outside-the-box thinking. Like I am a part
of--in my background, I spent 16 years with AT&T, which is a
telecommunications company here in this country, a very large
one.
And we went through changes that were constant. Change is
constant. But we had to look at it sometimes in a way of not
just what our mission was but the right way to serve it, and I
hope that you will look at all the things that you believe are
necessary for sustaining the Post Office, sustaining their
mission, but also looking at things that might be out of the
box.
What would that mean? Well, that may mean something that we
need to change in your mission statement, something that we
need to give you the flexibility to run your business the way
it will sustain it, the way you believe and the employees
believe you can move forward to make it happen together.
I am from Waco, Texas, and have had a strong relationship
with my postal carrier and the postal carriers at my home and
at my business, and they are dedicated honest people who come
to work every day.
We need to support them. But we also need to make sure that
the long-term effort when we look at it 10 years from now, that
we can offer the words sustaining with that, too. So, it is my
hope you will use at least my time with you today to say thank
you.
Thank you for your devotion. Thank you for your effort. And
thank you for having each of your people who are there today
work together. I look forward to that answer that comes and
hopes--hope that you will give us some sort of thinking outside
the box of ways that Congress needs to think about the way we
think about you to sustain that.
And I yield back my time.
Mr. Lynch. The gentleman yields back.
The chair now recognizes the gentlewoman from Missouri, Ms.
Bush, for five minutes.
[No response.]
Mr. Lynch. Thank God for staff, huh?
Ms. Bush. All right.
Mr. Lynch. There we go.
Ms. Bush. I can hear you now. OK. Perfect.
[Laughter.]
Mr. Lynch. Ms. Bush, you are up.
Ms. Bush. Technology, right? OK.
St. Louis and I thank you, Madam Chair, and--sorry, Madam
Chairwoman. I am sorry. Mr. Chair. Sorry, Madam Chairwoman--for
convening this important hearing.
St. Louis is home to more than 50 Post Offices and Postal
Service--and the Postal Service employs more than 5,320 postal
workers in my district. The United States Postal Service helps
families and loved ones stay connected, provide jobs, delivers
life-saving medicines, sustain small businesses, and gives
people access to the ballot box.
Our community respects the USPS as a fundamental public
service.
Chairman Bloom, by statute, the Postal Service's Board of
Governors comprises 11 individuals, including nine people
appointed by the president with the advice and consent of the
Senate, and then the Postmaster General and the Deputy
Postmaster General who are all appointed by the Board of
Governors.
How many members does the board have today?
Mr. Bloom. The board has six external Governors and the
Postmaster General.
Ms. Bush. OK. How long has the board lacked full
membership?
Mr. Bloom. Oh, goodness. I believe we haven't been at full
strength in quite a number of years. I will get back to you on
the exact number, but I believe it is at least six or seven
years since we had a full board.
Ms. Bush. OK. How have the Postal Service in general and
the board specifically suffered from having incomplete
membership on the Board of Governors?
Mr. Bloom. Well, Congresswoman, I guess what I would say is
that Congress intended us to have a full board, and so I think
an organization functions best when it has the full diversity
of views that comes from a, you know, a full group.
Congress, in its wisdom, set up nine as the number. I think
it is a good number. I sat on other boards with nine. I think
it is a good--for external Governors I think it is a good
number.
So, I think the board would always benefit from additional
perspective.
Ms. Bush. Given that there are still three Governor
positions unfilled and you are in your final year of service, I
believe, Chairman Bloom, for President Biden, are you not?
Mr. Bloom. Actually--I am actually in my--I am actually in
my holdover year, Congresswoman. Yes.
Ms. Bush. Your holdover year? OK.
OK. Thank you for clarifying.
Well, so President Biden has the chance to fill three open
positions on the board. What--can I ask you, Chairman Bloom,
what career field do the majority of Governors on the board
come from?
Mr. Bloom. We have a diversity of backgrounds. Just
thinking off the top of my head, there is one gentleman who has
been involved in a large trucking company so has some relevant
logistics experience. There is another gentleman who has been
in finance, another business-oriented individual. There is a--
one of the Governors has been involved as an airline pilot and
a union leader.
Ms. Bush. OK.
Mr. Bloom. So, it is a diversity of backgrounds.
Ms. Bush. What is the average net worth of Governors on the
board?
Mr. Bloom. I have no idea.
Ms. Bush. OK. How about any black, indigenous, or people of
color on the board?
Mr. Bloom. The board is comprised today of six white males.
Ms. Bush. How many women serve on the board?
Mr. Bloom. It is six white males, Congresswoman.
Ms. Bush. Exactly. Again. We need women to the front.
So, currently, the board includes only white men.
Mr. Bloom. That is correct.
Ms. Bush. This grotesque lack of representation is a
critical opportunity to diversity the board's ranks. An agency
of over 640,000 employees that come from every walk of life and
serve the entire American public should have representation at
the top reflective of the broader American population.
More than 35 percent of postal workers are people of color
while zero percent of Governors are. Meanwhile, the positions
that are filled and are not--are not supposed to be represented
by special interests include--actually include Wall Street
bankers are fossil fuel lobbyists.
This question is for Postmaster General DeJoy. Do you see
it as a problem that the Board of Governors of the United
States Postal Service looks like a millionaire white boys club?
Mr. DeJoy. What I would say is that the Postal Service's
not having a full board is not enabling it to reach its full
breadth of impact and I welcome that, and I would say also
there was a period where there were no board members on the
Postal Service.
But that is not a problem with the Postal Service. That is
a problem of whatever administration that is in power and the
Senate at the time. The Postal Service would love to have a
diverse board that reflects its population.
But this is not something that is within our--you know,
within our power, and I would say that the period where
whatever Postmaster General and leadership team was there at
the time, which I think it was my predecessor, that had to be
an unbearable time and a totally--it had a huge consequence on
her ability to lead and the ability for the organization to
move forward, and I feel very strongly about that and I think
the quicker we get some new board members from the
administration the less we can talk about this and move on to
the plan and the real, real problems that we need to fix here.
So, I welcome your discussion on this and whatever you can
do to advance this process, I certainly would appreciate it.
Ms. Bush. Thank you, Postmaster General.
I would like to reclaim my time.
Chairwoman Maloney. [Presiding.] The gentlewoman's time has
expired.
Ms. Bush. OK.
Chairwoman Maloney. OK. The gentleman from Arizona, Mr.
Biggs, is recognized for five minutes.
Mr. Biggs. Thank you, Chairwoman Maloney and Ranking Member
Comer, for leading this hearing. I thank the witnesses for
being here today and appreciate all my colleagues' work to find
a fiscally responsible future for the Postal Service and I am
looking forward to working with you on this effort.
But today, I want to discuss some of the 2020 events that
affected the Postal Service's ability to deliver mail in a
timely fashion. No, they don't have to do with COVID-19.
Last year, our Democratic colleagues turned a blind eye to
nationwide mayhem, destruction, rioting, and looting conducted
by Black Lives Matter and Antifa activists. Many businesses and
government agencies, including the Postal Service, saw their
entities burn and operations halted because of the persistent
violent riots.
Frederic Rolando, president of the National Association of
Letter Carriers, stated, quote, ``The postal property and
vehicles have been ransacked during the recent wave of civil
unrest and letter carriers have been assaulted and robbed on
their routes. Their irresponsible actions harmed postal
employees and the citizens we serve,'' closed quote.
Here are a few examples of how the Postal Service was
impacted by these events. In Minneapolis, two Post Offices were
burned and USPS vans were stolen and torched by rioting
protestors. Also in Minneapolis, the USPS shut down mail
delivery at seven Post Offices. The Kenosha Post Office in
Wisconsin had to close indefinitely due to the violent riots.
In Chicago, at least six Post Offices were broken into and
burglarized, affecting mail deliver operations, and in
Lancaster, Pennsylvania, a Post Office was pelted with debris
as riots erupted across that city.
To make matters worse, a member of this committee went on
national television, ostensibly to discuss the USPS funding
crisis, and called for continuing violence and unrest in the
streets.
And as if it weren't enough, Postmaster DeJoy faced
protests outside of his home in D.C. perpetrated by false
narratives from my colleagues on this committee.
Given all this evidence, I think our Democrat colleagues
owe an apology to Postmaster General DeJoy and all the
hardworking Postal Service workers who were affected by the BLM
and Antifa riots of 2020.
Mr. DeJoy, can you elaborate, please, on how the civil
unrest from last year affected your agencies operations,
including the financial impact from the destruction it
suffered?
Mr. DeJoy. So, they are always, you know, consequential,
disruptive, and costly both in terms of our assets and stress
on our employees. Fortunately, in many of these cases, we have
advance notice and we are able to get our people out, lock up
our buildings. The real consequence comes to the people that
live in those communities because they are the pride of the
service, and whenever the areas open up again, it takes time to
reopen our facilities and deal with any of the disruption.
So, these had impacts. They were specific to the individual
locations that it occurred, and I would say our overall broader
issues last year were more systemic nationally that created a
real consequence. But those areas do impact those people that
live in the communities and our workers that are in the
communities.
Mr. Biggs. Thank you. And, Madam Chair, I ask unanimous
consent to enter into the record reports documenting the
violence against USPS, including the letter that I quoted from
Mr. Alejandro from the National Association of Letter Carriers.
Chairwoman Maloney. Without objection.
Mr. Biggs. Thank you. An article from the StarTribune.com,
entitled, ``Burned Post Offices Destroyed in Minneapolis.
