THE POSTAL REORGANIZATION ACT TWENTY-
FWE YEARS LATER: TIME FOR CHANGE?
^ 4, (J 74/7; P 84/21
BEFORE THE
SUBCOMMITTEE ON THE POSTAL SER\n[CE
OF THE
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OP REPRESENTATIVES
ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
ON
H.R. 210
TO PROVIDE FOR THE PRIVATIZATION OF THE UNITED STATES POSTAL
SERVICE
NOVEMBER 15, 1995
Printed for the use of the Committee on Government Reform and Oversight
U.S. GOVERNMENT PRINTING OFFICE
40-147 CC WASHINGTON : 1997
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-055052-1
THE POSTAL REORGANIZATION ACT TWENTY-
FIVE YEARS LATER: TIME FOR CHANGE?
y 4.15 74/7; P 84/21
BEFORE THE
SUBCOMMITTEE ON THE POSTAL SERAICE
OF THE
COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
ON
H.R. 210
TO PROVIDE FOR THE PRIVATIZATION OF THE UNITED STATES POSTAL
SERVICE
NOVEMBER 15, 1995
Printed for the use of the Committee on Government Reform and Oversight
-/
U.S. GOVERNMENT PRINTING OFFICE
40-147 CC WASHINGTON : 1997
For sale by the U.S. Government Printing Office
Superintendent of Dociunents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-055052-1
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, Jr., Pennsylvania, Chairman
BENJAMIN A. OILMAN, New York
DAN BURTON, Indiana
J. DENNIS HASTERT, Illinois
CONSTANCE A. MORELLA, Maryland
CHRISTOPHER SHAYS, Connecticut
STEVEN SCHIFF, New Mexico
ILEANA ROS-LEHTINEN, Florida
WILLLVM H. ZELIFF, Jr., New Hampshire
JOHN M. McHUGH, New York
STEPHEN HORN, CaUfomia
JOHN L. MICA, Florida
PETER BLUTE, Massachusetts
THOMAS M. DAVIS, Virginia
DAVID M. Mcintosh, Indiana
JON D. FOX, Pennsylvania
RANDY TATE, Washington
DICK CHRYSLER, Michigan
GIL GUTKNECHT, Minnesota
MARK E. SOUDER, Indiana
WILLIAM J. MARTINI, New Jersey
JOE SCARBOROUGH, Florida
JOHN B. SHADEGG, Arizona
MICHAEL PATRICK FLANAGAN, Illinois
CHARLES F. BASS, New Hampshire
STEVEN C. LaTOURETTE, Ohio
MARSHALL "MARK" SANFORD, South
Carolina
ROBERT L. EHRLICH, Jr., Maryland
CARDISS COLLINS, Illinois
HENRY A. WAXMAN, CaUfomia
TOM LANTOS, California
ROBERT E. WISE, Jr., West Virginia
MAJOR R. OWENS, New York
EDOLPHUS TOWNS, New York
JOHN M. SPRATT, Jr., South Carolina
LOUISE Mcintosh slaughter. New
York
PAUL E. KANJORSKI, Pennsylvania
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
KAREN L. THURMAN, Florida
CAROLYN B. MALONEY, New York
THOMAS M. BARRETT, Wisconsin
GENE TAYLOR, Mississippi
BARBARA-ROSE COLLINS, Michigan
ELEANOR HOLMES NORTON, District of
Columbia
JAMES P. MORAN, Virginia
GENE GREEN, Texas
CARRIE P. MEEK, Florida
CHAKA FATTAH, Pennsylvania
BILL BREWSTER, Oklahoma
TIM HOLDEN, Pennsylvania
BERNARD SANDERS. Vermont
(Independent)
James L. Clarke, Staff Director
Kevin Sabo, General Counsel
Judith McCoy, Chief Clerk
Bud Myers, Minority Staff Director
Subcommittee on the Postal Service
JOHN M. McHUGH, New York, Chairman
MARSHALL "MARK" SANFORD, South
Carolina
BENJAMIN A. OILMAN, New York
CHRISTOPHER SHAYS, Connecticut
DAVID M. Mcintosh, Indiana
ROBERT L. EHRLICH, Jr., Maryland
BARBARA-ROSE COLLINS, Michigan
MAJOR R. OWENS, New York
GENE GREEN, Texas
CARRIE P. MEEK, Florida
Ex Officio
WILLIAM F. CLINGER, Jr., Pennsylvania CARDISS COLLINS, Illinois
Dan Blair, Staff Director
Robert Taub, Professional Staff Member
Heea Fales, Professional Staff Member
Steve Williams, Professional Staff Member
Jennifer Tracey, Clerk
Denise Wilson, Minority Professional Staff Member
(H)
CONTENTS
Page
Hearing held on November 15, 1995 1
Text of H.R. 210 6
Statement of:
Crane, Hon. Philip M., a Representative in Congress from the State
of Illinois 19
Frank, Anthony M., former Postmaster General; Patti Birge Tyson,
former Postal Rate Commissioner, and Murray Comarow, former execu-
tive director, Kappel Commission, and former senior assistant Post-
master General 107
Kiefer, Donald, chief. Economics Division, Concessional Research Serv-
ice, accompanied by Bernard A. Gelb, speciahst in industry economics.
Economics Division, CRS; Bemevia McCalip, analyst in business and
government relations. Economics Division, CRS; Frederick M. Kaiser,
specialist in American national government. Government Division,
CRS; Carolyn L. Merck, specialist in social legislation. Education and
Public Welfare Division, CRS; and Thomas Nicola, legislative attorney,
CRS 42
Rohrabacher, Hon. Dana, a Representative in Congress from the State
of California 27
Letters, statements, etc., submitted for the record by:
Collins, Hon. Cardiss, a Representative in Congress from the State of
Illinois, prepared statement of 13
Comarow, Murray, former executive director, Kappel Commission, and
former senior assistant Postmaster General, prepared statement of 137
Crane, Hon. Philip M., a Representative in Congress from the State
of Illinois, prepared statement of 22
Frank, Anthony M., former Postmaster General, prepared statement of .... Ill
Green, Hon. Gene, a Representative in Congress from the State of Texas,
prepared statement of 18
Kiefer, Donald, chief. Economics Division, Congressional Research Serv-
ice; Bernard A. Gelb, speciahst in industry economics. Economics Divi-
sion, CRS; Bemevia McCalip, analyst in business and government rela-
tions. Economics Division, CRS; Frederick M. Kaiser, specialist in
American national government. Government Division, CRS; and Caro-
1}^ L. Merck, specialist in social legislation. Education and PubUc
Welfare Division, CRS, prepared statement of 47
McHugh, Hon. John M., a Representative in Congress from the State
of New York, prepared statement of 3
Rohrabacher, Hon. Dana, a Representative in Congress from the State
of Cahfomia, prepared statement of 31
Tyson, Patti Birge, former Postal Rate Commissioner, prepared statement
of 120
(III)
THE POSTAL REORGANIZATION ACT TWENTY-
FIVE YEARS LATER: TIME FOR CHANGE?
WEDNESDAY, NOVEMBER 15, 1995
House of Representatives,
Subcommittee on the Postal Service,
Committee on Government Reform and Oversight,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in room
311, Cannon House Office Building, Hon. John M. McHugh (chair-
man of the subcommittee) presiding.
Present: Representatives McHugh, Sanford, EhrUch, Green, and
Meek.
Staif present: Dan Blair, staff director; Jane Hatcherson, Robert
Taub, Heea Vazirani-Fales, and Steve Williams, professional staff
members; Jennifer Tracey, clerk; Denise Wilson, minority profes-
sional staiff member; and Jean Gosa, minority staff assistant.
Mr. McHugh. Good morning. If we could call the hearing to
order.
We're still waiting for some Members to arrive and are hopeful
that will soon occur. But given the pressing legislative schedule
and the fact that we have two of the more senior Members of the
House here to present testimony, I wanted to begin, so as to not
disrupt their schedule any more than is necessary. And later as we
get into the various panels, we're hopeful that we can be joined by
other members of the subcommittee.
But let me begin by making what I hope will not be too long a
statement.
The purpose of toda/s session and those to follow is to systemati-
cally review the Postal Reorganization Act to determine whether
and in what ways Congress should consider reforms. This sub-
committee has traveled a considerable distance since last February
when we first met to begin our review of postal operations. And,
over the course of the ensuing 9 months, we have systematically
reviewed virtually every aspect of postal operations during the con-
duct of our eight general oversight hearings.
We heard from nearly 40 witnesses who urged the subcommittee
to consider reforms ranging from limited internal managerial
changes to full-fledged privatization of a new corporate entity com-
peting with the private sector in the delivery of mail.
It has been 25 years since Congress last comprehensively re-
formed the legislative infrastructure of the Postal Service. During
this interim, the environment in which the Service finds itself oper-
ating has changed dramatically. I doubt that any successful busi-
(1)
ness entity could operate in a competitive climate under a cor-
porate structure unrevised in the last quarter century.
Since 1970, the Postal Service has seen its operations tested by
emerging communication technologies and the entry of private sec-
tor competitors in fields unprotected by the private express stat-
utes. The purpose of this hearing and those to follow is to deter-
mine whether current postal customers benefit under the present
statutory scheme or whether legislative changes should be consid-
ered in the light of the competitive business environment in which
the Postal Service operates.
In reviewing the current structure, I think it necessary to re-
member the environment which led toward the enactment of the
Postal Reorganization Act. The Postal Service replaced the former
Post Office Department, which was beset with operational defi-
ciencies, poor management and labor relations, increasing costs
and skyrocketing deficits. Congressional appropriations accounted
for approximately 20 percent of the Department's operating budget.
Congress has actively engaged in the day-to-day operational ac-
tivities of the Department to the extent that individual postmasters
owed their appointments to their respective partisan political affili-
ation. Today, we find a Postal Service markedly different in crucial
ways from its predecessor. While operational costs and poor man-
agement relations still afflict postal operations, the Service finds it-
self on more stable financial grounds.
Despite uneven financial performances over the course of the last
25 years, the Service has not sought from Congress an operational
appropriation since 1982, and no longer is Congress involved in
day-to-day operations of the Service, since it established it as an
independent agency, charged with overseeing its own operational
activities. But despite these successes, future concerns regarding
the viability of the Postal Service remain.
These hearings will explore those concerns with an eye toward
reform initiatives which will respect the public service mandate of
the Postal Service, yet improve its operating efficiencies. These
mandates often find themselves in conflict and our inquiry will
probe these sensitive issues in exploring Government's proper role
in the facilitation of universal mail service.
And with that, I would submit a more complete opening state-
ment for the record.
Without objection, hearing none, so ordered.
And as I mentioned, I would like to welcome for our first panel,
two of our distinguished colleagues, both of whom have taken a
very bold stance on the issue of postal reform and through their co-
sponsorship, their introduction of bill H.R. 210, have called for
some sweeping changes in the structure of the postal organization.
And I want to welcome both of them here this morning, the gen-
tleman from California, Mr. Dana Rohrabacher, and a gentleman
who even to a greater extent than Mr. Rohrabacher has been dedi-
cated to this issue and has long advanced this particular piece of
legislation, the gentleman from Illinois, Mr. Phil Crane.
[The prepared statement of Hon. John M. McHugh, the text of
H.R. 210, and the prepared statements of Hon. Cardiss Collins and
Hon. Gene Green follow:]
Statement of the Honorable John M. McHugh
Chairman
Subcommittee on the Postal Service
"The Postal Reorganization Aa. twenty five years later: Time for Reform?"
November 15, 1995
Good morning. The Subcommittee will come to order. I want to welcome
our witnesses here today as the Subcommittee begins its anticipated series of postal
reform and privatization hearings. The pxupose of today's hearing, and those to
follow, is to systematically review the Postal Reorganization Act to determine
whether, and in what ways, Congress should consider reforms.
Today, we are pleased to welcome before the Subcommittee Representatives
Phil Crane and Dana Rohrabacher; Don Kiefer, Chief of the Economics Division
and his colleagues at the Congressional Research Service; Anthony Frank, former
Postmaster General; Patti Birge Tyson, former Postal Rate Commissioner; and
Murray Comarow, former Senior Assistant Postmaster General and Executive
Direaor of the Kappel Commission, whose recommendations served as the basis
for the Postal Reorganization Act.
This Subcommittee has traveled a considerable distance since last February
when we first met to begin our review of postal operations. Over the course of the
last nine months, the Subcommittee systematically reviewed virtiially every aspect
of postal operations during the condua of eight general oversight hearings. We
heard from nearly 40 witnesses who urged the Subcommittee to consider reforms
ranging from limited internal managerial changes within the Postal Service to full-
fledged privatization of a new corporate entity competing with the private sector in
the delivery of mail. While no unanimity was reached in support for any specific
approach for improving mail service and delivery, an overwhelming majority of
witnesses concurred that maintenance of universal service should serve as the
foundation on which any legislative reform approach should be based.
It has been twenty five years since Congress last comprehensively reformed
the legislative infrastructure of the Postal Service. During this interim, the
environment in which the Service finds itself operating has changed dramatically. I
doubt that any successful biuiness entity could operate in a competitive climate
under a corporate structure tmrevised in the last quarter century. Since 1970, the
Postal Service has seen its operations tested by emerging communication
technologies and the entry of private-seaor competitors in fields tinprotected by
the Private Express Statutes.
The purpose of this hearing, and those to follow, is to determine whether
current postal customers benefit under the current statutory scheme or whether
legislative changes should be considered in light of the competitive business
environment in which the Postal Service operates.
In reviewing the current structure, I think it necessary to remember the
environment which lead toward the enactment of the Postal Reorganization Act.
The Postal Service replaced the former Post Office Department which was beset
with operational deficiencies, poor management and labor relations, increasing
costs, and skyrocketing deficits. Congressional appropriations accoimted for
approximately 25 percent of the Department's operating budget. Congress was
actively engaged in the day-to-day operational aaivities of the Department, to the
extent that individual postmasters owed their appointments to their respective
partisan political affiliation.
Today, we find a Postal Service markedly different in crucial ways from its
predecessor. While operational costs and poor labor-management relations still
afflict postal operations, the Postal Service finds itself on stable financial grounds.
Despite uneven financial performances over the course of the last twenty five years,
the Postal Service has not sought from Congress an operational appropriation since
1982. And no longer is Congress involved in day-to-day operations of the Postal
Service since it established it as an independent agency charged with overseeing its
own operational aaivities.
Despite these successes, future concerns regarding the viability of the Postal
Service remain. These hearings will explore these concerns with an eye toward
reform initiatives which will respea the public service mandate of the Postal
Service yet improve its operating efficiencies. These mandates often find
themselves in conflia. Yet our inquiry will probe these sensitive issues in
exploring government's proper role in the facilitation of universal mail service.
At the onset of my chairmanship of this Subcommittee, I stated that we
would review reform proposals with the burden of proof falling on those
advancing the initiatives to show that such proposals would improve delivery and
service for postal customers. And, I emphasized the Subcommittee's intentions to
scrutinize in depth all phases of postal operations and services. While our inquiries
will undoubtedly lead into areas which have been ignored or rejeaed in the past -
and our probing of postal operations might prove unsettling to some - 1 repeat that
it is our duty to the people of this Nation to ensure that no legitimate question
goes unasked and that no valid argument goes unheard or unheeded. That was our
motto at the inception of the 104th Congress and it will be the guiding principle of
the Subcommittee as it embarks on its historic review of postal operations.
Once again, I would like to thank our witnesses for appearing here today for
the benefit of the Subcomminee. I particularly note the tenacity of Congressman
Crane in his longtime support of his legislation, H.R. 210. I also want to
compliment the Congressional Research Service on its comprehensive efforts in
preparing its report for the Subcommittee and I look forward to the CRS
representatives presenting their report.
Our panel of Congressional Research Representatives will include Don
Kiefer who serves as Chief of the Economics Division. Accompanying Mr. Kiefer
wLU be Mr. Bernard Gelb, specialist in Industry economics; Mr. Fred Kaiser,
specialist in American National government; Ms. Bernevia McCalip, analyst in
Business and Government Relations; Ms. Carolyn Merck, specialist in Social
Legislation; and Mr. Tom Nicola, legislative attorney.
Our final panel here today is made up of former postal appointees and
executives whose collective experience spans the quarter century of existence of the
Postal Reorganization Aa . The Subcommittee welcomes former Postmaster
General Tony Frank, former Postal Rate Commissioner Patti Birge Tyson, and
former assistant Postmaster General and Kappel Commission Executive Director
Murray Comarow. I want to particularly thank Ms. Tyson and Mr. Frank for
flying from Chicago and San Francisco, respectively, at their own expense, for the
benefit of the Subcommittee. These three witnesses have seen the Postal Service
operate from the "inside" and their testimony will prove valuable to the
Subcommittee in its efforts to develop reform initiatives. Thank you all for
appearing before us today and I look forward to your testimony.
104th congress
1st Session
H.R.210
To provide for the privatization of the United States Postal Service.
IN THE HOUSE OF REPRESENTATIVES
January 4, 1995
Mr. Crane introduced the following bill; which was referred to the Committee
on Government Reform and Oversight
A BILL
To provide for the privatization of the United States Postal
Service.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. TRANSFER TO A PRIVATE CORPORATION.
4 (a) In General. — In accordance with the plan pre-
5 scribed under section 3, all right, title, and interest of the
6 United States in and to all property of the Postal Service
7 shall be transferred to a corporation if, within 1 year after
8 the date of the enactment of this Act, such corporation
9 satisfies the requirements set forth in section 2.
10 (b) Specific Requirement. — The plan prescribed
11 under section 3 shall include such provisions as may be
2
1 necessary to ensure that no payment shall be required in
2 consideration for any rights or assets of the Postal Service
3 which are transferred pursuant to this Act.
4 SEC. 2. REQUIREMENTS FOR THE CORPORATION.
5 (a) In General. — ^A corporation shall be considered
6 to satisfy the requirements of this section if such corpora-
7 tion —
8 (1) is incorporated under the laws of a State;
9 (2) is not a department, agency, or estabhsh-
10 ment of the United States;
11 (3) is incorporated by not more than 9 individ-
12 uals who are especially qualified to establish and op-
13 erate an effective mail system by virtue of their edu-
14 cation, training, or experience, and who are chosen
15 by the employees of the Postal Service in an election
16 which shall be held at such time and in such manner
17 as the President shall by regulation prescribe;
18 (4) includes among its purposes the delivery of
19 postal services in a manner consistent with section
20 101(b) of title 39, United States Code, at rates es-
21 tabhshed in a manner consistent with section 101(d)
22 of such title;
23 (5) issues securities in a manner consistent
24 with subsection (b); and
•HR SIO IH
8
3
1 (6) satisfies such other requirements as the
2 President may by regulation prescribe in order to
3 carry out the purposes of this Act.
4 (b) Securities. — ^Any securities issued by the corpo-
5 ration —
6 (1) shall, during the 1-year period beginning on
7 the date of the enactment of this Act, be issued —
8 (A) only to employees of the Postal Serv-
9 ice;
10 (B) under a system (as developed under
11 section 4) which provides that securities shall
12 be issued to individuals based on their years of
13 service and levels of compensation; and
14 (C) subject to such terms and conditions,
15 including terms and conditions relating to the
16 sale, transfer, or other disposition of such secu-
17 rities following their issuance by the corpora-
18 tion, as may be necessary to promote the reten-
19 tion of well-qualified personnel; and
20 (2) may, after the end of that period, be offered
21 for sale to members of the general public under such
22 terms and conditions as the corporation considers
23 appropriate.
24 (c) Retirement Benefits. — Retirement benefits
25 provided to employees of the corporation must be com-
•HR SIO IH
4
1 parable to those which would have been afforded to those
2 individuals as employees of the Postal Service had this
3 Act not been enacted.
4 SEC. S. TRANSFER PLAN; PRESIDENTIAL DETERMINATION;
5 RATE^ETTING AUTHORITY.
6 (a) Transfer Plan. — Not later than the sixtieth
7 day after the date on which a corporation first satisfies
8 the requirements of section 2, as determined under sub-
9 section (b), the President shall, in conformance with the
10 requirements of section 1, and after consultation with the
1 1 commission under section 4, transmit to Congress —
12 (1) a comprehensive plan providing for the or-
13 derly transfer of all properly subject to this Act, in-
14 eluding a timetable under which such transfer is
15 completed not later than 180 days after the date on
16 which such corporation first satisfies such require-
17 ments; and
18 (2) such recommendations for legislation as the
19 President considers necessary in order to carry out
20 the plan described in paragraph (1), including
21 recommendations —
22 (A) for the abolishment of the Postal Serv-
23 ice;
•HR SIO IH
10
5
1 (B) for the continuation of the private ex-
2 press statutes with respect to the corporation
3 during the first 5 years of its existence; and
4 (C) for the repeal or modification of appro-
5 priate Federal statutes.
6 (b) Presidential Determination. — The Presi-
7 dent shall, for purposes of this section, determine the date
8 on which a corporation first satisfies the requirements of
9 section 2.
10 (c) Rate-Setting Authority.— After consulting
1 1 with the Postal Rate Commission, the President shall de-
12 velop and include as part of the recommendations submit-
13 ted under subsection (a) proposals relating to the means
14 by which rates of postage would be established during the
15 5-year period referred to in subsection {a)(2)(B). Such
16 recommendations may include continuing any operations
17 of the Postal Rate Commission (whether on a modified
18 basis or otherwise) which may be appropriate.
19 SEC. 4. POSTAL PRIVATIZATION COMMISSION.
20 (a) Establishment. — In order to cany out the
21 functions set forth in sections 2(b)(1)(B) and 3(a), there
22 is established a commission to be known as the "Postal
23 Privatization Commission".
24 (b) Membership. — The Commission shall consist of
25 12 members, to be selected by the President, of whom —
•HR »0 IH
11
6
1 (1) 3 shall be selected from among individuals
2 recommended jointly by the Speaker of the House of
3 Representatives and the President pro tempore of
4 the Senate;
5 (2) 3 shall be selected to represent the interests
6 of employees of the Postal Service;
7 (3) 3 shall be selected to represent the interests
8 of postal management; and
9 (4) 3 shall be selected from such other postal
10 experts as the President considers appropriate.
1 1 (c) Compensation.—
12 (1) In general. — Except as provided in para-
13 graph (2), members of the Commission shall be paid
14 at the daily equivalent of a rate, not to exceed the
15 rate of basic pay payable for level IV of the Execu-
16 tive Schedule, for each day (including travel time)
17 during which they are engaged in the performance
18 of duties of the Commission.
19 (2) Exception.— Members of the Conmiission
20 who are full-time officers or employees of the United
21 States shall receive no additional pay by reason of
22 their service on the Commission.
23 (d) TERmNATlON. — The Commission shall cease to
24 exist as of the date on which the work of the Commission
25 has been completed.
•HR IM IB
12
7
1 SEC. 6. DEFINITIONS.
2 For purposes of this Act —
3 (1) the term "Postal Service" means the United
4 States Postal Service and the Postal Rate CJommis-
5 sion;
6 (2) the term "property", when used with re-
7 spect to the Postal Service, means all assets and
8 rights, and all liabilities and obligations, of the Post-
9 al Service; and
10 (3) the term "State" means each of the several
11 States, the District of Columbia, and the Common-
12 wealth of Puerto Rico.
O
•HR SIO IH
13
Statement of the Honorable Cardiss Collins
Ranking Minority Member
Committee on Government Reform and Oversight
Hearing on Postal Reform
Subcommittee on the Postal Service
Wednesday, November 15, 1995
Mr. Chairman, today marks an historic occasion. For
the first time in 25 years. Congress will examine whether
and to what extent change is needed to bring the Postal
Service into the 21st Century. The momentum for Postal
reform debate begins with today's hearing to determine
whether the Postal Service and its customers benefit from
a statutory structure unchanged since 1970, the Postal
Reorganization Act.
14
Since its enactment and in the current competitive
atmosphere, the Reorganization Act has been witness to
a host of changes, both good and bad. First and foremost,
the Postal Service has moved from being a recipient of
Federal funds to using no Federal tax dollars. The Postal
Service has undergone six major restructurings and seen
the cost of a postage stamp increase from 8 cents to the
current price of 32 cents. Of late, the Postal Service has
been faced with increased competition due to FAX service
and other electronic communicative means and
competition from other forms of mail delivery service such
as UPS, FEDEX and the like. These competitive changes
are occurring in the midst of pressure to maintain high
standards for delivery, utilize automated postal equipment
and Improve labor management relations.
15
To date, this Subcommittee has held eight oversight
hearings. We have carefully and thoughtfully examined
the structure and operations of the U.S. Postal Service.
We have become knowledgeable on the major Issues
facing the Postal Service, postal employees and
consumers -issues, aptly categorized by Postmaster
General Marvin Runyon as "people, prices and products."
It is now time to build upon that education process
and begin to look for ways In which we might truly improve
the Postal Service, place it on sounder financial footing
and enable it to become more efficient and competitive.
16
We do this not in a vacuum and not as an aside; rather as
a deliberative body dedicated to preserving universal mail
service while exploring and pursuing ways which will allow
the Postal Service to better control its operations, improve
Its financial position and meet competitive challenges.
Whether we undertake mild reform such as granting the
Postal Service greater rate making flexibility or focus on
more radical change like privatization remains to be seen.
And so, as we mark this historic occasion, I urge my
colleagues to utilize the same careful and thoughtful
examination of postal reform as we have of postal
17
operations and issues. There are many areas in need of
reform. Accordingly we must craft a sound response for
change and refrain from knee-jerk, pot shot, ill-founded
solutions.
With that, I join my colleagues in welcoming our
witnesses and look forward to your testimony.
DW
18
Congressman Gene Green
Opening Statement
Postal Hearing, November 15, 1995
I would like to thank and commend Chainnan McHugh for having the insight to hold
these much needed hearings on the reorganization of the U.S. Postal Service. In this time
of massive reorganization throughout the federal government it is definitely timely to hold
discussions on how the postal service could better service its customers and look at ways in
which it might become competitive in the market in which it operates. As always I look
forward to hearing from the various witnesses who will testify this morning on how we can
make the postal service more responsive to the needs of its customers and more competitive
in this world of ever increasing technology. Again thank you Mr. Chairman.
19
Mr. McHuGH. Grentlemen, thank you for being here.
I turn the microphones and the attention of all of us toward you.
Please proceed in whichever way you deem appropriate.
STATEMENT OF HON. PHILIP M. CRANE, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF ILLINOIS
Mr. Crane. Thank you, Mr. Chairman.
This is deja vu all over again, because the first time I pleaded
the case for this legislation was 1970, before the committee. And
this is my first return visit since then.
And I have a statement, a longer statement, I'd like to submit
for the record, with your permission.
Mr. McHuGH. Without objection, so ordered.
Mr. Crane. Thank you.
I appreciate this opportunity, Mr. Chairman, and congratulate
the subcommittee for looking into, and beyond, the current oper-
ations of the USPS. The need for such an examination is all too ap-
parent. Times have changed since 1970 when Congress passed the
Postal Reorganization Act of that year, creating the USPS.
The intervening years have witnessed a pair of technological rev-
olutions having profound implications for mail delivery, one in com-
puters and the other in telecommunications. As a recent MicroSoft
white-paper points out, computers can do in 30 seconds today what
it took them a year to accomplish back then. Modems can transmit
their work product 1,000 times faster now than they could just 10
short years ago, and the traditional telephone line, which limits the
amount of data that can be transmitted electronically, has been su-
perseded by coaxial and fiberoptic cable.
Already these technological advances have had an impact on the
USPS. As the Postmaster General has observed in just the past
year, e-mail volume has increased by 122 percent and nearly 8 mil-
lion new addresses have been added to the Internet. By 1998, at
least 38 million people are expected to be on line, 10 times more
than 5 years ago. All of this suggests that the day when most
Americans do much of their banking, shopping, travel planning,
and corresponding on the computer is not very far away.
At present, total USPS mail volume is still growing, having in-
creased 3.1 percent over the last year, to more than 177 billion
pieces. But, with the rise in electronic communications, the USPS
has seen its financial and business mail deliveries drop substan-
tially, by 35 percent over the past 5 years in the case of the former,
and approximately 33 percent over the past 6 years in the case of
the latter.
In fact, the USPS has suffered losses of market share in four of
its six business categories, according to the Postmaster General,
who's also on record as predicting that USPS delivery of financial
mail will drop by another 35 percent over the next 5 years.
What these figures suggest is this: As computer usage acceler-
ates, so too will the decline in business mail being delivered by the
USPS. Before long, that drop plus the loss of other First-Class mail
deliveries to electronic competition will more than offset any
growth in bulk mail business. At that point, postal revenues will
begin to shrink, triggering a vicious cycle of postal rate increases,
followed by further losses of business.
20
Absent a change in its basic structure, the only other alter-
natives would be to increase taxpayer subsidies to the USPS or to
reduce the services it offers, either of which would be equally coun-
terproductive. True, there will be those who would rather not use
a computer or feel they cannot afford one, just like there were
when the car first came out. But just as laser printers cost no more
than dot matrix printers 5 years ago, so will computer systems be-
come increasingly sophisticated and affordable.
At the same time, today's computer holdouts will be prompted to
reverse their stance by their children and grandchildren, each of
whom is being exposed to computers at school, in the library, at
friends' homes and wherever video games are played. Sooner or
later most of these holdouts will do so after coming to the realiza-
tion that development of computer skills is a must for the young-
sters of today and tomorrow. That many have done so already is
evidenced by the rapid growth in precomputer toy sales of recent
years.
While I can understand why postal workers might not want to
concede the effect of the computer revolution on today's USPS, for
us to deny it would be an exercise in self-delusion.
We can argue over how long it will be before computer-fax-
modem-TV-telephone-cable-copier combinations cost no more than
a fancy color TV did just a few years ago. But there's no denying
that the day will come when such systems are found in almost
every American home. And when it does come, the USPS must be
able to compete with the new technologies, otherwise it will be rel-
egated to the very role its employees fear the most, handling an
ever-declining amount of rural, high-crime area, and junk mail de-
liveries.
Nor is the computer revolution the only reason today's USPS
needs restructuring. Thanks to its First-Class mail monopoly and
to the regulatory regime governing its operations for the past quar-
ter century, the USPS is not in a position to offer new products and
services in a timely fashion. Nor is it able or inclined to keep all
its outlets open evenings and weekends like other retailers. Neither
is it as sensitive to the provision of customer service as it could be.
Currently, it takes months for the USPS to get permission to
make price, product or labor adjustments, whereas its private sec-
tor parcel delivery competition can respond far more quickly to the
demands of the postal delivery marketplace.
The ability to make these adjustments when needed is essential
if the USPS is to counter that competition. Right now, it's lacking
in that area, but the bill I've introduced, H.R. 210, would correct
that deficiency. To that end, H.R. 210 would replace the current
USPS with a totally private, employee-owned postal corporation
over the course of the 5-year period, after which the USPS's First-
Class mail monopoly would end and the new outfit would be able
to compete with all customers as it saw fit — or all comers, rather,
as it saw fit. So that it can better raise operating capital more eas-
ily, cover existing USPS debt and fully meet the pension obliga-
tions incurred by the USPS, H.R. 210 also provides for the cost-free
transfer of all USPS assets to this new private sector operation.
In addition to enabling postal workers to become owners of their
business, the bill specifies that their pension benefits shall be com-
21
parable to those previously provided by the USPS. Many other as-
pects of this transfer are left to a Presidentially appointed Postal
Privatization Commission to determine. But the bottom line is this,
enactment of H.R. 210 would benefit postal workers and consumers
alike. Not only would the latter reap price and service benefits, but
postal workers would have an opportunity to add a share of com-
pany profits to their regular paychecks.
Were H.R. 210 to become law, the USPS would be the largest
Government-run mail service to become either a totally private
firm or a Government-owned, for-profit corporation. But it would
not be the first to move in one of those two directions.
In recent years, Holland and to a lesser extent Germany, have
taken steps toward postal privatization, while Sweden, Canada,
Australia, and New Zealand have converted their postal services
into autonomous Grovemment-owned, for-profit firms that operate
under varying degrees of regulation.
For instance, the Swedish Post, has given up its subsidy in its
First-Class mail monopoly in exchange for a greater degree of regu-
latory freedom that enabled it to get heavily into e-mail. Then,
there's the case of Argentina where deregulation reportedly has en-
abled over 250 delivery firms to compete with the Government
mail, the result being lower postal cost, faster mail delivery and a
profit for what was once a deficit-plagued Government postal oper-
ation.
Granted, none of these Government-owned postal firms serve
anywhere near as many people as the USPS. But they have been
known to make money at times, to break the Gk)vemment subsidy
habit on occasion, and to provide quality service quite frequently.
One thus may wonder whether such an approach would work bet-
ter in the United States than total privatization.
However, if the Grovemment owns the business, it's not likely to
treat competitors as favorably or as fairly as its own enterprise, es-
pecially if it's counting upon the latter for revenues. Also, private
corporations, including employer-owned ones, such as United Air-
lines, are more in tune with the times and free enterprise spirit of
America.
All that being the case, I hope Congress will soon consider and
then adopt legislation such as H.R. 210 that will bring the prospect
of postal employee entrepreneurship to life. As we look to the fu-
ture, privatization of the Postal Service makes sense not just philo-
sophically but as a practical matter as well.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Philip M. Crane follows:]
22
TESTIMONY OF PHILIP M. CRANE, M.C.
TO THE SUBCOMMITTEE ON POSTAL SERVICE
ON PRIVATIZATION OF THE U.S. POSTAL SERVICE
WASHINGTON D.C.
