Today marks the fourth in a series of hearings the Committee is holding to review the reforms recommended by the Presidential Commission on the Postal Service.

Under the effective leadership of Co-Chairmen Harry Pearce and James Johnson, the Commission  put together a comprehensive report on an extremely complex issue – identifying the operational, structural, and financial challenges facing the U.S. Postal Service.  The Commission’s recommendations are designed to help this 225-year-old Service remain viable over the long term.
 
So much depends upon the Postal Service’s continued viability.  The Postal Service itself has more than 730,000 career employees.  Less well known is the fact that it is also the linchpin of a $900- billion mailing industry that employs nine million Americans in fields as diverse as direct mailing, printing, catalog production, and paper manufacturing.  The health of the Postal Service is essential to thousands of companies and the millions that they employ.

One of the greatest challenges for the Postal Service is the decrease in mail volume as business communications, bills and payments move more and more to the Internet.  The Postal Service has faced declining volumes of First-Class mail for the past four years.  This is highly significant, given the fact that First-Class mail accounts for 48 percent of total mail volume, and the revenue it generates pays for more than two-thirds of the Postal Service’s institutional costs.

At our first hearing in September, the Committee heard from Commission Co-Chair Jim Johnson.  His testimony provided Committee members with the rationale behind the recommendations.  Commissioner Johnson also made the very important point that the Postal Service’s short-term fiscal health is illusory, and that Congress must not ignore the fundamental reality that the Postal Service as an institution is in serious jeopardy.

This Committee is intimately familiar with the Postal Service’s short and long-term financial pictures, having reported out the pension bill last year that forestalled the financial crisis that awaits the Service if we do not act.  The Presidential Commission presented its assessment of this crisis in frank terms, concluding, and I quote, “[That] an incremental approach to Postal Service reform will yield too little, too late, given the enterprise’s bleak fiscal outlook, the depth of current debt and unfunded obligations, the downward trend in First-Class mail volumes and the limited potential of its legacy postal network that was built for a bygone era.”  That is a very strong statement, and one that challenges both the Postal Service and Congress to embrace far-reaching reforms.

At the Committee’s second hearing in November, we heard from Postmaster General Jack Potter and Comptroller General David Walker.  The Postmaster General described transformation efforts already underway at the Postal Service, many of which are consistent with the Commission’s recommendations, such as the reduction of outstanding total debt from $11.1 billion to $7.3 billion; the elimination of more than 45,000 career positions through attrition; and the establishment of pay-for-performance systems for managers and executives.

In his testimony, Comptroller General Walker of the General Accounting Office, shared the Commission’s concerns about the Postal Service’s $92 billion in unfunded liabilities and obligations.  He pointed to the need for “fundamental reforms to minimize the risk of a significant taxpayer bailout or dramatic postal rate increases.”  Since April of 2001, the Postal Service has been on GAO’s “High-Risk” List.

Most recently, the Committee heard from representatives of the postmaster and supervisor associations, along with the former Director of the Federal Mediation and Conciliation Service, plus two experts on the issue of postal pay comparability.  The issues of pay-for-performance and potential changes to the bargaining process were discussed at length.

Today, we will again focus on the various recommendations affecting the Postal Service’s workforce, comprised of more than 700,000 dedicated letter carriers, clerks, mail handlers, postmasters, and others.  The Committee will have the opportunity to more fully explore the workforce-related recommendations of the Commission which include some of its more controversial proposals.  Among them are recommendations to reform the collective bargaining process; to give management and employee unions the authority to negotiate not only wages but also all benefits; to establish a performance-based pay system for all employees; and to authorize the new Postal Regulatory Board to develop a mechanism for ensuring that total compensation for postal employees is comparable to the private sector.

The Postal Service faces the difficult task of trying to right-size the workforce to meet the decline in mail volume, technological competition, and other operational challenges.  With some 47 percent of current career employees eligible for retirement by 2010, right-sizing does not, however, have to mean widespread lay-offs.  And it shouldn’t.  With careful management, much can be done to minimize any negative impact on employees and to create a more positive working environment.

As a Senator representing a largely rural state whose citizens depend on the Postal Service, I appreciate the Presidential Commission’s strong endorsement of the basic features of universal service – affordable rates, frequent delivery, and convenient community access to retail postal services.  It is important to me that my constituents living near our northern or western borders, or on islands, or in our many rural small towns, have the same access to postal services as the people of our cities.  If the Postal Service were no longer to provide universal service and deliver mail to every customer, the affordable communication link upon which many Americans rely would be jeopardized.  Most commercial enterprises would find it uneconomical, if not impossible, to deliver mail and packages to rural Americans at rates that the Postal Service has been offering.

The preservation of universal service, and many more issues, must be examined in depth if we are to save and strengthen this vital service upon which so many Americans rely for communication and their livelihoods.  The Postal Service has reached a critical juncture.  It is time for a thorough evaluation of the Postal Service’s operations and requirements.  It is time for action.

Senator Carper and I have committed to work together with Senators Stevens, Akaka, Lieberman, Fitzgerald, and others to draft a bi-partisan postal reform bill. Given the history of previous attempts at legislative reforms, I know this will be a daunting challenge, but it is essential that we seize the opportunity provided by the Commission’s excellent work. Successful reform will hinge on the cooperation and support of the Postal Service’s workforce.

I welcome our witnesses today, and look forward to hearing their views and insights on the recommendations of the Presidential Commission on the Postal Service.