Unrest Leave a Void;'' of the Gateway Pundit from May 29,
``U.S. Postal Service Vans Stolen and Torched by Rioting
Minneapolis Protestors;'' one from Fox9.com: ``USPS Shuts Down
Mail Delivery at Seven Post Offices in Twin Cities for
Friday;'' one from Breitbart dated August 24, 2020: ``Kenosha's
Main Post Office Closes Indefinitely Due to Violent Riots;''
one from the Chicago Sun Times, June 5, 2020: ``Reward Offered
for Details in Post Office Looting;'' one from RT.com.USA:
``Antifa Lays Siege to Lancaster Police Precinct Following
Latest Officer-Involved Shooting;'' and one dated August 17,
2020 from Black Enterprise.com: ``Rep. Ayanna Pressley Calls
for Unrest in the Streets Over the Failures of the Trump
Administration;'' and one August 15, 2020 from WUSA-9:
``Protestors Gather Outside of USPS Postmaster General's Home
in D.C. Amid Voter Suppression Allegations.''
Chairwoman Maloney. Without objection.
Mr. Biggs. Thank you, Madam Chair.
Chairwoman Maloney. The gentlewoman from Florida, Ms.
Wasserman Schultz, is recognized for five minutes.
Ms. Wasserman Schultz. Thank you, Madam Chair. I want to
turn to another topic that is addressed by this legislation,
and that is one of transparency. After the postmaster general
implemented operational changes in mid-July of last year,
service performance was substantially impacted. My district
office was flooded with calls from constituents experiencing
mail delays, and I received countless pictures of pallets of
undelivered mail and idled sorting machines. In early
September, I was urged to visit USPS facilities during a
morning shift to investigate the reports that I was getting
about the dysfunction going on inside. I provided USPS
management ample notice and had employees willing to escort me
through the facility, and yet I was denied entry. This was not
isolated incident. I became aware that several other Members of
Congress were also denied permission to make timely tours of
postal facilities in their districts.
Mr. DeJoy, in the interest of transparency and enhancing
public confidence in the Postal Service, will you commit to
remedying this issue and permitting Members of Congress access
to tour postal facilities upon request? And please do not say
that at the time, the Hatch Act was justification for not
allowing access. The Office of Special Counsel, which is the
principal enforcement agency of the Hatch Act, has made it
clear that the Hatch Act does not prohibit Federal employees
from allowing Members of Congress to tour Federal facilities
for an official purpose, which these tours were.
Mr. DeJoy. Ma'am, I will check with our legal counsel, and
if there is a new position that they wish the Agency to take,
personally, I have no issue where you go or what you see, but
there are Agency rules and positions we take because we are an
independent agency, and----
Ms. Wasserman Schultz. OK. Let me be specific. Reclaiming
my time. I am talking about upon request, not told that we have
to give 48 hours' notice, or two weeks' notice, or a week's
notice. Even around an election, nothing should bar a Member of
Congress being able to tour a postal facility for an official
purpose. And we aren't around an election now, but no matter
when we ask, there isn't any rule that I am aware of that would
bar us from being able to tour a postal facility. Obviously,
adequate notice is, you know, the morning of, the night before,
the afternoon before. But would you agree to remedy
unreasonable notice requirements so that Members of Congress
can tour facilities, particularly because this entire hearing
has been about the challenges that the Postal Service is having
with delivering mail.
Mr. DeJoy. So, as I said, I mean, the position on whether
the Hatch Act applies or not, I am not able to comment on it.
With regard to having Members of Congress visit our plants, we
will get back to you, but I don't have a particular objection
to it. But if you really want to go look at where our problems
are, I suggest you go to airports to look at backed-up mail.
Ms. Wasserman Schultz. OK. Reclaiming my time. I don't need
any suggestions about where I go. I want to be able to inspect
postal facilities, and I expect that you would ask your counsel
to communicate with the Office of Special Counsel about the
Hatch Act specifically and make sure that Members of Congress
can tour facilities upon request. That is what I want an answer
to, and that is what I want to do and other members to do as
well. So, moving on, I look forward to getting an answer from
you as soon as you can.
Mr. DeJoy. Mm-hmm.
Ms. Wasserman Schultz. The other thing I wanted to touch on
is mail delays and service standards. Mr. DeJoy, when I decided
to tour the local postal facilities, and I appreciate Ms. Tlaib
bringing this up as well, many of the reports I received were
about decommissioned sorting machines. And I understand that
the reason for decommissioning some of the sorting machines was
that letter volume was down while package volume skyrocketed.
However, these machines, which can label and sort thousands of
letters, bills, ballots each hour are a vital tool for our
postal workers, especially during an election season and other
busy times.
Now, I have asked you this question before and didn't get a
clear answer, so I am going to try again. Will you commit to
giving local plant managers the flexibility to reinstall
sorting machines when mail volume is high?
Mr. DeJoy. No, I won't commit to that.
Ms. Wasserman Schultz. Why not?
Mr. DeJoy. Because there is a process that we go through
within the organization that determines what----
Ms. Wasserman Schultz. OK. Reclaiming my time. I want to
make sure I ask Mr. Diamondstein about this issue. There have
been reports that USPS leadership are pursuing policies that
are deliberately slowing down the mail by decreasing service
standards. Are you concerned about making sure that there is
the local ability of supervisors to be able to request to plug
in sorting machines and also make sure that we can maintain
current service speeds? And what has happened in the past when
the USPS slowed down the mail by decreasing service speeds?
Mr. Diamondstein. Well, I think the best way I can answer
that question is we are for the Postal Service having an
operation where people get the prompt service they are promised
under the law. And if that means local autonomy, then there
should be enough local autonomy to do that and have that
decisionmaking going. Obviously, the union doesn't get involved
with the relationships between the managers, but there has to
be an operation that is nimble enough and committed enough to
make sure that that mail moves. And if it means local authority
to do certain things, then that is what it should include.
Ms. Wasserman Schultz. Thank you. That is why the President
needs to fill the Board so we can get a postmaster general who
actually is committed to making sure that that happens. Thank
you, Madam Chair. I yield back the balance of my time.
Chairwoman Maloney. Nancy Mace is now recognized for five
minutes.
Mr. DeJoy. I would suggest that would not solve your
problems.
Chairwoman Maloney. Nancy Mace?
[No response.]
Chairwoman Maloney. We will go to Yvette Herrell? Yvette
Herrell?
Ms. Herrell. Thank you, Madam Chair, and thank you for
hosting this committee meeting. It is very important. It is
important to our constituents all over the country. And one of
the things I heard here today that I do agree with is that the
status quo is not acceptable. I will also yield part of my time
at the end for a couple of answers from Chairman Bloom and from
Mr. DeJoy. But right now, what I want to ask is, can you
discuss and expand on the reforms you have made--this is to Mr.
DeJoy--at the U.S. Postal Service? When you arrived in June
2020, what did you see and how did you decide what to tackle
first?
Mr. DeJoy. I am sorry. I didn't understand the question.
Ms. Herrell. Let me see if I can do it this way.
Mr. DeJoy. There you go.
Ms. Herrell. OK. Thank you. Can you discuss and expand on
the reforms you have made at the U.S. Postal Service? When you
arrived in June 2020, what did you see and how did you decide
what to tackle first?
Mr. DeJoy. When I first arrived, I spent a lot of time with
the leadership team, management team, doing inquiries.
Actually, I started about 45 days before that doing that, so
when I arrived onsite, I had spoken to most of the leadership
team. I reviewed many, many internal audit reports and so
forth. And we also have to remember when I came on, at that
particular point in time, the Agency was forecasted to lose $22
billion that year, up from about $7 or $8. We ended at $9, and
run out of cash in September.
One of the top things that I looked at, and part of it was
supported by OIG report, was our none of our trucks were
running on time. It is the key to a network operation. I asked
the management team, which included area vice presidents,
operational vice presidents, and the COO, let's go look, which
these were not new ideas. This was on the table already. Let's
go look and actually make a move to try and have this work,
reduce extra trips and run trucks on time. Why? Because we run
50,000 truckloads a day and at 25 percent full, all right? So,
it should have been something to be able to accomplish.
We went ahead and implemented that, and it crashed. We
recovered in several weeks, and I learned from that and that is
why I began the reorganization. A big part of that consequence
was what led me to reorganize the organization, which we are in
the process of doing right now. The rest of the rumors about
machines, shutting down machines, cutting overtime, all that
stuff is not accurate.
Ms. Herrell. OK. Thank you. And earlier today, I heard
somebody on the committee say that the service standards have
been damaged. In your opinion, under your watch, have these
service standards been damaged, or, in your opinion, do you
think there have been some improvements made, because I do
appreciate that you are undertaking this entire process more in
the light of running the entity like a business, which I think
is a very smart thing to do. But I am curious about the comment
that was made earlier about the service standards that were
damaged.
Mr. DeJoy. Well, our performance against our service
targets for the standards have deteriorated significantly. They
have been on a path for the last seven or eight years of
deterioration, and we are going to continue and will continue
to do that unless we adopt a plan to not make the changes that
we want to make. This was exacerbated by the peak season, the
pandemic, and a significant breakdown in our transportation
network, and due to extreme volume and increased physical size
characteristics of the volume presented to us.
Ms. Herrell. Thank you. And my last question is to Chairman
Bloom. Just I wanted to give you a chance to respond to
partisan accusations that you were attempting to purposely slow
mail in voting prior to the election. Can you elaborate on that
for just a few seconds?
Mr. Bloom. Yes, sure. The Board of Governors was in full
support of all of the extraordinary measures that were taken to
try to fulfill our obligations to deliver election mail as
promptly as we possibly could. That was a key commitment of the
whole Postal Service, strongly supported by the Board.
Ms. Herrell. Thank you, Madam Chair. I will yield back. And
for the record, I am tickled pink to be in this committee
hearing today.
Chairwoman Maloney. OK. The gentleman from Vermont, Mr.