NOVEMBER 15, 1995
MR. CHAIRMAN, MEMBERS OF THE SUBCOMMITTEE, LADIES AND GENTLEMEN:
Thank you for giving me the opportunity to testify today on a
subject in which I have long been interested; the privatization
of the U.S. Postal Service (USPS). The subcommittee is to be
commended for its willingness to explore a concept that is
admittedly controversial but entirely relevant to the new era of
communications into which we are so rapidly entering.
Ever since Ben Franklin beceime the first Postmaster General in
1775, the USPS has been responsible for delivering first class
mail in the U.S., first as a department of the federal government
and then, for the last 25 years, as a quasi -governmental firm
which now has some 40,000 outlets nationwide. Over that time, it
has touched the life of almost every American, bringing good
news, bad news, more bills and what is commonly known as "junk"
mail.
However, times are changing rapidly and in ways Congress could
not have imagined when it crafted the Postal Reorganization Act
of 1970 that created the current USPS. The past two decades have
witnessed a pair of technological revolutions having profound
implications for mail delivery, one in computers and the other in
telecommunications. As a recent Microsoft White Paper points
out, computers can do in 30 seconds today what it took them a
year to accomplish back then. Modems can transmit their work
product 1,000 times faster now than they could just ten short
years ago. And the traditional telephone line, which severely
limits the amount of data that can be transmitted electronically,
has been superseded by coaxial and/or fiber optic cable.
As these advances in computer and telecommunications technology
have taken place, so too have they merged to form what is known
as the information superhighway. As a result, people are now
able, and will be increasingly able, to exchange information in
ways that raise fundamental questions about the long term
viability of the USPS as we know it. According to some
estimates, not only will computing power increase 100 fold over
the next decade but bandwidth, which relates to the speed and
quantity of mail that can be electronically transmitted, will
increase 1,000 fold during that same period.
Unlike the telephone or the telegraph, neither of which bore out
earlier prophets of postal service doom, modems. E-mail, FAX
machines, and various online services utilizing the Internet are
making it possible for people to quickly transmit high quality
hard copy without gracing a modern day post office. More so
every day, in fact. As Postmaster General Runyan has pointed
23
out, in just the past year, E-mail volume has increased by 122%
(to just under five billion messages) and nearly eight million
new addresses have been added to the Internet. By 1998, if not
sooner, at least 38 million people are expected to be on line, a
ten fold increase in the short space of five years.
Nor do those figures tell the whole story. Because computer
technology is advancing so rapidly, banking by computer, shopping
by computer, making reservations by computer, taking courses
online, and video teleconferencing will be the rule rather than
the exception in the months and years to come. Even bulk
mailers, who are responsible for roughly 38% of the mail the USPS
handles today, will be able to deliver to you electronically once
most American families have availed themselves of computer
technology. All of which spells trouble for the USPS unless it
is in a position to respond. As a matter of fact, the warning
signals are flashing already.
According to the Postmaster General, total USPS mail volume is
still on the rise, having increased 3.1% over last year to a
level in excess of 177 billion pieces delivered. But, thanks to
the increased usage of E-mail, fax machines, modems and the like,
the USPS has seen both its financial and business mail volumes
drop substantially in recent years, 35% over the past five years
in the case of financial mail and approximately 33% over the past
six years in the case of business mail. Not only that, but the
USPS has suffered a loss of market share in four of its six
business categories according to the Postmaster General, who is
also on record as predicting that USPS delivery of financial mail
will decline by another 35% over the next five years. Nor has
the USPS been able to compensate by increasing its market share
of overnight delivery mail. Despite lower than average rates,
the USPS reportedly has only 10% or so of that market.
What all those negative numbers suggest is this. As computer
usage accelerates, so too will the decline in business mail being
delivered by the USPS. Before long, that decline, plus the loss
of other first class mail deliveries to electronic competition,
will more than offset the increase in bulk mail deliveries. When
that time arrives, postal revenues will begin to shrink, at which
point the vicious cycle of postal rate increases followed by
further losses of business will begin in earnest. Absent a
change in its basic structure, the only other alternatives would
be to increase taxpayer subsidies to the USPS or to reduce the
services it offers, either of which would be equally
counterproductive .
Not everyone agrees with this pessimistic assessment, of course.
The computer revolution notwithstanding, critics claim there will
always be a need for "to-the-mailbox" postal service which, they
say, can only be provided by the USPS in rural and high crime
areas. But what those critics forget is that the computer is to
24
20th century mail delivery what the automobile was to the 19th
century horse and buggy; a much quicker and more convenient means
of transport.
True, there will be some people who would rather not use a
computer or who may not be able to afford one right now, just
like there were with the car when it first came out. But just as
laser printers cost no more than dot matrix printers did five
years ago, so too will computer systems become increasingly
sophisticated and affordable. At the same time, today's computer
holdouts will be encouraged to rethink their position by their
children and grandchildren who are being introduced to computers
at school, at the library, at friends houses and wherever video
games are played. Sooner or later, most of those holdouts will
realize that the development of computer skills is a must for the
children of today and tomorrow. That many have already come to
that realization is evidenced by the rapid growth in pre- computer
toy sales in recent years.
While I can certainly understand why postal workers might not
want to concede the effect the computer revolution is likely to
have on the USPS as it is currently constituted, for us to do
likewise would be an exercise in self-delusion. We can argue
over how long it will be before computer- FAX-modem-TV- telephone-
cable -copier combinations cost no more than did a fancy color TV
of recent vintage, but there is no denying that the day will come
when such systems are found in almost every American home. And
when that day does come, the USPS must be able to compete with
these new technologies, otherwise it will be relegated to the
very role its employees fear the most: handling an ever declining
number of rural, high crime area and "junk" mail deliveries.
Nor is the telecomputer revolution the only reason today's USPS
is ill equipped to meet the marketing challenges of the 21st
Century. Having had a monopoly over first class mail delivery .
but not the ability to offer the latest communications products
or services, the USPS and/or its workers are not in tune with the
requirements of modern day retailing. To put it bluntly, they
are not able to offer new products and services in a timely
fashion, not in a position to serve the millions of Americans who
work from 7 a.m. to 7, 7:30 or even 10 p.m. five days a week and
from 8 till 5 on Saturdays, and not as sensitive to the concept
of customer service as they should be. Currently, it takes
months for the USPS to get permission to make price, product or
labor adjustments, whereas its private sector parcel delivery
competition can respond far more quickly to the demands of the
postal delivery marketplace.
Like it or not, the ability to make those adjustments in a timely
fashion is essential if the USPS is to counter what the
competition is doing (in fact, more and more retailers are
switching to round-the-clock hours in response to changes in
25
working patterns) , which prompts one to conclude that, for the
USPS to be successful in the future, it must be at liberty to
meet and beat that competition. Put simply, the USPS must be set
free of the institutional strictures that have fostered a
reverence for the good old days and ways at the expense of a
truly competitive free market approach and outlook.
Chief among those strictures has been the organizational
structure under which the USPS currently operates. So long as it
has a monopoly over first class mail delivery, receives federal
payments to cover the discounts it provides on the delivery of
other mail, has special borrowing privileges at the U.S. Treasury
and cannot change prices, products or services without a long,
drawn out regulatory hassle, the USPS will never have either the
ability or the inclination to make the kinds of market-driven
adjustments just mentioned. Only if the USPS becomes a truly
private corporation, preferably one owned by its own employees,
will the performance and profit incentives necessary to make
those adjustments come into play.
If enacted into law, H.R. 210, which I have sponsored, will bring
into being just such a corporation over a five year period, after
which the first class mail monopoly will end and the new
employee -owned corporation will be on its own to compete with all
comers as it sees fit. To make it easier for this new postal
firm to raise operating capital, assume a cumulative USPS debt
that exceeds $8 billion, and cover existing USPS pension
obligations, H.R. 210 also provides for the cost-free transfer of
all USPS assets (the value of which is nearing $50 billion) to
the new all -private corporation.
In addition, the measure not only allows postal workers to become
owners of their business, but it specifies that their pension
benefits shall be comparable to those previously provided by the
USPS. Many other aspects of this transfer to private, employee-
owned status are left to the President and a specially appointed
Postal Privatization Commission to determine, but the bottom line
is this: enactment of H.R. 210 would be a good deal for postal
workers and consumers alike. Not only would postal customers
reap the price and service benefits of free market competition,
but USPS workers would have a great opportunity not just to
preserve their jobs in the 21st century but to share the profits
as well .
That such would, in fact, occur is reinforced by what is
happening to postal delivery services in other nations. Holland
has already begun the process of privatizing its postal service
(by selling 30% of it to postal workers cimong others) and Germany
has taken the first small step in that direction. In addition,
Sweden, Canada, Australia, and New Zealand have all converted
their postal services into autonomous, government -owned firms
that operate under varying degrees of regulation with the aim of
26
making a profit. The Sweden Post, for instance, surrendered its
subsidy and its first class letter monopoly in exchange for a
greater degree of regulatory freedom that has helped it get
heavily involved in electronic mail. And in Argentina,
deregulation has permitted over 250 postal delivery companies to
compete with the government mail, with the result reportedly
being a speedup of mail delivery, a reduction in postal costs and
a profit for what was previously a deficit -plagued government
postal operation.
Granted, none of these postal firms serve anywhere near as many
people as does the USPS, which carries approximately 40% of the
world's mail, but they have been known to make profits at times,
to break the government subsidy haibit on occasion, and to provide
quality service quite frequently. Which is more than can be said
for the USPS on occasion, despite the fact that a vast majority
of its managers and employees are honest, hard working people who
try the best they can under the circumstances to do a good job.
Given the relative success some of these for-profit, government
postal corporations have enjoyed, one may wonder whether such an
approach would work better in the U.S. than total privatization.
That is a good question, to which there are two equally good
answers. The first is that when government owns the business, it
is not likely to view, or treat, competitors as favorably or
fairly as its own enterprise, especially if it is dependent on
the latter for revenues. And the second is that private
corporations, including employee owned ones, are more in tune
with the times and the free enterprise spirit of America. Just
ask the friendly skies folks at United Airlines or the employees
of Avis what they think of being able to run their own firms.
Or you might want read the article in the May, 1995 issue of the
IBEW Journal which describes the purchase, by International
Brotherhood of Electrical Workers Local 111, of Mobile Tool
International by means of an Employee Stock Ownership Plan.
All that being the case, I hope Congress will soon consider, and
then adopt, legislation such as H.R. 210 that will bring the
prospect of postal employee entrepreneurship to life. As we look
ahead to the 21st Century, privatization of the Postal Service
makes sense, not just philosophically but as a practical matter
as well.
27
Mr. McHuGH. Thank the gentleman for his comments.
Before we proceed, I'd Uke to welcome and gratefully acknowl-
edge the presence of the gentlelady from Florida, Carrie Meek.
Mrs. Meek, any opening comments you'd like to make at this
time?
Mrs. Meek. Not at this time, Mr. Chairman.
Mr. McHuGH. I thank the gentlelady.
The gentleman from California has the floor, Mr. Rohrabacher.
STATEMENT OF HON. DANA ROHRABACHER, A REPRESENTA-
TIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Rohrabacher. Mr. Chairman, thank you very much, I ap-
preciate the opportunity to testify here before your committee.
First, let me state that I am not here to bad-mouth postal em-
ployees. In general, I think most postal employees are good, hard-
working individuals, patriotic Americans. I am here to discuss the
Postal Service's status as a protected Government enterprise which
adversely affects its ability to adapt to the needs of a changing and
increasingly competitive market.
The Postal Service's ability to compete in our ever-changing
world is constrained by laws and regulations that dictate its orga-
nization and operation as a Government Agency. Unfortunately,
many of the criticisms we hear of the Post Office and postal em-
ployees, quite frankly, the individuals involved are getting a bum
rap, because it's the structure we're talking about, not the individ-
uals.
The Federal Grovemment originally established the Postal Serv-
ice over 200 years ago as a means of keeping in contact with re-
mote areas of a still developing United States. At that time, there
was no communications network in place.
Today, it's an entirely different story, as Mr. Crane has just sug-
gested; telephones, fax machines, cable, satellites, computers, tele-
vision, radio, are all methods used by people to instantaneously
communicate around the world.
In comparison, it takes an average of 2 or 3 days for the Postal
Service to deliver a First-Class letter. That's not an attack on the
Postal Service, it's just a difference in the times. And today, that
is not good enough and, in the future, is going to lead to repercus-
sions on the Postal Service and on the 750,000 people who work for
the Postal Service.
As the level of service provided by the Postal Service continues
to decline in comparison to the other alternatives, and postal rates
continue to rise, more and more consumers will be turning to alter-
native communication methods, and this will create a cycle, which
Mr. Crane spoke about.
Over the past 5 years, the Postal Service has lost 35 percent of
its First-Class business to business mail, and expects to lose an-
other 35 percent in the next 5 years. Furthermore, declining cost
of these new technologies will soon change the way that many
households conduct their own business transactions.
If this trend continues, and we certainly expect it to, the Postal
Service will be little more than a delivery agent for Third-Class
mail. And while there is certainly a need for this type of delivery
28
in the United States, it is not necessary for the Federal Govern-
ment to be the only provider of such a service.
In an effort to improve efficiency and to keep up with techno-
logical change, the Postal Service has tried various solutions, from
new management to a complete reorganization, and most of these
reforms have been to no avail in terms of the long-run problem. To-
days fast-paced business environment demands that service pro-
viders adapt quickly or fall by the wayside, surpassed by more in-
novative competitors with better ideas. A Government-run Postal
Service will soon be rendered irrelevant by its inability to adapt in
a dynamic and swiftly changing marketplace.
Mr. Chairman, now is the time to act before the Postal Service
totally flounders, leaving hundreds of thousands of good Americans
unemployed, and leaving the U.S. Government with a crisis on its
hands. Mr. Crane's bill, H.R. 210, provides an excellent framework
to keep the Postal Service competitive and postal workers employed
and able to meet the needs of the American public well into the fu-
ture. It does this by creating one of the largest employee-owned
corporations in the world.
Now, you heard me, and as Congressman Crane mentioned, we
want to give the Postal Service to its employees, who I think would
do a tremendous job of running the organization if freed from bu-
reaucratic constraints. As we have seen with companies owned by
their employees, such as United Airlines, Avis, Weirton Steel, em-
ployee owners approach their job with a far different attitude than
most working people. They feel personally responsible and thus are
loyal, hard-working and responsive to the needs of their company
and the consumer. This, in turn, creates a productive sense of
teamwork between management and Federal employee owners, for-
merly called labor.
I do not support the idea — let me underscore this — I do not sup-
port the idea of selling the Postal Service to the highest bidder.
And I understand why Postal Service employees would be con-
cerned about that.
As I said, H.R. 210 will turn the U.S. Postal Service into the
world's largest employee-owned company by transferring the entire
corporation, lock, stock and mail truck, to its 750,000 employees.
The value of the stock provided to each employee will be based
on the years of service and levels of compensation and on average
would be worth tens of thousands of dollars. And that's when the
company first starts out. If this company succeeds, which I have
every reason to believe it will succeed, that stock will be worth
hundreds of thousands of dollars.
The retirement of existing Postal Service employees will be guar-
anteed. The new employee-owned company will determine the re-
tirement provisions of new employees. The employee-owned Postal
Service will be run by individuals who are elected by the employees
and it will be given a 5-year grace period, as Congressman Crane
suggested, before the private express statutes are lifted and com-
petition is allowed.
Competition gives managers and workers the incentive to provide
customers with the services they want. Employees understand that
their jobs depend on customer satisfaction. Without competition,
employees have few incentives to provide the exceptional service
29
that's required in this competitive market, and the Postal Service
lacks those incentives to control the cost and maintain high quality
as it stands today, but will have those incentives under the system
we are proposing.
Postal unions fear H.R. 210. They believe it's just going to be a
ploy to sell off the Postal Service to outside investors. Let me em-
phatically state, this is not true. During the first year as an em-
ployee-owned company. Postal Service stock will be issued only to
postal service employees. After this period, the bill allows for the
stock to be issued to the public only — and again let me stress this —
only if the employees decide to do so.
Let me repeat, if the employee-owned Postal Service does not
want to issue stock to the public, it does not have to, it is not re-
quired to. This should put an end to the claim that Mr. Crane and
I have some sort of ulterior motive to sell the Post Office to out-
siders.
I personally identify with working people. I'm not a wealthy man,
I don't even own stock. I have been an employee all my life, and
I think that employee ownership is an idea whose time is rapidly
coming to the United States of America, and the Postal Service can
be one of the best examples of how it can work.
Employee ownership will bring together higher-quality service at
competitive rates to this Nation's postal customers. Freed from its
regulatory constraints, the Postal Service will be able to adapt to
the many technological changes taking place in the communica-
tions arena. Employee owners will be empowered, they will be em-
powered with the means to control their own future, and will bring
to play all the incentives and profit motives inherent in a competi-
tive free enterprise system.
With privatization, postal employees will find themselves profit-
ing directly from being more responsive to customers' needs. Most
importantly, this bill will save postal employees' jobs and improve
their lives by making them, as I say, part of the largest employee-
owned companies, if not the largest employee-owned corporation, in
the world.
In conclusion, I would like to tell the subcommittee members
that H.R. 210 should not be considered as the last and only word
on how to bring about fundamental reform that is necessary to
save the Postal Service. Mr. Crane and I are totally open to sugges-
tions on the details of how to achieve the goal that this bill lays
out.
And I will just close by saying this: Now is the time for us to act
and to act boldly, when the Postal Service is not in the midst of
a deep crisis. There are 750,000 people who work for the Post Of-
fice. If we wait for the crisis to happen, if we wait for the impact
of technology to put the Postal Service in a bad situation, it makes
it dramatically more difficult to have the reforms that are nec-
essary, I believe, to conduct the necessary reform of privatizing by
giving this over to the employees.
Let's give it to the employees now, while we can provide the em-
ployees a substantial chance to profit and to start out and to actu-
ally make this a success. If we wait until there's a crisis, it's going
to be much more difficult to do, and the livelihood and retirements
40-147 0-97-2
30
of all of these employees will be at stake. And the Federal Govern-
ment will be stuck with a much higher bill.
We could do this now at relatively small cost and it's something
we should move forward with. It's an idea whose time has come.
Thank you very much, Mr. Chairman.
[The prepared statement of Hon. Dana Rohrabacher follows:]
31
Testimony of
The Honorable Dana Rohreibacher
Hearing on the United States Postal Service
Subconunittee on Postal Service
Committee on Government Reform and Oversight
November 15, 1995
Mr. Chairman, Members of the Subcommittee, thank you for
this opportunity to testify today. I commend your decision to
hold a hearing on the future of the United States Postal Service
and specifically, on the topic of privatization, which to my
knowledge has never been discussed in a forum such as this.
Let me start by saying that I am not here to attack Postal
Service employees. In general, I think most Postal employees are
good, hard-working, individuals. I am here to discuss the Postal
Service's status as a protected government enterprise which
adversely affects its ability to adapt to the needs of a changing
and increasingly competitive market. The Postal Service's
ability to compete in our ever- changing world is constrained by
the laws and regulations that dictate its organization and
operation as a government agency. Postal Service customers face
inconvenient hours, poor customer service and decreasing worker
productivity. Again, blame should not rest with postal
employees. The blame, instead, should rest with a protected
Postal Service which perpetuates inefficiency and non-
responsiveness to consumers.
The federal government originally established the Postal
Service over 200 years ago as a means of keeping in contact with
remote areas of the still-developing United States. At that
time, there was no other communications network in place. Today
is an entirely different story. Telephones, fax machines, cable,
satellites, computers, television and radio are all methods used
by people to communicate around the world. As the level of
service provided by the Postal Service continues to decline and
postal rates continue to rise, more and more consumers are
turning toward these alternative communication methods.
Over the past five years, the Postal Service has lost 35% of
its first class business -to-business mail and expects to lose
another 35% over the next five years. If this trend continues,
the Postal Service will be little more than a deliveiry agent for
third class mail. While there is certainly a need for this type
of delivery, it is not necessary for the federal government to be
the only provider of such service. Declining costs for new
technology will soon change the way many households conduct their
business transactions.
32
In an effort to improve efficiency and keep up with
technological changes, the Postal Service has tried various
solutions from new management to complete reorganization to no
avail. It is obvious that without fundamental reform that will
transform it into a true competitive, commercial enterprise, the
Postal Service will not have the freedom and flexibility
necessary to adapt to this changing marketplace. Today's fast-
paced business environment demands that service providers adapt
quickly or fall by the way side surpassed by more innovative
competitors with better ideas. A government -run postal service
will soon be rendered irrelevant by its inability to adapt in a
dynamic and changing swiftly marketplace. Mr. Chairman, the
Postal Service as we know it may soon be extinct and that means
unemployed Americans -- something that no one wants.
Mr. Crane's bill, H.R. 210, provides an excellent framework
to keep the Postal Service competitive and postal workers
employed and able to meet the needs of the American public well
into the future. It does this by creating one of the largest
employee- owned corporations in the world. You heard me right, I
want to give (yes, give) the Postal Service to its employees, who
I think could do a tremendous job of running the organization if
freed from bureaucratic constraints. As we've seen with
companies owned by their employees such as United Airlines, Avis
and Weirton Steel, employee owners approach their jobs with a far
different attitude than most working people. They feel
personally responsible, and thus are loyal, hard working and
responsive to the needs of their company and customer. This, in
turn, creates a productive sense of teamwork between management
and their fellow employee -owners (formerly called "labor").
I do not support the idea of selling off the Postal Service
to the highest bidder. As I said, H.R. 210 will turn the United
States Postal Service into the world's largest employee- owned
company by transferring the entire corporation, lock, stock and
mail truck, to its almost 750,000 employees. The value of stock
provided to each employee will be based on their years of service
and levels of compensation, and on average, would be worth tens
of thousands of dollars. The retirement benefits provided to
employees of the new employee -owned Postal Service will be
preserved. The new company will determine retirement provisions
for new employees. The employee -owned Postal Service will be run
by individuals who are elected by the employees and it will be
given a five-year grace period before the private express
statutes are lifted and competition is allowed. Competition
gives managers and workers the incentive to provide customers
with the services they want. Employees understand that their
jobs depend on customer satisfaction. Without competition,
employees have few incentives to provide exceptional service and
the Postal Service lacks incentives to control costs and maintain
high quality.
Postal unions fear that H.R. 210 is just a ploy to sell off
the Postal Service to outside investors. This is simply not
33
true. During its first year as an employee -owned company, Postal
Service stock will be issued only to Postal Service employees.
After this period, the bill allows for stock to be issued to the
public only if the employees decide to do so. Let me repeat
this: If the employee -owned Postal Service does not want to
issue stock to the public, it does not have to do so. This
should put an end to claims that Mr. Crane and I have an ulterior
motive to sell off the Postal Service to outsiders.
Employee ownership will bring higher quality service at
competitive rates to this nation's postal customers. Freed from
its regulatory constraints, the Postal Service will be able to
adapt to the many technological changes taking place in the
communications arena. Employee ownership will empower postal
employees with the means to control their own future and will
bring into play all the incentives and profit motives inherent in
the competitive free enterprise system. With privatization,
postal employees will find themselves profiting directly from
being more responsive to consumer needs. Most importantly, this
bill will save postal employees' jobs and improve their lives by
making them part of one of the largest employee -owned company in
the world.
In conclusion, I would like to tell the Subcommittee members
that H.R. 210 should not be considered the last or only word on
how to bring about the fundamental reform necessary to save the
Postal Service. Mr. Crane and I are certainly open to
suggestions on the details of how the goals of our bill should be
carried out. Thank you.
34
Mr, McHUGH. I thank the gentleman for his comments.
I would also like to acknowledge the presence of the vice chair-
man of the subcommittee, the gentleman from South Carolina, Mr.
Mark Sanford.
Mark, any opening comments?
Mr. Sanford. No, thank you.
Mr. McHuGH. OK.
I know you two gentlemen, like everyone in the House, have very
busy schedules. If you could stay with us, perhaps we could have
a little exchange.
Would that be agreeable?
Mr. RoHRABACHER. Sure.
Mr. Crane. Yes.
Mr. McHuGH. I would defer to either of the two Members.
The gentleman from South Carolina.
Mr. Sanford. I have a question for my colleague from California.
Some people have objected to the idea of selling off public lands in
the West to westerners because these lands are public assets
owned by everybody in the country, all 260 million of us. I suppose
some people would also say that Postal Service assets being sold
to any particular group, especially the employees themselves,
would be taking a public asset and boiling it down to a fairly small
vested group. What would be your counterpoint to that?
Mr. ROHRABACHER. Well, when you're talking about Gk>vemment
assets, what you wsmt to do is determine what is the use of those
assets which will be of most benefit to the public. And my sugges-
tion is, is that unless we act now and follow the course of action
that we are suggesting, that we will find that these assets that
we're talking about within a very short period of time, perhaps in
10 years, will become an incredible liability. And now that the or-
ganization, the structure, is there and we're not in the midst of a
crisis, those assets would be best used to bring about this new or-
ganization and relieve the general public from the liabilities they
face by having a Postal Service associated with the Grovemment of
the United States, as compared to all kinds of other services we
have in our society.
So the benefit for the people of preventing this potential liability,
of course, disastrous liability in the future, if technology turns this
750,000-employee organization it has now into irrelevance and into
a major liability, the benefit of getting rid of that now benefits the
entire public.
So this is the course that although it will cost some in terms of
assets, by giving this to the employees, in the long run it will be
to the benefit of the entire country, not just the employees.
Mrs. Meek. Mr. Chairman.
Mr. McHuGH. The gentlelady from Florida.
Mrs. Meek. This question is for my colleague.
If this bill were to pass, when would it become effective?
Mr. Crane. Oh, when would it become effective? That would be
up to the committee to determine. My personal predilection would
be sooner rather than later. But that would be up to the discretion
of the committee and the Congress finally in creating this ESOP.
Mrs. Meek. The reason I ask that question is you already have
a structure that exists in the postal op>erations, which has been
35
there for quite some time. And of course, in my opinion, you would
need to do some significant impact studies to see whether or not
this new change will be effective to the public and to the people it
serves. Wherein if you were to restructure your current system, you
know where the problems are there.
I have seen it in much of the dialog and what I read here this
morning, that you have pretty much identified where most of the
problems are. It would appear to me that some method toward re-
structuring would be another option to be looked at as well as to
redo the whole system.
Mr. Crane. Well, I agree with you and I think that's going to in-
evitably occur, out of necessity, with the changing times we're expe-
riencing. But my personal predilection again goes to the idea of em-
powering those people who have faithfully served our Postal Serv-
ice, and when I say empowering them, I mean that transfer of all
of the postal assets to those employees which works out to about
$65,000 per employee. I mean, that's the average benefit. And I
think once they had that kind of stake, you're going to see times
change because I think they are as in tune as anybody with what
needs to be done to remain competitive. And it would be ownership
that motivates the employees intensely.
So I think, based on private sector comparisons, you could antici-
pate a changing delivery system. I think you could anticipate postal
employees being more acutely conscious of this whole thing. They
would make those adaptations and guarantee that we have an en-
tity that can survive in a changing world. And, as I said, it's a per-
sonal benefit to each and every one of them.
Mr. ROHRABACHER. If I could add something to my colleague's
answer?
Mrs. Meek. Yes.
Mr. ROHRABACHER. Any restructuring of the current system that
keeps it under the current framework within the context of the
Government and within the context of no competition in First-Class
mail, it will not result in the type of changes that will in the long
run be successful. The reason the Post Office is not successful and
will not be successful, is because unlike all the other services and
goods that are provided in our society by the private sector, there's
no competition and profit motive at work. And the only way to do
that is some t5rpe of privatization.
And, as I say, the only thing that makes sense to me to be a fair
privatization, especially fair to those 750,000 people who made
their lives building this organization, and as I say, they get a bum
rap half the time because the/re being blamed for the deficiencies
of the structure, the only way to be fair to them is to make it an
employee-owned corporation. But if you try to just restructure what
you've got, you're just, of course, basically changing — again, this is
a cliche, but you're rearranging the chairs on the deck of the Ti-
tanic.
The Titanic is going to go down because it's got a gaping hole in
its side, and in this case the gaping hole in the side of postal deliv-
ery is the incredible change of technology that's taking place in our
society. And you can't ignore that. You can't ignore the iceberg, es-
pecially after you've hit it.
36
Mr. McHuGH. The gentleman from South CaroUna has a follow-
up question.
Mr. Sanford. One last question, I promise. Some people have ar-
gued in favor of commercialization rather than privatization. Com-
mercialization is privatization of certain components of the postal
delivery system rather than privatization of the whole. The idea is
that if you privatize the whole system, you're still handing over
monopolistic control to that entity. Is that something we want to
do with a private company?
Mr. ROHRABACHER. No, we're not advocating turning over monop-
olistic control. We believe that after 5 years, the Post Office, the
new private employee-owned Post Office, would have to compete
with outside companies like UPS or Federal Express or other peo-
ple who would like to get in. But they will have an advantage, let
me tell you, they will have an advantage in that we are giving
them debt-free assets to modernize — if they want to modernize.
After that, they could borrow against the property that's owned by
the Post Office, et cetera. This gives them a tremendous possibility
for success, especially if we act now before there's a crisis, before
the technological hammer comes down on everybody's head.
Mr. Sanford. Thank you, Mr. Chairman.
Mrs. Meek. Mr. Chairman.
Mr. McHuGH. The gentlelady from Florida.
Mrs. Meek. When you are considering restructuring the manage-
ment, I perceive that you're not that happy with the management
of the current system. You're saying that it is, in some respects, in-
effective in terms of reaching the goal. I am concerned about the
750,000 people who now work for the Post Office
Mr. ROHRABACHER. That's my primary concern as well.
Mrs. Meek. I am concerned about them, and my question is still
has anyone thought about the impact of such a change, privatiza-
tion, on those employees?
Mr. ROHRABACHER. Well, the 750,000 employees, I guess it's
somewhat like Medicare, and I hate to bring that up because there
is a difference between the parties on how we're approaching Medi-
care, but the fact is, in the long run, do we care more about those
750,000 employees by trying to basically entrench a status quo that
in the long run is going to lead to a disaster for those people? And
in the long run, we can see it as we've outlined, technology is mak-
ing the system, the postal system, irrelevant. And as this tech-
nology comes more and more to play in our society, those 750,000
people are going to be more and more at risk. And believe me, ev-
erything that I'm advocating today comes from an employee's point
of view and not, oh, we're just going to manage the system better.
I happen to believe in employee ownership and, by the way, I be-
lieve in employee ownership in the private sector as well. And I
think that we should have incentives for that as well. And I think
that these postal employees that we're talking about could do a
good job, could do a very good job at running a company, if they
had the ownership and had the power to do so.
Mrs. Meek. Thank you.
Mr. McHuGH. Before we proceed, I'd like to acknowledge the
presence of the gentleman from Texas, Mr. Green.
If I could just ask a couple of questions, to folio wup.
37
The gentleman from Illinois mentioned that the value of each
employee's portion of that ownership would be $65,000?
Mr. Crane. The average, that would be the average. There would
be a variation, because that stock would be turned over to the em-
ployees based on your length of service and the position that you
held.
Mr. McHUGH. I assume you're computing that average based on
some total value?
Mr. Crane. The total value of all of the assets of the Post Office.
Mr. McHUGH. And how was that computed?
Mr. Crane. That total value is somewhere in the neighborhood
of like $46 billion.
Mr. McHuGH. Right now, it's my understanding the Postal Serv-
ice has a $9 billion net equity. Has that been figured in to that?
Mr. Crane. Well, I'm sure that is calculated in that figure, but
I'm talking about all of the assets the Post Office has, that's prop-
erty, buildings, vehicles.
Mr. McHuGH. Minus the $9 billion net equity?
Mr. Crane. Well, I was told — I'd have to
Mr. McHuGH. I'm not challenging the gentleman's figures, I'm
just trying to understand them.
Mr. Crane. Wait a second, I think I've got the figure here.
All right. The assets of the USPS, and that's including deferred
retirement costs, in 1994 were $46,416 billion.
Mr. McHuGH. So your calculation, $65,000 per average, that was
the
Mr. Crane. Well, actually, the average for every employee is
worth about $63,607.
Mr. McHuGH. That's right in the same neighborhood. I thank
you.
You will obviously be off doing other important work at the time,
but it's expected that the subcommittee later this morning will
hear from a number of other panelists who are going to point out,
I think, a pretty significant dichotomy, if you will, as to the man-
date that this Grovemment has placed upon the Postal Service.
On the one hand, it is in selected areas required or at least ex-
pected it operate like a business. We judge its performance against
UPS and DHL and others. And yet we have burdened it, if that's
the proper phrase, with some responsibilities that decidedly inhibit
its ability to operate like a private business.
I know you provide protections for 5 years on the mail monopoly,
First-Class. Is my assumption that after that first 5 years there
would be no requirement of universal service at a uniform price?
And if I'm correct in that, the obvious question that I would ask
and I think many others, including Senator Ted Stevens of Alaska,
is what does it cost to deliver a piece of First-Class mail to
Pierrepont Manor or to
Mr. Rohrabacher. By the time that happens, by the time we
run our 5 years, you can imagine that electronically that would
cost probably about 2 cents. Bottom line is that electronics are
changing the whole nature of the transfer of information.
Now, this all made sense, not just for Alaska, but for — ^through-
out the United States, it made sense for the Grovemment to have
a postal system to tie the country together 200 years ago. That's
38
why we have a U.S. Post Office. This makes no sense at all any-
more. I mean, Alaska, believe me, the people in Alaska will be
serviced and probably more effectively 10 years from now if we
make this change than they are today, because the changes that
are taking place in the electronic transmission of communications
is upon us. And this idea that we have to have a universal, we
have to have a Government body delivering some sort of an enve-
lope to every address in the country, this is a totally antiquated
idea. It's as antiquated as the Conestoga wagon, and it makes no
sense anymore. And those people in Alaska will be serviced because
you can service people over lines now, over electronic, over
fiberoptic cable, or over satellite transmission. And, it is very cheap
as compared to what it used to be. And, those costs are going to
continue to go down.
So it's no longer just an idea that we have to deliver an envelope
all over the country. I think First-Class mail is going to cost — or
the equivalent of First-Class mail, if we open up the market, is
going to be much, much cheaper in the future everywhere.
Mr. Crane. Could I add one I think to that, Mr. Chairman?
Mr. McHuGH. Absolutely, please.
Mr. Crane. And that is that the Postal Service's least efficient
performance is in rural delivery. And yet they have contracted out
already to 5,000 private businesses to handle some of their rural
deliveries. And these people are doing it for a profit. And I think
that the postal system itself could just as easily take it all over and
make a profit just as private enterprise is doing in delivery of part
of the Postal Service, A; but B, I think it's important to recognize
that such businesses as United Parcel Service, they deliver to the
most remote areas of the country. And I mean, they have no guide-
lines that if you live out in the boondocks, you've got to come into
town to pick up your package. So there's evidence that the private
sector can deal with these problems and I feel confident the Postal
Service, if privatized, could do it also.
Mr. McHUGH. I think some may say the reason in fact that the
satisfaction rates are so high in rural areas, is because the Postal
Service is contracting out and that the continuing of privatization
may already show some benefits, just as a counterpoint, not nec-
essarily as an endorsement of it.
So you two gentlemen have kind of different views, but they
would tend to fill each other's spaces, and to the extent the gen-
tleman from California says that's really not going to be a concern
because electronic communications will be how virtually everyone
communicates by the time this bill is fully effective, while the gen-
tleman from Illinois says that may or may not be true, but even
if it isn't, competition will fill the gaps and in fact will provide that
service.
Am I being fair in that assessment?
Mr. Crane. Well, I think, I'm inclined to agree with Dan, but I
don't think in 5 years you're going to see that as a universal sys-
tem, you know, with various forms of telecommunication. But, it is
escalating astronomically, and frankly, I can't figure those things
out. My kids can, my grandchildren can. And we're living in a dif-
ferent era than the one I grew up in or you grew up in.
39
And so it is coming, unquestionably. But to give you a timeframe
for it, I couldn't project that. I'd say it will be a generation, at least.
Mr. McHuGH. It's interesting, as you two read your statements
and as I was reading them over both last night and this morning,
if you did some selective and creative editing, either of you could
have been speaking for Marvin Runyon. Because you really have
a lot of concerns in common about that lack of flexibility, the con-
straints against their opportunities to compete and how they can't
introduce products.
Mr. ROHRABACHER. That goes with Government. That is what
happens when you have the Government — ^that's why you shouldn't
have the Government involved in services or producing products or
services that can be done in the private sector. Because the Grov-
emment has natural inefficiency as part of it. It doesn't have a
profit motive and there isn't competition. And you should only get
the Government involved in those areas that it's absolutely nec-
essary for the Government to be involved in. Now, in the past,
postal delivery was necessary to hold our country together. It's not
anymore.
Mr. McHuGH. Well, you pick a particularly interesting week to
make that charge, given all that's happened here. I say you'd have
some who might frilly agree with you. But I was going to play dev-
il's advocate for a moment. Because for all of the inhibitions it
might be suffering under for the moment, at least at this point in
time, the Postal Service is showing about a $1.8 billion profit. Some
have suggested that for all of its faults, we should retain its struc-
ture and start to take those profits for a greater public good, what-
ever that might be. I would suspect what your answer might be,
but we've heard that kind of claim, I'd like to hear your comments
on the record.
Mr. Crane. Deficit reduction, you mean?
Mr. ROHRABACHER. Well, now is the time.
Mr. McHuGH. Depends on which side of the aisle deficit pro-
gram.
Mr. ROHRABACHER. Now is the time to act, when the Post Office
is not in the midst of a crisis, to have the real reform. In the pri-
vate sector, many companies do their best — do their best in restruc-
turing themselves not at the pit, but actually when they're doing
well. And those are the companies that go on to even do better.
But this is the time to have some fundamental reform to do this,
because we can see that those 750,000 people, the Post Office right
now, is making a profit, but those 750,000 people are in jeopardy
in the long run. You can see it, and anybody who refuses to see it
is what we call "in denial."
The bottom line is those 750,000 people can be assured their pen-
sions, they can be assured assets beyond anything they could ever
believe before, assured control of their own destiny as never before,
and assured a decent job in the future, if we act now. But if you
wait until the Post Office goes into a crisis because several compa-
nies have found a way through electronic mail to outcompete the
Post Office — and I don't think it's going to happen in another gen-
eration, I think this is coming in the next 5 years, people who
think about cellular phones and fax machines, how did we run our
lives without cellular phones and fax machines? And that's just
40
something that's happened in the last 10 years, really. And this is
coming, so we should move quickly.
Mr. McHuGH. The gentlelady from Florida has indicated she has
another question.
Mrs. Meek. I've tried to — it's a short-term kind of thing, but I'm
trying to get an idea of the structure of what you're perceiving.
What is your dream of how this will operate? It sounds a little
amorphous as to how it's going to happen.
Who owns the company?
Mr. ROHRABACHER. There will be a corporation that will be
Mrs. Meek. Who's obligated, to whom are they obligated?
Mr. RoHRABACHER. The employees themselves are the stockhold-
ers, they own the company. They elect the people who manage the
system.
Mrs. Meek. Hold on just a moment, I haven't quite finished yet.
Just like to ask you a series of things so you can tell me how they
operate, to whom are they obligated, how will it be handled, that
kind of thing. I think I'm getting an idea of what you're talking
about, and I'm sure privatization has quite a few assets. But I'd
like to know in terms of who's responsible.
Mr. ROHRABACHER. Well, it's just like any other who's respon-
sible to the United Parcel Service or Federal Express, except the
difference is the stockholders in this new corporation will be the
employees. The people hiring the management will be the employ-
ees.
Mrs. Meek. Will they have a contract with anybody?
Mr. ROHRABACHER. Contract with
Mrs. Meek. Yes. Will there be a contract that the people who
work in the Postal Authority or the management and the workers,
since I don't seem to get a feel from the resolution as to who is re-
sponsible for what? That's my main concern.
Mr. ROHRABACHER. Well, Phil, would you like to
Mr. Crane. Well, for example, if you were a postal worker and
these assets are transferred over to you and the other members of
the committee, you could in turn negotiate with someone that you
elected to hire to serve as Postmaster (General . And there you could
give him a contract. But it's your business and you decide what
kind of an offer you want to make, what responsibilities he is sup-
posed to take on, what compensation he could get. And that is a
determination, as Dana was mentioning, made exclusively by you
as a current owner of that entire postal system.
Mr. ROHRABACHER. We've eliminated
Mr. Crane. Or stockholders.
Mr. ROHRABACHER. We eliminate the dichotomy between labor
and management, which has basically, I believe, not served this
country well. What we have now are a lot of people who think of
themselves as adversaries, and in reality the Ainerican people who
are working for various economic enterprises should be thinking of
themselves as a team. And employee ownership, especially in terms
of the Postal Service, would create a team of people that have a
profit motive and competition, and you would see a dramatic in-
crease in productivity and such, because they now are a team rath-
er than spending time fighting one another. They're going to find
ways to try and improve the service of the Postal System.
41
Mrs. Meek. This is my last question. This corporation, as you
perceive it, would have no obligation to the Grovemment or would
it have any obligation to the Government, and to be guided by
some of the broad kinds of things that Government does to protect
its citizens?
Mr. ROHRABACHER. I don't foresee that — I see the company — now
Phil and I may differ on this, and there are some things in the
bill — ^by the way, the bill, as far as I am concerned, is a blueprint —
but both Phil and I are very happy to work and make it better with
suggestions, people might have suggestions on how to improve it.
I foresee the company after 5 years as being just like United Air-
lines, and there would be no reason why — let's say the Govern-
ment, let's say the U.S. Grovernment, all of these years had run an
airline, and they run it, you know, and that airline was not in bad
condition but you could see that the competition was coming in
with other airlines.
Well, if we gave the airline over to its employees, as United Air-
lines right now is owned by its employees, well, it would be very
similar. Because United Airlines is operating just like all the other
airlines, and all we're sajdng is that the employees now will be the
owners of a large corporation in competition with Federal Express,
UPS, and others.
Mr. Crane. I think another parallel you can draw is renting a
car versus owning a car. With a rental car, you don't tend to be
as concerned as you do your own automobile.
Mrs. Meek. Thank you.
Mr. McHUGH. You two have been very generous with your time
and the subcommittee and I personally appreciate it. And we wel-
come the opportunity to review your thoughts and share your in-
sights.
As I tried to indicate in my opening remarks, this is the first step
in the next series of steps that this subcommittee intends to take
on what we think, and I know you've raised very important issues.
So we look forward to having your input and your assistance as we
go along that path.
Thank you for being here this morning.
Mr. Crane. Thank you, Mr. Chairman,
And let me just add one thing. The language in H.R. 210, I be-
lieve, and correct me if I'm wrong, Pete, I think that language is
about 8 years old now. And there have been revolutionary changes
that have occurred in means of communication during that inter-
vening time. So I'm not sajdng that language is sacrosanct and
that's why we need your expertise.
Mr. McHuGH. Well, thank you for that. And things do change,
there's no question.
Mr. Crane. Thank you.
Mr. McHuGH. We thank our colleagues for joining us.
The second panel this morning will include a number of rep-
resentatives from the Congressional Research Service. They will in-
clude Mr. Don Kiefer, who represents or serves as Chief of the Eco-
nomics Division; accompanying Mr. Kiefer will be Mr. Bernard
Gelb who is a Specialist in Industry Economics; also Mr. Fred Kai-
ser, who is a Specialist in American National Grovemment; Ms.
Bemevia McCalip, Analyst in Business and Grovemment Relations;
42
and Ms. Carolyn Merck, Specialist in Social Legislation; and Mr.
Tom Nicola, legislative attorney. If we can find seats for everyone.
There are many quirks and probably reverse appropriate fea-
tures of the U.S. Grovemment. One is that when Members of Con-
gress appear before our committee the/re not sworn in, but
strangely, good people like yourselves must be. I hope you take no
offense to that, but it is according to the committee rules, so if you
would all rise, please, and raise your hands, right hands and affirm
to me.
[Witnesses sworn]
Mr. McHuGH. Thank you.
The record will show that all of the witnesses affirmed and re-
sponded in the affirmative.
And with that, I would turn the dais over to Mr. Kiefer for his
comments and for how he would like to direct the panel.
We are at your service, sir. Welcome.
STATEMENTS OF DONALD KIEFER, CHIEF, ECONOMICS DIVI-
SION, CONGRESSIONAL RESEARCH SERVICE, ACCOMPANIED
BY BERNARD A. GELB, SPECIALIST IN INDUSTRY ECONOM-
ICS, ECONOMICS DIVISION, CRS; BERNEVIA McCALIP, ANA-
LYST IN BUSINESS AND GOVERNMENT RELATIONS, ECO-
NOMICS DIVISION, CRS; FREDERICK M. KAISER, SPECIALIST
IN AMERICAN NATIONAL GOVERNMENT, GOVERNMENT DIVI-
SION, CRS; CAROLYN L. MERCK, SPECIALIST IN SOCIAL LEG-
ISLATION, EDUCATION AND PUBLIC WELFARE DIVISION,
CRS; AND THOMAS NICOLA, LEGISLATIVE ATTORNEY, CRS
Mr. Kiefer. Thank you, Mr. Chairman, and members of the sub-
committee. My name is Donald Kiefer. I am the Chief of the Eco-
nomics Division of the Congressional Research Service.
The Congressional Research Service would like to thank you for
the opportunity to assist you in identifying issues for consideration
in your review of possible changes in the structure of the U.S. Post-
al Service. Our report, prepared at your request, analyzes in an
economic framework the performance of the U.S. Postal Service in
the context of its mandates, its rules of operation, and develop-
ments in the private sector.
The report defines and describes concepts of privatization and
other alternative structures that could be used to provide postal
service in the United States. It looks at changes that have been im-
plemented in a number of other industrial countries as they have
tried to improve the performance of their postal systems.
Finally, the report analyzes the likely effectiveness of selected al-
ternative structures in providing mail service in the United States
and their likely effects on postal markets.
Now, as you indicated, Mr. Chairman, I'm joined by several other
analysts from the Congressional Research Service who actually
prepared this report. The analysts in turn are Bernard Gelb, to my
immediate left, who served as the overall coordinator and editor of
the project; Frederick Kaiser, Bernevia McCalip, Carolyn Merck,
and Thomas Nicola. Each one of the first four will provide brief re-
marks, summarizing important points and sections of the report,
and then we will all be available for your questions.
43
At this time, I'd like to turn it over to Bernard Grelb to begin the
summary of the report.
Mr. Gelb. Good morning. I will summarize the entire report. My
colleagues will each focus on an aspect in which the subcommittee
has expressed particular interest.
Congress established the U.S. Postal Service in 1970 to convert
the Post Office Department into an entity that would provide mail
service on a businesslike self-sustaining basis. The Postal Service
improved enough so that it has not received or requested a subsidy
in a number of years.
However, the USPS has come under stress as a result of new
technology and competition in mail service in particular, and com-
munications in general, and it has had difficulty adjusting. This
has contributed to reported shortcomings in and dissatisfaction
with its service.
The Postal Service has lost large portions of some of its markets
to competitors whose names we know well. Both an effect and a
cause of these losses has been the Postal Service's ceding of part
of its monopoly.
Shortcomings in Postal Service performance appear to stem from
both conceptual and operational causes. Conceptually, while the
Postal Service is to operate on a businesslike basis, it also has a
public service mission, "to bind the Nation together."
Postal Service competitors can tailor their capital and labor re-
sources to narrow markets, but the Postal Service has to have a
broad infrastructure in order to meet its obligation of universal
service. And whereas private firms set prices based upon their
costs, including return on investment and upon competitors' prices,
the Postal Service must take account of social externalities, equity
and political considerations.
Operational problems result partly from the law governing Postal
Service operations and dealings with its employees and partly from
shortcomings in the way both managers and rank and file workers
run the organization.
A major impediment to the Service's ability to compete is the
cumbersome process of setting rates and introducing new services.
The multiplicity of USPS services combined with broad, multiple,
and conflicting rate-setting criteria, pose challenges in the pricing
of services. And USPS costs are higher than they might be other-
wise.
A range of types of options £ire possible to restructure the postal
system to deal with perceived problems. As it has with other agen-
cies providing services to the public or to specific sectors of the
economy. Congress could custom design a modified or new postal
entity to suit its particular objectives. Actual options that have
been proposed in the public arena range from modest chzinges in
governing laws and management structure, to complete privatiza-
tion of the Postal Service and total deregulation of postal markets.
The report analyzes how well four hypothetical alternative struc-
tures would do the job of providing mail service to the Nation, and
what their effects on postal markets might be. The hjrpothetical al-
ternatives, which vary in terms of departure from the present sys-
tem, are based mainly upon actual proposals.
44
Our analysis finds that as one moves away from the present sys-
tem, the altered entity would be able to operate more efficiently
and compete better. At the same time, in moving toward a totally
deregulated and less integrated system, the character of mail serv-
ice probably would tend to move away from the present levels of
universality, regularity, and uniformity.
The question of what combination of organizational, institutional,
and mail service attributes would be best ultimately is an issue for
political resolution. CRS assumes neither that the Government
should nor that it should not be involved in providing postal serv-
ice. Furthermore, our analysis of possible alternatives does not nec-
essarily indicate a belief that change is advisable.
Bemevia McCalip will discuss the evolution of the Government's
monopoly.
Ms. McCalip. Mr. Chairman, members of the committee, good
morning. Since 1792 the U.S. mail monopoly has undergone numer-
ous changes and now applies to "letter mail" only.
Controversy over the mail monopoly began when the framers de-
parted from the English precedent of a totally monopolistic ap-
proach to Government-run postal service. This raised questions
about whether they really intended to establish a postal system as
a Federal monopoly.
Nevertheless, the first of the mail monopoly laws, referred to as
the private express statutes, was passed. The initial legislation pro-
hibited the private carriage of letters and packets, but exempted
newspapers.
By 1845, private express companies had proliferated and viola-
tions of the private express statutes were rampant. To curb these
acts. Congress made it unlawful to establish any "private express"
for the conveyance of "letters, packets or packages of letters or
other mailable matter," but exempted newspapers, magazines,
pamphlets and periodicals.
In response to complaints from businessmen and merchants, an-
other Federal law was enacted, permitting private carriage of mail
if postage was prepaid and letters were dated and sealed.
The last major changes in the mail monopoly occurred adminis-
tratively in 1978 and 1986. In 1978, the Postal Service exempted
"extremely urgent letters" that met either a time of delivery or
price test. In 1986, private mail companies were allowed to provide
international mail delivery through a service called "Remail." The
Postal Service retains, however, exclusive use of mailboxes.
Despite the erosion of the mail monopoly over the past century,
letter mail presently generates more than 60 percent of the Postal
Service's revenue. Due to the large volume of First- and Third-
Class mail, the Postal Service still holds considerable clout in the
mail marketplace. However, the future viability of the mail monop-
oly is considerably blurred by the increasing use of electronic mes-
saging and advances in telecommunications.
Now I turn to Fred Kaiser who will discuss alternative types of
structures that might be considered for the Postal Service.
Mr. Kaiser. Mr. Chairman and subcommittee members, thank
you for the invitation to put our 2 cents' worth into this consider-
ation of the restructuring of the U.S. Postal Service. My focus is
on the conceptualization of alternative structures. It emphasizes
45
some of the major types of institutional, organizational and struc-
tural options available to change the postal system. These range
from far-reaching comprehensive privatization proposals such as
creating a private corporation, about which we just heard at some
length, to modest adjustments within an organization.
While it is possible to combine some of the options or alter-
natives, others are quite simply incompatible with one another.
That is because these are based on different and even competing
assumptions, understandings, objectives and values related to Gov-
ernment and governance.
Privatization has gained prominence recently as a means of cut-
ting Government spending, eliminating operational inefficiencies,
improving performance and providing goods and services, and re-
ducing the role of Government in society. Four basic types or meth-
ods of privatization have the most relevance as alternatives for
structures in a postal system. Contracting out is perhaps the most
frequent, and probably the oldest form of privatization.
Divestment or divestiture is the clearest type of privatization.
That is the sale or transfer of a Government agency, corporation,
service or asset to private ownership.
Franchising, through this method the Government awards a pri-
vate operator the right to sell a certain product or provide a service
to the public, often through concessions or lease arrangements.
Finally, displacement. Under this approach, the Government re-
linquishes its control over a good, service or activity, or even a
function, by default, withdrawal or deregulation.
Besides these, there are many other varied options to restructure
the Postal Service. These tend to emphasize or have a focus on
agency management. And their objectives are to improve internal
management controls and capacity building, eliminate or modify
competing objectives and support cost-saving goals, reduce outside
interference with internal managerial decisions, or alternatively
enhance management guidance from relevant outside entities.
We've identified nine prominent options among a wide variety.
Two of them, for instance, are to centralize all management powers
in the head of the operation and chief executive officer. A second
would be to grant the Postmaster General or Board of Governors
greater authority and flexibility over the work force and workplace
matters. And these again are just illustrations.
Now, our colleague, Carolyn Merck, will conclude our prepared
remarks by discussing issues pertaining to postal worker fringe
benefits.
Ms. Merck. Good morning, Mr. Chairman, and members of the
subcommittee. I will address some issues concerning what chang-
ing the relationship of the Postal Service to the Federal Govern-
ment could mean with regard to postal employee benefits, particu-
larly health insurance and retirement.
As long as postal workers are defined as Federal employees, they
have access to Federal employee health insurance and retirement
coverage. This access would cease if postal workers lose their Fed-
eral jobs or if postal employment were redefined or redesigned as
nonpostal — excuse me, non-Federal.
Postal workers currently participate in the Federal employees*
health benefits program, although unlike other Federal workers,
46
their share of the cost of the insurance premiums is collectively
bargained and they currently pay a lower share of the premiums
than other Federal workers. Presumably, under any change in the
status of the Postal Service, postal workers would be offered health
insurance by their employer, although they could be excluded from
the FEHBP if they are no longer Federal employees.
Should there be a change in the status of the Postal Service, the
most difficult issues the Congress would face with regard to postal
employee benefits pertain to retirement. Postal workers participate
in the Federal Civil Service Retirement programs under the same
terms and conditions as nonpostal Federal workers. Under Postal
Service redesign options that would shrink the number of postal
workers due to assumption by private enterprise of certain serv-
ices, some postal workers might lose their jobs and, hence, would
no longer be entitled to Federal retirement system coverage.
Alternatively, if the entire Postal Service were converted into a
non-Federal entity in which the employees retained their jobs but
were no longer defined as Federal personnel, they would lose Fed-
eral retirement coverage just as if they had lost their jobs.
Workers with at least 5 years of Federal service would continue
to be vested in the benefits earned as of the termination of their
Federal status, but thefy would receive no credit toward their Fed-
eral pension after that time and would be eligible only for a de-
ferred Federal pension starting at age 62, a pension that could lose
significsmt value during the intervening years.
As a result, there would probably be considerable pressure for
Congress to intervene to protect the retirement benefits of postal
workers who make the transition from Federal to non-Federal sta-
tus. However, there are no rules and limited precedents for such
a situation. In those rare instances in which a Federal entity has
been defederalized. Congress has made different pension arrange-
ments.
If Congress were to cover all postal workers under a new retire-
ment system, or if Congress were to permit the Postal Service to
be credited to a non-Federal retirement plan, complex issues would
need to be addressed regarding how vested benefits and service
credits under the old Federal system would be treated and fi-
nanced.
Thank you, Mr. Chairman. This concludes our prepared state-
ments, and we would be happy to address any questions you might
have.
[Note. — ^The committee print report prepared by the CRS for this
subcommittee entitled, "Mail Service in the United States: Explor-
ing Options for Improvement" is available through the subcommit-
tee office.]
[The prepared statement of Mr. Kiefer, Mr. Gelb, Ms. McCalip,
Mr. Kaiser, and Ms. Merck follows:]
47
CRS
Congressional Research Service • The Library of Congress • Washington, D.C. 20540-7430
Statement by
Donald W. Kiefer, Bernard A. Gelb, Bernevia M. McCalip,
Frederick M. Kaiser, and Carolyn L. Merck
Congressional Research Service
Library of Congress
before the
Subcommittee on Postal Service
Committee on Government Reform and Oversight
U.S. House of Representatives
November 15, 1995
Dr. Donald W. Kiefer, Chief of the Ekxmomics Division
Mr. Chairman and Members of the Subcommittee, the Congressional Research
Service would like to thank you for the opportunity to assist you in identifying
issues for consideration in your review of possible changes in the structure of
the U.S. Postal Service.
Our report, prepared at your request, anal3rzes in an economic framework
the performance of the U.S. Postal Service in the context of its mandates, its rules
of operation, and developments in the private sector. The report defines and
describes concepts of privatization and other alternative structures that could
be used to provide postal service in the United States. It looks at changes that
have been implemented in a number of other industrial countries as they have
tried to improve the performance of their postal systems. Finally, the report analyzes
the likely effectiveness of selected alternative structures in providingmail service
in the U.S. and their likely effects on postal markets.
I am joined today by several CRS analysts who were involved in the project
and who will respond to your questions. The analysts are Bernard Gelb, Frederick
Kaiser, Bernevia McCalip, Carolyn Merck, and Thomas Nicola. Four of these
analysts will briefly summarize key points in sections of the report.
48
CRS-3
Bernard A. Gelb, Specialist in Industry Ek»nomics,
Economics Division
Good morning. I am Bernard Gelb, an industry analyst in the Economics
Division of CRS. As Don Kiefer said, our report aims to help the Subcommittee
define the issues for its plcinned consideration of possible change in the Postal
Service, and does so in an economic framework. I am going to summarize the
findings of the report as a whole; each of three of my colleagues will focus on
a specific aspect or issue in which the Subcommittee has expressed particular
interest. Some important points in our report necessarily are omitted from our
testimony because of time constraints.
The U.S. Postal Service (USPS) was established in 1970 to convert the then
existing Post Office Department into an entity that, still under Government
supervision, would provide mail service in the United States on a business-like
self-sustaining basis. The USPS improved enough over its predecessor so that
it has not received, or requested a subsidy in a number of years.
However, the USPS has come under stress as a result of new technology and
competition in mail service in particular and communications in general; and it
has had difficulty adjusting. This has contributed to reported shortcomings in
and dissatisfaction with its service. There reportedly was a deterioration in mail
service in the late 1980s — in terms of general consistency and in terms of extreme
situations. Service appears to have recovered somewhat in recent years, however.
The USPS has lost substantial portions of some of its markets to competitors
whose names we know well. Both an effect and a cause of these losses has been
the Postal Service's ceding of part of its monopoly. Following my presentation,
Bemevia McCalip will provide some details on the evolution of the Federsd
Government's monopoly on letter mail.
The shortcomings in Postal Service performance appear to stem from both
conceptual and operational causes. Conceptually, while the USPS is to operate
on a business-Uke basis, it also has been given a broad public service mission to
be "a basic and fundamental service provided to the people by the Government.. .to
bind the Nation together through the personal, educational, literary, and business
correspondence of the people" (P.L. 91-375). Whereas Postal Service competitors
can tailor their capital and labor resources to narrow markets, the Postal Service
has to have a broad infrastructure in order to meet its obligation of universal
service. And whereas private firms set prices based upon their costs (including
return on investment) and competitors' prices, the Postal Service must take accouint
of social externalities, equity, and political considerations. The Postal Service
is explicitly required to provide universal service in every class of mail, and is
required through interpretation to provide letter mail service at a uniform price.
49
CRS-4
Operational difficulties result partly from the more specific laws governing
USPS operations and dealings with its employees, and partly from shortcomings
in the way both management and rank-and-file workers "run" the organization.
A major impediment to the USPS* ability to compete is the cumbersome process
for setting prices and introducing new services imposed by the law. The Postal
Service's multiplicity of services combined with broad, multiple, and conflicting
rate-setting criteria pose difficult challenges to the USPS in pricing its services.
And, for reasons detailed in our report, the Postal Service's costs are higher than
they might be otherwise.
This country is not alone among nations in having a postal service that has
come under the stress of new technologies and strong competitors in communications
and in parcel delivery. A number of other industrial countries have moved to
improve their postal systems through organizational and other changes. Actually,
the United States was among the first of the industrial countries to reorganize
its postal system.
A number of types of options are possible to "restructure" our postal system
anew to deal with the perceived problems. As it has in other cases of agencies
providing services to the public or specific sectors of the economy, Congress could
custom-design a modified or new postal entity to suit its particular objectives.
Fred Kaiser will discuss the generic types of alternative institutional arrangements
that might be considered. CaroljTi Merck then will discuss a few issues related
to postal workforce benefits that might have to be addressed in a transition from
the present to a reshaped postal structure.
Actual options proposed by a number of observers and mailing industry
representatives range from modest modifications of USPS governing laws and
management structure to complete "privatization" of the USPS and total deregulation
of postal markets.
The report analyzes how well four hjrpothetical alternative structures that
vary in terms of departure from the present Postal Service would do the job of
providing mail service to the Nation, and what their effects on postal markets
might be, including how competitors might respond. The hypothetical alternatives
are based mainly upon actual proposals in the public arena; their "design" largely
ignores the fine points of the legal form of the structure. (Key aspects of the
operating framework of the system probably are much more important factors
than the legal form of the organization in determining how the structure would
do the job of providing mail service.)
Our analysis finds that, roughly speaking, as one moves away fi^m the present
system, the altered entity would be able to operate more efficiently and compete
better. (In the present "system," we include the present conceptual and operational
rules as well as the structure.) At the ssime time, in moving toward a totally
deregulated and less integrated system, the character of mail service probably
would tend to move away from the present levels of universality, regularity, and
uniformity (including price in the case of first-class mail).
50
CRS-5
The question of what combination of organizational, institutional, and mail
service attributes would be best ultimately is an issue for political resolution.
CRS assumes neither that Government should nor that it should not be involved
in providing postal service. Furthermore, the CRS analysis of possible alternatives
to the present sjrstem does not indicate our belief that change necessarily is
advisable.
51
CRS-6
Bemevia McCalip, Analyst in Business and Government Relations,
Economics Division
Since 1792, the U.S. mail monopoly has undergone numerous changes and
now applies to "letter-mail" only.
Controversy over the mail monopoly began when the framers departed from
the En^ish precedent of a totally monopolistic approach to government-run postal
service. This raised questions about whether they really intended to establish
a postal system as a Federal monopoly. Nevertheless, the first of the mail monopoly
laws, referred to as the Private Ebcpress Statutes, was passed. The initial legislation
prohibited the private carriage of "letters and packets," but exempted newspapers.
By 1845, private express companies had proliferated and violations of the
Private Express Statutes were rampant. To curb these acts, Congress made it
unlawful to establish any "private express" for the conveyance of "letters, packets,
or packages of letters, or other mailable matter," but exempted newspapers,
magazines, pamphlets, and periodicals. In response to complaints from businessmen
and merchants, another Federal law was enacted permitting private carriage of
mail if postage was prepaid and Iet1;^r9«>^ne dated and sealed.
i
The last major changes in the mail monopoly occurred administratively in
1978 and 1986. In 1978, the Postal Service exempted "extremely urgent letters"
that met either a "time of delivery" or "price" test. In 1986, private mail companies
were allowed to provide international mail delivery through a service called "Remail."
The Postal Service retains, however, exclusive use of mail boxes.
Despite the erosion of the mail monopoly over the past century, letter-mail
presently generates more than 60 percent of the Postal Service's revenue. Due
to the large volume of first and third class mail, the Postal Service still holds
considerable clout in the mail marketplace. However, the future viability of the
mail monopoly is considerably blurred by the increasing use of electronic messaging
and advances in telecommunications.
Now I would like to turn to Fred Kaiser, who will discuss sdternative types
of structures that might be considered for the Postal Service.
52
CRS-7
Frederick M. Kaiser, Specialist in American National Government,
Government Division
Mr. Chairman and Subcommittee Members, thank you for the invitation to
comment on this consideration of the restructuring of the United States postal
system. My focus is on the conceptualization of alternative structures. It emphasizes
some of the major types of institutional, organizational, and structural options
available to change the postal system. These range from far-reaching, comprehensive
privatization proposals, such as creating a private corporation, to modest adjxistments
within an organization. While it is possible to combine some of the options, others
are incompatible with one tmother. That is because these are based on different
and even competing assumptions, objectives, and values.
Privatization Concepts and Options
Privatization has gained recent prominence as a means of cutting government
spending, eliminating operational inefficiencies, improving performance in providing
goods and services, and reducing the role of government in society. Some
privatization initiatives, however, have been criticized for not delivering on their
promises, on the one hand, or going too far, on the other. Questions have been
raised, moreover, about several key matters: what particular activity or function
should be privatized (i.e., "commercial" activities but not "core" functions of
government); which government office should implement the effort (i.e., the agency
itself or another office with, perhaps, more experience or expertise in field); and
how should costs, prices, and payments be determined.
Privatization is subject to different interpretations but is usually viewed as
covering a wide and varied range of actions. Four broad types have the most
relevance as alternative structures for a postal sj^tem.
1. Contracting Out. The most frequent and probably the oldest form of
privatization is contracting out — a government's practice of entering into
contracts with private businesses, firms, organizations, and individuals to
perform a specific task or provide a good or service.
2. Divestment or Divestitm«. The clearest type of privatization is divestment,
sometimes referred to as divestiture, i.e., the sale or transfer of a government
agency, corporation, service, or asset to private ownership.
3. Franchising. Through this method, the government awards a private operator
the right to sell a certain product or provide a service to the public, often
through concessions or lease arrangements. Usually, a fee is paid to the
government for this right.
53
CRS-8
4. Displacement. Under this approach, the government relinquishes its control
over a good, service, activity, or even function, by default, withdrawal, or
deregulation. Such displacement may be limited to a narrow rsmge of goods
or services, resulting in selective "load shedding." Displacement may also
be extensive, encompassing a wide range of interrelated services and activities,
or even complete, if the government ends responsibility for a function or
terminates the mission of an agency.
Management Restructuring Options
Many other varied options to restructure the U.S. Postal Service, with a focus
on agency management, also exist. Their objectives are to: improve internal
management controls and capacity building, eliminate or modify competing objectives
and support cost-savings goals, reduce outside interference with internal managerial
decisions, or, alternatively, enhance management guidance from relevant outside
entities. Prominent among the wide range of management restructuring options
are the following:
1. Centralize all management powers in the head of the operation and chief
executive officer, i.e., the Postmaster General.
2. Grant the Postmaster General or Board of Governors greater authority and
flexibility over the workforce and workplace matters.
3. Redefine the powers and reduce the staff of the Postal Rate Commission,
in so far as they might intrude on the management decisions of the USPS.