Welch, is recognized for five minutes.
Mr. Welch. Thank you very much, Madam Chair. Mr. DeJoy,
Vermont has a number of companies that depend on catalog sales,
and they are really important companies in Vermont. And as you
can appreciate, they are very concerned about the potential of
increased costs of the catalogs, and my understanding is that
under consideration now is about a seven percent increase this
year, and over five years, 35 percent. Could you speak to that
and what your analysis is about the impact that would have on
those businesses? And what they tell me, just so you can
respond specifically to them, is that with that kind of price
increase, they will really have to reduce that marketing tool
and probably go to digital. And, A, they don't want to do that,
and B, obviously that might have an impact on revenue, that
even though you are raising prices, the revenue will go down.
Mr. DeJoy. So, I have been speaking to many people in the
industry about the recent, you know, PRC rule. This is our
regulator. We had a 10-year test, right, with the legislation,
and they took four years to evaluate it. And they came to the
conclusion that, more or less, that the reduction in mail
volume has had significant consequences to the Postal Service,
you know, over the last 14 years. They didn't fix any of that,
right, but that could have been somewhere between $25 and $50
billion, you know, that would have helped the health.
Mr. Welch. Just to focus this, I am really concerned and
they are concerned about price increases and the impact on
their----
Mr. DeJoy. And they should be.
Mr. Welch. Yes.
Mr. DeJoy. They should be concerned about it because it is
one of the tools and it is one of the levers we get to pull,
right? And our regulator has established that we have a certain
amount of pricing increases that we can do now based on a four-
year analysis in costs. Now, as I told the industry, that is a
lever. That is part of our plan: pricing. This legislation is
part of our plan, and operational cost savings is part of our
plan, and growth is part of our plan. To the extent that we
don't get anything else done but this PRC ruling, then I am
going to have to use it all to keep us in business. If we get
cooperation and we get to move forward with the plan, we get
this legislation, we are not out to profit. We are out to break
even as your laws, as the congressional laws, mandate us to.
That is all this is about. So, the sooner we can get moving on
legislation, get moving on the operational improvements that we
need to make, which may include some minor service adjustments,
the less we will have to use price. The Board, myself, the
management team, we want to be an economic, affordable user for
everyone.
Mr. Welch. So, you know, I hear you acknowledging that a
price increase would put pressure on these marketers and their
marketing plans. You are mindful of that.
Mr. DeJoy. I am very, very mindful, sir, of, you know,
delivering an affordable service. Now, I will also say that
there are many, many users of the mail system to deliver mail
and packages. Some may be in your constituents' situation, but
a big part of our mail volume, they are our customers and we
appreciate them, but over 60 percent of our business are
commercial users, corporations that have a profit, that attempt
to make profit. So certainly, no one likes price increases, but
that does not mean that it leads to any further reduction in
mail.
Mr. Welch. Thank you. In my last 45 seconds, can you tell
us the bipartisan proposals that are under consideration that
you support? I mean, there has been talk here by the chair and
our ranking member----
Mr. DeJoy. Right.
Mr. Welch [continuing]. About some provisions they agree
on.
Mr. DeJoy. Well, I think what the chair and the ranking
member are speaking about is the Medicare integration that is
in the bill and the elimination of the pre-funding. The rest of
the bill has some reporting and stuff like that----
Mr. Welch. So, you do support that, those----
Mr. DeJoy. Yes, sir. Yes, sir, I support it. Our Board
supports it. Our union leadership supports it. It has been an
unfair situation for the Postal Service. It needs to be
corrected.
Mr. Welch. Thank you, Mr. DeJoy.
Mr. DeJoy. Mm-hmm.
Mr. Welch. Madam Chair, I yield back. Thank you.
Chairwoman Maloney. The gentleman yields back, and I now
recognize the gentleman from Kansas, Mr. LaTurner. You are not
recognized for five minutes.
Mr. LaTurner. Thank you, Madam Chairwoman. I want to thank
you for holding this hearing to help the committee and Congress
focus on the challenges facing our Postal Service, which are
many. In rural America, we understand the importance of postal
mail to connecting our people and communities. In these
unprecedented times, the United States Postal Service, which
was already having financial issues, has been put under even
further strain. Our founders recognized the importance of
postal mail to uniting our country by including the
establishment of post offices and postal roads in our
Constitution.
The Post Office is vital to commerce across America. Any
postal reform considered by Congress must guarantee continued
and long-term access to mail delivery for rural areas like
Kansas, while also being financially responsible. Every one of
my constituents back home, including corporate constituents,
like Hallmark Cards, will suffer if we don't get this right. We
must enact meaningful reforms that will place the Postal
Service on a long-term path to financial sustainability, while
at the same time increasing efficiencies and improving
services. It is my hope that in this hearing and subsequent
hearings, we will focus on the United States Postal Service's
challenges, both financial and operational, instead of focusing
on politics.
Mr. DeJoy, how are you doing today, sir?
Mr. DeJoy. I am great. Thank you.
Mr. LaTurner. I wanted to ask, when you talk about your
bold operational reform agenda, what aspects of this plan are
you most worried about, that are most at risk to immediate
resistance?
Mr. DeJoy. I think there are visions and aspirations for
the Postal Service in terms of delivery that are just
achievable, you know, with our current network. We talk about
flying. We don't own planes, right, so we have, you know, a
deteriorated transportation network. And so we spend a lot of
money, a lot of inefficiency in trying to achieve these
composite-type standards that are just not doable in the
current environment. And then we get down to questioning if we
are committed to six-and seven-day-a-week delivery, does it
make a difference if it is an extra day, you know, to get a
letter, because something has to change. We cannot keep doing
the same thing. Last year, we did $80 billion worth of service
to the American people and we charged $70, right?
So my goal, our goal here, is to potentially charge $72 and
get another $2 or $3 out of the operational costs, which is
very, very achievable, but we can't achieve it just doing
everything we are continuing to do. So, I am worried about
continued resistance to change, which everybody here seems
concerned about and recognizes that there is an issue, but to
get consensus to make a move when we have a plan--this is a
well-thought-out balanced, robust plan--would be a real shame
for everyone not to, you know, jump on it and support it.
Mr. LaTurner. Thank you. And a question for Mr. Quadracci
on Zoom. Earlier you talked about the elements that you think
need to be added to this bill. Can you elaborate on that,
please?
Mr. Quadracci. Yes. I know we had some technical
difficulties.
Mr. LaTurner. Yes.
Mr. Quadracci. But basically----
Mr. LaTurner. Thank you.
Mr. Quadracci [continuing]. There are four main items. It
was to avoid, you know, triple and quadruple rate increases
that the postmaster general just talked about, that the Postal
Rate Commission has allowed for. You know, I will come back to
that. But then six-day delivery, which has already been talked
about, investing in higher retirement returns for the
employees, which has already been talked about, and really
return the overpayment to the Civil Service Retirement System.
You know, this is stuff that was paid by the customer through
postage. We are not asking for that back for the customer. We
are asking it to be used for the Post Office's stability, and
that is billions of dollars.
But back to, you know, the triple and quadruple rate
increases, if I take you back to--this was personally very
painful for me--it was the last year that the Post Office was
allowed to increase by any rate it wanted before they were
capped by CPI under the PAEA. And when that came out, it was
anywhere from a 10 to 40 percent increase in rates that would
kick in in 2008. Immediately, we saw our volume drop like a
rock. The industry lost between 25 and 30 percent of its
volume. A lot of people blame the Great Recession on that, but
I will tell you as someone who is very close to his clients,
that that is not true. It started before the wheels came off in
the economy because of that big increase. Those catalogers that
were just discussed and many others dropped mail like a rock.
Chairwoman Maloney. The gentleman's time has expired.
Mr. Quadracci. And once the economy came back----
Chairwoman Maloney. The gentleman's time has expired.
Mr. Quadracci. OK. Thank you.
Mr. LaTurner. Thank you, Madam Chairwoman.
Chairwoman Maloney. The gentleman from Georgia, Mr.
Johnson, is recognized for five minutes.
Mr. Johnson. Thank you, Madam Chair. Mr. DeJoy, you have
led a distinguished career in business, having served as the
CEO of New Breed Logistics from 1983 to 2014. And thereafter,
when that company was acquired by XPO Logistics, you served as
the CEO of XPO Logistics' supply chain business. So, you have
got a long and successful career in logistics. Isn't that
correct, sir?
Mr. DeJoy. Yes. Yes, it is.
Mr. Johnson. And you brought that training with you when
you accepted the position at the Postal Service, beginning your
tenure in May 2022, correct?
Mr. DeJoy. June 2020, sir.
Mr. Johnson. I said 2022. That is what I meant, 2020, but
you corrected me in terms of May. It was June, not May. But can
you name for me, sir, one enterprise, governmental or private
sector, that is required to fully pre-fund health benefits for
its retirees and current employees?
Mr. DeJoy. I don't know of any. I don't know of any. I have
heard of something someplace, but for the most part, it is non-
existent.
Mr. Johnson. And this requirement has created a crushing
blow for the Post Office's ability to maintain solvency on a
year-to-year basis. Isn't that correct?
Mr. DeJoy. Yes, sir.
Mr. Johnson. And so when people talk about the Post Office
not making money, and being insolvent, and needing to be
replaced, that is just not true, is it?
Mr. DeJoy. Well, I don't think any of that is true, but we
have financial problems. This----
Mr. Johnson. Well, I will tell you that the decline in
first-class mail is one of those factors, isn't it?
Mr. DeJoy. Yes, sir. We lost over 45 billion pieces of mail
a year 10 years ago.