4. Place the Postal Service under the Government Corporation Control Act.
5. Create a single-head agency, along the lines of other independent agencies
within the executive, such as the Environmental Protection Agency.
6. Increase management controls or guidance by the Office of Management and
Budget over the corporation.
7. Place the Postal Service under the 1990 Chief Financial Officers Act tmd
ensure its compliance with the 1994 Government Management Reform Act,
both of which are intended to improve financial management practices.
8. Insist on compliance by the Postal Service with the goals and objectives of
the Government Performance and Results Act of 1993.
9 . Follow up regularly and meaningfully on the findings and recommendations
of the Inspector General, who is also the Chief Postal Inspector. Increase
the status of the IG, by making the post a presidential appointment subject
to Senate confirmation. Separate postal inspection operations from the other
traditional IG activities that combat waste, fraud, and abuse.
54
CRS-9
Carolyn L. Merck, Specialist in Social Legislation
Education and Public Welfare Division
Gfood morning Mr. Chairman and members of the Subcommittee. I will address
some issues concerning what changing the relationship of the Postal Service to
the Federal Government could mean with regard to postal employee benefits,
particularly health insurance and retirement. As long as postal workers are defined
as Federal employees, they have access to Federal employee health insurance and
retirement coverage. This access would cease if postal workers lose their Federal
jobs or if postal emplojTnent were redefined or redesigned as non-Federal.
Health Insurance
Postal workers currently participate in the Federal Employees' Health Benefits
Program O^'EHEP), although, unlike other Federal workers, their share of the
cost of the insurance premiums is collectively bargained, and they currently pay
a lower share of the premiums than other Federal workers. Presumably, under
any change in the status of the Postal Service, postal workers would be offered
health insurance, although they could be excluded from the FEHBP if they are
no longer Federal employees.
Retirement
Should there be a change in the status of the Postal Service, the most difficult
issues the Congress would face with regard to postal employee benefits pertain
to retirement. Postal workers participate in the Federal civil service retirement
programs under the same terms and conditions as non-postal Federal workers.
Under Postal Service redesign options that would shrink the number of postal
workers due to assumption by private enterprise of certain services, some postal
workers might lose their jobs and hence would no longer be entitled to Federal
retirement system coverage.
Alternatively, if the entire Postal Service were converted into a non-Federal
entity in which the employees retained their jobs but were no longer defined as
Federal personnel, they would lose Federal retirement coverage just as if they
had lost their jobs. Workers with at least 5years of Federal service would continue
to be vested in the benefits earned as of the termination of their Federal status,
but they would receive no credit toward their Federal pension after that time
and would be eligible only for a deferred Federal pension starting at age 62, a
pension that could lose significant value during the interveningyears. As a result,
there would probably be considerable pressure for Congress to intervene to protect
the retirement benefits of postal workers who make the transition from Federal
to non-Federal status. However, there are no rules and limited precedents for
such a situation. In those rare instances in which a Federal entity has been de-
55
CRS-IO
federalized, Congress has made different pension arrangements. If Congress were
to cover all postal workers under a new retirement system, or if Congress were
to permit Federal postal service to be credited to a non-Federal retirement plan,
complex issues would need to be addressed regarding how vested benefits and
service credits under the old system would be treated and financed.
Thank you, Mr. Chairman. This concludes our prepared statements. We
will be glad to address your questions.
56
CRS
Economics Diviaion
Congressional Research Service • The Library of Congress • Washington, D.C. 20540-7430
Memorandum
January 31, 1996
TO
Honorable John M. McHugh, Chairman
Subcommittee on the Postal Service
House Committee on Government Reform and Oversight
Attention: Dan Blair
FROM Bernard A. Gelb, Specialist in Industry E>:onomics
SUBJECT : Questions for the record of the Subcommittee hearing on
possible reform of the Postal Service.
This memorandum and the attached materials respond to your letter
of November 27, 1995, which requests answers to 10 questions to supplement
the record of the bearing held on November 15, 1995. For ease of
understanding our responses, the memorandum repeats the questions. In
some cases, the responses refer to the CRS report requested by you and
released at the hearing.'
Please note that a number of CRS analysts have contributed to this
memorandum. In alphabetical order, they are: Amy Abel, Environment and
Natural Resources Policy Division; Bernard A. Gelb, Ek:onomic8 Division;
Linda Levine, Ek:onomic8 Division; Bernevia M. McCalip, Economics Division;
Carolyn L. Merck, Education and Public >^elfare Division; Robert D. Poling,
American Law Division; and Vince Treacy, American Law Division. The
authors are identified with their responses. We trust that the following is
responsive to your inquiry.
QUESTION #1'
Longstanding labor relations problems persist on the workroom floor
of the Postal Service. Literature on the subject suggests that a unionized
organization can make little progress in reinventing the organization or
changing its culture if relations between management and labor leaders are
adversarial.
'us. Libreiy of Congress. Congressional Research Service. Mail Servic* in the Vnittd Statet:
Exploring OpHont for Improvement. CRS Report 95-1105 E, coortlinatsd by Bernard A. Gelb.
Washington, November 13, 1995. 78 p.
^ Vince Treacy, Legislative Attorney, prepared the response to both parts of this question.
57
CRS-2
A. To what extent has the Postal Reorganization Act's mandates on
postal labor relations created challenges for improving labor-management
relations in the Postal Service?
Response to A
Postal labor relations should be viewed in historical perspective.'
Postal employees engaged in extensive organizing from 1880 to 1900. From
their earliest days, postal unions concentrated on achieving their goals by
securing favorable legislation from Congress. In 1902, President Theodore
Roosevelt issued a "gag order" to prohibit all employees of the executive
departments from seeking to influence legislation in their behalf, either
individually or through associations, except through the heads of
departments.
After a long struggle. Congress repealed the gag order by means of the
Lloyd-LaFollette Act of 1912,^ and recognized the right of postal employees
to organize unions and to affiliate with outside organizations. The Lloyd-
LaFollette Act was the primary statutory provision for postal labor relations
until 1970. During those years, the Post Office continued to operate as a
government agency, with the Postmaster General in the President's Cabinet.
Collective bargaining, however, was limited to subjects not covered by law.
Since the major topics of wages and hours were governed by statute, postal
union efforts were concentrated on lobbjnng Congress for better pay and
working conditions. In 1961, President Kennedy's executive order revamped
Federal labor relations, and President Nixon set forth more reforms under
E.O. 11491 in 1969. Neither of these Orders permitted bargaining over
wages.
An accumulation of wage grievEmces and other labor-management
problems triggered the major national postal strike of March 1970. The
strike forced a reappraisal of the entire Post Office situation at the highest
levels of authority. After postal operations were restored, negotiators
hammered out a Memoremdum of Agreement that formed the basis of
statutory reform. The Postal Service was established as an independent
establishment by the Postal Reorganization Act, and collective bargaining
was instituted for determining all wages, hours, and other terms and
conditions of employment under the National Labor Relations Act.
The policy of the Postal Reorganization Act was to provide tenured
management free of political considerations. Postal operations were
substantially removed from congressional and presidential control, with
performance, not politics, to determine tenure.
' See Nesbitt, Murray B. Labor Relations in the Federal Government Service. Washington,
Bureau of National AfTairs, 1976. 545 p.
* 37 Stat. 555.
58
CRS-3
The strike was prohibited. In lieu of strikes and lockouts, Congress
mandated binding interest arbitration to resolve impasses in collective
bargaining. From the perspective of 25 years of bargaining history, the
Postal Reorganization Act has succeeded in several major respects:
* Wages, hours, and working conditions have been eliminated as a
matter of congressional concern, and are now covered by comprehensive
collective bargaining agreements.
* There have been no major postal strikes in the 25 year history of
the Act. All outstanding issues have been resolved at the table, or through
binding interest arbitration.
* As noted in the CRS report, the Postal Service achieved financial
self-sufficiency by 1985, and has operated without subsidies since then, while
the price of first-class postage, corrected for inflation, has been stable.
B. How can Congress encourage and assist postal management and
unions to address these problems?
Response to B
It is clear that labor relations could be better. The key question is
how to achieve this goal. To begin with, Congress has adopted a settled
hands-off policy for almost all private sector labor disputes, and has showed
little desire to abandon this policy. Whether Congress would make an
exception for postal labor relations is open to question. Moreover, it does not
appear that Congress wants to get involved all over again in the day-to-day
operations of the postal system.
It has been suggested that there would be far greater urgency to
postal collective bargaining if the parties conferred under the threat of a
strike or lockout. On the other hand, the potential damage from a national
postal strike would be immeasurable. Congress does not seem ready to revisit
the question of the right of postal employees to strike. If the ban on striking
is continued, then the substitute for the strike, in some form of compulsory
interest arbitration, must eilso continue, although the current format of that
arbitration could be streamlined.
Postal management and some Postal Service observers often suggest
that interest arbitration leads to costly settlements that favor the union, and
that management might fare better if the unions were required to strike for
higher wages, and if management could respond with private sector tactics,
that is, using supervisory and management workers, contracting out, or
hiring temporary or permanent replacements.
The notion that granting the right to strike to postal unions would
strengthen the hand of management in labor bargaining is very questionable.
59
CRS-4
It would be far more likely to strengthen the unions by increasing their
bargaining power and by escalating their demands. The Postal Service could
attempt to operate through a strike, but the President or Congress would
probably have to intervene quickly to prevent permanent economic damage.
In general, the historical record leads to several conclusions. First,
the unions are likely here to stay in postal labor relations. Second, collective
bargaining does, in fact, limit postal management's discretion in
implementing changes, just as it does in any unionized enterprise. Third,
both employees and management have a crucial stake in increasing
productivity in postal operation through increased capital investment,
improved employee training, and better management skills. Fourth, Congress
has consistently treated postal labor relations on an equal footing with all
competing private sector enterprises. Fifth, the basic policy in the private
sector has been for the Federal Government to keep its hands off the
bargaining process, and to restrict its control to setting the ground rules and
resolving disputes over those rules; the Government requires the parties to
come to the table, but does not dictate the result reached at that table.
Therefore, it is up to the parties to come up with ways to expedite
change within the existing collective bargaining system. There are at least
two avenues for improvement: (1) improved communications and (2) reform
of the interest arbitration system.
(1) One approach is to bring the parties to a new table for frank and
candid discussions outside the regular contract bargaining process. Congress
could establish a permanent Presidential Commission on postal labor
relations, composed of representatives of labor, management, and the public.
The existing Postal Service Advisory Council, established by section 2(a) of
the Postal Reorganization Act,' might then be abolished. The Advisory
Council lacks independence, because it is chaired by the Postmaster General
and supported by the Postal Service. The Advisory Council has four labor
union representatives, four management representatives, and four
representatives of msgor mail users, but only three representatives of the
public at large. Its mandate, which includes 'all aspects of postal operations,"
is broad and unfocused.
If a Presidential Postal Labor Commission carried the prestige of a
White House agency with a national agenda, it might help it to accomplish its
mission. For the same reason, such a commission should be chaired by a
senior, neutral public official nominated by the President. The Commission
could be independent of the Postal Service, and could receive administrative
support from the Federal Mediation and Conciliation Service to ensure its
neutrality.
39 use. § 206(a).
60
CRS-5
The mission of the Commission would be to make recommendations to
the Postal Service for improvement of labor-management relations in all
respects. The Commission could report annually to the President and
Congress on its recommendations for necessary legislative changes.
The effort would be to improve labor relations by mutual exchange of
views outside the confrontational atmosphere of collective bargaining and
grievance resolution. The Commission would focus on the labor-management
process and seek innovative ways for the parties to resolve disputes and
facilitate agreement.
(2) Given the unique role of interest arbitration in Postal Service
labor relations, reform of the arbitration process might be considered. When
it enacted the Postal Reorganization Act, Congress in effect delegated its
former legislative responsibilities to the parties in the collective bargaining
process, and, when they could not agree, ultimately to the arbitrators. The
arbitrators, however, do not have the usual statutory standards to guide
them in the exercise of this delegated legislative power.
Congress could enact standards for interest arbitrators to apply in
resolving postal bargaining impasses. It could require arbitrators to heed
comparable wages in competing private sector enterprises as well as
traditional employee concerns. Congress recently enacted similEir standards
for public sector interest arbitration in the mass transit industry. Those
standards, set forth in the Appendix at the end of this memorandum, could
serve as a model for postal labor reform.
QUESTION #2
If the Postal Service or parts thereof are privatized, who would be
responsible for paying pension £ind health benefits?
Response^
As far as future benefits are concerned, it is assumed that the
employing entity issuing the payroll checks would also be responsible for
financing and paying pension and health benefits. Responsibility for paying
pensions for past service is more problematic.
When Congress established the U.S. Postal Service (USPS), it decided
that postal employees would continue to be covered by the same retirement
plans applicable to regular Federal employees. All Post Office Department
employees whose service commenced before 1971 were covered by the same
Federal Civil Service Retirement System (CSRS) applicable to all Federal
employees. The cost of CSRS benefits for pre-1971 postal service is paid by
Prepared by Carolyn L. Merck, Specialist in Social Legislation.
61
CRS-6
the Federal Government. When Congress enacted legislation that placed
workers entering Federal service on or after January 1, 1984, under Social
Security and the Federal Employee Retirement System (FERS), new postal
employees were included.
An important objective of the Congress in establishing the USPS was
that it be totally self-financing. Thus, although the Office of Personnel
Management (0PM) administers the retirement system for the USPS, the law
requires the USPS to reimburse the Government for the cost of retirement
benefits earned by postal workers since 1971. In 1995 the USPS paid the
Federal Government about $5 billion to finance future retirement costs for
current employees and cost-of-living adjustments (COLAs) for current postal
retirees. This amount includes (a) the agency "matching" share of
contributions into the system on behalf of current workers, (b) amortization
payments that finance future pension costs attributable to annual employee
pay raises (amortized over 30 years), and (c) amortization payments that
finance annual retiree COLAs (amortized over 15 years).
In general, if all postal operations were turned over to nonfederal
entities, and if current postal workers were to lose the right to continue to
participate in the Federal retirement programs, from the time of the
conversion forward, the new employer would be responsible for all employee
compensation, including pay, retirement, and health insurance. Under
current law, USPS workers not eligible to retire when their jobs are
privatized could leave their retirement contributions in CSRS or FERS and,
beginning at age 62, draw a deferred annuity. Administered by OPM,
benefits attributable to pre-1971 service would be paid by the Federal
Government; and post-1971 service benefits would be financed by payments
the USPS has made to the Grovernment.
However, because part of the benefits earned after 1971 is financed
over time through amortization payments, the benefits would not be fully
financed when the privatization takes place. Either the USPS would have to
pay off the remaining scheduled amortization pajrments in a lump sum
(which would be many billions of dollars), or responsibility for the benefits
could be assumed by the private entity, depending on the reorganization plan
adopted. Alternatively, Congress could authorize the Federal Government to
assume that obligation, as well as the obligation to finance past and future
COLAs for postal retirees.
It is assumed that, if postal workers were to become private sector
employees, they would be covered by a new retirement plan from which they
would draw benefits based on service with the private entity, under the
eligibility and benefit criteria of that plan, find paid for by that employer.
Thus, when the workers retire from their postal jobs, they might receive two
annuities: one fi"om the Government for their pre-privatized postal
employment, and one from the private firm inheriting the USPS employees.
40-147 0-97-3
62
CRS-7
QUESTION #3
Could the Federal Government sever its pension commitments for
benefits already earned?
Response^
When Congress established the USPS, it shifted financial
responsibility for retirement benefits earned after 1971 from the Federal
Government to the USPS, but the law obligated the Government to pay
benefits earned before 1971. Presumably, this commitment would not
change. The Government is not committed to pay for the benefits earned
after 1971, however. Those benefits are financed through postal revenues
collected by the USPS.
QUESTION #4
If the Federal Government is to honor its pension commitments, how
could this be accomplished if the Postal Service were "privatized?" How much
would the Federal pension obligation be?
Response^
Under current law, the Federal government is committed to pay
annuities to postal workers with pre-1971 service, and the USPS is required
to reimburse the Government for the cost of annuities for service after 1971.
Assuming that, under a partial privatization scheme, the USPS would no
longer be responsible for retirement benefits earned after affected postal jobs
are privatized, the USPS would realize reduced obligations. However, if
USPS revenues were to decline significantly due to privatization of a major
share of postal business, the USPS might not have the revenues necessary to
complete the amortization payments to which it currently is obligated.
If the Congress wanted to "hold harmless" postal employees Eiffected by
privatization, it could enact legislation to provide postal workers with either
(a) an indexed deferred annuity at age 62; or (b) continued coverage under
the Federal retirement system. Under the first option, the value of a
worker's earned benefits at the time the job is privatized would be protected
from erosion by indexing the annuity to reflect either wage growth or
inflation from the time of separation from the Federal system until age 62.
Under the second option. Congress could entitle private postal
workers to continued coverage under the Federal retirement system.
^ Prepared by Carolyn L. Merck, Specialist in Social Legislation.
^ Prepared by Carolyn L. Merck, Specialist in Social Legislation.
63
CRS-8
However, workers psirticipating in the pre-1984 retirement plan are not
covered by Social Security. Unless the law were changed to excuse them
from Social Security, once they are private sector employees, they would be
required to pay into both systems, requiring a combined employee payroll tax
of 13.2%. The cost to the Federal Government of either option depends on
the nature and extent of the privatization scheme adopted.
Alternatively, each worker whose job is privatized could be paid a cash
lump sum equal to the present value of their deferred annuity. This could be
rolled over into an individual retirement account (IRA). While this option
would cost the same as paying deferred annuities, it would have a larger
budget impact in the year the changeover occurred; this is because the
payments would be scored as a one-time outlay in the year paid, rather than
spread over the retiree's lifetime as monthly annuity payments.
QUESTION #5
Your report addresses the effects of technological changes on the
future growth in mail volume. You quote the recent GAO report on
automation regarding a potential decrease in future mail volumes. However,
you further state that the impact of new technologies on mail diversion could
be overstated and that "(8)uch new services and the additional economic
activity they generate could, themselves, generate additional mail in the
traditional sense."
Please explain this statement. Are you saying that even though the
Postal Service's msu-ket share of communications may decrease, advances in
communications technology will sufficiently increase total communications to
the extent that the Postal Service will still see its overall increase?
Response"
We are saying that even though the Postal Service's market share of
communications may decrease, advances in communications technology could
sufficiently increase total communications to the extent that the Postal
Service would see its overall (revenues) increase.
The suggestion that the impact of new technologies on diversion of
communication from letter mail to electronic forms could be overstated is
based on the possibility that some factors may not tend to reduce the volume
of letter mail, or mail in general. For example, part of the growth of
electronically transmitted messages may be substituting for person-to-person
telephone calls or in-person transactions, rather than substituting for letter
mail. Moreover, when electronically-trfmsmitted business is transacted (e.g.,
purchases by fax or on-line services), the completion of such transactions
' Prepared by Bemevia M. McCalip, Analyst in Businees and Government Relations.
64
CRS-9
could result in the delivery of products or invoices sent via the mail, as well
as a payment (check) mailed to the seller or credit card company to which the
charge was made.
In addition, in order to reach potential customers, electronic services
often advertise by sending literature through the mail. Consequently, the
impact of new telecommunications technology on the volume of mail could be
positive. For example, "USPS first class mail volume (excluding priority mail
and mailgrams) increased 10 percent between FY1989 and FY 1994, despite
the technological changes and incursions" occurring in communications in
general and letter mail in particular.'"
QUESTION #6
Your report states that the cost structure of Postal Service operations
is very labor intensive, with employee pay and benefits accounting for more
than 80 percent of expenses. For Federal Express and the United Parcel
Service, these expenses account for 50 and 60 percent of operating expenses,
respectively.
A. How can the Postal Service bring these costs more in line with
similarly situated businesses and companies?
Response to A"
The report discusses a few factors that appear to account for the
labor-intensiveness of the Postal Service's cost structure. (1) Postal Service
employees earn relatively high wages}"^ (The response to Part B of this
question addresses the extent to which Postal Service employee benefits may
contribute to higher compensation costs.) (2) Physical capital per employee
in the Postal Service is relatively low.'' (3) The Postal Service has more
constraints in managing its workforce compared with its competitors.'^ For
example, the requirement that the USPS be able to deliver to every address
every day probably tends to make the Postal Service more labor intensive.
To lower employee compensation costs relative to those of similarly situated
'" Mail Service in the United States, p. 24.
' ' Prepared by Bernard A. Gelb, Specialist in Industry Economics, and Linda Levine, Specialist
1 Labor E^xinoniics.
'2 Mail Service in the United States, p. 29.
'^ Mail Service in the United States, p. 30.
" Mail Service in the United States, pp. 30-31.
65
CRS-IO
businesses, the cited factors (and any others) would have to be addressed
where possible.'*
In theory, the following approaches are possible options that could be
used to adjust labor costs. (1) Compensate newly-hired employees less than
current employees doing the same work. (2) Restrain pay increases of
current employees. (3) Seek more ways of using equipment (mechanical
and/or electronic) to do work (i.e., substitute capital for labor) or to help
workers do their jobs (i.e., improve productivity), and invest in such
equipment. (4) Contract out work where contracting out is cost-effective.
In practice, the implementation of these options could have
unanticipated consequences that might affect the fulfillment of the objective.
For example, adoption of a two-tier pay structure, which has been used to
some extent in private industry, may risk impairment of morale. Moreover,
as the CRS report notes,'* the General Accounting Office has found that
some past automation efforts by the Postal Service were not very
productive."
In addition, the extent to which such actions may be taken is limited
in at least two broad respects. Firstly, because M four options relate in some
way to terms of emplojnnent, they may be partly or fully governed by
provisions in existing collective bargaining agreements. To the extent that
this is true, changes in those employment conditions would have to be
negotiated when the contracts are up for renewal. Secondly, as indicated in
the CRS report, the general mission and specific services required of the
USPS probably limit the Postal Service's flexibility in allocating its flnancial
resources to labor and capital in the same manner as competitors such as
Federal Elxpress and the United Parcel Service.
B. To what extent do employee "fringe benefits" such as retirement
and health benefits contribute to higher Postal Service compensation costs?
Response to B'^
Although comparisons between the fringe benefits of postal employees
and those of workers in the private sector doing comparable work are
difficult to make definitively, postal employees* benefits may not be
significantly higher than those received by private sector workers. A CRS
" This does not imply that the USPS is not making or has not already made such efforts.
'® op. cit. p. 28.
''' VS.GenenlAixoxmtingOfrice. Postal ServUe: Automation UTakingLongerand Producing
Less Than E:q)ected. Wash., DC. Feb. 1995.
*' Prepared by Carolyn L. Merck, Specialist in Social Legislation.
66
CRS-ll
analysis of private and Federal sector retirement plan benefits showed mixed
results. An analysis by the Hay/Huggins Company found that Federal health
insurance benefits may be nearly comparable to those received in the private
sector."
Whether current postal fringe benefits are higher than those costs
would be under a private postal service provider would depend on the
compensation structure of the private service provider. And, given the
differences between the range of services and service mix provided by Federal
Express and the United Parcel Service in particular, and those provided by
the Postal Service, it would be difficult to make a fair comparison between
the respective fringe benefit structures.
C. Does the current (use of) interest arbitration affect these costs?
Response to C^°
Yes, it probably affects almost all aspects of employee costs.
A large proportion of Postal Service collective bargaining negotiations
have ended in arbitration.^' Because arbitrators sometimes split the
difference between the offers of the parties, compulsory arbitration can have
a chilling effect on negotiations. Unions and management may be motivated
to avoid good-faith bargaining, maintain extreme positions, and hope to get a
good arbitration award.^
It is likely that the fairly frequent use of interest arbitration benefits
the unions and the employees they represent, more than it benefits the
Postal Service, tending to raise USPS costs. Because the contracts must be
ratified by union membership, and union officials are subject to membership
elections, union negotiators are arguably more motivated than USPS
management to obtain the best possible award. Management negotiators,
" U.S. Library of Congreae. Congressional Research Service. Federal Civil Service Retirement-
Comparing the Generosity of Federal and Private-Sector Retirement Systems. Report No. 95-687
EPW, by Income Maintenance Section, Education and Public Welfare Div. Washington, June 5,
1995. 17 p. The report found that the miiltitude of private sector retirement plans makes conclusive
comparisons difficult, and its analysis showed mixed results. The Hay/Huggins data, reported in
the CRS report, show that Federal worker health insurance is less valuable than private sector
plans for four different salary levels.
^ Prepared by Bernard A. Gelb, Specialist in Industry Economics.
^' Mail Service in the United States, p. 31.
^ See, for example, Sauer, Robert L., and Keith E. Voelker, Labor Relations: Structure and
Process. New York, Macmillan Publishing Co., 1993. p. 247; and Lowenberg, J. Joseph, and Michael
H. Moekow. Collective Bargaining in Government, Readings and Cases. Englewood Cli£Ga, NJ, Prentioe-
Hall, Inc. 1972 p. 315.
67
CRS-12
under less direct threat to their jobs, might tend to be more restrained in
their positions.
QUESTION #723
The Kappel Commission recommended that labor-management
impasses over contracts or pay be referred to the President who would be free
to establish whatever ad hoc methods he chooses to resolve the matter.**
The Commission asserted that such a procedure would create uncertainties
for both parties and make for more meaningful bargaining, thereby
strengthening the process.
A. How would an exercise of Presidential authority in this area affect
overall Service operations?
Response to A
It need not have any effect on operations.^
In a report in which Robert R. Nathan Associates wrote about
personnel and labor relations for the Commission in 1968, the contractor
suggested development of a bargaining impasse procedure "which would freeze
a deadlocked situation long enough to permit the President to invoke one or
more of several means available to him.. .[emphasis added]."^ A "freeze"
would mean that employees come to work as usual, are supervised as usual,
and are governed by the terms and conditions of employment that prevailed
before the impasse occurred (i.e., those in the expired contracts).
However, when it passed the Postal Reorganization Act of 1970,
Congress chose neither to involve the President in postal labor-management
relations nor to require that the U.S. Postal Service maintain "status quo"
conditions during the arbitration of contract impasses. Section 1207 of Title
39 of the U.S. Code of Federsil Regulations, which covers postal impasse
procedures (including arbitration), does not explicitly state that wages and
other terms and conditions of emplojmtient must be continued beyond a
^ The response to both parts of this question was prepared by Linda Levine, Specialist in Labor
Ek»nomic8.
^ The Commission's report actually stated that if there were a bargaining impasse "which
the parties are unwilling to submit to binding arbitration or to resolve by some other agreed-upon
means, the issue would be referred to the President of the United States." (p. 60)
^ The asserted uncertainties and possible effects on bargaining are disc\issed in the response
to part B of this question.
* The Report of the President's Commission on Postal Organixition, Annex (Contractors Reports),
vol. 1. Wash., U.S. Govt. Print. Off., June 1968. p. 89.
68
CRS-13
contract's expiration date, until such time as an impasse is resolved. The
National Labor Relations Act, which governs labor-management relations
involving the U.S. Postal Service (USPS) consistent with the provisions of
the Postal Reorganization Act, allows an employer to make some unilateral
changes in wages and terms of employment after an impasse is reached and
the collective bargaining agreement has expired.^
Nonetheless, according to USPS labor-management staff, the Postal
Service has adhered to the provisions of expired collective bargaining
agreements while unresolved issues were being arbitrated.^ Most recently,
postal employees performed their usual duties under the terms of expired
contracts for 19 months in the case of those represented by the National
Association of Letter Carriers (NALC) eind a little over 20 months in the case
of those represented by the American Postal Workers Union (APWU), before
arbitration panels issued their decisions on August 19, 1995 and October 1,
1995, respectively. During the immediately preceding round of bargaining,
postal workers represented by both the NALC and the APWU continued to
perform their duties, as usual, for almost 6 months under the terms of
contracts that had expired on November 20, 1990.
Despite this pattern and the legislation referenced in footnote 4,
Congress might consider whether to enact a provision explicitly requiring the
parties to maintain status quo conditions to ensure that they are not diverted
from focusing on day-to-day operations under either the current or a revised
impasse resolution procedure.^
^ There are limits to the changes permitted. For more information, see: U.S. Library of Congress,
Congreamonal Research Service. Mail Service in the United States: Exploring Options for Improvement.
CRS Report 95-1105 E, coordinated by Bernard A. Gelb Wash., Nov. 13, 1995. p. 73.
^ An exception to this pattern almost occurred in Summer 1984. After contracts had expired
with many issues still unresolved, the USPS announced that it planned to implement terms from
its last pre-impasse offer concerning wage and benefit levels of newly hired workers. Congress
responded by adopting an amendment (HAmdt. 1028, Conte) to a supplemental appropriations
bill (H.R. 6040/P L. 98-3%) that prevented the USPS from using any appropriated funds for this
purpose. According to Title IE, section 303 of the legislation:
None of the funds made available to the United States Postal Service under this
Act or any other Act may be used to restructure employee compensation practices
as in effect under the most recently effective collective bargaining agreement under
section 1206 of title 39, United States Code, except in accordance with the results
of procedures aet forth in section 1207 of such title.
See material accompanying this memo for pro/con statements on this issue that congressional
representatives made at the time.
^ For example, if the USPS announced its intention to implement new contract terms before
completion of the dispute resolution procedure, the unions representing its employees might expend
their energies lobbying Congress to prevent such an action. (See footnote 4 ) In addition, if the
USPS did put new contract terms into place, employees' morale and performance might be adversely
affected, and they might engage in a work slowdown or an illegal strike. Moreover, (continued)
69
CRS-14
A potentially analogous situation involves the contract impasse
procedure in the railroad industry. The Railway Labor Act expressly states
that while a presidentially appointed fact-finding board is investigating an
impasse involving the Nation's largest railroads, employers must maintain
prior wages and working conditions and employees must perform their duties.
Freight thus continues to be hauled across the country, usually without
interruption, while status quo conditions prevail during the industry's
lengthy impasse process.'"
B. Is this recommendation consistent with other Kappel Commission
recommendations which sought to remove political considerations from the
administration of the Postal Service?
Response to B
No. This recommendation would appear to make the President the
ultimate broker of postal contract disputes. The recommendation stemmed
from the Commission's belief that providing the President leeway in deciding
upon particular dispute resolution procedures would "make for more
meaningful bargaining." Experience in the railroad industry, however,
suggests that this might not be the actual outcome.
While employees at the Nation's largest railroads worked under the
terms of expired contracts, negotiations sometimes have lasted for years -
partly because the potential for presidential (and on occasion
congressional)^' involvement discouraged unions and management from
engaging in a truly serious give-and-take of proposals. Rail labor and
management have, in several instances, been willing to see if they could get
more from a presidential emergency board than they had achieved at the
(continued) the USPS' action could be for naught: after spending time and energy implementing
the new terms, the arbitration panel or President ultimately mi^t impose different contract ptroviaions.
^ Under the Railway Labor Act, the National Mediation Board (NMB) first decides if and when
negotiations have reached an impasse; it then proffers arbitration to the parties. If either declines,
a 30-day cooling off period begins, after which the parties can engage in "self-help" activities (e.g.,
a strike or lockout). If, however, the NMB believes that a dispute will substantially disrupt interstate
commerce, it can recommend to the President that he appoint a presidential emergency board (PEB).
If the President agrees with the NMB's recommendation, he then selects three members from a
list of arbitrators provided by the NMB. The fact-finding board typically has 30 days to issue a
recommended settlement. While the recommendations of PEBs usually have been accepted by the
parties or have served as a basis for the parties to settle the outstanding issues, either party can
reject a PEB's recommendations. If the latter occxirs, the parties again are allowed to take self-help
measxires following another 30-day cooling off period. Dviring each of the cooling off periods, status
quo conditions must be maintained.
The Railway Labor Act does not specifically mention congressional involvement in contract
dispute resolution. Nonetheless, Congress has intervened in several instances. Congressional action
usually occurred after strikes led to the disruption of rail service. Because postal workers — unlike
railroad workers — are barred from striking, congressional involvement might be less likely in postal
compared to rail impasses.
70
CRS-15
bargaining table. And, if either of the parties did not like a board's
recommended settlement of outstanding issues, they have gone so feir as to
prevail upon Congress to settle the dispute -- despite the fact that Congress
has crafted several different dispute resolution procedures over the years. ^^
As exemplified by the collective bargaining process in the rail industry, the
possibility that a variety of means might be used to resolve an impasse does
not appear to have promoted genuine bargaining.
QUESTION #8
Some postal critics argue the Postal Service's financial outlook is
perched precipitously on the assumption of increases in mail volume. What
would happen to postal finances should mail volume go flat or actually
decrease? Is one class of mail any more important than another in terms of
protecting volume growth?
Response^^
Under current law, Section 3621 of the 1970 Postal Reorganization
Act mandates that the Postal Service first determine what level of services it
must provide to carry out its statutory functions and then set its rates to
fund those activities. This section also requires the USPS Board of
Governors to establish reasonable and equitable classes of mail and
reasonable and equitable rates of postage and fees. When the USPS
estimates that its expenditures (reflecting estimated savings from more
efficient operations and/or new technologies) for a forthcoming fiscal year will
be higher than estimated revenues, the Service can and usually does request
an increase in postal rates to meet such expenditures.**
To the degree that prices (postage) and customer services or programs
do not appeal to customers or are not generally perceived as competitive, and
postal business consequently goes elsewhere in the marketplace, USPS mail
volume would suffer and revenue from mail services probably would decrease.
Postal operations then would have to adjust to the smaller market share to
avoid expenses exceeding revenues. However, as suggested in the CRS
report, the USPS's ability to make such adjustments may be limited by the
^^ Congressional actions have included: appointment of arbitration boards; imposition of all
the terms of a PEB's recommendation; imposition of part of a PEB's recommendations while extending
the status quo period to allow the President, in one instance, and several Cabinet departments,
in another, time to recommend their own solutions if the parties didn't reach agreements in the
interim; and, extension of the status quo period to give the parties more time to negotiate a settlement
" Prepared by Bemevia M. McCalip, Analyst in Business and Government Relations.
^ As discussed on pages 7-9 of the CRS report, the Postal Service's rate-setting process (including
changes in postage rates) is complex, and requires participation by the Postal Rate Commission.
71
CRS-16
mandates and regulatory framework under which the Postal Service
currently operates.
Of the different classes of mail, first- and third-class appear to be very
important to the Postal Service. Based upon revenue per unit delivered, it
would appear that first-class mail is most important; this class accounted for
53 percent of total USPS mail volume but 62 percent of total revenue in
FY1994. However, rapid growth of third-class mail volume suggests that this
class also is very attractive, even though it accounted for only 22 percent of
revenues in FY1994, compared with 39 percent of volume. Both of these
classes are covered by the mail monopoly.
According to the USPS, "all mail is important and plays a vital role in
the overall rise in mail volume." The USPS further notes that when
customer satisfaction is high, volume will either increase or remain at
sufficient levels to allow it to meet costs. ^
QUESTION #9
Our Postal Service is the only postal administration required to
submit its rate structure before an independent rate-making body How do
other countries assure that their postal administrations do not abuse their
monopoly status by overcharging postal customers?
Response^
Among a group of 10 countries whose postal administrations were
studied by Price Waterhouse, the U.S. Postal Service is the only postal
administration required to submit its proposals for rate changes or rate
structure changes to an independent rate-making body.*^
Nearly all of the countries in the group, however, have a means of
trying to prevent "excessive" rate increases. All but one of the postal
administrations are required to either get approval for letter mail rate
changes from a supervising government ministry or their rates are subject to
a cap based upon a price or a wage index.^ But the postal administrations
of these countries have greater freedom in the pricing of nonmonopoly
services, as compared with the U.S. Postal Service.
^ Telephone conversation with U.S. Postal Service spokesperson on December 22, 1995.
^ Prepared by Bernard A. Gelb, Specialist in Industry Economics.
^ Price Waterhouse LLP. A Strategic Review ofProgreaaive Postal Administrationa — Competition,
Commercialization, and Deregulation, prepared for the U.S. Postal Service, Feb. 1995. 52 p.
^ See table 5 in Mail Service in the United States, p. 41-44.
72
CRS-17
QUESTION #10
In your report you propose a "flexified USPS" alternative which
maintains the monopoly and decreased rate regulation. One of the criticisms
of the current system is the length of time for deciding a rate case. How long
would an Administrative Law Judge panel take in deciding a rate case? Are
there any analogous Federal or State regulatory proceedings? How long do
they take in deciding rate cases?
Response^^
It is difficult to speculate about the amount of time that would be
required for the conduct of a complete postal rate case under the "flexified
USPS" reform option. This is so for several reasons.
First, the "flexified USPS" alternative is not currently described in
proposed legislative language. Therefore, it is not possible to conduct a
comparative analysis of the length of current rate proceedings relative to the
length of proceedings conducted under the "flexified" approach. As we
observed in our report, replacement of the Postal Rate Commission (PRO
with administrative law judges and simplification of the Board of Governors'
rate approval process should facilitate rate and classification changes. These
yet-to-be-defined modifications could result, for example, in several "smaller"
proceedings involving classification issues and the rates and fees for various
classes of service, rather than a single comprehensive rate proceeding
encompassing a wide range of of classifications and rates as under the
current system.
Second, the statutory procedures presently impose a formalized
process for the establishment of postal rates and classifications in a two-stage
process that permits the Postal Rate Commission, an independent regulatory
body, to make recommendations to the Board of Governors of the Postal
Service. The decision-making process requires that a formal public hearing
be conducted on the record with rights of participation of interested parties.
Among other things, these steps were intended to assure independent and
responsible deliberations on rate matters. Obviously, under other regimes,
the formality and the extensiveness of the rate hearing process could be
simplified. Simplifications in the scope of the rate proceeding, limitations on
the nature of evidence and submissions in support of and opposing particular
rate proposals, circumscription of the amount of testimony or number of
witnesses heard, and other similar procedural modifications could reduce the
time required for rate proceedings.
Finally, one of the principd objectives of the "flexified" approach is to
provide a more responsive rate classification and rate setting process so that
'' Prepared by Robert D. Poling, Specialist in American Piiblic Law, and Amy Abel, Specialist
in Energy Policy.
73
CRS-18
greater flexibility would be created to respond to the market. Expedited
decision-making would seem to be an important element in achieving the
flexibility offered by this approach.
As the foregoing observations imply, there is nothing inherent in the
use of a panel of Administrative Law Judges, as opposed to the Postal Rate
Commission, that would necessarily expedite postal rate proceedings.
Instead, modifications of the procedures used by the decision-making panel,
however it may be constituted, would have a more determinative effect on the
length of the proceedings.
Many Federal and State rate-making procedures might be considered
analogous to the postal rate process. Public utility rate regulation offers
many similarities to the purpose and process of postal rate-making.
Electicity, natural gas, telephone, water, and other utilities that are rate
regulated might be considered relevant to the Postal Service. The origin of
the current Postal Rate Commission was modeled after the rate-making
process used by the Federal Power Commission (now the Federal Energy
Regulatory Commission). However valuable the broad analogies to the rate
regulation in those areas may be, the nature of the proceedings at the Postal
Rate Commission and, say, the Federal Energy Regulatory Commission are
difficult to compare. The substantive decisions made by these agencies in
rate proceedings involve very different considerations. These substantive
differences may help explain time differences in the two types of proceedings.
In any event, we are unaware of any scholarly effort to analyze the length of
rate proceedings based upon the use of Administrative Law Judges.
APPENDIX TO RESPONSE TO QUESTION #1
DEPARTMENT OF TRANSPORTATION
AND RELATED AGENCIES APPROPRIATIONS ACT, 1986
TITLE IV: Providing for the Adoption of Mandatory Standards and
Procedures Governing the Actions of Arbitrators in the Arbitration of Labor
Disputes involving Transit Agencies Operating in the Nationa Capital Area
Section. 40L Short Title . - This title may be cited as the 'National
Capital Area Interest Arbitration Standards Act of 1995'.
Sec. 402. Findings and Purposes.
(a) Findings. - The Congress finds that -
(1) affordable public transportation is essential to the economic vitality
of the national capital area and is an essential component of regional efforts
to improve air quality to meet environmental requirements and to improve
74
CRS-19
the health of both residents of and visitors to the national capital area as
well as to preserve the beauty and dignity of the Nation's capital;
(2) use of mass transit by both residents of and visitors to the national
capital area is substantially affected by the prices charged for such mass
transit services, prices that are substantially affected by labor costs, since
more than 2/3 of operating costs are attributable to labor costs;
(3) labor costs incurred in providing mass transit in the national capital
area have increased at an alarming rate and wages and benefits of operators
and mechanics currently au-e among the highest in the Nation;
(4) higher operating costs incurred for public transit in the national
capital area cannot be offset by increasing costs to patrons, since this often
discourages ridership and thus undermines the public interest in promoting
the use of public transit;
(5) spiraling labor costs cannot be offset by the governmental entities
that are responsible for subsidy payments for public transit services since
local governments generally, and the District of Columbia government in
particular, are operating under severe fiscal constraints;
(6) imposition of mandatory standards applicable to arbitrators resolving
arbitration disputes involving interstate compact agencies operating in the
national capital area will ensure that wage increases are justified and do not
exceed the ability of transit patrons and taxpayers to fund the increase; and
(7) Federal legislation is necessary under Article I of section 8 of the
United States Constitution to balance the need to moderate and lower labor
costs while maintaining industrial peace.
(b) Purpose. - It is therefore the purpose of this Act to adopt standards
governing arbitration which must be applied by arbitrators resolving disputes
involving interstate compact agencies operating in the national capital area
in order to lower operating costs for public trsuisportation in the Washington
metropolitan area.
Sec. 403. Definitions. - As used in this title -
(1) the term 'arbitration' means - (A) the arbitration of disputes,
regarding the terms and conditions of employment, that is required under an
interstate compact governing £in interstate compact agency operating in the
national capital area; and (B) does not include the interpretation and
application of rights arising from an existing collective bargaining agreement;
(2) the term 'arbitrator' refers to either a single arbitrator, or a board of
arbitrators, chosen under applicable procedures;
(3) an interstate compact agency's 'funding ability' is the ability of the
interstate compact agency, or of any governmental jurisdiction which
provides subsidy payments or budgetary assistance to the interstate compact
agency, to obtain the necessary financial resources to pay for wage and
benefit increases for employees of the interstate compact agency;
(4) the term 'interstate compact agency operating in the national capital
area' means any interstate compact agency which provides public transit
services;
75
CRS-20
(5) the term 'interstate compact agency' means any agency established
by an interstate compact to which the District of Columbia is a signatory;
and
(6) the term 'public welfare' includes, with respect to arbitration under
an interstate compact - (A) the financial ability of the individual jurisdictions
participating in the compact to pay for the costs of providing public transit
services; and (B) the average per capita tax burden, during the term of the
collective bargaining agreement to which the arbitration relates, of the
residents of the Washington, D.C. metropolitan area, and the effect of an
arbitration award rendered pursuant to such arbitration on the respective
income or property tax rates of the jurisdictions which provide subsidy
payments to the interstate compact agency established under the compact.
Sec. 404. Standards for Arbitrators. —
(a) Factors in Making Arbitration Award. - An arbitrator rendering an
arbitration award involving the employees of an interstate compact agency
operating in the national capital area may not make a finding or a decision
for inclusion in a collective bargaining agreement governing conditions of
employment without considering the following factors:
(1) The existing terms and conditions of employment of the employees in
the bargaining unit.
(2) All available financial resources of the interstate compact agency.
(3) The annual increase or decrease in consumer prices for goods and
services as reflected in the most recent consumer price index for the
Washington, D.C. metropolitan area, published by the Bureau of Labor
Statistics of the United States Department of Labor.
(4) The wages, benefits, and terms and conditions of the employment of
other employees who perform, in other jurisdictions in the Washington, D.C.
standard metropolitan statistical area, services similar to those in the
bargaining unit.
(5) The special nature of the work performed by the employees in the
bargaining unit, including any hazards or the relative ease of employment,
physical requirements, educational qualifications, job training and skills, shift
assignments, and the demands placed upon the employees as compared to
other employees of the interstate compact agency.
(6) The interests and welfare of the employees in the bargaining unit,
including - (A) the overall compensation presently received by the employees,
having regard not only for wage rates but also for wages for time not worked,
including vacations, holidays, and other excused absences; (B) all benefits
received by the employees, including previous bonuses, insurance, and
pensions; and (C) the continuity and stability of employment.
(7) The public welfare.
(b) Compact Agency's Funding Ability. - An arbitrator rendering an
arbitration award involving the employees of an interstate compact agency
operating in the national capital area may not, with respect to a collective
bargaining agreement governing conditions of employment, provide for
salaries and other benefits that exceed the interstate compact agency's
funding ability.
76
CRS-21
(c) Requirements for Final Awsu-d. - In resolving a dispute submitted to
arbitration involving the employees of an interstate compact agency
operating in the national capital area, the arbitrator shall issue a written
award that demonstrates that all the factors set forth in subsections (a) and
(b) have been considered and applied. An award may grant an increase in
pay rates or benefits (including insurance and pension benefits), or reduce
hours of work, only if the arbitrator concludes that any costs to the agency
do not adversely affect the public welfare. The arbitrator's conclusion
regarding the public welfare must be supported by substantial evidence.
Sec. 405. Procedures for Enforcement of Awards. — (a) Modifications
and Finality of Award. — In the case of an arbitration award to which
section 404 applies, the interstate compact agency and the employees in the
bargaining unit, through their representative, may agree in writing upon any
modifications to the award within 10 days after the award is received by the
parties. After the end of that 10-day period, the award, with any such
modifications, shall become binding upon the interstate compact agency, the
employees in the bargaining unit, and the employees' representative.
(b) Implementation. - Each party to an award that becomes binding
under subsection (a) shall take all actions necessary to implement the award.
(c) Judicial Review. - Within 60 days after an award becomes binding
under subsection (a), the interstate compact agency or the exclusive
representative of the employees concerned may file a civil action in a court
which has jurisdiction over the interstate compact agency for review of the
award. The court shall review the award on the record, and shall vacate the
award or any part of the award, after notice and a hearing, if -
(1) the award is in violation of applicable law;
(2) the arbitrator exceeded the arbitrator's powers;
(3) the decision by the arbitrator is arbitrary or capricious;
(4) the arbitrator conducted the hearing contrary to the provisions of
this title or other statutes or rules that apply to the arbitration so as to
substantially prejudice the rights of a party;
(5) there was partiality or misconduct by the arbitrator prejudicing the
rights of a party;
(6) the award was procured by corruption, fraud, or bias on the part of
the arbitrator; or
(7) the arbitrator did not comply with the provisions of section 404.
77
98 STAT. 1422 PUBLIC LAW 98-396— AUG. 22, 1984
Sbcurities and Exchange Commission
"Salaries and expenses", $1,000,000;
Sexective Service System
"Salaries and expenses", $369,000;
SMITHSONtAN iNSTmiTION
"Salaries and expenses", $1,420,000;
"Salaries and expenses, Woodrow Wilson International Center for
Scholars", $18,000;
Other Temporary Commissions
Navajo and Hopi Indun Relocation Commission
"Salaries and expenses", $22,000;
United States Houx:au8t Memorial CouNca
"United Stetes Holocaust Memorial Council", $11,000;
Unfted States Information Agency
"Salaries and expenses", $3,160,000;
UNrrEO States Tax Court
"Salaries and expenses", $400,000.
TTTLEin
GENERAL PROVISIONS
«■•
Sec. 301. No part of any appropriation contained in this Act shall
remain available for obligation beyond the current fiscal year unless
expressly so provided herein.
Sec. 302. Except where specifically increased or decreased else-
where in this Act, the restrictions contained within appropriations,
or provisions affecting appropriations or other funds, available
during the fiscal year 1984, limiting the amount which may be
expended for personal services, or for purposes involving personal
services, or amounts which may be transferred between appropria-
tions or authorizations available for or involving such services, are
hereby increased to the extent necessary to meet increased pay costs
authorized by or pursuant to law.
Sac. 80S. None of the funds made available to the United States
Postal Service under this Act or any other Act may be used to
restructure employee compensation practices as in effect under the
most recently effective collective bargaining agreement under sec-
tion 1206 of title 39, United States Code, except in accordance with
the results ofprocedures set forth in section 1207 of such title.
Sec. 303a. The project for Bonneville Lock and Dam, Second
Powerhouse, Washington and Oregon, is hereby modified to author-
ize the Secretary of the Army, acting through the Chief of Engi-
neers, to acquire in the Steigerwald Lake Wetlands Area, Clark
Postal Service
employee
compensation.
39 1JSC1206
note.
Bonneville Lock
and Dam, Wash,
and Ore.
Fiih and wildlife
project
78
Public Law 98-396 98 Stat. 1369
Second Supplemental Appropriations Act, 1984
August 22, 1984
Public Law
1.1 Public Law 98-396, approved Aug. 22, 1984. (H.R.
6040)
Aug. 10, House agreed to conference report, receded
and concurred in certain Senate amendments, and in
others with amendments. Senate agreed to conference
report, receded and concurred in House amendments.
"Making supplemental appropriations for the fiscal year ending September
30, 1984. and for other purposes."
Provides for various Federal departments and agencies, and legislative
branch programs.
(aSS4:PL98-396 57 p.)
P.L. 98-396 Hearings
98th Congress
P.L. 98-396 Reports
98th Congress
2.1 H. Rpt. 98-474 on H.R. 4293, "Second Supplemental
Appropriation BUI, 1984," Nov. 3, 1983.
(aS83:Hl83-t4 22 p.)
rri- 1/8:98-474.)
2J H. Rpt 98-916 on H.R. 6040, "Second Supplemental
Appropriations Bill, 1984," July 27, 1984.
(CIS84:HI83-22 169 p iL)
(YI. 1/8:98-916.)
2J S. Rpt 98-S70 on H.R. 6040, "Supplemental Appro-
priations BUI, 1984," Aug. 2, 1984.
(CISa4:SI83-l3 191 p. iL)
(YI. 1/5:98-570.)
2.4 "H. Rpt. 98-977," conference report on H.R. 6040,
"Making Supplemental Appropriations for the Fiscal
Year Ending Sept 30, 1984," Aug. 10, 1984.
(aS84:HI83-24 iS p.)
(Yl. 1/8:98-977.)
"Supplemental Appropriations for 1984, Part 1,"
bearings before the Subcommittee on Treasury, VS.
Postal Service, and General Government Appropria-
tions, the Subcommittee on Legislative Appropria-
tions, the Subcommittee on Defense Appropriations,
and the Subcommittee on Energy and Water Develop-
ment Appropriations, House Appropriations Commit-
tee, Feb. 1, 2, 6, 8, 22-24, 28, 29, Mar. 22, 1984.
(aS84:Ht81-il ii-^467+rip it Index.)
(Y4.Ap6/\lAp6/2/9»4/pL I.)
"Supplemental Appropriations for 1984, Part 2,"
hearings before the Subcommittee on Labor, HHS,
and Education Appropriations, the Subcommittee on
Commerce, Justice, State, and the Judiciary Appro-
priations, and the Subcommittee on Transportation
Appropriations, House Appropriations Committee,
Feb. 23, 28, 29, Mar. 6-8, 12-16, 19, 20, 23, 28, 29,
Apr. 12, 1984.
(CIS84:H181-S2 ii+MO+x p. U. Inda.)
(Y4.Ap6/l:Ap6/2/9S4/pLl)
P.L. 98-396 Documents
98tb Congress
H. Doc. 98-127, "Supplemental Appropriations, Com-
munication from the President" Nov. 2, 1983.
(CIS83:HI80-S5
P.L. 98-396 Debate
7 p no paging.)
(Yl. 1/7:98-1 27.)
130 Congressional Record
98th Congress, 2nd Session - 1984
4.1 Aug. 1, H.R. 6040 considered and passed House.
4J Aug. 7, 8, H.R. 6040 considered and passed Senate,
amended.
98th Congress, 2nd Session
CIS/INDEX Legislative Histories 2SS
79
July
tCi9U
CONGRESSIONAL RECORD— HOUSE
The party plalform tallu a lot about
(Ighting drug abuse and again we
would all agree that that \s something
we want to do. but there is no lan-
guage whatsoever in the platform
about locking up drug traffickers. It
goes into a lot of statistics and so on
about how bad the problem is. but
when you get down to what we are
going to do. how are we going to gel
alongside the Olympians. That part-
ner is the United States of America.
That's right, our country and our Gov-
enunent. Despite all claims that the
Los Angeles Olympics is truly a "pri-
vate" affair, the United States is con-
tributing resources. In the form of hel-
icopters and security equipment, to
the tune of $50 million.
The Department of Defense alone
tough on crime, there is nothing in the already has spent t35 million, just to
platform to suggest that one of the provide added security to the Olympic Olympics. I do not know what is. I am
21713
If the Olympics is conducted as
planned, there wUl be no need to high-
light the high quality of the security
arrangemenu. But the high quality se-
curity arrangements are In place. The
United States has spent $10 million on
the design, production, and mainte-
nance of the intrusion detection
system and the security fence that will
surround the Olympic villages.
If this is not public support of the
things we ought to be doing is locking
away people who traffic in drugs, not
one line saying that.
Well, then, we look to find out what
It Is they are willing to do about crime.
As I say. we have programs against
drunk drivers, again very meritorious
kinds of things, but what about the
criminals that are raping, robbing,
murdering, and so on out in the
streets?
You cannot have a crime program, it
seems to me. without addressing that.
It Is not addressed, but they do say
that we ought to restore the credibil-
ity of our criminal courts. Interesting-
ly enough, when you read that section.
games, and to insure that all proceed-
ings go off according to plan. The De-
partment of Defense is contributing 77
helicopters. 330 M-16 rifles and
393,000 rounds of ammunition to help
the Los Angeles Police prepare for the
possibility of a mishap at the games.
This is all well and good, the United
States is the host country for these
games, and should take ail possible
steps to guarantee the safety of all na-
tions' delegations. What I cannot un-
derstand is how this is not regarded as
a public act in support of the Olym-
pics. Congress authorized the money
and Congress appropriated the money.
I have no quarrel with this country
glad that the Los Angeles Olympic
Committee has been successful in at-
tracting private contributions. But It is
important that they do not forget the
public commitment. I am proud to live
In the host country of this year's
Olympiad, and I am especially proud
of the American athletes who quali-
fied to represent the United States.
They should feel the support of their
country behind them. They already
know the country backs them emo-
tionally. Let them know the country
backs them financially as well.*
what It turns out that they are talking chipping in for the Olympics. But it is
about doing is not making the courts quite another matter to lend a hand
tougher. Most of the section is a sec-
tion looking for more ways to put
criminals back out on the streets after
we have caught them. That is the res-
toration of credibility in the court
system.
What I am saying, this plalform is a
blueprint of why we are not acting on
the President's crime control package
here in the Bouse of Representatives.
The fact Is that the President's crime
and not receive at least a token ac-
knowledgement.
The Pentagon is also aiding Califor-
nia law enforcement agencies by call-
ing on the Air Force and the Army; 14
explosive-detecting dogs were flown to
Los Angeles and made available to
help with security arrangements, cour-
tesy of Uncle Ssun. In case an emer-
gency situation arises, the Pentagon is
providing blankets, cots, night vision
POSTAL LABOR CRISIS
The SPEAKER pro tempore. Under
a previous order of the House, the gen-
tleman from Michigan [Mr. Ford) Is
recognized for 10 minutes.
• Mr. FORD of Michigan. Madam
Speaker, with the breakup of AT&T,
the Nation's largest civilian employer
Is now the U.S. Postal Service. The ne-
gotiations for new collective bargain-
ing agreements between the Postal
Service and the unions representing
control package is aimed at getting goggles, splints, bandages, buses, and over a half-million postal employees
tough on crime. It is aimed at making even four airplanes.
some changes in Federal law that
hopefully then would be reflected in
State and local laws that are aimed at
doing one thing, getting criminals off
the streets, getting tough.
are the single largest set of labor nego-
tiations in the United States this year.
As we all know, these negotiations
have been troubled from the start, and
the existing contracts expired at mid-
The largest single equipment ex-
pense to the Pentagon is $12 million
for communication devices and radios.
The radios alone are a substantial U.S.
Government contribution. I'm glad to night on July 20 with no new agree-
Thls House Is not about to consider help the athletes, and the city of Los ment having been reached and numer-
a tough anticrlme program because Angeles. But when they use those ous controversial Issues outstanding,
the party that controls this House has radios, I hope they don't attribute the Title 39 of the United States Code
usefulness of those items to private
sources. The source Is a very public
one— the American taxpayer.
Not only has the U.S. Government
already made it clear in their platform
that they do not want a tough anti-
crime program.
Madam Speaker, I yield back the
balance of my time.
prescribes an ordely, fair, and peaceful
process for resolving postal bargaining
disputes such as this, I regret
report, however, that one party to the
a 1910
contributed actual material goods, but dispute— Postal Service management-
it has provided manpower as well. For ^ hot adhering to this process,
almost 2 years, 10 Pentagon employees Instead of pursuing Its goals peace-
have been working full time, trying to fully, through the statutory factfind-
anticipate different emergency sltua- Ing and arbitration process. Postal
lions and figuring out how to respond Service management on July 25 unllat-
to those situations. Those 10 people erally Implemented a new pay and
PENTAGON PROVIDES OLYMPIC
PROTECTION
The SPEAKER pro tempore. Under are paid with salary checks issued by benefits system for Incoming employ-
a previous order of the House, the gen- the U.S. Government. If you stiU ees. Whatever the ultimate outcome, I
tleman from Illinois [Mr. Aottonzio] is think the United States is not provid- now fear for the short-term and long-
recognized for 5 minutes. ing assistance to the Olympics in a term impact of this action on postal
• Mr. ANKUNZIO. Madam Speaker, real and mjanlngful manner, you may employees and on the Postal Service
no one is more proud of our Olympic be Interested to know that our Gov- itself.
athletes than I am. The individual ac- emment is sending more than 100 em- I have expressed my dismay in a
compUshments of each participant Is ployees to Los Angeles to help the city letter to the Postmaster General. I
surely worthy of recognition. Yet, cope with the influx of visitors during wish to share that letter with the
there is an invisible partner working the games. House:
80
21714
CONGRESSIONAL RECORD— HOUSE
July 31, I9s^
tion will be created within the Nation
al Library of Medicine. This clearing"
house will provide a data base on ih(
efficacy, comparative cost, and possi.
COHMITTr£ OK POST Omct
AND Civil Scnvicz.
Waihington. DC. Julu 21. 1)84.
Hon. WiLxuM P. Botcn.
Postmtuttr General US. Postal Sennce.
WashmgtOTU DC.
DcAA Mr. Postmasteh GtNCBAL. I have
been notified of your unilateral implemen-
tation of the pay and benefit levels for new
hires contained in the Postal Service's final,
pre-impasse offer
It now seems clear to me tliat the ill-ad-
vised unit consolidation attempt in relation
to the 1981 contract negotiations was not an
isolated instance of short-stptited. reaction-
ary, and unlawful labor relations policy. ..„ „ _.. ...
The damage to labor man.ieement rela- ,ng and a report entitled -Quackery: A "ou'd be established in the Depart-
tions within the Postal Ser\ ice :3 liltely to be jjq Billion Scandal." revealed that '"^f" o' Justice and composed of two
permanent I have watched ana listened pa health fraud was the single most prev- representatives of the Department of
tiently for months as Postal Senice man- . . d,_,-,_. f„ud nemetrated •'"s''". the Food and Drug Adminis-
agement and the Board of Governors issued ^^"Lrthe^derly A^d the dl^I^^g '""°"- 'he Federal Trade Commis-
innammatory and provocative statements against tne elderly. And the aamaging c«™„. ,.
QUACKERY; THE NEED FOR A
FEDERAL RESPONSE
The SPEAKER pro tempore. Under
a previous order of the House, the gen- . , .
tieman from Florida tMr. PippebI is "'e s'de effects of drugs, medical de-
recognized for 5 minutes. ""^^^^ »"<* treatments including both
• Mr. PEPPER. Madam Speaker. Proven and unproven remedies, for
quackery is an enormous problem with American cor\sumers.
a severe impact on the health and Third. I am calling for the creation
well-being of our citizens An intensive °' * strike force on health quackery.
4-year study conducted by the Sub- "> coordinate the efforts of those Fed-
committee on Health and Long-Term ^^al agencies responsible for curbing
Care of the House Select Committee '"« ^'« ""^ promotion of fraudulent
on Aging, which culminated in a hear- health remedies. The strike force
inflammatory and provocat
about postal employees pav .ind benefit
levels— and. by unplication. about the collec-
tive bargaining process whicli resulted in
those levels. I have remained silent because
of
which we included in the Postal Reorganiza.
tion Act of 1970 ultimately would result in a
fair agreement for both sides. But this uni-
lateral action now raises the question of
whether the Postal Service shares my faith
in the collective bargaining process.
Private sector labor law is clear- when im-
passe is reached, management may imple-
ment Its final offer. The union, however,
has the concomitant right :o stnice. thus
suring parity of bargaining povv
case, thougn. the unilateral action destroys
panly. The postal unions are barred from
striking. The Acts factfinding and arbitra-
tion procedures exist not merelv as a substi-
tute for pnvate sector labors right to strike,
but also as a substitute for private sector
management's right to unilateral implemen-
tation.
I believe that the unilateral changes that
the Postal Service intends to implement are
illegal under the Postal Reorganuation Act
When the Act was passed, it was my under
standing, the understanding of the Conunit-
effects are not limited to our Nations ^lon. and the U.S. PosUl Service, se
seruor citizens. Americans of all ages ^^ied by the head of each agency.
are being victimized. The strike foice will submit to Con-
The problem of medical quackery is sress both a proposed plan of action
y belief that the bargaining process gj-owing at an alarming rate. In 1965. ^nd final report on progresss made in
' ' - ■"" " ° in hearings by the U.S. Senate Special combatting health quackery.
Committee on Aging, it was estimated I liTKe my colleagues to Join me in
that quackery was costing the Nation
SI billion a year. Today the Subcom-
mittee on Health and Long-Term Care
conservatively estimates that it costs
the Nation more than $10 billion. The
cost in human terms, measured in dis
illusion, pain, and forsaken or post
support of this important and timely
reform package.
Thank you.*
PERSONAL EXPLANATION
The SPEAKER pro tempore. Under
In this poned medical treatment because of ^ previous order of the House, the gen-
reliance on unproven methods, is more
difficult to measure, but nonetheless
very real.
Nothing short of a full-scale, con-
certed effort involving all of the Fed-
eral. State, and local agencies responsi-
ble for controlling quackery will serve
to have significant impact in reducing
these reprehensible activities. The ele-
ments of this attack must include: the
establishment of these activities as a
priority commer^urate with the poten-
tee. and the understanding of the Congress tial harm; the development of educa-
thal. if any disputes remained upon the
piratlon of any collective bargainmg agree-
ment, ail parties would be required to re-
spect the status quo pending exhaustion of
the dispute resolution machinery estab-
lished by section 1207.
Legalities aside. I sincerely am puzzled by
this decision. The Postal Semce apparently
believes that this action majies it more
Ukely that the arbitration board -viU impose
tional activities to inform the public of
the nature and degree of the hazards
associated with unproven remedies;
and increased enforcement activities,
particularly the application of crimi-
nal sanctions.
I have introduced three bill today
which wUl help us achieve these ends.
The first bill would amend the Fed-
the two-tier system which management era! Food, Drug, and Cosmetic Act, the
could not gain through negonations— per- Federal Trade Commission Act. and
haps not the 23% differential contained in title 18 of the United States Code to
Its -final offer." but a two-tier svsiem none- increase criminal penalties for those
theless. But. from your perspective. I would ^^^ knowingly sell or offer for sale
'.°.';7„n,tU^'hw,'Ji?hir..n„T.nJ°v!iel^ i^nsafe or ineffective drags, medical
react uniavorably to inis action, ind view it., . j:.. .. »*■
as evidence of failure to barga-n ,n good devices, and medical treatments. Mini-
faith. Why the United States Postal Service rnum fines of $1,000 will be increased
could not have continued :o acvocate Its to $5,000 and minimum prison sen-
contract offer peacefully, throug.-. the stat- tences of 6 months and 1 year will be
utory dispute resolution process, s beyond increased to 5 years and 10 years re-
my comprehension. Whatever :s acr-.ieved by spectively. This will serve to place pen-
alties in proper relation to the poten
tieman from Florida [Mr. Nn^ONl is
recognized for 5 minutes.
• Mr. NELSON of Florida. Madam
Speaker, due to official business. I was
not recorded on several rollcalls earlier
this year.
If I had been present, I would have
voted -yes" on rollcalls 47, 79, and 148,
all motions to approve the House
Journal.
I also would have voted "yes" on
roUcsJl 210. the Frenzel amendment to
reduce funds for House of Representa-
tives operations; "yes" on roUcall 301.
adoption of the conference report on
the Bankruptcy Amendments of 1984;
"yes" on roUcall 303, the resolution
providing for adjournment of the
House and Senate from June 29 to
July 23, 1984; and "yes" on roUcall 305
passage of the water resources devel-
opment authorization.*
this action is being purcha-sed a: :^.e cost of
a generation of ill will and devastated
morale.
Sincerely.
William D. "orb.
THE HELStNKI PINAL ACT: 9
YEARS LATER
The SPEAKER pro tempore. Under
a previous order of the House, the gen-
tleman from Florida [Mr. Fasceli.1 is
recognized for 5 minutes.
* Mr. FASCELL. Madam Speaker,
today marks the ninth anniversary of
the Signing of the Pinal Act of the
Conference on Security and Coopera-
tial harm posed by fraudulent health tion In Europe (CSCEl. The leaders of
remedies. 35 sovereign states— all of Europe
Second, a clearinghouse for con- except Albania— plus the United
sumer health education and informa- States and Canada met in Helsinki and
81
21746
(4) Approximately one-third of the
workers showed slgnUlcant hearing
loss since going to work at the facility.
The inspectors recommended cita-
tions but the agency eventually vacat-
ed all of the citations on the basis of
an agreement with the company
which not only waived possible fines,
but also exempted the company from
correcting conditions in the plant that
were In violation of the law. The ra-
tionale given for exempting the com-
pany from the .same law that other
employers are expected to meet was
that the facility could be used by the
National Institute for Occupational
Safety and Health to learn more about
hearing loss in workplaces where Gov-
ernment standards for noise and hear-
ing loss were being violated.
It Is Interesting however that OSHA
reached this conclusion without con-
tacting the National Institute for Oc-
cupational Safety and Health or seek-
ing their scientific judgments as to
whether they wished to conduct such
research or whether this facility repre-
sented a useful or usable research op-
portunity.
NIOSH did finally visit the Coors fa-
cility In May of this year and stated
that they would not participate in
such a study.