Mr. Johnson. And is that any reason why you would want to
create a situation where the first-class mail was not delivered
within the current timeframe that is set for it to be delivered
within, and you would want to stretch it out and deliver the
first-class mail, let it be delivered at a slower pace than the
pace that is set in stone for right now?
Mr. DeJoy. I mean, that is----
Mr. Johnson. Why would you want to cause first-class
delivery to be degraded?
Mr. DeJoy. So, I think first-class delivery is degraded
already because we don't make our service standards. We are not
able to make our service standards. We have never made our
service standards, and it is going to be increasingly----
Mr. Johnson. Well, you are----
Mr. DeJoy. It is going to be increasingly difficult to, in
fact, you know, make them. If we were to try to proceed with a
plan----
Mr. Johnson. But you are trying to change the service to
allow for first-class mail to be delivered over a longer period
than the guidelines currently call for.
Mr. DeJoy. You are guessing at what I am trying to do.
Mr. Johnson. Why would you do that?
Mr. DeJoy. We haven't released a plan yet.
Mr. Johnson. Well----
Mr. DeJoy. I will say that at the end of the day----
Mr. Johnson. Well, why would you want to do that?
Mr. DeJoy [continuing]. If we move forward with a plan,
only about 30 percent of first-class mail would be impacted
with any additional delays.
Mr. Johnson. Well, let me ask you this.
Mr. DeJoy. And it comes because we are not able to reach
the markers.
Mr. Johnson. Let me ask you this question, sir. Let me ask
you this question. During the middle of a pandemic and in a
climate where there were going to be millions more ballots cast
in an upcoming election----
Mr. DeJoy. Yes.
Mr. Johnson [continuing]. You decided to change the service
delivery standards for the mail, and, as a result, the
performance of the Post Office went into a steep decline. Why
did you do that?
Mr. DeJoy. Well, are you talking about the past or are you
talking about the future? You are confusing me.
Mr. Johnson. No, I am talking about this past summer----
Mr. DeJoy. Yes. So----
Mr. Johnson [continuing]. Right before the judge ordered
you to replace those----
Mr. DeJoy. The intent of the changes that I made, you would
think, would make the mail move on time. We were asked to put
together a plan to have our trucks dispatch from the plants on
time. We had significantly late vehicles, 50,000 a day, running
around with 25 percent full. That is what I did. We failed at
the execution. We fixed that----
Mr. Johnson. Well, the service standards went down.
Mr. DeJoy. And that was all done within----
Mr. Johnson. They were lowered as a result of your actions.
Chairwoman Maloney. The gentleman's time has expired. The
gentleman may answer the question.
Mr. DeJoy. The transportation change that I made in July
was remedied by the last week of August. It had no impact.
After that, we ran extra trips. We ran late trips. We did
everything we possibly could. The system was overwhelmed by
package and mail volume, underwhelmed by the performance of our
carrier networks, and also, quite frankly, our own operations
within our plant facilities. We talked earlier about embargos.
These were not embargoes. We had lines outside our plants
because we couldn't fit anything else in our plants. That is
not an embargo. That is being physically overwhelmed. However,
had we gotten mail and packages to our delivery units, it got
delivered 98 percent of the time within a day. So, nothing that
has gone on over the last four months had anything to do with
my asking the trucks to run on time in July.
Chairwoman Maloney. The gentleman's time has expired. The
gentleman from Georgia, Mr. Clyde, is recognized for five
minutes.
Mr. Clyde. Thank you, Madam Chair, for holding this
important hearing and to our witnesses for their testimony. It
is no secret that the election in my home state of Georgia was
plagued with improprieties and irregularities. While I am not
here to get into the specifics of those, nor am I looking to
point fingers at the Postal Service, I am trying to understand
some terminology used more than 10 times in the Postal
Service's 2020 Post-Election Analysis Report, that being the
term of ``extraordinary measures.'' This term was used
throughout the report to highlight the Postal Service's success
in having achieved the results that it did. Your report notes
that some extraordinary measures deployed in the 2020 election
had been deployed in previous years. I also want to make it
known that some of the extraordinary measures deployed in 2020
were court mandated, as was in the case of Georgia, and ballots
processed under such measures were excluded from total counts.
As a businessman and a former Navy logistics officer, the
term ``extraordinary measures,'' as it pertains to promoting
metrics achieved and results delivered, leads me to think that
you took steps above and beyond expectations. ``Extraordinary
measures'' also generally requires the reshuffling of resources
and labor away from other primary tasks and duties. But in the
case of the Postal Service, those extraordinary measures taken
were measures that helped you meet expectations and fulfill
your missions, not to exceed them, nor did you put proper
accounting processes in place.
My Democratic colleagues are encouraging states to expand
mail-in ballots, and are pushing a bill, H.R. 1, that would
restrict states' rights to determine the vote-by-mail
eligibility of its residents. For an entity already flailing
and saddled with billions of dollars in liability, I cannot
imagine that said extraordinary measures are sustainable. So,
to Mr. DeJoy, in a few sentences, how critical is it for
Congress to take steps toward reforms that bolster efficiency
to make these extraordinary measures, as they pertain to
meeting minimum expectations, a relic of the past? What do we
need?
Mr. DeJoy. I kind of got a little lost. What is the
question, the specific----
Mr. Clyde. How critical is it for Congress to take steps
toward reforms that bolster efficiency to make these
extraordinary measures that we have been talking about, as they
pertain to meeting minimum expectations, a relic of the past?
Mr. DeJoy. What was the last word?
Mr. Clyde. A relic of the past. Enunciation is really
terrible here.
Mr. DeJoy. Yes, the last two words.
Mr. Clyde. A relic of the past.
Mr. DeJoy. A relic of the past.
Mr. Clyde. Yes. Thank you.
Mr. DeJoy. So, extraordinary measures have been a set of
procedures that the Postal Service has done historically around
mail-in ballots, and it really is quite, you know, something to
see. We actually hunt inside plants for ballots to make sure it
gets processed, often to the degradation of other type of
services around election time. We are probably the most stable
thing in the mail-in ballot process. We have 50 states and a
number of districts that, you know, have electoral boards, and
all their processes are different. And that is, you know, a big
reason for some of the consequence of why we need to go through
the extraordinary measures we do to get ballots out to the
voters and back to the electoral boards. So, to the extent that
anything can be done to streamline that, even a simple thing as
a barcode in the first-class, you know, mailing of ballots,
would be very, very helpful to the Postal Service.
But I would say to you, taking on that and going back to
our plan in the future, there are extraordinary measures going
on within the Postal Service everywhere. We have, you know,
composite measures and metrics that we need to fulfill that are
just not able to be filled.
Mr. Clyde. OK.
Mr. DeJoy. And it creates an operational process that, at
the time, I found quite chaotic.
Mr. Clyde. OK. All right.
Mr. DeJoy. And of the things that, you know, this plan that
we have----
Mr. Clyde. Thank you, Mr. DeJoy. I just have one more
question for you----
Mr. DeJoy. Yes.
Mr. Clyde [continuing]. And I just have a few seconds left,
on the topic of the Postal Service's role in upholding the
sanctity of our elections. We know that a 2017 investigation by
the Office of the Special Counsel found some Postal employees
violated the Hatch Act. Can you please submit for the record
answers to the following: one, detail of changes made to
prevent violations during the 2020 election cycle, especially
as it pertains to ballots processed under extraordinary
measures; and two, is the Office of the Special Counsel
currently investigating or planning to investigate possible
violations of the Hatch Act that might have occurred last year.
Mr. DeJoy. Yes. I am not aware of any of that, nor am I
aware of any violations that are even being, you know, talked
about, but we will go back and, you know, look through the
records.
Mr. DeJoy. I think there was a commitment by the 630,000
men and women of the Postal Service to perform, you know, to
within the letter of the law to move, you know, ballots
through, and I don't think anything other than that happened.
Mr. Clyde. OK. Thank you very much. I yield back.
Chairwoman Maloney. The gentlelady from California, Ms.
Speier, is recognized for five minutes.
Ms. Speier. Thank you, Madam Chair. Mr. DeJoy, the
President provided an executive order upon becoming President
that he wanted electric vehicles to be used to the greatest
extent possible. A GSA analysis on the lifetime basis of EVs
versus conventional vehicles found that they were about equal
because of the lower cost of maintenance and the cost of gas,
and as batteries become cheaper, they will probably actually
decrease in price. So, my question is, you have just purchased
a number of vehicles. My understanding is not one of them is an
EV.
Mr. DeJoy. Well, that is not true. We announced the
acquisition yesterday. As you know, our vehicles are 30 years
old and catch on fire----
Ms. Speier. Yes. If you would just answer the question. How
many EVs did you purchase?
Mr. DeJoy. We have in our plan a commitment to buy 10
percent of----
Ms. Speier. Of the fleet? Well, why would it be 10 percent?
Why not 90 percent?
Mr. DeJoy. Because we don't have the $3 or $4 extra billion
in our plan right now that it would take to do it, but we are
happy to talk with the Administration and with this Congress if
they want to help us.
Ms. Speier. All right. Thank you.
Mr. DeJoy. But we did spend about $500 million on
convertible.
Ms. Speier. Reclaiming my time. Reclaiming my time.
Mr. DeJoy. Every vehicle could be, you know, converted to
electric. We have very well----
Ms. Speier. All right. I thank you, Mr. DeJoy. I would like
to go on to another issue. In October 2020, CBS News reported
that XPO Logistics landed a $5 million highway shipping
contract with USPS, which was the first regular contract for a
postal route that XPO Logistics had signed with the USPS in
more than a year. An ongoing investigation by a crew in
Washington revealed that USPS also awarded XPO Logistics
another highway shipping contract of nearly $26,000 to run from
November 2020 to 2022. You were, of course, formerly employed
by XPO Logistics and had maintained an interest when you came
on board as postmaster general. In October of last year, the
Office of Government Ethics issued a certificate of divestiture
to you showing that you had finally agreed to divest. Have you
completely divested of XPO Logistics?