Mr. Speaker, this Is an example of
another type of the gross abuse of the
law that has been practiced at OSHA.
Only 2 months ago we learned that
the agency was promoting a scheme by
which the Dan River Textile Co. could
escape Federal requirements for
cotton dust exposure by having an-
other study of what breaking those
rules would do to worker's lungs.
NIOSH was also volunteered by the
Labor Department for funding that re-
search. In that Instance, NIOSH also
said they would not participate.
In another case, we learned that
Gulf Coast Lead Co. In Tampa. FL,
was given a variance from Federal lead
level requirements. When one of the
employees at the plant had to be car-
ried off the Job because of kidney fail-
ure linked to high levels of lead in his
blood, the variance and experiment
was flTially terminated.
OSHA testified before the Appro-
priations Committee that the Gulf
Coast Lead case and another case in-
volving mechanical guarding were the
only experimental variances that have
been granted since January 1981. How-
ever, the situation at Coors demon-
strates that the Department has been
granting variances after the fact as
well as before, and that experimenta-
tion on workers has been used as an
excuse to provide selected employers
an opportunity to avoid meeting the
same worker protection standards that
are required of most employers in
more Instances than have thus far
been cited by the Department.
EXTENSIONS OF REMARKS
Mr. Speaker, we cannot let Occupa-
tional Safety and Health regulation
require many employers to meet re-
quirements from which others are ex-
empted. Protecting worker health
cannot be allowed to become another
tool of political patronage. When Fed-
eral Inspectors find a workplace that is
particularly dirty, noisy, or uniiealthy.
they have not found an opportunity
for long-term scientific inquiry on the
human consequences of violating rules
that have already met the test of sci-
ence and the Federal regulatory proc-
ess. They have rather found a problem
that needs to be corrected.
In a nutshell, employees of this Gov-
ernment who are charged with pro-
tecting the health and lives of Ameri-
can workers at tajtpayer expense are
not there for the purpose of locating
someone else's ears, lungs, or kidneys
in order to conduct crude experiments
on already established scientific find-
ings— even If it may mean higher quar-
terly dividends for friends of the ad-
ministration in power.
That is what equal Justice under the
law and equal enforcement of the law
is all about. That Is not Just necessary
to provide decent working conditions
for workers: it is necessary to provide
an equal playing field for employers
who are engaiged in stiff competition.
Following Is the text of the settle-
ment agreement between the Coors
Co. and OSHA;
Doited States of America Occupational
Safety and Health Review Commission
RaTMOND J. DONOVAM. SECRTTAAT OP LaSOR.
UMnrr States Departmimt op Labor,
COBCLAIMAWT. V. ADOLPR COORS COBCAKY.
Respondent
OSHRC DOCKET NO. a3-Oftft4
Stipuiation and Nones op DisiassAL
Come now complainant. Secretary of
Labor, and respondent, Adolph Coors Com-
pany, and make the foUowlii« stipuiaclons
and agreements:
1. In consideration of complainant's agree-
ment to withdraw the citation hereinafter
described, respondent, without admitting
that It has violated any of the provisions of
the Occupational Safety and Health Act, or
any of the regulations and standards pro-
mulgated pursuant thereto, hereby agrees
to cooperate in, and volunteer the use of,
the "cold-end " of Its glass plant for, a re-
search study on the effect of occupational
noise on the hearing of employees exposed
thereto, and the relationship of the Imple-
mentation of hearing conservation pro-
grams and personal protective equipment to
said noise exposure.
2. It is agreed that the aforesaid research
study Is to be conducted by the National In-
stitutes of Occupational Safety and Health
as agent for, and pursuant to a memoran-
dum of understanding with, the Occupation-
al Safety and Health Adminstratlon. The
specific protocol and procedures lor the
aforesaid research study will be agreed to
separately and si>ecificail7 between com-
plainant and respondent prior to commence-
ment of sajd study.
Wherefore, based on the aforesaid consid-
erations, complainant hereby withdraws
July 31, 19H
other than serious citation number i for .i
leged violation of 2$ C.P.R. 1 19IO}S<hvii
Issued on May 31. 1M3. '
Dated this ISlh day of October. 19u
Francis X. 1.illy.
Deputy SolicxtOT of Labor
Tedrick a Hoosh. Jr.,
Resumal Solicilor
Bradley. Campbell & Carney. PC bv
Lawrence W Marguess. 1717 Washms
ton Avenue. Golden. Colorado SO^oi-
1994 (303) 27$-3300 Attorneys for R«!
spondent.
Jaylynn K. Fonney. Attorney, gjj
Walnut Street. Itoom 2106. Kansas
City. Missouri 64106 (816) 374-S4<l
Attorneys for Raymond J. Donovan^
Secretary of Labor. U.S. Depanmem
of Labor.*
JPOSTAL NEOOTIATIOMS
HON. WILLIAM (Bia) CUY
or KISSOORI
IM THE HOUSE OF REPRESEHTATIVrs
Tuesday, July 31. 19S4
• Mr. CLAY. Mr. Speaker, with con-
tract negotiations now broken off, the
Postal Service and the postal employ-
ee unions have entered the legally
mandated factfinding process, Under
the Postal Reorganization Act of 1970,
a Joint selected factfinding panel will
have 45 days to report Its findings.
Then, assuming that both manage-
ment and the unions still cannot
agree, an impartial panel of arbitra-
tors will conduct hearings and make a
final and binding determination.
WhUe It Is regretUble that labor and
management were unable to reach
agreement, this dispute resolution
process Is rational and one of proven
success.
What Is most disturbing however Is
the decision of the Postal Service to
unilaterally Implement a 23-percent
pay cut for all postal employee hired
on or after August 4, 1984. This action
Is highly improper and Incoiisistent
with the intent of Congress when It
enacted the Postal Reorganization Act
1970.
When I was privileged to chair the
Subcommittee on Postal Personnel
and Modernization and the Subcom-
mittee on Postal Operations and Serv-
ices, I had ample opportunity to un-
derstand the intricacies of the Postal
Reorganization Act of 1970 which gov-
erns postal labor relations. That land-
mark legislation provided for binding
arbitration to resolve contract disputes
because postal employees were denied
the fundamental right of most work-
ing people— the right to withhold their
labors— the right to strike.
I was therefore shocked that postal
management decided to escalate exist-
ing tensions by reducing the pay and
benefits of new employees, particular-
ly since Congress provided binding ar-
bitration as a substitute for the right
82
July 31. im
to strike. Congress Intended th*t mat-
ters In dispute— pay and benefits par-
ticularly—would be maintained In the
(tatus quo until the arbitration panel
tiad the opportunity to work Its collec-
tive will-
I appreciate the fact that the Postal
Service believes — erroneously, in nvy
Judgment— that they are acting In ac-
cordance with the law. Nevertheless.
EXTENSIONS OF REMARKS
their actions are not simply Inconsist-
ent with the Intent of Congress, they
are penny wise and pound foolish. For
the relatively small amount that the
Postal Service saves by this Ill-advised
action, they have pushed postal labor
relations back many years. This action
wUl Irrevocably damage postal labor
relations and exacerbate tensions In
the workplace.
21747
I urge the Rea«an-appolnte«a who
now control the Postal Board of Gov-
ernors to reconsider this Ill-advised
action and to follow the Independent
panel of factfinders and others to
work their collective will free of the
antagonism which the Governors' ac-
tions have generated.*
83
-21908
CONGRESSIONAL RECORD— HOUSE
August 1, ]$84
World War II. But somehow there
seems to be an impression that some-
thing Is wrong to give anything to a
country in Central America.
Mr. LONG of Maryland. Mr. Chair-
man, will the gentleman yield?
Mr. STRATTON. I will be very
happy to yield.
Mr. LONG of Maryland. Mr. Chair-
man. 1 thinlt at the time the gentle-
man visited down there, it is quite pos-
sible that the Senate had not acted on
the urgent supplemental conference
bill. If that is true, since that time, the
Senate has acted and El Salvador has
been sent an additional $62 million in
military assistance.
There is no sense in providing this
big Increase with only 2 months re-
maining in the fiscal year.
Further, the subcommittee started
mariting-up the 1985 foreign aid bill
this morning and it contains addition-
al funds for El Salvador. A point of
order has been raised on the proposed
amendment already so we are really
talking about a dead horse.
Mr. NICHOLS. Mr. Chairman, will
the gentleman yield?
Mr. STRATTON. I yield to the gen-
tleman from Alabama.
Mr. NICHOLS. Mr. Chairman. I Just
want to support what the gentleman
from New York has said and what the
other gentleman from New York is
trying to do. I am not a great advocate
of foreign aid. as this body knows, but
I was persuaded that their cause is
Just and I hope that what we are send-
ing them down there is needed.
Mr. Chairman, I support the amend-
ment offered by my colleague. Mr.
Kemp, and urge my colleagues to do
the same. This assistance, both mili-
tary and economic, is desperately
needed by El Salvador. We have nur-
tured this country, and Just when it Ls
beginning to develop the infrastruc-
ture necessary to support a democratic
government responsive to the needs of
its people, we are refusing to help
them.
During a recent visit by Armed Serv-
ices Committee members, both Salva-
doran and US. officials agreed that
significant progress toward creating a
democracy In El Salvador is being real-
ized. Earlier this year El Salvador held
its first free presidential election in
many years. Over 80 percent of the eli-
gible population voted. Human rights
violations appear to be on the decline,
and the major opposition candidate,
Roberto D"Aubulsson, told the delega-
tion that he will support the new gov-
ernment within the framework of the
Constitution.
President Duarte stressed, however,
that "the honeymoon of his election
was over after the first 12 hours." He
noted that the elections created great
expectations on the part of the Salva-
doran people, as well as the United
States and various European govern-
ments. If democracy is to flourish, the
country's economic and social condi-
tions must improve: the agrarian
reform must continue; and most im-
portantly, the United States must con-
tinue its assistance to the people of El
Salvador. He complained that the
United States has not responded as ex-
pected and instead has essentially
been "yes. in sentiment— no. in re-
sources."
The Government and people of El
Salvador were led to believe that if
free elections were held and the Gov-
ernment took positive steps toward
controlling human rights violations,
that U.S. assistance would be forth-
coming.
There was general agreement among
the Embassy, church, and Salvadoran
officials who met with the delegation
that the human rights situation is im-
proving. Significant progress has been
made in preventing indiscriminate vio-
lence since President Duarte assumed
office. He has taken several positive
steps to ensure that human rights are
not violated. Including the removal of
officials suspected of death-squad af-
filiations from Government positions.
He has committed himself to the es-
tablishment of a commission to inves-
tigate human rights violations, and
h£s addressed military units through-
out the coimtry on the need to stop
such violations. Finally, to dramatize
the firm stance of his administration
against human rights violations.
Duarte Intends to supervise personally
the investigation of the next docu-
mented case of abuse.
The Salvadoran military is also
making progress and is struggling to
train and equip its forces so that peace
can be maintained. Without that
peace and the elimination of guenilla
attacks, needed land reform and criti-
cal Industrial and agrarian develop-
ment cannot be accomplished.
El Salvador, of course, faces many
problems In Its quest to become a
stable democracy. Reform wUl not be
easy and will not come about as quick-
ly as most would like. However, one
thing Is clear without meaningful US.
assistance, furnished in a timely
manner, the Government of El Salva-
dor will not be able to fulfill Its com-
mitment to its people.
Although El Salvador is fiercely In-
dependent and cherishes its sovereign-
ty. It recognizes that it desperately
needs the temporary assistance of
other countries.
I urge my colleagues to support the
amendment offered by Mr. Kchf as a
commitment to El Salvador's efforts to
help Itself, and to so ensure that U.S.
troops wiU not be needed to assist that
coimtry.
The CHAIRMAN. The question is on
the preferential motion offered by the
gentleman from New York [Mr. Stbat-
toh).
The preferential motion was reject-
ed.
The CHAIRMAN. The Oerk will
read.
The Clerk proceeded to read title II.
Mr. WHITTEN (during the reading).
Mr. Chairman. 1 ask unanimous con-
sent that title II be considered as read
and open to amendment at any pomt.
The CHAIRMAN Is there objection
to the request of the gentleman from
Mississippi?
There was no objection.
The CHAIRMAN. Are there any
points of order?
Are there any amendments?
The Clerk will read.
The Clerk proceeded to read title
HI.
^Msmairr omMS «T n. oovn
Mr. CONTE. Mr. Chairman. I offer
an amendment.
The Clerk read as follows:
Amendment offered by Mr. Contc Page
6a. after line 21. tnaert the following new
section:
Sec. 303. None of the funds made available
to the United States Postal Service under
this Act or any other Act may be used to re-
structure employee compensation practices
as in effect imder the most recently effec-
tive collective bargaining agreement under
section 120« or title 39. t7nited SUles Code,
except In accordance with the results of pro-
cedures set forth in section 1207 of such
title.
Mr. WHITTEN. Mr. Chairman, I re-
serve a point of order on the amend-
ment.
The gentleman from California (Mr.
Roybal], chairman of the subcommit-
tee, is not on the floor, so I reserve a
point of order at this time.
The CHAIRMAN. The gentleman
from Mississippi CMr. Whitten] re-
serves a point of order on the amend-
ment.
The gentleman from Massachusetts
(Mr. CoNTE] is recognized for 5 min-
utes in support of his amendment.
a 1550
Mr. CONTE. Mr. Chairman, I have
spoken with the gentleman from Cali-
fornia (Mr. RoTBAi.] and counsel In re-
gards to this amendment.
The Chairman, this amendment Is
designed to send a clear and strong
message to the negotiators— on both
sides— of the current Postal Service
employee contract talks. That message
Is fairness and negotiations In good
faith.
I'm sure that Members are familar
with the current stalemate in employ-
ee contract negotiations. The latest
union contract expired on July 20.
1984; 600.000 unionized employees are
now working without a collective-bar-
gaining agreement. At the end of the
negotiation process, both sides were
still mUes apart from reaching
common ground. However, the specific
Issues Involved in the negotiations are
not the reason for this amendment. In
1970, the Congress attempted to depo-
liticize, as much as possible, the work-
84
' ugust 1, 1984
CONGRESSIONAL RECORD— HOUSE
/ ina of the Postal Service. The problem Mr. Chairman, my understanding Is
oof Is not with the particular issues or that a point of order has been re
deoiands under negotiation, but with served.
»n abuse of the process as provided in ' "■"
21909
the law.
■ The Postal Service Reorganization
Act of 1970 grants the postal workers
the right to bargain collectively. De-
signed to protect the public interest
I would like to ask some questions
with regard to the subject matter to
the author of the amendment.
Mr ROYBAL. I thank the genile
man.
The CHAIRMAN. Does the gentle-
man insist on his point of order?
Mr. WHITTEN. Mr. Chairman. I re-
served the point of order until I could
my understanding that this confer with the chairman of the sub-
amendment Is one in which title 39 of committee. It is his desire not to insist
on it. as I understand it
The CHAIRMAN. The gentleman
the United States Code is affected
the"law provides for an orderly and particularly with regard to the proce
fair process to negotiate union con dures set forth in section 207 of that does not Insist on his point of order
fr«rt aereements. If an existing con- title. Please explain to us what is con- Mr. HOYER. Mr. Chairman. I m
move
to strike the requisite number of
words.
Mr. Chairman. I rise in support of
the amendment offered by the gentle-
man from Massachusetts. I would
Mr. CONTE. Chapter 39. to which bring to the attention of the commit-
tract agreements. II an existmg
tract expires and the parties involved tained In that section,
axe at an impasse, then a 45-day fact- Mr. CONTE. Will the gentleman
finding period begins. If the Issues are yield?
still not resolved at this pomt, the ne- Mr. ROYBAL. I yield to the gentle-
gotlatlons are referred to a three- man from Massachusetts
member arbitration board to conclude Mr. CONTE. Chapter
a binding agreement. you referred. Is the Postal Reorganiza- lee that Chairman Ford, chairman of
In return for this right to bargain tion Act of 1970. the authorizing committee of the Post
collectively, we expect our postal em- Mr. ROYBAL. In this Postal Reorga- office and Civil Service Committee, on
Dloyees to refrain from strikes or any nization Act. is what you are attempt- juiy 26, 1984. wrote to Postmaster
Job actions. The experience In 1970 Ing to do In this Instance is to modify Bolger with reference to the proce-
ihould remind Members of the reason that act or to put in place ceruln pro- dures to which this amendment
for this prohibition. cedures that come under that act? speaks. In that letter the chairman of
Recent news reports about unllater- Mr. CONTE. Does the gentleman the authorizing committee essentially
al moves by the U.S. Postal Service are mean my amendment? took the same position that the rank-
disturbing to many Members of Con- Mr. ROYBAL. By your amendment, (^g minority member, the gentleman
gress. including myself. Last week, the Mr. CONTE. No; it does not try to from Massachusetts [Mr. ConteI takes
Postal Service announced that new modify that act. It is Just a straight \n offering his amendment, which is to
employees hired after August 4. 1984 funding prohibition which refers to say to hold the parties In e<)ual posi-
would be paid about 23 percent less chapter 39. the PosUl Service Reorga- tion until such time as the sUtutory
than current workers. nization Act. arbitration procedure has an opportu-
■ • With the negotiations heading for Mr. ROYBAL. Has any attempt been nity to work, so that none of the Indl-
the binding arbitration stage, the made to try to get this amendment viduals Involved will be prejudiced
Postal Service has decided to Impose also passed in the other body? during the period of time during
one of its demands, subverting the Mr. CONTE. Not at this point. But which the arbitrators consider this
process provided in the Reorganiza- certainly, if this amendment is adopt- matter.
tion Act. This is unfair and a breach of ed today, there will be a lot of work jf that were not the case, as the gen-
Jlhe agreement reached by Congress in done to get it adopted. I expect to talk tleman from Massachusetts points out.
the 1970 Reorganization Act. to Mr. Abdnor and other Members in unlike the private sector where in the
. This amendment is designed to pro- the other body. I think many Mem- private sector the employer would
hlblt the Postal Service from Imposing bers of Congress are very upset about have the option of Imposing his last
this unfair, unilateral action before an this unilateral action by the Postal offer, the employee would then have
agreement Is reached. The amendment Service. the alternative opportunity to go out
deals only with the process of negotia- Mr. ROYBAL. May I say that I on strike. In this Instance, of course,
tloiis. not the issues under consider- wholeheartedly agree with the gentle- the employees are precluded from
atloo. It says that there can be no re- man from Massachusetts In the state- taking that action as a strike is Illegal,
structuring of the employee's compen- ments that he has made with regard Therefore I think the actions of the
«atlon practices until there Is a negoti- to this matter. I think that it is a cor- gentleman from Massachusetts and
ated agreement as provided by the rect procedure to take in the absence the substance of this amendment are
law. If there are changes to be made In of insisting on the point of order. We entirely appropriate and effect fair-
employee compensation, let those are not going to Insist on that point of ness for both sides without, as the gen-
changes develop as a result of the ne- order. But I wanted to be sure that we tleman has said. Interjecting ourselves
gotlatlon process designed by Congress had something In place in the other ij, and taking a position as to either
and In effect for 14 years. body that would complement what Is issue.
. Let me emphasize to the House, the being done here today so that when
amendment Is not an attempt to take we go to conference we wUl have at u ibw
sides In the dispute, but an effort to least been able to present our subject in closing. Mr. Chairmaa I would
make sure that the procedures man- matter on an equal basis. me to quote from the letter Mr. Pord
dated by the Congress are followed Mr. CONTE. First of all. let me say. sent to Postmaster General Bolger
during this negotiation. as I have said many, many times here dated July 26. 1984. wherein he said.
.The Congress has an obligation to on the floor, that I have the greatest and I quote:
insure that the spirit and Intent of the respect for the gentleman from Call- ,y^y ^^^ tjnlt«d SUt« Postal Service
law Is fulfilled. Postal workers are Fed- fomla [Mr. Roybal]. He has done a „^jj „„( have continued to advoc»t* its
eral employees and should have all the great job as chairman of that subcom- contract offer peioefuUy. through the sut
rights and protections reserved for mlttee. It is a pleasure for me to work utory dispute resolution process, is b«yond
them by the law. nothing more or with him. °" """""^'S'.""- '^"i"'!!. ''.f k"!;!!'. ^1!
nothing less Let me say that U this amendment Is this «tlon l. being pur^»«e<l at th. cost o^
I uSl^coUeagues to support this adopted today the gentleman can be » •J™™"-" of Ul .Ul and devastat«l
amendment. assured that starting tonight I wUl morale. ^ . .^ ., „,
Mr. ROYBAL. Mr Chairman. I v. ork with Members of the other body I think if we adopt the amendment
«o>^to strike the requisite number of on^this^amendment. and I think we o'/i).*,««2i!f,!^f ,^:;?-„'t^^''X'?
we will preclude that unwanted effect
85
21910
CONGRESSIONAL RECORD— HOUSE
August 1, 1984
and therefore I rise in strong support cold • concept to i
people. 1 don't be-
jf the gentleman's amendment.
The CHAIRMAN. U there further
discussion on the amendment.
Mr, DAUB. Mr. Chairman. I wish to
Ueve IL'
Now. If the version of this supple-
mental that the chairman of the Ap-
propriations Committee rolled for us
something that we have heard an
awful lot on this floor. We have heard
an awful lot of people who say that we
cannot cut individual appropriation
bills because there are good and
associate myself with the remarks of out here a little while ago is In fact a proper reasons for those bills to be
my colleague from Massachusetts. Mr. correct version of what we are consid-
Conn:, and indicate my support for his ering here. I would suggest we right
amendment. He raises some excellent now have an opportunity to do some-
points with respect to the obligations thing about that which Mr. Mondale
we have to postal employees, and his spoke of yesterday.
brought before us at the levels they
are.
This Is a general appropriations bill,
this goes to all aspects of Government.
Those of you who have told your con-
stituency that you want to see some-
thing done in the defense area, here is
your chance. My amendment would
cut $187 million, a fairly modest de-
crease, but neverless a decrease; tl87
million out of defense.
.. u. ., -r-L, .. - .1 u.. . . ^ -J.I Are you going to go back and explain
management s objectives. Theu- efforts figures a bit to meet our own priorities ,. ,^05. nponle that vou have h«.n
v,.„« i^^^^ K^„ oi.™ifi»»„. i» K.H„„ ►,,,» o... «r<. i„ f,,.. o..n„» „„ ih.. .H^in "' ^""^ peopie mat you nave oeen
amendment clarifies those obligations
In a recent letter I sent to John
McKean. the Chairman of the Board
of Governors for the U.S. Postal Serv-
ice. I urged him to keep In mind the
Mr. Mondale was attacking the ad-
ministration's high deficit. Federal
deficit. Well, according to the chair-
man of the committee, what we have
before us here today is a supplemental
important role that the mall sorters appropriation which was asked for by
and handlers have played In achieving the administration, that we Juggle the
have Indeed been significant In bring
Ing the Postal Service to a sound fi-
nancial footing, a point that must be
recognized in the negotiating process.
In addition. I encouraged good faith
efforts to provide incentives for con-
tinued advances in productivity.
but we are in fact acting on the admin-
istration's request.
What I am suggesting Is if we really
are concerned about the same things
Mr. Mondale is concerned about, here
is a chance to do something about
those concerns, at least reduce this
telling that you are going to get at the
deficit by cutting defense that you
voted against doing something about
defense? Or how about the $240,000 in
military foreign aid?
I say that if you vote against It. you
fleets well on the performance of
postal employees but also underscores
Its ability to compete effectively with
other mall deliveries.
We must assure that In the negotiat-
ing process the proper procedures are
profitable Postal Service not only re- supplemental a'ppropriatlon by 1 per- "J y°'i^.,¥*'^' *-^°^ '^"'^•, ^°*
cent. -- •- ., ^ about the $1.8 million In economic for-
Mr. YATES. Mr. Chairman. wUl the *'^ *''^- Save that amount of money.
gentleman yield for a question? ' suggest there is a few other things
Mr. WALKER. I would be glad to y°" might want to consider, too.
yield to the gentleman from minols. ^^'^y- 'his Is a very dangerous
_, ,_. , Mr. YATES. Does the gentleman amendment; this saves $25,000 of the
followed. A credible and competitive Intend his amendment to be applicable money that is In here for restoring the
postal service Is a vital asset to this to the pay Increases that are provided Presidential yacht. Good heavens, you
Nation, and the concerns of postal in this bill for the Government em- <*° "°' "ant to go back and tell your
workers and letter carriers must be ad- ployees?
dressed. Mr. WALKER. I would say to the
I commend my colleague from Mas- gentleman that It is my intention to
sachusetts for Introducing this amend- cover all aspects of the bill with a 1-
ment. and once again, voice my sup- percent cut in the total funding of the Park? My amendment actually cuts
constituents that you actually saved
$25,000.
Bow about $5,000 restoration of a
golf course down here at East Potomac
bill. $5,000 out of the restoration of a golf
Mr. YATES. WUl the gentleman course. Or how about the $6,000 of the
yield for a further question? upgrading of our own video recording
Mr. WALKER. I would be glad to system around here?
yield. ^ot> know. It must be taxing on the
Mr. YATES. Are not the funds that '^deo recording system to have those
are In this bill for the pay increases "*de angle shots of the Chamber, we
The Clerk concluded the reading of based upon request of the admlnlstra- are having to upgrade It to the tune of
the bill. tlon? $600,000. WeU. I save $6,000 of that
Aioofiiitsrr orrEREB »v ut. wauax Mr. WALKER. The gentleman Is ab- Or how about the $5,000 for addl-
Mr. WAI^KER. Mr. Chairman, I solutely correct. The point that I am tlonal parking places out in San Pran-
port for the measiore.
The CHAIRMAN. The question is on
the amendment offered by the gentle-
man from Massachusetts (Mr. Co^^^E].
^The amendment wu agreed to.
The CHAIRMAN. The Clerk will
read.
offer an amendment
The Clerk read as follows;
making Is the fact that It Is your Presl- Cisco? It seems to me here is some
dential candidate who Is telling us the thing we might want to consider
Amendment offered by Mr. WtLKct: On administration has this high deficit doing.
Pi«e 69. after line i. Insert the following problee which Is causing untold proj- 1° other words, you know, we are
lems across the country. really not doing anything very drastic
So If the gentleman Is correct, these to 'his amendment. It Is a 1-percent
are administration requests, here Is an cut. It Is a way of speaking to the defi-
opportunlty offered by this gentleman
on the Republican side to reduce the
administration's request by a modest 1
percent.
„ . , . , _,.. . . And I would suggest to the gentle- .^.. v-..=.u.u.«i», v.u« v,k^ w» ^.^tuv.-
Mondale, was quoted with regard to „^^ that the administration claims ment is troublesome to all Members.
deiicit and the Washington 'Times tj,at within this particular appropria- In my experience In Congress, I have
!^" ff,^ ° morning reports it uonj ^01 there are some things In seen two or three major programs or
' """^ there that they did not request. I bills where the budget of the Presi
would say to the gentleman that they dent and the Office of Management
claim that there are a little over $1 bU- and Budget regularly sent down rec-
^i'e^e l^:^e l^u "lirTutl^: "0° of unrequested domestic a4dK>ns ommendatlons at a higher than neces-
All my amendment would do would sary figure so that Members of Con-
be to get about half of that back. It gress could show how much they cui
would get $540 million of that back. It the budget. Foreign aid has been ban
he said. "I am told that the deficit Is too would also. It seems to me, speak to died many times that way.
section:
Sec 303: Notwithstanding any other pro-
visions of this Act, tich amount appropri-
ated or otherwise made available in this Act
Is hereby reduced by one percent.
Mr. WALKER. Mr. Chairman, yes-
terday the Democratic candidate for
President of the United States, Mr.
this way:
Mr. Mondale attacked the admlnlstra-
tlon's federal deficit as the cause of high In
terest rates. coUapse of small businesses, uo
reach educational costs.
"I have heard that the deficit Is too diffi
cult an Issue for Americans to understand.
I would ask for Its approval.
Mr. WHITTEN. Mr. Chairman. I rise
in opposition to the amendment.
Mr. Chairman, this type of amend-
86
,t 1. 198i
I DeiDOCr»u usrd this lo lorm* the
LTm o( wuiung lo like > htuhel lo
^Suim w»5 » re»I problem. Socl»l
Vu Ih* niiion's biSBMi ind most Im
rdoni""'^ protram. over 36 million
fXxntW. Irom il Moreover. Ihe el
much more likely lo vole lh»n Ihe
P-oouUllon No politician in hlj
■ ^inls lo be on the wronj side ot
KoKint^r
^^_ Democrats' charges.
^ttMted adjusting Social Security
gl upward to match Ihe modest
n the consumer price index, an In-
jam estimated at 2 9 percent The
1 was necessary because a llltleno-
^uje enacted in 1972 provided thai
tat Uvlni increase would be paid In
ir when the Innalion rat* tell below
nt (The provision was little noticed
.i>an In/latlon o( 3 percent has
ffvnthlnkable In the last decade.)
! 1984 II appears that the change In
r price Index will fall below this
?J>ollUclans hate a benellt vacuum.
■Ident Reagan rushed to fill this
! Republican-controlled Senate, per-
jjl^rful of being tarred with the same
fthe Democrats used on Reagan, voted
f to endorse the proposal.
1 analysts praised Reagan's Inltla-
fc'a master stroke; in a single move he
at the Democratic criticism that he
r Social Secunty.
he political analysis have not been so
I' point out the costi of this effort.
e, IS money. It will take
\ bUllon to finance this Increase, a
nllal amount even by federal stand-
the deficit Is estimated at tlTO
bents of the Increase claim that this
nt )s not as large as It seems because
tlon factor is cumulative. That is, if
r'8 Increase were 4 percent. It would
to this year's 2.9 percent for a
nent Increase of 6.9 percent. In
tirds, this year's Increase would be
rUter.
) tngeiilous reasoning simply Ignores
terro cost of spending $5 billion
' Moreover, the provision limiting
t^tDCreases when Inflation falls below
nt does reduce budget outlays In a
1,'lrhose financial stability has been
! of grave concern. To forget those
ht problems Just as the election ap-
I IJ fiscally irresponsible.
Uy Important Issue Is whether this
■ to corapellllon U> provide more
I benefits. House Democrats are Dot
'let Reagan take credit for Increas-
; they may well demand a bigger
-Since Reagan Is unlikely to veto a
JUiange so close to the election, his
oposal may provoke a bidding war.
1 parties scrambling to provide the
, :rous benefits.
y^ bigger question is whether these
",;W111 lead us back lo the old days
Hon year benefit Increases were
nplace. Such a system would help
"Jly In the short run— but probably
5 one In the long run since It would
the financial health of the
. the politicians derive some gain
'hey can accommodate an impor-
Inlerest that relies heavily on
government. And. since few
.of Corigress pay Social Security
«T can provide the benefits without
' loot the bill themselves.*
EXTENSIONS OF REMARKS
POSTAL 8ERVICS OONTHACT
NEGOTlATIONa
HON. MICKEY LELAND
IN THE HOUSE Or REPRESENTATIVES
Wednesday. August 1, 1984
• Mr LELAND Mr Speaker. I rise
today lo decry the recent actions of
the Reagan appointee dominated
board of the US. Posul Service in
making a unilateral decision on pay
for future hires of the Postal Service.
The Postal Service has decided that it
is going to implement its most recent
contract offer which would create a di-
visive two-tiered system of compensa-
tion distinguishing between current
employees and new hires. Two-tiered
employment systems are divisive.
unfair, and extremely detrimental to
employee morale. Rarely are contract
negotiations pleasant affairs. But the
Postal Service's actions go beyond the
usual posturing of collective bargain-
ing. With this act. the Postal Service is
not conducting itself in a manner that
conforms to the statutory standard of
good faith, the standard in all collec-
tive bargaining sessions.
In 1982. as chair of the Subcommit-
tee on Postal Personnel and Modern-
ization. I conducted extensive joint
hearings on the effectiveness of the
Postal Reorganization Act of 1970. Mr.
Speaker, at no time during that
lengthy review of the act did we en-
counter, consider, or anticipate a situa-
tion such as this. The Postal Reorgani-
zation Act clearly states that collective
bargaining Is up to the Postal Service
and the employee representatives. The
act also clearly intends that these par-
ties are to be equal partners in this
process.
Postal employees were given the
right to bargain collectively for labor
contracts, but were not given the right
to strike. The clear intention of the
act was that the status quo — that is.
the contract provisions that the em-
ployees are presently working under—
should remain in effect until the par-
ties have come to agreement on the
terms of a new contract. The drafters
of the Postal Reorganization Act did
not envision a Postal Board of Gover-
nors with such audacious contempt for
Its employees that It would act in such
a callous manner. If so, then certainly
the act would have stated expressly,
rather than by implication, that uni-
lateral moves are against the policy of
the act. The Postal Service alleges
that its action does not violate the
letter of the Postal Reorganization
Act. But with 6 yeass as a member of
the Committee on Post Office and
ClvU Service and 5 years as Chair of
one of its subcommittees, it is my con-
tention that the Postal Service's
action Is certainly violative of the
spirit and policy of the act.
22063
The Postal Service has decided to
make this move at a time when the
Posul Service is experiencing a robust
financial health. The Postal Service is
doing so well financially they have
postponed an expected first-class rate
increase. The Postal Service is so
pleased with Itself that it is giving out
bonuses to management to the tune of
$10,000 to J20.000. The Postmaster
General himself will get a bonus of
S62.000. The Postal Service has recent-
ly bought a jet for the use of the Post-
master General and other top offi-
cials. The reason why postal manage-
ment is lavishing such generous re-
wards on itself is that the Postal Serv-
ice is in the best financial health in its
history with volume and revenues at
all time highs.