Mr. DeJoy. I have completely divested of XPO Logistics.
Ms. Speier. Have you transferred any of your interests to
your adult children?
Mr. DeJoy. No.
Ms. Speier. Has the----
Mr. DeJoy. I have not transferred any of my XPO interest to
my adult children. You said ``any of my interests.''
Ms. Speier. To your wife.
Mr. DeJoy. No.
Ms. Speier. To any of your family members?
Mr. DeJoy. So, you said any of my interests. I have lots of
interests. If you are talking specifically about XPO, I haven't
transferred that to anybody.
Ms. Speier. Do you have any interests associated with the
Postal Service contracts that have been with the Postal Service
in the past?
Mr. DeJoy. Ma'am, I have had a number of investigations
with regard to my ethics. An OIG report came back without
recommendation. I did it all right. I don't know where you are
going with this, but there are no ethical violations in my time
at the Postal Service, nor anywhere else in my career.
Ms. Speier. Well, evidently----
Mr. DeJoy. Evidently?
Ms. Speier [continuing]. The OIG did not review some of
your accounts, and the name of the entity associated with those
accounts is redacted. I am just curious, Ms. Whitcomb, if there
has been an updated review of Mr. DeJoy's compliance with
ethics requirements.
Mr. DeJoy. I comply with all ethics requirements. I did it
immediately as I came into the organization.
Ms. Speier. No, I am asking this of Ms. Whitcomb. Is she on
the line?
Ms. Whitcomb. Yes, I am here. Yes, since the issuance of
that report, we completed our work and found that Mr. DeJoy
followed guidance from Postal ethics staff and provided written
recusal notifications, set up screening arrangements to avoid
potential conflicts----
Ms. Speier. Thank you.
Ms. Whitcomb [continuing]. And divested appropriately.
Ms. Speier. Thank you. Let me end by asking you this, Mr.
DeJoy. In my area, my constituents, I just got two yesterday.
One got a letter that took 12 days from Dallas, Texas to San
Francisco. I think people are willing to accept one day, but 12
days presently is only going to become greater in the future.
In the Bay Area, there are 100 non-carrier positions and 100
letter carrier positions before the November election that were
unfilled. The Bay Area cost is very high. You could get a job
at the In-N-Out Burger drive-through for $18 an hour. My
understanding is it is about $17 an hour as a starting salary
for USPS. And so my question is, are you willing to look at a
different rate of salaries for those who live in high-cost
areas?
Chairwoman Maloney. The gentlewoman's time has expired. The
gentleman may answer the question.
Mr. DeJoy. So, the union leadership and our H.R. team
negotiate rates. But what I will tell you is that I am
committed to improving on the pre-career status of some 200,000
employees within our organization and have them really see a
path to full-time employment, and I think that is really where
we can improve on the retention and still stay competitive in
the marketplace. And that is work I am very, very active in
doing and recently converted 10,000 people in December, and
that has not been done in many years here.
Ms. Speier. I yield back my time here.
Chairwoman Maloney. Thank you. The gentleman from Texas,
Mr. Fallon, is recognized for five minutes.
Mr. Fallon. Thank you, Madam Chairwoman. The Federal
Government and this institution, Congress, we are world-class
experts at kicking the can down the road and also burying our
heads in the sand. In short, we are terribly proficient at
ignoring glaring, alarming, and potentially devastating
problems, not just here, but in a myriad of ways. Solving the
current dire financial status of the Postal Service should not
be partisan. It seems it is because I have been watching this
for several hours now, but it shouldn't be. We should take
partisanship and throw it in the trash, particularly when we
are looking at the realities of math.
Between 2007 and 2019, the Postal Service lost $79 billion,
and in 2020, I believe that figure was $9.2 billion. Former
Postmaster General Megan Brennan testified a couple years ago
that in the absence of real legislative and regulatory reform,
the Postal Service would be flat broke by about 2024. And what
are some of the answers that are being proposed today by our
friends on the other side of the aisle? Is it cutting costs? Is
it reducing work force compensation? Is it limiting unfunded
liabilities? Is it requiring the financial condition of the
Postal Service to be considered during future collective
bargaining? No. No, not one of those things. Medicare
integration has been talked about a lot, and it looks as if, by
estimates, it will save about $40 billion dollars over the next
decade. But we are trying to close $160 billion gap, and
taxpayers shouldn't be on the hook for that anyway. It is not
as if Medicare is a shining example of financial safety and
stability.
Mr. DeJoy, I have a very quick question for you. How many
of the proposed reforms from the 2018 task force--I believe
there may be, like, six major ones--have been implemented? Have
there ever been any?
Mr. DeJoy. I can't hear you.
Mr. Fallon. I am sorry. Can you hear me?
Mr. DeJoy. Yes.
Mr. Fallon. How many of the proposed reforms from the 2018
task force have been implemented?
Mr. DeJoy. So, if you haven't noticed, we have had kind of
a restriction on implementing a lot of different processes. But
the task force, I did study the task force, and there was some
good directional elements of it, and there were some things
that I would not sign on to. But some of those elements that we
announced the plan, I will be, you know, happy to discuss it.
And in that report, I mean, the White House report absolutely
supported, you know, that it should remain a public entity, and
that we needed to look at new ways of marketing our services,
but recognized that there are cost and operational issues which
our plan addresses.
Mr. Fallon. OK. Is it fair to say that that was
constructive, though, as far as the task force? They had some
ideas that were worth looking into?
Mr. DeJoy. As a public agency, we take all input.
Mr. Fallon. OK. And I apologize and thank you, and I think
you are doing a great. I just am short on time. Mr.
Diamondstein, I want to ask you a few questions, if I could.
Your union currently has on its website a link to a 2021 union
contract survey, and in it, you also tell your members, and I
am going to quote here, ``Contract negotiations are most
challenging with management always trying to chip away at our
wages, rights, and benefits.'' And I would just have to share
that I think demonizing the Americans that work at the Postal
Service and in the Postal Service leadership doesn't do
anything to solve the crisis that we are facing. It doesn't do
anything to close that gap. So, you know, when we are looking
at background material here, when we were reading through it--
it was rather extensive, I was really alarmed by the $160
billion in unfunded liabilities and debt; $50 billion unfunded
liabilities for pension benefits, $60 billion in unfunded
liabilities for worker compensation liabilities, and $19
billion for compensation as well. It is glaringly obvious that
this $160 billion chasm has to be closed, or at least narrowed,
by limiting at least some somewhat the aforementioned unfunded
benefits, or they are going have to be trimmed.
So, I just had three quick questions for you. Is your union
willing to acknowledge that, and what is your union doing to
help the Postal Service become profitable, obviously other than
fighting management. And then last, do you oppose or support
requiring the financial condition of the Postal Service to be
taken into account during future collective bargaining? And I
can ask those questions again.
Mr. Diamondstein. You expect me to remember those three
questions.
Mr. Fallon. OK. Well, I will go first. Are you willing to
acknowledge that this $160 billion chasm is large, it is
glaring, and we are going to have to do something to trim that?
Mr. Diamondstein. OK. I appreciate that question because a
lot has been thrown around today about the dire financial
situation. But the reality is that a heck of a lot of this
liability and debt is paper, and it was created. If the Postal
Service is broke, we could say it is broke on purpose. And so,
actually our pension plans are over funded. Our retiree
healthcare funds are funded in a way that no other company or
no other Federal agency does. There is a lot of money there. So
to me, it doesn't get us to where we need to go by creating
this picture that is really not the case.
Now that isn't diminishing that we feel there is some real
challenges, so one of the questions you asked is what are we
doing about it. We are huge advocates of expanded services.
Expanded services bring in new revenue, such as in the
financial service world, such as paycheck cashing, such as
licensing, such as electric charging stations in front of many
post offices. There are all sorts of things that we can do that
we are willing to work with management on.
Now, your third question--I think I remembered them all--is
the question of what have we done. The Postal workers have
given up a lot. And I am glad you are reading our website, but
you should go back to our 2010 collective bargaining agreement
where we didn't get pay raises for two years at all, where we
lowered the standards to the point that the Post Office
unfortunately is having trouble hiring. We didn't want to go
that way, all right? But we believe in good living wage jobs,
good benefits, and the problem with the Postal Service is not
that we have a collective bargaining process where if it ends
up in interest arbitration, they can't take into account the
financial----
Chairwoman Maloney. The gentleman's time has expired.
Mr. Diamondstein [continuing]. Post Office. We are model
employers under the law, and we should remain that way. But I
do take issue with this idea of the hundreds of billions of
dollars that is thrown around when it is really not case, and
Congress can fix it----
Chairwoman Maloney. The gentleman's time has expired.
Mr. Diamondstein [continuing]. With many of the ways we
have talked about.
Chairwoman Maloney. The gentleman from Maryland, Mr.
Sarbanes, is recognized for five minutes.
Mr. Sarbanes. Thank you, Madam Chair. Can you hear me OK?
Chairwoman Maloney. Yes, we can.
Mr. Sarbanes. OK. I appreciate the hearing, and I
appreciate the good work on the bill that we have been
discussing today. And thank you for your staff's efforts on
that, and hopefully we can make some forward progress with it.
Postmaster General DeJoy, you, I think, conceded a couple
of rounds back that there was some failure of execution in
terms of the plan that you were implementing last spring and
summer. I thank you for that acknowledgement. What the head
scratcher for me was that you would barrel forward with your
plan as the pandemic was ramping up. I just never understood. I
mean, leave aside the pros and cons of the plan, and I have a
lot of concerns about it, but why you wouldn't go into some
kind of a pause mode at a time when the postal work force was
going to be under incredible pressure, I have never completely
understood.
But be that as it may, I want to, Mr. Diamondstein, talk to
you for a moment. First of all, thank you for your
representation of American Postal Workers Union. You have very
strong members and leadership in the Baltimore area. I want to
thank you for that because they have given us good insight on
some of the challenges that the Postal Service is facing. One
of the components of the bill that we are talking about in the
discussion draft, in addition to the Medicare integration and
eliminating the requirement to pre-fund retiree health
benefits, has to do with service performance reporting. And it
is the idea that there will be required targets for the Postal
Service to meet in terms of performance and then reporting what
goes with those targets, and that will reflect nationwide
performance, area performance, district levels, et cetera, and
form the basis of a plan that can go to PRC on addressing the
failure to meet standards in the future.
My question for you is, can you speak to how that effort,
and that focus, and that reporting regime relates to the Postal
Workers Union and other union support for restoring 2012
service standards, which I know is something that you all have
spoken to. Talk to me a little bit about how you see those
relating, and talk to me as well about your confidence and
experience with the Postal Service management pulling the union
into the conversation around how to meet those standards and
address any gaps between the standards and actually what is
happening in practice.
Mr. Diamondstein. Well, to take the second part first, my
union has not been consulted as management sought input on
their 10-year planning. It is not like we never have
conversations here and there with our counterparts, but we
never were consulted by the Board of Governors or by this
Administration, and we think that is a real problem. We know
what is going on in the workroom floor. We are all Postal
workers ourselves and union leadership were in touch with our
members, and we have a lot to offer.
In terms of the language of the bill, the draft discussion,
we are glad that you are taking on the question of service
standards. We think it should be stronger in our first read,
and we have made no bones about it that we would like to see
overnight delivery restored within our towns, one side of the
street to the other, that that would be good for the business.
It would be good for the customers. It would be good for the
workers. It is a win-win-win, and that is what revised 2012
standards would do. But we do appreciate the committee's
efforts to try to address the service issues, which folks on
both sides of the aisle are obviously very concerned about and
Postal workers are deeply frustrated with.
Mr. Sarbanes. Well, thank you.
Mr. Diamondstein. I hope I have answered your question.
Mr. Sarbanes. No, I appreciate that, and I would just say
there is no hope of achieving any service standards that meet
the public's expectation if the work force, and the unions, and
the people that are on the front lines aren't collaboratively
involved in that conversation, whether it is, in this instance,
with respect to our committee and how we discuss proposed
legislation, or, just as importantly, with the management of
the U.S. Postal Service.
Chairwoman Maloney. The gentleman's time has expired.
Mr. Sarbanes. So, thank you for your----
Chairwoman Maloney. The gentleman's time has expired. Ms.
Kelly is now recognized for five minutes.
[No response.]
Chairwoman Maloney. Ms. Kelly of Illinois.
Ms. Kelly. Thank you, Madam Chair. The coronavirus pandemic
has caused a great increase in the volume of packages that are
moving through the postal system, increasing in some weeks by
60 percent over the same period last year, as we have been
discussing. According to press reports, over last year's peak
holiday season, the surge in package volume essentially
overwhelmed many postal processing facilities, with packages
piling up so much that it became difficult for workers to move
freely in order to do their jobs.
I am getting calls daily from my district, people crying,
screaming into the phone, their mail drastically delayed by
three to four weeks. The surge in package volume was
undoubtedly a major factor. There have been reports that UPS
and FedEx ``dumped packages'' that they could not deliver on
time. Mr. Postmaster, what do you have to say about that?
Mr. DeJoy. Well, I agree with you that we have been
overwhelmed by packages, as I said earlier in my testimony. The
extent to which UPS and FedEx dumped, I don't know if that is
the right word, but they are able to refuse package volume, and
we chose not to. So, to the extent that they were not taking
volume, we were the only outlet for the American people, and we
got a whole bunch of it, and that resulted in what you were
describing in your district all over the country. Those
conditions existed.
Ms. Kelly. Yes, I just got a Christmas card last week. Why
did the Postal Service seem so unprepared for the package
surge?
Mr. DeJoy. Well, I am here eight months, and this has been
going on for 10 years, right, the network, the erosion in the
network, the imbalance in our operating schedules. But even if
I was here for 10 years, we are in a pandemic, Congresswoman,
and the 40-percent increase over peak volume for our
organization was probably even too much to predict. I mean, I
don't think FedEx and UPS like not taking volume, right,
because they are profit oriented.
So, you know, we were overwhelmed with packages in the
regular business, you know, before the pandemic, right? We had
not outfitted any of our operations significantly enough with
package sortation equipment, the right transportation
methodology, the right plant-to-plant movements, significant
issues in moving packages. So this----
Ms. Kelly. OK. Let me ask Mr. Diamondstein, what was the
experience of workers during the surge, particularly with
respect to coronavirus safety in postal facilities? And I am
sorry I am not on camera. I am trying, but it just won't let me
on.
Mr. Diamondstein. Well, first and foremost, it was
obviously very stressful. Postal workers as frontline essential
workers, like so many other frontline essential workers, are
still dedicated to the mission, but we have had a lot of
sickness. We have unfortunately had an unfortunate share of
deaths and, of course, we have had a lot of people that weren't
able to come to work because of the childcare issues, with
schools, and all sorts of things. Now, in terms of the health
and safety, I think that the parties, the union and management
at the national level of the Post Office, really did quite a
good job putting in a lot of protocols to make the workplace as
safe as possible in a dangerous time.
It was a little shaky in the beginning because people were
hit kind of unawares, but there has been plenty of PPE. There
has been a lot of safety shields between the folks that staff
the windows and the customers. There has been extra cleaning.
There has been extra chemicals. There has been extra wash-up
time. So, I think on that part, we did excel as both union and
management. It doesn't mean it has always been applied evenly
and equally throughout the country.
Ms. Kelly. Right.
Mr. Diamondstein. But there is certainly the vehicle there
for folks to protect themselves. We also agree with
management----
Ms. Kelly. I am running out of time.
Mr. Diamondstein. I am sorry.
Ms. Kelly. So, I just want to say to the postal workers,
thank them for their service, but we need to take steps to make
sure the Postal Service is on firm footing going forward----
Mr. Diamondstein. Absolutely.
Ms. Kelly [continuing]. Because it is a disgrace if you
could just hear all the phone calls. Thank you. I yield back.
Mr. Diamondstein. Great.
Chairwoman Maloney. The gentlewoman from Michigan, Mrs.
Lawrence, is recognized for five minutes.
Mrs. Lawrence. Thank you so much. Mr. Bloom, I am looking
at the tenure of Board of Governors, and it seems like the
longest one that has been in place is 2018, so the majority of
all you have been serving almost entirely in the pandemic
experience. Have any of you ever gone through an entire
structure reorganization like what is being proposed or the
service standards? Do you have any experience in that?
Mr. Bloom. Well, we are----
Mrs. Lawrence. Yes or no?
Mr. Bloom. I have had a lot of experience with
restructuring, yes.
Mrs. Lawrence. As it impacts service standards? Where did
you work before, sir?
Mr. Bloom. The experience I had was working for the Federal
Government with the General Motors restructuring, working for
the Steelworkers Union and the integrated steel industry and
other----
Mrs. Lawrence. And they don't have service standards, sir,
correct?
Mr. Bloom. No. No, that would not----
Mrs. Lawrence. Sir, my next question is to the postmaster
general. Yes or no, do you recognize that during your tenure
since you have been here, you have been compromised by COVID,
holiday mail, and election mail, a record amount of election
mail, during this period? Yes or no.
Mr. DeJoy. What do you mean by ``compromised?''
Mrs. Lawrence. You have been impacted, your ability to do
your job.
Mr. DeJoy. Yes.
Mrs. Lawrence. Can you confirm that the staffing, as has
been stated by the union representative, has been compromised
or impacted by COVID? So, you don't have the 600,000 employees
that you have on paper. They haven't been able to work, so you
have been working with a reduced staff, correct?
Mr. DeJoy. Yes, in fact, we have had 200,000 new hires, and
our population stayed the same. That is a tremendous amount of
new entries into----
Mrs. Lawrence. Absolutely. It is because of their work
environment, I am told. So, my question is to you, Mr. DeJoy.
You recognize that the Postal Service is in a competitive
market with UPS, FedEx, and other delivery companies, correct?
Mr. DeJoy. I do.
Mrs. Lawrence. So, as a customer, if you are going to
reduce the standards----
Mr. DeJoy. Mm-hmm.
Mrs. Lawrence [continuing]. And raise the amount of mail,
and you have another company sitting right beside you that will
continue to have those standards, would that decrease the
volume of people who would come to the Postal Service, because,
as of now, it is affordable, and even in 2020, you were in the
90's for service standards, but now you have reached one of the
lowest ever. And I am not putting it all on you, sir. You are
new to the job. You have been impacted by these. But why is
there any common sense behind changing an organization in the
middle of a pandemic? You haven't even stabilized your work
force because there is a revolving door. There are so many
things that you need to do. I appreciate you saying you are
being bold, but that is just like me saying that I am going to
restructure an organization in the middle of a pandemic when
half my work force isn't there. I had an unprecedented amount
of mail volume, and then I had this huge impact of COVID with
parcels.
Let me tell you one of the challenges. In my district, you
have NDC, which is a parcel processing plant, that did not know
what was incoming mail and what was outgoing mail. The mail was
literally gridlocked. That is a lack of management. You have to
fix the management that you are responsible for before you
start ripping everything apart. To me, and I have said this to
you personally, I don't understand how you come in just ripping
the organization apart during a pandemic when you haven't even
come in to show your leadership of being able to run an
efficient, accountable organization. It has changed. I called
the postmaster about the gridlock of trucks sitting for 20
hours to drop a load in Detroit. He told me I can't answer that
question because ``I have no responsibility over processing.''