That Is why it is absolutely incom-
prehensible why the Postal Service is
trying to freeze worker salaries and
reduce pay for new hires. It is these
very people, and not those who sit
behind desks at postal headquarters,
who are primarily responsible for the
United States having the lowest postal
rates in the free world.
What the Reagan dominated Postal
Board of Governors is saying is clear,
and that is that only those at the top
of the Postal Service's massive bu-
reaucracy should benefit from the
dedicated efforts of Its rank and file
employees. These employees, the most
productive postal employees In the
world, are being told that they do not
deserve to share in the fruits of their
labor.
I urge my colleagues to Join me In
opposing this action by the Postal
Service and speaking out to ensure
that the intent of the Congress, in
passing the Postal Reorganization Act
of 1970, is not violated.*
DISASTROUS IMPACT OP THE
ADMINISTRATION'S TAX POU-
CIES ON BUSmESS AND THE
CONSUMER
HON. JAMES J. FLORID
Wednesday, August 1, t9i4
• Mr. PLORIO. Mr. Speaker, yester-
day I received a letter from Dr. Walter
S. Mason, president of Best Western
International, the Nation's largest as-
sociation of independently owned and
operated hotels, motels and resorts.
The firm has 82.000 employees nation-
wide and Is headquartered in Phoenix.
AR.
Mr. Speaker, as the chairman of the
Subcomimlttee on Commerce, Trans-
portation and Tourism I have a direct
concern for the lodging Industry. I cite
Dr. Mason's letter as Irrefutable evi-
dence of the artificially stimulated
building boom which has swept this
country since the passage of TEFRA
87
22080
SERIOUS UNEMPLOYMENT IS
CAMOUFLAGED BY DETVIOUS
STATISTICS
HON. MAJOR R. OWENS
or SCU- YORK
IN THE HOUSc: OF REPRESENTATIVES
Wednesday. August 1. l$S-i
• Mr OWENS. Mr. Speaker, there
has been a great deal said about the
unemployment rate, and particularly
about the recent decline to pre-
Reagan rates. In my district, which is
in the heart of Brooklyn, the reality
that I see is in no way consistent with
the rosy rhetoric that I hear. The
frustrations of my unemployed con-
stituents have led rae to probe this sit-
uation in greater depth. What I found
should be of interest to all those who
seek an accurate reading of the unem-
ployment tragedy in our society.
The unemployment rate in June was
7 percent for the country and 15 per-
cent tor blacks in this country. The
black rate was dowTi from 20.3 percent
last June. This seemed like good news
until I found that the percentage of
adults working, called the labor force
participation rate, has remained con-
stant at 62 percent for blacks. If the
same percentage of blacks are work-
ing, how can the unemployment rate
drop by 25 percent? The answer is rel-
atively simple. The Department of
Labor simply doesn't count everyone.
This is a simple way to reduce unem-
ployment—don't count all of those
who are unemployed.
Looking at New York State and New
York City, the picture is similar. In
the State as a whole, the labor force
participation rate remained constant
at 60 percent while unemployment
dropped from 9.1 to 7.2 percent. The
State's black participation rate re-
mained constant at 54.5 percent while
unemployment dropped from 15.3 to
11.5 percent. In New York City the
black participation rate remained at S3
percent while unemployment officially
dropped from 14.7 to 10.7 percent. In
each set of figures, significant drops in
the unemployment rate were officially
noted when there was no change in
the percentage of people in the work-
force. In short, undercounting the un-
employed is a consistent practice
which provides the basis for rosy rhet-
oric while unemployment and poverty
continue unabated.*
D.S. POSTAL SERVICE URGED TO
RESUME GOOD FAITH NEGOTI-
ATIONS
HON. JAMES L OBERSTAR
OP UINTfieSOTA
IN THE HOUSE OP R£3"R£SENTATIVES
Wednesday, Augvst 1, 19S4
• Mr. OBERSTAR. Mr. Speaker. I
was astonished and greatly distressed
EXTEiNSIONS OF REMARKS
to lean, that the m.inagemenl of the
US Postal Service, unilaterally ana
.irbitrarily. in the course of contract
negotiations had set up a two tier pay
system. While the Postal Service con-
tends that this action is based on law.
I can't think of a worse lactic (or an
employer, particularly a public em-
ployer, to take than this one which
has brought labor-management rela-
tions in the Postal Service to an all-
time low.
This action can only have a negative
impact on the current employees and
on the bargaining team, serving not
only to impair morale, but also to
impede negotiations. It has created an
atmosphere of distrust on the part of
employees by giving the appearance
that management is not negotiating in
good faith.
I might remind my colleagues that
postal workers are not in the same po-
sition as other employees, as the
Postal Reorganization Act of 1970
denies postal workers the fundamental
right of other working people, the
right to strike, substituting for that
right, 'oinding arbitration. Certainly it
was the intention of Congress in estab-
lishing this unique arrangement that
matters under negotiation would be
held in status quo until an arbitration
panel, if ordered into the process, had
concluded its work.
The Postal Service obviously be-
lieves otherwise and. m ordering a
lower pay scale for new hires, is dam-
aging labor relations and undermining
the labor-management negotiation
process in the U.S. Postal Service.
I urge the Board of Governors of the
U.S. Postal Service to rescind their
action as a step toward reestablishing
a climate of good will and to enter
upon good faith collective bargaining
in order to resolve the present im-
passe.*
August 1. I9gj\
0 fulfill the goal of human rights. L»,l
us not deceive ourselves: Human
nghu \
THE HELSINKI FINAL ACT: A
PROMISE
HON. TOM LANTOS
OF CALIFORNIA
IN THE HOUSE OP REPRESENTATIVES
Wednesday, August 1. 1984
* Mr. LANTOS. Mr. Speaker, 'the
participating States will respect
human rights and fundamental free-
doms, including the freedom of
thought, conscience, religion or belief,
for all without distinction as to race,
sex. language or religion."
These powerful words are found in
the Final Act agreed to at Helsinki 9
years ago today. These vords repre-
sent that which is good and whole-
some in the human spirit, the quality
which places man above the animals,
the potential which points mankind to
a future of cooperation and mutual re-
spect.
These words are also a promise,
made by all signatories of the treaty.
do not arise inherently out of the goon
■i'lll of a community, but from the
compliance by governments. Human
rights are not protected by the shield
of righteousness, but are nurtured and
defended by governments which re.
3peci them. The promise inherent m
the Helsinki Final Act, therefore, ij
one that has to be assiduously moni-
tored.
To monitor the lofty ideals ex-
pressed in the Helsinki Final Act
groups were established throughout
the signatory States, including impor-
tant groups in Eastern Europe.
Czechoslovakia saw the rise of the
Charter 77 group, which has been con.
tinuously harassed by state officials.
.\natoly Shcharansky and Andrei Sak-
harov became active and forceful ac-
tivists in the Soviet Helsinki monitor
group. Their fates at the hands of a
merciless Soviet police are well known.
How has the promise of the Helsinki
Final Act been upheld? "(The States)
will recognize and respect the freedom
of the individual to profesc and prac-
tice " • • religion. ' That is impressive
rhetoric. The reality is frighteningly
different. Crosses are torn off school
walls in Poland, causing students to
boycott their classes. Local toughs are
recruited into breaking up church-re-
lated peace demonstrations in East
Germany. And anti-Semitic articles
are officially sanctioned in the Soviet
press.
"(The State) will respect the right of
persons belonging to national minori-
ties to equality before the law." That
is inspiring rhetoric. The reality Is to
be found in Czechoslovakia, where
Miklos Duray faces trial for defending
the rights of the Hungarian minority
living in predominantly Hungarian-
speaking areas to receive instruction
in Hungarian. Or Emo Borbely. a high
school history teacher In Romania,
who was sentenced to 6 years in jail
when he protested against state-spon-
sored pamphlets bearing the words
"The Himgarians are traitors. Stop
them! Beat them! Tear them asunder!"
"The participating states will deal In
a positive and humanitarian spirit
with the applications of persons who
wish to be reunited with members of
their family." That is beautiful rheto-
ric. The reality Is more grim. Thou-
sands wish to leave Romania to rejoin
families in West Germany and Israel,
In spile of some improvements in
recent years, the wailing list is still
long. Tens of thousands of Soviet
Jews— the refuseniks— wish to leave
Mother Russia to enjoy religious and
personal freedom In Israel and the
United States, Yet, currently only
about 70 persons are allowed to emi-
grate each month. This Is Intolerable
and unbearable.
^^^t s, i;,o^ CONGRESSIONAL RECORD— SENATE
The Sut« education&J acency sh&JI
icJliiun procfdura under which * mem
**^_j. kw&rded a scholarship under Ihls
"^Lrt «ut)li3ho thai ihf scholar u main ^^ ^,|, ^ awarded based on criteria
iW-" -....,.„„,. or^finencv and d„ot- g^^^^ii^^^ ^y each Slaw educational
agency.
This Idea of FederaJ merit scholar
ships is not a new one and has received
much thoughtful attention by many
educational organizations and congres-
sional education experts. Provisions
for such a scholarship program were
contained in the Economic Competi-
tiveness and Cooperation Act and we
have incorporated many of the sugges
tions we received into the current bill.
I encourage my colleagues to join me
In supporting this worthwhile endeav-
St 8. im
hotaJ'
satisfactory proficiency and devot
^ time to the course of study for
, the scholarship was awarded
"AWARDS CCXCMONY
4191. la) The Slate educational
f _^Ty shall make arrantements to award
l!!^t scholarships under this subpart at a
■"'^ , each Stale which is convenient to
'individuals selected to receive such
kiiarshlps To the extent possible, the
f'nri s^*^' *** made by Members of the
lienU'
and Members of the House of Repre-
he Delegate In the case of
District of Columbia and the Resident
ixnlssioner m the case of the Common-
1th of I*uerto Rico) who represent the
Commonwealth, or Oistrict. as the
may be. from which the individuals
?b) The selection process shall be com-
. and the awards made prior to Augiist
i e*ch year.
"coKSTvocnoN or hczds pbovisions
... 419J Nothing In this subpart, or any
■ Act. shall be construed to permit the
of a merit scholarship under this
I be counted for any needs test in
ctlon With the awarding of any grant
ptbe malting of any loan under this Act or
' r other provision of Federal law relating
^educational assistance.
If*'AtrrH0RiLAT10H or APPROPIUATIOWS
, 419K. There are authorized to be ap-
1 (S.OOO.OOO for each of fiscal years
; 1967. and 19S8 to carry out the provi-
iof this subpart.".
bXl) Section 419 of the Act Is redeslgnat-
I'u section 420.
2) Section 420 of the Act Is redesignated
j^ifecUon 420A.
r. KEhTNEDY. Mr. President. I am
to join Senator Btrs along
I Senators Chiles and Pell in co-
oring the Federal merit scholar-
P-bUL I would also like to commend
or Btud for his continued efforts
upport of our Nation's yoting
ple.and higher education.
1 bill will encourage students of
demlc achievement to further
education by providing indlvld-
^1,500 scholarships for 1 academic
rlt Is most fitting that we recog-
Jithe academic strer\gths of our Na-
D|i, youth and reward their talents
npmotlng studies at instltutloiis of
r learning. These Intellectual en-
Kron of our young people are
of highest praise and encour-
oent for these individuals promise
Muture leaders In our country.
De we continue to malntjtin our
ommltment to providing access
ucatlon for needy students, we
' also use Federal resources to
ge excellence. In my Judgment,
bill does an excellent Job of
this objective. The Federal
ti«cholarjhlp bill provides non-
pfble scholarships based solely on
jThe recipients will be students
sPubilc or private secondary
Lwho have been admitted lor en-
nt at an Institution of higher
22705
learning. These awards which will be County police, and the FBI were also
offered in each congressional district, involved in this action. Called 'Oper-
the District of Columbia, and Puerto atlon Cleansweep." the charges result-
ing from these arrests ranged from
possession of small amounts of mari-
juana to possession with intent to selL
This action was taken as part of a
Defense Department effort to crack
down on drug use among military per-
sonnel. This investigation, begun by
the military in April, led as well to the
arrest of a number of civilians who
had been dealing both marijuana and
cocaine. Quantities of LSD. Valium,
and other drugs were also seized in
this raid.
Mr. President, we in America have,
bar none, the finest fighting forces in
the world. We cannot allow otir mili-
tary personnel to be corrupted and
eventually destroyed by illicit drugs.
We must remain diligent in our efforts
to educate our young soldiers to the
potential dangers of drug abuse — dan-
gers that can often have more damag-
ing results than those found on the
battlefield.
Mr. President, I ask unanlmotis con-
sent that the article entitled "70 Are
Arrested at Port Belvoir," dated July
12, 1984, In the Washington Post, be
inserted in the Record.
There being no objection, the article
was ordered to be printed in the
Record, as follows:
70 Aju AutzsTzs AT Port BcLvon— Drdc
f^oBC Bbcai* in April
(By Anndee Hochman and Charles
Pishman)
More than 70 military personnel and civil-
ians were arrested this week after a three-
month drug sweep at Port Belvoir by mili-
tary authorities. Fairfax County police and
the FBI. officials reported yesterday.
Fort Belvoir officials arrested 62 military
personnel on the base In Fairfax County
Monday and Tuesday, most on charges In-
volving possession of small amounts of mari-
juana. It was the culmination of what mili-
tary officials called "OperaUon Oean-
sweep." The military charsei ranged from
POSTAL CONTRACT
NBGOTIATIONS
Mr. DeCONCINI. Mr. President. I
am concerned about recent actions by
the U.S. Postal Service which appear
to be Inflammatory and provocative.
As we all know, the Postal Service and
the Postal Urtions are presently in the
midst of contract negotiations. The
1979 Postal Service Reorganization
Act spells out very clearly how these
negotiations are to take place and tn
what context a decision is to be made.
The Postal Service appears to be
thwarting these procedures by recent
announcements that it plans to reduce
the pay of new hires before complet-
ing negotiation process set by law.
This is bad policy and sends a mes-
sage to postal workers that the system
doesn't work. Mr. President. I believe
the system can work and must give it
that opportiinity. Therefore, I urge
Postmaster General Bolger to with-
draw his proposal (or a pay cut for
new hires.
At the same time, I caution postal
workers to also abide by the rules as
set out In the Postal Service Reorgani-
zation Act. The unions must discour-
age any talk of strikes and show good ''"P'' '>°'^°" "> P?f^'°","!"' ^'f°'
faith In the system. The system can
work and all parties must give it that
opportunity.
The House version of the supple-
mental appropriation bill contains an
amendment prohibiting the Postal
Service from making the changes pro-
posed by Postmaster Bolger. I urge the
Postmaster General to withdraw these
proposals and prevent the necessity of
congressional actloiL
DRUG ABUSE IN THE MILITARY
Mrs. HAWKINS. Mr. President, a
recent Washington Post article points
out, yet again, how prevalent drug
abuse Ls within our military forces.
It Is reported In this article that
more than 70 military personnel and
civilians were arrested by tnilltary au-
thorities after a 3-month drug investi-
gation at Port Belvoir, VA, Fairfax
to sell, according to LL CoL John Ooley.
spokesman for the post.
Ooley said the crackdown on drugs wis
the largest at Fort Belvoir In at least four
years, and involved the use of undercover
officers. d083 trained to sniff out drugs and
searches of personnel as they entered the
gates of the base.
The arrests were said to be part of the De-
feiue DepartmeDt'i effort to crack down oo
drug use among military persoruwl. an
effort that has led the services to condttct
widespread, but unannounced urine tests for
drug usage and to quickly discharge thoae
suspected of using drugs.
Officials said the Port Belvoir arresu were
designed to have a deterrent effecL "We
want to make It known that drug trafficking
on Port Belvoir is not goiiig to t)e an easy
thing to do." Ooley said.
The military investigation. t)egun in AprlL
led to civilian suppliers and resulted In the
arrest of eight Fairfax County residents,
county police said. In addition, two other
Fairfax County residents were arrested at
Port Belvoir Monday by the FBI and
89
22962
CONGRESSIONAL RECORD-HOUSE
through their constituent encourage-
ment, to sign discharge petition 10 and
to allow this most important issue to
go forward. We would hope that you
would not only sign that discharge pe-
tition in the next several days but you
would also sign the public honor roll
that allows the people of your home
district to know that you publicly sup-
port the idea of a constitutional
amendment to balance the Federal
budget and limit ta.xes.
Mr. Speaker, it is the responsibility
of this House to give this most impor-
tant issue to the American public for
their consideration.
SUPPORT DRGED FOR EaTORTS
OF POSTAL SERVICE OFFICIALS
(Mr. DANNEMEYER asked and was
given permission to address the House
for 1 minute and to revise and extend
his remarks.)
Mr. DANTfEMEYER. Mr. Speaker,
in recent days there have been several
media attacks on the Postmaster Gen-
eral and the Postal Service Board of
Governors over the postal workers
labor contract impasse and the Serv-
ice's implementation of a new. lower
wage scale for new hires. These new
wages are based on comparable private
sector wages. Some have even made
the ludicrous charge that these ac-
tions are coercive, union-busting ef-
forts by Reagan appointees to the
Board of Governors. I think it is time
we put this matter into proper per-
spective.
When the U.S. Postal Service was es-
tablished in 1971 as a quasi-govern-
mental operation, part of the intent
was to promote business-like oper-
ations, where the managers were com-
mitted to a concern for profits and
losses. Wages were required by the act
that the Congress passed to be compa-
rable to those wages paid in the pri-
vate sector for similar skills and levels
of responsibility.
The advent of competing delivery
services adds considerable free market
demands on the PostaJ Service to keep
rates competitive and service quality
high. With 35 percent of all postal
costs being labor costs, the manage-
ment and the Board of Governors
cannot ignore marketplace factors. I
think It is high time we stop complain-
ing about high postal rates and then
criticize attempts to contain the costs
that drive up those rates. We must get
behind the current efforts of the Post-
master General and the Board of Gov-
ernors to apply realistic management
principles and competitive wage rates
in the operation of the Postal Service.
I feel these proposals fairly balance
the interests of employees, mailers
and the public in general. Its time to
stop taking cheap shou at the Postal
Service.
THE ANNIVERSARY OF RICHARD
NIXONS RESIGNATION
(Mr. DOWNEY of New York askea
and was given permission to address
the House for 1 minute, and to revise
and extend his remarks.)
Mr. DOWNEY of New York. Mr.
Speaker, it is hard to believe that 10
years ago today Richard Nixon re-
signed his Presidency. You and others
were present in the House at that
time. I was just a ycung man cam-
paigning for Congress.
I think it is appropriate that we take
time to reflect on those 10 years be-
cause it gives us an indication of what
is right with this country and what is
wrong. What is right, of course, is that
we proved ourselves to be a nation of
laws and not of men. that no individ-
ual was exempt from the law. and that
if you undermined the very founda-
tions of our Republic, you would be
punished, as Richard Nixon was when
he was disgraced and forced to leave
the Presidency.
a 1020
What is wrong with us is that we
have a collective amnesia as a nation.
we have forgotten and forgiven, appar-
ently, much of what Richard Nixon
stood for. Forgotten are the things he
did to this Nation, the turmoil he
forced us to go through. The secret"
plan for ending the war in Vietnam
which cost the lives of 20.000 Ameri-
can boys and countless thousands of
Asians before it was implemented.
Today. Nixon is hailed as an elder
statesman and his advice seems sound
when compared with the nonsense on
foreign affairs emanating from the
White House. The proof that in the
land of the blind the "one-eyed" man
Is king.
A nation which understands the les-
sons of history will not be led by the
blind or those who purport to speak
for them.
A igust 8. ^^^ I
c;v.li:u»tion as 'vc know It. Its survi
•vill envy the dead.
Vet. the United States and tj,
Soviet Union continue to edge clos»!
ind closer to nuclear annihllat^^
Still, the United States refuses to re
nounce the first use of nuclear weao!
Otis.
.\r. American poet vrote: "In a dark
time, the eyes begin to see. '
.^ we now face one of the darkest
periods of the nuclear era. we must
begin to see an end to the madness of
the nuclear arms race.
Renouncing the first use of nuclear
weapons would help put an end to
that madness and would bring hope to
ail of us whose lives are shadowed by
the threat of a nuclear holocaust.
HIROSHIMA-39 YEARS AGO
(Mr. WEISS asked and was given
permission to address the House for 1
minute and to revise and extend his
remarks. )
Mr. WEISS. Mr. Speaker. 39 years
ago this week an atomic bomb was
dropped on Hiroshima. At 15 minutes
past 8 on the morning of August 6.
1945. the bomb bay doors of the Enola
Gay opened. Moments later the first
atom bomb ever dropped on the Earth
exploded above Hiroshima City.
In the words of one survivor. August
6 was "the end of Hiroshima, of Japan,
of hiunanklnd."
Our nuclear weapons are now thou-
sands of times more destructive than
the Hiroshima bomb and our nuclear
arsenals thousands of times greater in
numbers. The next use of nuclear
weapons will bring about the end of
THE LATE HONORABLE CARL D
PERKINS
(Mr. HIJBBARD asked and was
given permission to address the Bouse
for 1 minute and to revise and extend
his remarks.)
Mr. HUBBARD. Mr. Speaker, yes-
terday morning more than 3.000
people gathered in the Knott County
Central High School gymnasium at
Hindman. KY. for the funeral of our
beloved friend and colleague, the late
Carl Dewey Perkins. There in that
eastern Kentucky high school gymna-
sium, tributes galore were paid to this
great American. More than 80 of his
congressional colleagues awoke before
dawn yesterday to come to the VS.
Capitol, then to Andrews Air Force
Base, then to the London. KY. Airport
and then an hour and a half drive over
to the town of Hindman, KY, the
birthplace and home of the late Carl
D. Perkins.
Speaker O'Neill's words at the fu-
neral included. "Thousands have
served In Congress, but few have had
the impact that Carl Perkins has."
Our majority leader, Jim Wrioht, re-
ferred to Carl Perkins as "'a giant of a
man In our day." Jim Wright said,
"No man has done more for those who
needed his help than Carl Perkins did
in his 36 years of public servl<»."
I believe our majority leader said It
best as he closed his remarks by
saying, "Carl, your day Is done, your
battle won. Well done. "
On September 11. the Members of
the House will have 4 hours to pay
tribute to the late Carl D. Perkins.
Those of us from Kentucky appreciate
the many colleagues who went to our
State yesterday to pay tribute to Carl
D. Perkins.
Vema Perkins, Carl's widow, and
State representative and Mrs. Can
Christopher Perkins. Carl's son and
daughter-in-law have expressed their
appreciation for the many, various ex-
pressions of sympathy sent to them
since last Friday.
90
August 8, 1984
Potrero Hill's Inhabit&nU share not
only mignificient views of the city and
bay. but a strong sense of community
tits unique even for San Francisco.
Ruth Passen and her family have lived
and worked in Potrero Hill for many
years. She is managing editor and the
driving force behind San Pranciscos
oldest community newspaper, the Po-
trero View. The paper has helped
unify this neighborhood, providing its
people with crucial Information on
issues affecting their lifestyle and en-
vironment.
Ruth Passen Is a crusader whose
mission Is to improve the lives and sur
roundings of the residents of San
Francisco. Over 30 years ago she led a
fight to save a local playground when
a major street was being widened. In
recent years, she has pushed for af-
fordable housing, fought against a
proposed pornography district, op-
posed a large electric utility pumping
station In the neighborhood, and
many other Issues.
She recently received the Daniel
Koshland Award for outstanding com-
munity work from the San Francisco
Foundation. Ruth also received the
Media Award from the Mental Health
Association of San Francisco. Next
month. I will be spealcing at a testimo-
nial dinner honoring her commitment
to the community.
Ruth spends most of her time with
the newspaper and community causes
but also U an avid San Francisco 49ers
fan— a season ticket holder since
1966— and has a deep Interest In the
arts- theatre, symphony, opera, muse-
ums. I am pleased to bring the accom-
plishments of this outstanding woman
to the attention of my colleagues.*
"CRITIQtTE OP UNLAWPOL AC-
TIONS BT THE f>06TAI. SERV-
ICB
HON. BARBARA BOXER
Wedneaday, Augutt B, 19S4
• Mrs. BOXER. Mr. Speaker. I join
my colleagues In expressing my
dismay at the misguided if not unlaw-
ful position taken by the Postmaster
General and the management of the
VIS. Postal Service during the ongoing
contract negotiations. Clearly their ac-
tions In attempting to unilaterally
mandate their two-tier salary schedule
for new postal employees and also
reduce sick leave and other benefits of
new hires Indicates contempt for the
collective bargaining process mandat-
ed in law and disdain for the thou-
sands of hardworking postal employ-
ees whose efforts have put the Postal
Service in the black In recent years.
We often hear officials of the
Reagan administration attack what
they call the arrogance of big govem-
EXTENSIONS OF REMARKS
ment. yet their actions surely reflect
the true situation. Obviously respect
for the law and for the rights of the
little people, the ordinary employee,
are a very low priority for the Reagan
appointees at the Postal Service. Over
the last months and weeks they have
repeatedly and unmistakenably made
clear their determination to impose
their pomt of view despite the require-
ments of the Postal Reorganization
Act of 1970 and In the face of the com-
plete willingness of the employees to
bargain In good faith with them.
As our esteemed colleague Mr. Ford.
the chairman of the Committee on
Post Office and Civil Service pointed
out in a recent letter to the Postmas-
ter General. Mr. Bolger. "private
sector labor law is clear when an im-
passe is reached, management may im-
plement its final offer. The union,
however, has the concomitant right to
strike, thus insuring parity of bargain-
ing power. In this case though, the
unilateral action destroys parity. The
postal unions are tiarred from striking.
The act's factfinding and arbitration
procedures exist not merely as a sub-
stitute for private sector labor's rights
to strike, but also as a substitute for
private section's right to unilateral Im-
plementation. I believe that the uni-
lateral changes that the Postal Service
intends to implement are unlawful
under the Postal Reorganization Act. "
I totally agree with Chairman
Ford's assessment of the Postmaster
General's proposals and hope that the
Members of this House will strongly
respond to this latest administration
flouting of law. For despite all of their
traditional rhetoric and posturlngs the
administration should remember the
words of Clarence Darrow, who once
said. "True patriotism hates Injustice
in Its own land more than anywhere
else."*
SOCIAL SECURITY COST-OP-
LIVING RAISE
HON. THOMAS M. FOGUETTA
IN THI HOUSE or RXmESENTATrvlS
Wednaday, August S. 19S4
• Mr. FOGLIETTA. Mr. Speaker,
soon the House of Representatives wUl
be considering legislation to guarantee
the Nation's 36 mUllon Social Security
beneficiaries a cost-of-living raise this
January. I will be supporting this
effort. Because last year's Social Secu-
rity rescue package postponed cost-of-
living adjustments from July 1984 to
January 1985, without specific legisla-
tion beneficiaries might not receive an
Inflation raise for 3M years.
When the House addressed the
Social Security rescue package last
year, I opposed delaying the Social Se-
curity COLA. I not«d at the time that
a 6-month COLA delay would reduce
23191
benefits. Although the rate was
coming down then and is low now. In-
flation is increasing prices and the el-
derly, on fixed incomes for the most
part, still find it difficult to keep up.
I am pleased President Reagan Is
supporting this effort on behalf of
senior citizens. I must admit, however,
to some uneasiness. After all. It was
President Reagan in his first year In
office who recommended eliminating
the Social Security minimum benefit.
And less than 1 year after Congress
acted to put Social Security on a firm
financial footing, it was President
Reagan on March 29. 1984. who said—
and I quote— * • • what we need to do
is a revamping of the program. "
By supporting legislation to give
Social Security beneficiaries a cost-of-
living raise this January, I hope Presi-
dent Reagan is signaling at last his
willingness to join Congress in the
effort to banish what Franklin Delano
Roosevelt called the "spectre of old-
age destitution."*
TRIBUTE TO MR. AND MRS.
JOHN COWDEN
HON. JAMES R. "JIM" OUN
or viftciifiA
IM THE HOaSZ or REFRESarTATrVES
Wednesday, August S. 19S4
* Mr. OLIN. Mr. Speaker. I would like
to take this opportunity to recognize
the fine efforts of two very historical-
ly minded residents of the Sixth Dis-
trict of Virginia. Mr. and Mrs. John
Cowden of Mlllboro, VA. have on their
own initiative restored Fort Lewis, the
18th century plantation home of CoL
Charles Lewis. Colonel Lewis gave his
life at the Battle of Point Pleasant In
1774, which Is widely recognized as the '
first battle of the American Revolu-
tion.
Fort Lewis, located In Mlllboro,
stretches for 950 acres In a remote
valley along the Cowpasture River In
what Is now Bath County. Colonel
Lewis left his wife and four children
there in August 1774. to Join his Au-
gusta County regiment at Warm
Springs. VA. Soon the 13 companies of
the regiment Joined other units of the
Southern Division and moved west-
ward. Their destination was Point
Pleasant in what is now West Virginia,
where It was hoped that a united force
could succeed In putting down Indian
terror on the frontier.
On the morning of October 10. 1774,
the Colonials were met with a surprise
attack by a large force of the Confed-
eracy of Indian Nations. During 13
hours of fighting, 46 men of the Vir-
ginia line were killed or mortally
wounded. Including Charles Lewis.
Happily though. desplU being greatly
outnumbered, the Colonial troops
were victorious.
91
\J0, J984
^ubllc wxoantAnt. and cons, ler
. -^i^r«sent*Uon of middle Income
I'l bAve recently felt the need to
' lU w*th you regarding some of
lie Issues facing our nation.
r the reports I receive from the
ernliK ^^^ federal budget deficit.
^ coouol over defense contract
'J4J-. W. R- Grace's study and evaJ-
[*5 th« efficiency of the federal gov-
ot, *x«J ^^^ apparent falling of the
gcarity system. I am extremely con-
^ Gome of these issues have been
la long time and I have sat back and
f^ed any opinion at all. t have
jitten you before. Myself and many
-^imerlcans through our own fault
left the Job totally up to you and the
^members of Congress. Our expres-
'mMftd opinions were made when we went
K^poUs to vote. I do not feel that voting
fh. I f^cl ^^^^ ^^^ ideas and opinions
1 to you In this letter. If any. repre-
rast majority of middle Income
r. examining the Issues of the afore-
I paragraph. I find it difficult to
i separate them with regard to flnd-
ble solutions. Let me say that I do
fi^n the solutions, only the opinion of
i Income Americans on what we think
i be done.
1 that there Is an overwhelming lack
1 regarding the federal budget def-
r members of Congress. After all. the
I government does possess the power
nt money. I do not blame the federal
nent entirely for this situation. I
r blame the people of this country for
; themselves to become so dependent
^ ^jocial support. I understand that
■' programs account for a tremendous
I of our national budget. Social serv-
ft][havc gotten totally out of control In
Tcountry. Too many people have come to
'i<}D social security as their primary
■ of retirement Income. What are the
wen? Then there Is the trade off be-
I Increasing taxes or cutting spending
it Reagan has gained much popu-
over the past 3 W years because he did
to get a tax decrease through Con-
J I feel for the first time In history
has realized that tax decreases en-
people to work harder, earn more
y, work more efficiently, spend more
which stimulates economic gixtwth
•-provides more Jobs, and last but not
expect less from their federal govern-
Spending cuts and governmental
must first be dealt with before any
on of a tax increase. Mr. Grace's
and evalutlon of government efflden-
*«bould receive a dose examination and
Ltvpproprlate Implementation as soon as
The defense budget is probably not
but effective cost controls are Inad-
I assume that Mr. Grace's report
this. I believe that Mr. Reagan was
Justified In having the study done. I
t believe that the members of Cen-
tre independent enough to always
fhe way that they would like to.
troubled social security system must
r made solvent. If there must be a tax in-
the Increase should be restricted to
•dal security fund but only In equal
cutB of spending from that fund. Pro-
must be cut to a reasonable level If
■yrtem Is to service Its original Inten-
*upplemental retirement income. I was
to learn the number of federal
programs available to Americans. I
EXTENSIONS OF REMARKS
ask you. Is this what Congress intended for
a system to become? 1 know this Is not a
popular issue because you would probably
lose votes cither way you voted If a major
piece of legislation were Introduced on this
subject. I have a deep respect for the senior
citizens of this country. I do not believe It is
their portion of benefits that has the
system In financial trouble. The endless list
of additional programs which never had ap-
propriations In the beginning are the root of
the problem.
There Is much more that I would like to
say but I will not concentrate your thoughts
on more issues at this time. I would appreci-
ate the opportunity to communicate with
you In more detail concemmg these issues
or on other Issues affecting the people of
this great nation.
Sincerely.
Harold R. Tohey. Jr..
Certified Pubtic AccountanLm
POSTAL NEGOTIATIONS
IMPASSE
HON. THOMAS M. FOGUETTA
or PEWMSYLVAWU
m THE HOUSE OP REPRESENTATIVES
TTiundav. August 9. 19S4
• Mr. POGLIETTA. Mr. Speaker, I
would like to call the attention of the
Bouse to a recent action by the U.S.
Postal Service that offends and disap-
points me.
As Members may know, the USPS
and the postal employees' Joint Bar-
gaining Committee have been at an
Impasse in their contract negotiations.