I said, well, give me the person. They told me to go to Denver.
I called Denver. They couldn't give me an answer right away.
So, here we are with this disjointed organization. You haven't
shown, and I am not saying you can't, but you haven't shown
your leadership, and now you want to rip it apart.
Mr. DeJoy. Congresswoman, we have had good conversations
before. I think this type of description of what is going on is
not really accurate, ``rip it apart,'' or ``nobody knowing what
is going on.'' I would suggest to you, if we look back over the
past 10 years----
Mrs. Lawrence. It is factual. It is going on.
Mr. DeJoy. I am sorry?
Mrs. Lawrence. It is going on. You had a gridlock, and you
know that----
Mr. DeJoy. OK.
Mrs. Lawrence [continuing]. Where no one knew----
Mr. DeJoy [continuing]. And where do we want to put that
responsibility?
Mrs. Lawrence. Well, it ultimately rests in your hands,
sir. You're the postmaster general.
Mr. DeJoy. OK. And we have a plan to fix that, but----
Chairwoman Maloney. The gentlewoman's time has expired.
Mr. DeJoy. But I would say to you that the problem is more
than one-dimensional, right? With regard to the organization,
that is one of the things that we are very much working
aggressively on to have an organizational strategy that
actually knows who is responsible for these things. I would
suggest to you, before you may think people knew they were
responsible, but if they did, when we ran trucks on time, they
would have went with mail and they didn't. So, and we are also
facing----
Mrs. Lawrence. Fix it.
Mr. DeJoy [continuing]. With regard to your service----
Mrs. Lawrence. Fix it.
Mr. DeJoy [continuing]. With regard to your service
question----
Chairwoman Maloney. The gentlewoman's time has expired.
Mrs. Lawrence. Fix it.
Chairwoman Maloney. OK. The gentleman from California, Mr.
DeSaulnier, is recognized for five minutes.
Mr. DeSaulnier. Thank you, Madam Chair. I want to thank you
for having this hearing, and I also want to associate myself
with the comments from my colleague from Louisiana some time
ago about the historical importance of the Postal Service. All
these years since before the founding, postal delivery has been
important to this country and it has adapted, and clearly, we
have a challenge now in this global economy.
I would like to say before specifically asking a couple
questions of Mr. Diamondstein, as a former small business owner
in a very low-margin business--the restaurant business in San
Francisco Bay Area--this cultural thing that the private sector
is always right, it drives me slightly to distraction. Having
been from the private sector, but now having spent a lot of
time on ride-alongs looking at government services about the
local, state, and Federal level and ride-alongs with the Postal
Service here in the East Bay of San Francisco Bay area, and a
lot of discussions, including with the former postmaster
general, the public sector can learn from the private sector.
The private sector is not all-knowing, and we can see
shortcomings from the private sector as well. You mentioned
companies like Enron and WorldCom, and the recession, and
housing crisis.
And then the issues of subsidies, I wish we had more
accurate descriptions about how taxpayers subsidize the private
sector and what we get, to be politically agnostic, were those
returned to people. So, in this instance, again, as a former
retailer, one of the great strengths of the Postal Service is
the retail aspect of people liking their delivery person. The
letter carriers are out there every day, again, having been on
ride-alongs with postal workers. My success when I was in
private sector was directly related always to my employees and
the relationship I had in management, even though I often
wasn't physically there, although it wasn't a large corporation
like the current postmaster general's background. I think to
destroy that branding in any way has been a great disservice to
the American taxpayer. So, specifically, having these
performance standards, and I look forward to this legislation
and having a real discussion focused on performance standards,
the background of instilling that and getting a reward from it,
but still protecting a lot of the important assets,
particularly the rank and file in the Postal Service.
So, Mr. Diamondstein, it is interesting to me, along the
tone of my comments, is that 7,500 mid-managers don't have the
ability to go to the Merit System Protection Board. So, could
you tell me some of the challenges to that and some of the
things we need to do to allow due process, but also to this
very important group of people to make sure that their morale
is good and they feel like they are being protected while we
still demand high standards from them?
Mr. Diamondstein. Well, Congressman, we obviously don't
represent the mid-managers that you are speaking of, but we
have no opposition to people in the organization having the
maximum due process that the law can provide, and the MSPB is
certainly a route there. So, you know, we focus on our
collective bargaining agreements and our rights within that,
but we have not put up any up obstacles on that question.
Mr. DeSaulnier. And in terms of the people you do
represent, the benefit for them to be able to access the due
process that the Merit System allows them, could you give us a
few comments about that, and understanding there is a balance
here. Management and rank-and-file have a traditional
relationship. We want it to be as healthy as we can, but we
want a collective benefit to go to the taxpayer or the
customer.
Mr. Diamondstein. OK. Well, again, just be careful about
the taxpayer since it is not a taxpayer-funded entity, and I
think that is important to keep in mind.
Mr. DeSaulnier. Right.
Mr. Diamondstein. In terms of our members, we have due
process under a collective bargaining agreement, and within
that, there are groups of employees or disabled veterans who
also have access to MSPB under the law. So, we are satisfied
from the point of the people that we represent that the due
process rights are there. They work.
Mr. DeSaulnier. Yes, I appreciate the comment about
taxpayer. I am sorry. I slipped into my former party
affiliation from many years ago when I was registered as a
Republican, so I appreciate that, but just a last comment. I
really think the Congress would be well served if we had a
better understanding of the relationship between subsidies and
support, whether it is in the infrastructure and transportation
system, and the benefit that we all get as Americans from that.
So, thank you, Madam Chair. I yield back.
Chairwoman Maloney. The gentleman yields back. The
gentleman from California, Vice Chair Gomez, is recognized for
five minutes.
Mr. Gomez. Thank you so much, Chair Maloney. I really
appreciate this hearing. I just want to start off by expressing
my appreciation to the men and women of the U.S. Postal
Service, the letter carriers, the postal workers, for just
being out there every single day during this pandemic. I know
the pandemic has had an impact not only when it comes to almost
every aspect of American life, but also to the men and women
who are still going to work every single day, delivering the
mail, making sure that things try to get there on time. It
hasn't been easy at all, and I know that they are deeply
concerned about the decrease in performance. They are also
deeply concerned about just the direction of the U.S. Postal
Service across the board.
So, I am in complete support of making sure that we can
provide as much financial support to the U.S. Postal Service as
possible. Americans do see it, that it should not be run like a
business, but as a public service, and I think that there is a
reason why, because oftentimes a business just attempts to
maximize profit, not necessarily how it caters to their
clientele, just how do we maximize profit. And when you just
try to maximize profit, it doesn't mean that you automatically
get the best result.
I want to ask Mr. DeJoy about a couple of things. Coming
from California, trying to have more electric vehicles on the
road, and combatting climate change is a big deal. You
mentioned 10 percent of the fleet would be electric. Real
quick, just a few questions, and I am just trying to figure it
out. You are replacing a lot of these old mail delivery trucks.
What is the new miles per gallon for each new truck, especially
since the old one was, I guess, 10 miles per gallon?
Mr. DeJoy. It is more. I don't recall off the top of my
head what it is. You know, we have a year decide what the final
complement is on the electric vehicle, and we are very much
pursuing it, but we need to kick the project off.
Mr. Gomez. Listen, I am glad you are moving forward. I
heard that you guys have been trying to find somebody to
actually do this since 2015, so I am glad it is moving. But if
you are replacing just inefficient vehicles, right, the
American people want to know how you made that decision. Was it
based on miles per gallon? Great. And then at the same time,
what kind of tailpipe emission standards are they achieving?
How much are they reducing in greenhouse gas emission? Just
kind of figuring out, like, because that is a big deal if you
are not going through more electric, right, by raw numbers,
which we would know are cleaner.
You said also that you could convert these new trucks to
electric if you got more resources. How much would it cost to
convert a truck, and was that taken into the consideration when
deciding just to purchase 90 percent fossil fuel vehicles?
Mr. DeJoy. First of all, the evaluation factor on what you
were speaking as a total cost of ownership over a 10-, or 15-,
or 20-year period when we did it, which includes everything,
the cost per truck is a little misleading because it is really
the cost of the electric infrastructure around the Nation that
we would need to implement. And this is a procurement-sensitive
statistic. I can't, you know, disclose in total, but it was
significantly more.
Mr. Gomez. Reclaiming my time. I just want to be very
clear. Congress is going to be supportive of trying to get
electric vehicles in the Postal Service fleet, and we also
understand that it is part infrastructure, and we can take that
into consideration when we allocate resources. I think you
should take a harder look on what kind of fleet you are going
to be using, especially since the issues regarding the climate
crisis are just growing. One last thing----
Mr. DeJoy. I was hoping for the invitation, sir.
Mr. Gomez. Yes. You said ``we are proud of what we have
done.'' And I look at the Postal Service, and I must admit I am
really disappointed in where it is at, and rightly or wrongly,
and I think it is rightly, you are being stuck with just the
deterioration of the public's confidence in it.
Chairwoman Maloney. The gentleman's time has expired.
Mr. Gomez. I hope that the Board of Governors takes steps
to review it, but with that, I have to yield back since my time
is up. Thank you so much.
Chairwoman Maloney. Thank you. The gentleman yields back.
The gentlewoman from Massachusetts, Ms. Pressley, is recognized
for five minutes.
Ms. Pressley. Thank you, Madam Chair. Thank you for
convening today's hearing. The United States Postal Service is
one of our Nation's greatest institutions. Its public servants
are our greatest individuals on the front lines of this ongoing
pandemic. In the Massachusetts 7th, which I represent, nearly
3,000 postal workers across 38 facilities--shout out to NALC
Local 34--they are risking their health to deliver everything
from lifesaving medication to unemployment checks. It is
critical we enact legislation to bring stability to USPS and
the lives of all of its employees. But make no mistake, there
is no legislative fix.
[Inaudible] of Postmaster General DeJoy and the current
Board of Governors. They have caused the postal work force to
suffer, they hey have caused delivery and critical services to
be cut, and they have caused our communities great hurt. These
actions are a clear dereliction of duty and service to the
American people. They demand accountability, which is why I
have repeatedly called for the removal of Mr. DeJoy and the
entire Board of Governors, and the appointment of a new diverse
board with the experience and skills needed to represent the
public interest and to restore the public's faith and integrity
of the USPS.
The USPS needs leadership that respects the fundamental
role the Agency plays in our society, and Congress can leverage
the resources, dedicated workers, and infrastructure of the
Postal Service to meet the Agency's fiscal needs and to serve
the broader American public. Postal banking presents a unique
opportunity to simultaneously increase revenue for the U.S.
Postal Service while advancing economic justice. An estimated
one in four people in America are unbanked or underbanked,
including 50 percent of black and Latinx communities, resulting
in thousands of dollars in fees and resilience on predatory
check cashing services and payday loans. This burden
disproportionally falls on communities of color. Sixty-three
percent of majority black census tracts do not have an active
bank branch. These banking deserts, however, do have post
offices. If post offices offered financial services, such as
money transfers, bill payment, and check cashing, our Nation
would take a significant step toward closing the racial wealth
gap. Mr. Diamondstein, can you provide any details on the
history of postal banking in our country?
Mr. Diamondstein. Well, for over 60 years--I can't remember
the exact dates, Congresswoman--I think 1911 to 1967 or so,
there was actually a savings bank in the Postal Service. The
Postal Service now provides financial services, such as money
orders, some types of check cashing, and I completely agree
with your comments around postal banking. We would like to
start with the basic thrust of improved, and enhanced, and
expanded financial services as a step that may get us some day
to a public option on postal banking. But the advantage of the
steps is it is within the Postal Service itself. It will not
take legislation to do those things. We think it would be great
for the people, the social justice issues you raised, and we
think it would be great for the Postal Service itself. And the
postal workers that we represent are ready to rock and roll.
Ms. Pressley. Thank you, Mr. Diamondstein. And could you
further unpack, elaborate as to why the USPS is uniquely
positioned to provide banking services to those who are
unbanked and underbanked? And also, could you just answer, is
there support for postal banking among postal workers?
Mr. Diamondstein. Yes, there is definitely support amongst
postal workers for postal banking, for expanded financial
services. People see it as an important service and an
important part of our future. Your first question,
Congresswoman, please again?
Ms. Pressley. How is the USPS uniquely positioned to
provide these services?
Mr. Diamondstein. Well, we are in all these neighborhoods
where banks have pulled out. We are trusted. We are trained. We
are accountable. We are dedicated. And 91 percent of the people
of the country, through the entire political spectrum, support
the Postal Service and trust postal workers. So, we are in a
great position to provide these expanded services.
Ms. Pressley. Thank you. Thank you. And there are so many
who are eligible for stimulus relief during the pandemic, but
are unable to access those funds because they are unbanked. In
a public report, the Office of the Inspector General concluded
that, ``Financial services have been the single-beset new
opportunity for post offices to earn additional revenue. For
the Postal Service, this might translate into $8.9 billion per
year.'' Ms. Whitcomb, how could providing financial services
improve the financial footing of the USPS?
Ms. Whitcomb. Yes, the report that you cited, we issued a
while back, and we did an analysis of the positioning of the
Postal Service to provide financial services. And, as you
stated, posts around the world are very active in the financial
services industry. Many posts achieve significant financial
benefits by providing financial services to the citizens in
other countries. So, we are happy to discuss this----
Ms. Pressley. I am so sorry. I am running out of time.
Reclaiming my time just for one minute----
Mr. Comer. Madam Chair, out of time, and we have votes on
the floor.
Chairwoman Maloney. The gentlelady's time has expired.
Ms. Whitcomb. We can discuss it further with the committee
staff.
Ms. Pressley. Thank you.
Chairwoman Maloney. OK. That concludes all of our witnesses
today and questioning. But before I close, I ask unanimous
consent to place in the record letters of support for reforms
to the Post Office. Without objection.
Chairwoman Maloney. And before I close, I would like to
offer Ranking Member Comer a chance to ask any wrap-up
questions to the witnesses or to make any closing remarks.
Ranking Member Comer, you are now recognized.
Mr. Comer. Well, thank you, Madam Chair, and I appreciate
very much that you held this hearing, and I appreciate very
much the ongoing conversations that we have to try to get to a
real bipartisan postal bill that actually does reform. I want
to say, Mr. DeJoy, you said earlier, your only request is for
those included in the draft bill, but requests aren't the same
as needs. And our side has sought to clarify that you have
support of the Board and that Democrats' charges against you
are baseless. It is clear, as Mr. Connolly said, that they want
you gone.
So, your plan when it comes out might be fantastic, but
however long you do end up staying, it is not going to be
forever. So, we need policies that are going to address the
aspects of the Postal Service's problems over and above those
dealing with retiree benefits. And when I asked you what
happened the last time you tried to make those operational
changes, it wasn't to have you detail how those changes
impacted service. It was to highlight how entrenched interests
fought you tooth and nail at every turn, and the likelihood is
that is what is going to happen in the future.
But I felt it was essential for us to discuss the obstacles
facing the Postal Service and hear about some difficult
decisions that we will have to make in Congress. With this
information, we have a real opportunity for the Postal Service
to enact meaningful change. It is often a mantra that we should
start with the easy pickings. The temptation to do so in the
case of postal reform is strong because of how much we hear
from our constituents and stakeholders, nervous about any
possible changes to how things have always been done. Fixing
some accounting issues and doing things like switching the pot
of money from which employee healthcare is funded will no doubt
cleanup the books and create some short-term relief for the
Postal Service, but they are not nearly enough, and everyone
knows that. They will not solve the problems confronting the
Post Office, and the American people are not going to see them
as an improvement on the services they rely on.
As Mr. Bloom said in his written statement, ``If I have
learned one thing, it is that the single largest impediment to
achieving a successful outcome is that stakeholders will
support the abstract need for change, but will seek to avoid
changing anything that impacts their particular interests.''
So, in other words, the chairman of the Board of Governors is
saying that stakeholders know something is wrong, they know
something needs to change, so they all say the right things
about it. But when push comes to shove, they refused to
consider any changes that will force them, in turn, to adapt or
evolve in a way that ensures the Postal Service can survive and
thrive.
We here on this committee should not limit ourselves to the
easy pickings and leave the more difficult decisions to some
later date. If we do, it will be too simple to pat ourselves on
the back for finally enacting some postal legislation and
ignore the opportunity to create real lasting change that will
allow the Postal Service to serve the American people better. A
postal bailout alone without any structural changes is not a
real reform bill.
So, Mr. DeJoy, we look forward to your forthcoming plan. We
appreciate the working relationship that you and Mr. Bloom and
the entire Board have, and we appreciate the fact that the
Board supports your forthcoming changes. So, Madam Chair, I
look forward to working with you as we move forward to pass a
real bipartisan postal bill that reforms the Post Office. I
yield back.
Chairwoman Maloney. I thank the gentleman for his comments
and his willingness to work together for real postal reform. I
now recognize myself for five minutes.
First, I would like to express my appreciation to all the
postal workers who have been on the frontlines of helping the
American people during this time of COVID. I want to ask
Postmaster General DeJoy about a bill that is on a slightly
different topic which I will be introducing today, the Vote By
Mail Tracking Act. This bill would require all ballots mailed
in Federal elections to include a Postal Service bar code,
allowing the ballot to be tracked by the Postal Service,
election officials, and the voter. This bill would go a long
way toward ensuring that ballots are sorted, processed, and
delivered efficiently, and would provide more transparency and
accountability to voting by mail. Mr. DeJoy, does the Postal
Service support the use of barcodes to track all Federal ballot
mail?
Mr. DeJoy. Yes, ma'am, we do.
Chairwoman Maloney. Thank you. Ensuring that ballots are
delivered on time and giving election officials and the public
additional transparency can only improve our elections.
And in closing, I want to thank everyone for a fruitful
discussion today on this incredibly important topic. We have
heard it many times throughout this hearing--it bears
repeating--the Postal Service is one of our Nation's most vital
and respected institutions. It deserves our full support.
Sadly, its financial situation is far too unstable and requires
that Congress act in a bipartisan manner to ensure that it can
continue to serve the American population for years to come.
The draft reform legislation that we discussed today will help
the Postal Service accomplish that goal. Medicare integration
will save the Postal Service at least $10 billion in the next
10 years. Eliminating the unfair pre-funding mandate will take
over $35 million off the Postal Service's debt sheet, and
additional requirements to help the Postal Service meet its
service performance targets will give the American people
increased certainty that their Postal Service truly works for
them in an efficient and effective manner.
I appreciate the contributions of my colleagues today on
both sides of the aisle. I appreciate the testimony of Mr.
DeJoy and all of our panelists, and I hope that we can continue
to work together to introduce a bipartisan bill that can pass
the House in the very near future and be sent to the Senate and
hopefully pass there, and signed into law.
I yield back, and the meeting is adjourned. Thank you.
[Whereupon, at 3:15 p.m., the committee was adjourned.]
[all]