This is an unfortunate and difficult
situation, but we have mechanisms for
handling It. Under the Postal Reorga-
nization Act of 1970. when the parties
have reached an Impasse, there Is a 45-
day factfinding period, during which
recommendations may be issued to
both sides to encourage an agreement.
If, however, an agreement has not
been reached within 90 days after the
expiration of the current contract, an
arbitration panel is appointed. This
panel has 45 days to Issue its binding
award.
Unfortunately, the Postal Service
has chosen to bypass this objective,
deliberative, and equitable process to
unilaterally impose its last offer— a 23-
percent pay reduction— as the pay
scale for employees hired after August
4 of this year. This unprecedented
action raises several issues:
It may very well be against the law.
Our colleague, William Ford, chair-
man of the Post Office and Civil Serv-
ice Committee, in a letter to Postmas-
ter General Bolger stated, "the unilat-
eral changes • • • are Illegal under the
Postal Reorganization Act." It Is his
Interpretation of the law that, when
an Impasse occurs, the status quo re-
mains in effect until an agreement has
been reached, or the binding arbitra-
tion process is complete.
Beyond the legal question Is that of
the Postal Service's intentions. It is
clear to me that the Postal Service, by
24125
unilaterally implementing an Issue
that Is the subject of negotiations. Is
not bargaining In good faith.
In fact, the Postal Service Is under-
mining the collective bargaining
system. In the private sector, if an Im-
passe of this sort Is reached, manage-
ment has the right to Impose Its final
offer unilaterally. This is balanced,
however, by labor's right to strike.
The postal unions, representing public
employees, cannot strike. Similarly,
the Postal Service does not have the
right to implement Its offer, and that
is why the dispute resolution mecha-
nisms contained In the law are so fun-
damental to the collective bargaining
process. The Postal Service has Ig-
nored these Important procedures.
Additionally, we cannot miss the un-
derstandably devasUtlng effect this
action has on employee morale. The
ridiculousness of expecting employees
whose wage rates differ by 23 percent
to work side by side as an efficient,
productive workforce is exceeded only
by that of expecting postal employees
to trust the Postal Service to bargain
in good faith again.
Mr. Speaker, the kindest thing I can
say about this action on the part of
the Postal Service Is that It Is short-
sighted. What It really is. however, is
arrogant, antlworker, and un-Ameri-
can. It Is probably illegal, undoubtedly
unfair, and unavoidably damaging to
everyone's best Interests. I stand with
postal employees across the Nation,
particularly those In my city of Phila-
delphia, and with other concerned
Members of Congress, In calling upon
the Postal Service to reconsider this
ill-advised action.*
THE BROADCAST STATION
OWNERSHIP ACT OP 1984
HON. TIMOTHY L WIRTH
OPCOLOa«DO
IN THE HOUSE OF REPRESENTATTVSS
Thursday. Axigvat 3, 19S4
• Mr. WIRTH. Mr. Speaker, today. I
am Introducing, along with m; col-
league Congressman Leuutd, the
"Broadcast Station Ownership Act of
1984." This legislation is In response to
the misguided action taken 2 weeks
ago by the Federal Communications
Commission in its repeal of the so-
called 7-7-7 rule, which Umlted the
number of radio and television sta-
tions any one entity could own to
seven AM radio, seven FM radio, and
seven television stations (no more
than five of which could be VHF).
The FCC replaced this rule with a
short term, transitional limit on
broadcast station ownership which
permits an entity to own up to 12 AM,
12 FM, and 12 TV stations. Moreover,
after 1990 under the PCC's new rule,
broadcast station owners would be al-
92
24014
CONGRESSIONAL RECORD— HOLSE
:honty to "zt ".-anslerrra :rom reocral A:a
Hiahways *
MOTION OFfTREO 3V "in. WHITTEN
Mr. WHITTiN. Mr. Speaker. I oifer
a motion.
The Clerx read as ;olIows:
Mr Whittsn moves that the House recede
:rom xis disagreement "O the imenoment ot
:he Senate numbereo 195 ana concur there-
in vith an amendment, .is fo.iows. In lieu o(
the rriatter stnMcn and -nserted oy iaid
■unendmeni. insert the :oIlo*inii:
S3S.0O0.O0O. or xhicr. SI JOOOOO -.nail be
derived 5y transler 'rom the unobligated
balances ot Interstate Commerce Commis-
sion. Salaries and expenses . ind of which
S3. 300. 000 shaJI be derived by transier from
the unobligated balances of Civil .Aeronau-
tics Board. Payments to air earners;",
Mr. CONT2 (during the reading)
Mr. Speaker. I isk unanimous consent
:hai :he motion oe considered as reaa
and printed in the Record.
The SPEIAKER pro tempore. Is
there objection to the request of the
gentleman from Massachusetts (Mr.
Conte]?
There -vas no objection.
August 10, !S8A
:er!ved from
:40TI0N OrfXRED I
ir.ions.
The Conte amendment aces not set
Mr WHITTZN. Mr. Speaker. . o.fer i^^,c^':^ Xv^^''^^^ ^^
''"°''°"- n 50OO (ar.h collec-.;ve bargamme
■vith ts emoioyees. It 3 thai simple
The Postal Seor'janizatior. Act of 1970
iet collective oarsaining as the »ay
:hat vages vouic ie ie: ,'or posui
ti'orise.'s. II agreement cannot be
reached, arbitration must oe usea
T'.-.ere .s no right to stnke. The proce-
dures ire clear and they are fair. The
Postal Service ought to follow the law
in this year's contract negotiatioru
the Postal Service has crossed the line
;rom being a tough bargainer to being
an unfair employer. The Postal Serv.
;ce has hired a jnion busting law firm
:o iet .negotiating policy. It has unila-
The Oerx .-eaa as follows:
-Mr 'VinTTTN -noves thai ;he House T^ctae
'.Torn ,L3 aisaj;r(.*ement :o the rtmencmenl of
the ienatc numoered JOo ana roncur tbere-
in -vati in imenoment. as .'ollows; '.n lieu of
ihe mal'.er jiricxen ana ;nsertea oy iaic
amenament. insert the 'ollowing
52.131.000 of which not to excfea HOO.OOO
shall be de-'iveo from 'State and local assist-
ance" and of which not to exceed i307 000
shall oe derived from Efnergency planning
ina assistance ' ".
Mr. CONTE (during the reading).
.Mr. Speaker. I asit unanimous consent
that the motion be considered as read
and printed n the .Record.
The SPSAK2R pro tempore. !s ,„,,,. ,,,„ ,„ . . ^, ^
there objection to the request of the 1^:;^ "te.mpteo^ establish a two-tier
gentleman from Massachusetts [Mr. '*a8« ^'f^^'n. with .new hires getting 23
CONT^r percent less. Postmaster General
The're was no objection. Bolger has mouniea his soapbox to de-
The SPEAKER pro tempore. The ElYL'^*' ''°^^ worSters. who average
The SPE.\KER pro te.mpore. The question is on the motion offered by '--■'"'O a year, are overpaid. And, to
question is on the motion offered by the gentleman from Mississippi (Mr ■'"''"in- Mr Bolger told the Washing-
the gentleman from Mississippi [Mr. WhittenI. '°" ^°^' '^' Sunday that he is under-
Wkitte-n;. Xhe motion was agreed to. P*''' because he makes only J82.900 a
The .motion was agreed to. The SPEAKER pro tempore. The >■""■•
The SPEAKER pro tempore. The Clerk will designate the ne.xt amend- Although Congress no longer sets
Clerk -.viU designate the ne.xt amend- ment in disagreement. postal rates, we still set the law under
The amendment reads as follows: which the US. Postal Service must op-
Senate amendment No. :08: Page 67. «'^'e The Postal Service has no right
strike out all after line 21 over to and in- '° violate the law requiring collective
eluding line 3 on page 68. bargaining.
MOTION orrxRED BY MR. wHiTTtN Mr. CONTE. I thank the gentlewom-
Mr. WHITTEN. Mr. Speaker. I offer ^ ^■'O'" Colorado for her great contn-
a motion. bution.
The Clerk read as follows: Mr- Speaker. I yield myself such
Mr. WuiTTBi move» tiut Utt House tuist '''"* ^ ' ""^y consume.
oft'ttjT'dlsagjeein^iii lo the amendment of
■tlte Senate numbered JOS. ■
'^"The SPEAKER pro tempore. The
gentleman from Mississippi [Mr.
Whittem] will be recognized for 30
minutes and the gentleman from Mas-
sachusetts (Mr. CONTEl will be recog-
nized for 30 minutes.
Mr. WHITTEN. Mr. Speaker. I have tleman
no requests for time. Conti).
Mr. CONTE. Mr. Speaker. I yield 2 All this does is require the Post
Mr. Speaker. I ask unanimous consent minutes to the gentlewoman from Col- Office to enforce existing law and not
that the motion be considered as read orado [Mrs. Schroeder]. to change regulations. There are nego-
and printed in the Record. (Mrs. SCHROEDER asked and was tiations going on which follow the
The SPEAKER pro tempore. Is given permission to revise and extend normal procedure, and that is what
there objection to the request of the her remarks.) should be done. That is why this
gentleman from Massachusetts (Mr. . Mri. SC£aiOIX>ER. I thank the should be done. That is why this
gentleman for yielding this time to amendment becomes so important, for
roe- the Post Office to continue existing
Mr. Speaker, the House should hold law.
firm on the Conte amendment which Mr. WKITTEN. .Mr. Speaker. I yield
prohibits the Postal Service from uni- such time as he may consume to the
laterally restructuring its employee gentleman from Massachusetts, (Mr.
pay scheme, which is set through col- Bolawd).
ment in disagreement.
The amendment reads as follows:
Senate amendmenl So. 201: Page 63. after
line 23. insen:
Const.-uction. minor projects", an in-
crease of S66d.000 in Che limitalion on the
expenses of the Office of Construction:
MOTION orratEB by mr. whittem
Mr. 'VHITTEN. Mr. Speaker. I offer
a motion.
The Clerk read as follows:
Mr. WHrrmt moves that the House recede
from its disagreement to Ihc amendment of
the Senate numt>ered 201 and concur there-
in with an amendment, as follows: In lieu of
the matter proposed by said amendment,
insert the foliowing:
"Construction, minor projects", an In-
crease of U34.000 in the limiution on the
expenses of the Office of Construction:
Mr. CONTE (during the reading)
CONTE]
There was no objection.
The SPEAKER pro tempore. The
question is on the motion offered by
the gentleman from Mississippi [Mr.
Whittem).
The motion was agreed to
Mr. ADDABBO. Mr. Speaker, will
the gentleman yield?
Mr. CONTE. I yield to the genUe-
man from New York.
M^: ^P/^^^Qt'^ thank the gen-
tlemsiriTor yielding.
Mr. Speaker, the House should stand
by the amendment offered by the gen-
from Massachusetts (Mr.
The SPEAKER pro tempore. The lective bargaining. This amendment ..itt BOhAlfD. I thank the gentle-
prevents Postmaster General William man.
P. Bolger from cutting the pay of new .Mr Speaker. I rise in support of the
employees by 23 percent. The Postal amendment offered by the gentleman
Service announced this plan on the from Massachusetts,
day the old collective bargaining Mr. Speaker, as a member of the
«.338.ooo. of which not to exceea S800.000 agreement ran out. There is no doubt conference of the 1984 supplemental
shall be denved from Slate and local assist- that this move was an attempt by the appropriations bill. I strongly support-
Clerk will designate the next amend
ment in disagreement.
The amendment reads as follows:
Senate amendmenl No. 205: ?a«e f>5. line
stnke out "'l. 514. 000" ana insert
93
lo. im
CONGRESSIONAL RECORD— HOUSE
24015
, House position on the Conte
.ifdnient to preserve neutrality In
, ongoing factfinding and arbitra-
,1on process involving the U.S. Postal
service and over 500.000 to its employ-
ees.
The Conte amendment prohibts the
use of appropriated fiinds to imple-
ment unilateral changes in pay and
benefits pending the outcome of the
statutory procedures set forth under
the Postal Reorganization Act. The
sole purpose of this amendment is pre-
serve neutrality and the status quo.
No party may do anything to effect
compensation changes except by
reaching mutual agreement or by im-
plementing the award of the statutory
arbitration board.
Mr. Speaker. Congress should not
become involved In postal contract ne-
gotiations. In fact, the Conte amend-
ment does not do that. The amend-
ment is designed to prohibit the Postal
Service from imposing an unfair, uni-
lateral action before an agreement Is
reached or the impasse mechanism are
exhausted. This amendment deals
only with the process of negotiations,
not the issues under consideration.
Our colleague Congressman Ddall,
the principal author of the Postal Re-
organization Act. has said on this
issue: "It was the intent of the 1970
law to require that no changes in
wages and working conditions should
be established before the Postal Serv-
ice and the union either reach agree-
ment on a new contract or the impasse
procedure has been fully exhausted."
Mr. Speaker, adoption of the Conte
amendment is Congress way of recon-
firming the intent of the 1970 law
passed by Congress. This amendment
Just mandates that the n.S. Postal
Service live up to this lav. It would
prohibit the Postal Service from using
any appropriations to implement the
two-tier pay system, reduced annual
leave, and reduced sick leave for new
employees.
Therefore, Mr. Speaker, I continue
to strongly support the position of the
House conferees on the Conte amend-
ment.
Mi. CONTE. Mr. Speaker. I yield
such time as be may consume to my
good friend, the gentleman from Ne-
braska [Mr. Daob].
Ur. 'DVIB.Jl appreciate my friend
from Massachusetts yielding to me.
Mr. Speaker, I rise in support of the
amendment offered by the gentleman
from Massachusetts [Mr. Conte] and
commend the gentleman for his advo-
cacy on this issue.
The point here is one of fairness.
The VS. Postal Service provides a
unique and vital service to this Nation
and. thus, the Postal Service and Its
employees are covered by a unique set
of laws that are encompassed in the
Postal Service Reorganization Act of
1970.
Key among the provi^ ons of this act
are the rights of the postal workers to
bargain collectively and the prohibi-
tion against strikes by postal worl^ers.
The law also provides the framework
for the settlement of disputes and the
intent of the law is clearly to prevent
unilateral action by either side.
The Conte amendment underscores
this intent. We expect the postal
worker to stay on the Job during any
contract negotiations. They, in turn,
expect us to protect their right to
have their grievances negotiated in
good faith.
These mutual expectations are ad-
dressed in the postal laws and should
be respected. I urge the House to insist
on the Conte amendment to assure
that they are.
I thank the gentleman again for his
courage.
Mr. CONTE. Mr. Speaker, I yield
such time as he may consume to my
good friend, the gentleman from
Maryland [Mr. HoyerI.
^Mr. HOYER. I thank the gentleman
from Massachusetts for yielding.
Again, I want to join others in con-
gratulating him on his leadership on
this issue. I was pleased to rise and
speak on behalf of this amendment
when the House adopted it when the
bill was on the floor of the House.
I would urge the House to strongly
support the gentleman from Massa-
chusetts and the House's position in
this amendment because, as has tieen
pointed out. it simply retains the par-
ties in status quo during the period of
time that they are in arbitration.
D 1620
Unlike private-sector employees, the
public employees cannot walk off, and
we do not want them to walk off, have
a Job action, or strike. As a result, I
think it is important that we adopt
the gentleman's language, and I am In
strong support of our retaining and re-
jecting the Senate's position.
Mr. SiKaker, I rise in strong support
of affirming the position of the House
in true disagreement with the Senate
on the Conte amendment prohibiting
the Postal Service from restructuring
employee compensation levels.
The Conte amendment, which
passed the House by voice vote last
week, essentially restates congression-
al Intent by protecting the collective
bargaining rights of postal workers.
Two weeks ago. the Postal Service uni-
laterally decided that employees hired
after August 4. 1984. would take a 23-
percent cut in salary. The Postal Serv-
ice refused to bargain on this pay cut
and, instead, has informed postal em-
ployee organizations that we
will implement, effective the next pay-
roll period, the pay schedule, annual
leave, and sick leave benefits for new
employees contained In that final
offer."
This amendment takes no sides in
the negotiations oetween the Postal
Service and the unions which repre-
sent postal employees. Instead, the
amendment protects those employees
not yet hired by the Postal Service
from the arbitrary, and uiueasonable
actions of the Postal Service. Addition-
ally, the amendment serves a warning
to the Postal Service that the Con-
gress will not tolerate self-serving in-
terpretations of the law.
The actions of the Postal Service are
ttireatening a cooperative labor-man-
agement atmosphere at the Postal
Service that has resulted in the U.S.
Postal Service being the most efficient
and productive postal system In the
world. The Conte amendment Is nei-
ther a prolabor nor a promanagement
vote. Instead it is an absolutely essen-
tial statement by the Congress that ar-
bitrariness in the collective bargaining
is not only violative of congressional
intent. It also will not be tolerated by
the Congress who worked long and
hard to craft a fair bargaining process
in the Postal Reorganization Act of
1970.
I urge my colleagues to overwhelm-
ingly endorse the House's position on
this amendment.
Mr. CONTE. Mr. Speaker. I yield
such time as he may consume to the
gentleman from New York [Mr.
GlLMANl.
Mr. OILMAN. Mr. Speaker. I rise in
strong support of the gentleman's
amendment, and I commend the gen-
tleman from Massachusetts [Mr.
CONTZ] for bringing the measure to
the floor at this time, a very critical
time during some very important ne-
gotiations. The Conte amendment to
the conference report on HJL 6040.
the supplemental appropriations bilL
prohibits the use of appropriated
funds to implement unilateral changes
in pay and t>eneflts pending the out-
come of the statutory procedures set
forth under the Postal Reorganization
Act It will send what I believe to be,
that which is currently most needed
by the management of the U.S. Postal
Service [USPSl: A strong, unabashed
signal that they must follow the law.
The Postal Service Reorganization
Act of 1970 grants the postal worken
the right to bargain collectively. This
law Is designed to protect the public
interest In that it provides for an or-
derly and fair process to negotiate
union agreements. If an existing con-
tract expires and the parties Involved
are at an Impasse, then a 4S-day fact-
finding period begins. If the Issues are
still not resolved at this point, then
negotiations are referred to a three-
member arbitration board to conclude
a binding agreement.
At no point, Mr Speaker, does the
Reorganization Act allow postal work-
ers or management, to ignore the proc-
ess that it so clearly sets down. We
94
CONGRESSIONAL RECORD— HOUSE
August 10, 198i
Ai. our postal employees to rerrain mail ir we let it function the way it is ihe Conue amendment restores the
^striking or any job actions. Uke- supposed to. status quo and ensures neutr«lily
Se we also expect management to All the Conte amendment does is to while the sututory process works Its
'work with labor to resolve difficulties, say. "Dont do anything foolish. Wait will. The Postal Service may not use
With the current negotiations head- and let the rules work the way they any funds made available to it under
ing for the binding arbitration stage, are supposed to work. Dont try to any act— including the Postal Reorga-
this is not the time to create ill will, take advantage of each other." nization Act— to implement compensa-
Both parties are going to have to work i would call on all the postal work- tlon changes except in accordance
hard at accepting the agreement that ers. if this amendment is adopted, to with a negotiated agreement or an ar-
will be handed down to them. If observe the fact that Congress has bilration award.
morale is damaged now. it will be that asked them to hold the sutus quo. and i urge support for the House posi-
much harder to heal any wounds later, i would ask that managment would re- tion od the Conte amendment.
The Conte amendment that was spond in kind by going back through Mr. CONTE. Mr. Speaker. I thank
unanimously adopted by the House the process the way they should and the gentleman from Michigan [Mr.
Just over a week ago, is designed to not provoke untoward action by Forb).
prohibit the Postal Service from im- anyone. Mr. Speaker. I yield myself such
posing, unilateral action before an j^^ Speaker, the sole purpose of the time as I may consume,
agreement is reached. However, news copte amendment is to preserve the Mr. Speaker, the House conferees by
reports point out that the Postal Serv- integrity of the statutory factfinding a vote of 15 to 1 agreed to hold firm on
ice announced that new employees wUl ^^^ arbitration process which, if al- t^is provision. During the conference
be paid about 24 percent less than ig^gj to work, will resolve the present late last night, the Senator from
those already on the employee roles. collective bargaining impasse between Alaska offered a substltuU amend-
Such a move would circumvent the ^^^ ^ g postal Service and the unions ^g^t. a sense of the Congress resolu-
spirit of sound and fair management/ representing over 500.000 postal em- tion. This subslituU was unacceptable
employee relations In order to pre- pjoye^s. to the House.
serve neutrality and the sUlus quo in ^ ^^ all know, these negotiations j hope the House wUl now insist on
the bargaining process, I urge my col- ^^^^ ^^en troubled from the start, and ^^ position.
leagues to support this a^ndment ^^^ existing contracts expired at mid- Throughout the short life of this
^'.i^^^ThP m,v7^^ume to the "^eht on July 20 with no new agree- provision there has been a lot of con-
'.Pnnerj, ^om Sga^nJr FORD] ment having been reached and numer- f^i^n. the misunderstanding. «id a
gentleman from Micnigan iMr. roRDj. ^^^ <,o„troversial issues outstanding. ,„„ „i.i„„Hf„»- ct.f.,^.„.« .ho„t thi<:
Title 39 of the United Stales Code
prescribes an orderly, fair, and peace-
few misleading statements about this
funding prohibition.
Essentially, this amendment is de-
ful process for resolving postal bar- ^^^^ ^ ensure that the Postal Serv
gaining disputes such as this. I regret ^^^ Reorganization Act of 1970 is im-
the chairman of the Committee on
Post Office and Civil Service.
Mr. FORD of Michigan. Mr. Speak-
er as the chairman of the committee
a-irh iiiH-;diction over authorizing leg- gaumig uL»t.u..ci. o^iv... j^o w.«. . 'j-o-" jce Reorganization Act oi i»(u is im-
^latioTfor the Post Off ce Turge in '« feP°"' however, that one party to p,en,enled as the Congress intended,
^hf strongest pos^fblete^ that we the dispute-Postal Service manage- ^e law provides for a specific, orderly
^cep °hT ta^Uon on ^enditures ment-is not adhermg to th^ Pr~:^- and fair procedure to establish a col-
known as the Conte amendment. Ir^^^ of pui^uuig its goal^ peace- ^^ bargaining agreement for some
Po7about 14 yearTnow. since 1970, fuUy. 'h^°"8h/h« '*^'"'°'I '^^^li 600.000 postal workers,
we have had a lawful process on the ^8 ^^ arbitration Process Postal j.^ ^^ ^^^^ Members are familiar
books written by some of us here. I Service management on July 25 umlat^ ^^^ ^^^ current stalemate in employ-
was one of those who participated. eraUv Implemented a new pay and ^ contract negotiations. The Utest
along with President Nixons people, benefits system for incoming employ- ^^^^ contract expired on July 20.
It could not be called a prolabor or an e^ 1984; 600,000 unionized employees are
antllabor solution that we reached. If Pnvate-sector labor law is clear ^^^ working without a coUective-bar-
we would go back and look al the de- When Impasse Is reached man^e- gaming agreement. At the end of the
bates, we would find that there was so ment may implement its imai oner, negotiation process, both sides were
much of an agreement that there was The union, however, has the concoml- ^^^ ^^^ ^^p^^t from reaching
never an argument In the committee tant right to strike, thus ensuring ^r^^n ground. However, the specific
or on this floor about those provisions parity of bargaining power, in inis ^^^^ involved in the negotiations are
governing what happens IX the bar- case, though, the umlateral action de- ^^^ ^^^ nzson for this provision. In
gaining between the 500,000 employ- stroys parity. The postal unions are ^^^^ ^^^ Congress attempted to depo-
ees of the Post Office and manage- barred from striking. The act s fact- ^^^^^,^ ^ ^^^j, ^ possible, the work-
ment breaks, down, if there Is an Im- finding and arbitration compensation p^^^^ Service. The prob-
passe. procedures exUt not f ere'/. »f, *.="''• 1^^ now is not with the parUcular
We provided a piece of machinery, stltute for private sector labors right demands under negotlaUon.
and we said, "You wlU go through to strike, but also as a substitute for ^ ^^^ ^^ ^^^ rocess as
these steps, and then you wlU abide private sector management s right to ^^^^^ ^ j^^ ^^
and you wiU both be bound by what unUateral Implementatlou. " ^^^ Service ReorganlzaUon
those steps produce." For the first I believe that the unilateral changes The J-^i^^ ^ ^^^^„
time since that has been on the books, that the Postal Service mtends to im- AC' oi i» ^*^S«aln coU«:tively. De-
posul management, for reasons that plement are lUegal under the Postal ^f^^«^' pro^cT^e pubUc Interest,
escape me. has taken this action. I do Reorganization Act. When he act J^^~ J° f^vides for an orderly and
not think the Postmaster General passed, it was my understanding, the j"* '* ^cks to n««°'-'»'« "^°" ~"-
would have done this without serious understanding of the committee, and J!^ P5°fffr-!fti u an ex^lng con-
interference from people who never the understanding of the Congress "^ f*;"^^^'^' ^^^^^ U^oWed
should have been meddling in this that. If any disputes remained upon '^'^ '^"^i^p^ '^e^4t-<iy facT
''^^^rev^nrU^'has happened '^^"^'^J.^^t^^'^^^ ^^ ^^ ^f J "'tf^e ?i^
now ^Vovc^ti^e andlooUsTand ^r^ulred to respect the status quo stU "°'/,^ ^l"* »' "^ P«f VtSiSI:
threatenSs the continued daUy oper- pending exhaustion of the dispute res- K°">"°,"t ."!„^'*"^rd^ » '^
atlon of the PosUl Service, which this olution machinery esUblished by sec- member arbltmion board to conclude
year will carry 130 bilUon pieces of tlon 1207 of title 39. a \>\nd!ini agreement.
95
,tO. 198i
CONGRESSIONAL RECORD— HOUSE
24017
^tum for this right to bargain This merely puts back In place the from Massachusetts for his Ic \dershlp
^cively. we expect postal employ- language and makes It possible for the on this Important Issue.
/lo refrain from strikes or any job Postal Service to continue Its present Mr. BARNES. Mr. SpeiLker I rise In
^lons. The experience In 1970 should employment procedures, not to make strong support of the amendment of
remind members of the reason for this any changes until such time as a final the gentleman from Massachusetts
prohibition. determination is made either by arbl- (Mr. Corm) for a number of compel-
Recent news reports about unilattr- tration or by any other means. ling reasons:
Mr. Speaker. I urge my colleagues to First, we have to play by the rules,
support the motion offered by the This amendment simply asks the Post-
chairman of the committee. master General to play by the rules as
The SPEAKER pro tempore. The set forth In the Postal Reorganization
newly hired employees would be paid Chair recognizes the gentleman from Act. The rules say that Postal Service
about 23 percent less than current Mississippi [Mr. WHrrrEM). must bargain collectively with its em-
workers. With the negotiations head- Mr. WHITTEN. Mr. Speaker. I ployees. If the parties cannot agree,
ing for the binding arbitration stage, would call attention to the fact that in the rules provide a reasonable process
the Postal Service has decided to the beginning I got unanimous con- for resolving the dispute. When the
sent for all Members to revise and Postmaster General of the United
extend their remarks on this bill or States announces that he regards the
any amendment thereto. rules as an Impediment to his plans for
Mr. Speaker, I sneld such time as he the Postal Service— and when the
may consume to my colleague, the Postmaster General puts his plans
gentleman from Wisconsin CMr. above the law — Congress must re-
KirrTKtl. spond.
Mr. KUBCZKA. Mr. Speaker, I rise Second, maintain effective postal op-
In strong support of the motion to eratlons. The Issue before vis Is not
al moves by the U.S. Postal Service are
disturbing to many Members of Con-
gress. Including myself: 2 weeks ago,
the Postal Service announced that
Impose one of its demands, subverting
the process povlded in the Reorganiza-
tion Act. This Is unfair and a breach of
the agreement reached by Congress In
the 1970 Reorganization Act.
This amendment is designed to pro-
hibit the Postal Service from imposing
this unfair, unilateral action before an
agreement is reached. The amendment
deals only with the process of negotia- insist on disagreement to the Senate whether postal employees should be
tions. not the Issues under consider-
ation. It says that there can be re-
structuring of the employees compen-
sation practices until there is a negoti-
ated agreement as provided by the
law. If there are changes to be made In
employee compensation, let those
changes develop as a result of the ne-
amendment regarding the prohibition paid at one level or another. Employ-
on the use of funds by the U.S. Postal ees rightfully regard the Postmaster
Service for the purpose of restructur- General's action to Implement a two-
ing employee compensation practices tiered system as a breach of faith. At a
and I ask unanimous consent to revise
and extend my remarks.
time when the Postal Service operates
at a surplus and postal employee pro-
Mr. Speaker, the Postal Services Re- ductlvlty is second to none, such a
organization Act of 1970 grants postal
gotiation process designed by Congress employees the right to bargain coUec-
and in effect for 14 years.
Let me emphasize to the House, the
amendment Is not an attempt to take
sides in the dispute, but an effort to
make sure that the procedures man
tively and establishes an orderly pro-
breach of faith makes no sense. I sin-
cerely hope that those who interpret
the Postmaster General's action as an
cedure for the renewal of contract effort to provoke confrontation with
postal employees have misinterpreted
the Postmaster General's Intentions.
Nevertheless, I believe that the gentle-
agreements. On July 20, 1984, the
latest union contract expired and re-
newal negotiations appear
dat«d by the Congress are followed headed toward binding arbitration as man's amendment will encourage the
during this negotiation. The Congress provided in the 1970 Reorganization Postmaster General to take steps to
Act. avoid confrontation.
The House language became neces- Third, no one wants to disrupt or
sary when the Postal Service an- Impair postal operations right before a
noimced that new employees hired Presidential election. If we invite the
after August 4, 1984, would be paid at consequences of the Postmaster Gen-
23 percent less than current employ- eral's proposal. If we allow postal de-
has an obligation to insure that the
spirit and intent of the law Is full-
fUled. Postal workers are Federal em-
ployees and should have all the rights
and protections reserved for them by
the law, nothing more or nothing less
I urge my colleagues to insist on the ees. This urUlateral restructuring of livery to be disrupted, we are playing a
House-passed position.
The SPEAKER pro tempore. Does
the gentleman from Mississippi (Mr.
WHrrrEN) seek time?
Mr. WHITTEN. Yes: Mr. Speaker.
Mr. Speaker, I yield such time as he
may consume to the gentleman from
California (Mr. Rotbal], the chalr-
the employee compensation system very dangerous game of economic and
undermines the entire collective bar- political roulette. I am sure that my
gaining procedure set up by the Con- colleagues understand that this Is a
gress. The House language Is In no game without winners. If we allow the
way intended to prejudice either side Postmaster General to play this game.
In the current contract negotiations. It our economy will lose and the taxpay-
Is designed merely to assure that em- ers will lose. Equally Important, we
ployee wages and other compensation should not let the Postmaster Gener-
man of the subcommittee which deals matters are decided through negotta- al'i Intransigence have any direct
^tta tbls subject;
Mr. ROYBAL. Mr. Speaker, what
tion and not imposition. Congress de- bearing upon the 1984 election,
veloped the collective-bargaining proc- Fourth, collective bargaining and
this amendment actuaUy does is Just ess for postal workers. It Is the duty of sound management. The Postmaster
restore the language that was deleted
by the other body, the language that
was passed by the Bouse, language
that I think should be restored.
The language reads:
Congress to make certain that process General has expressed his distaste for
the collective-bargaining process. He
regards It as an Impediment to effec-
tive management of the Postal Serv-
ce.
The Postmaster General believes
works.
When Congress denied postal em-
ployees the right to strike, we prom-
ised them an orderly and fair process
None of the funds made available to the to resolve contract disputes. The arbi-
U.S. Postal Service under this or any other trary action by the Postal Service cuts that the reasons that required Con-
Act may be used to restore employee com- ^^ ^^e heart of that promise and gress to enact coUectlve-bargalnlng
S^Jl^n&7ff';^u"«u«Jfei:SUSg Ifvf 'h« employees with "ttle ln«n- laws no longer apply. Bijt th,^ rea-
under secUon 12M of tlUe 39 Dnlted SUtes "** ^ "'* "P '*' *-^^^ ^^^ °' -^^ •>"■ ">"* <*° apply. It's Just as true today as
Code, except in accordance with the result S^^- " "as 50 years ago that It's better to
of prxxxdures set forth in section 1207 of I urge Members to support the resolve conflict between an employer
such title. motion and I commend my colleague and his or her employees peacefully
96
CONGRESSIONAL RECORD— HOUSE
August 10. 1984
reasonably, 't will be ironic salary system. It precludes funds for good-faith efforts In the coUecUve bar
^. if the Postmaster General's ac- an action that Is possibly illegal and gaining process.
^ catalyze the Kind of reaction certainly devastating to the morale of
j,ti collective bargaining has enabled postal workers, a group of workers de-
j4 to prevent. serving praise and respect, not union-
I urge Members to support the gen- busting threats and criticisms of em-
tleman's amendment, because in the ployee pay and t>enefit levels
Mr. Speaker, when Congress passed
final analysis no one in this Chamber
who has any understanding of busi-
ness In our country believes that it's
either fair or responsible to ask em-
ployees to work side by side— doing the
same work— when one group earns one
fourth less pay.
Time and again this body has gone
on record on the principle of equal pay
for equal work. This instance is no ex
The implementation of a two-tiered
pay and benefits system Is a clear re-
jection of the fair play and Integrity
intended by Congress between employ-
ees and management as outlined m
the 1970 Postal Reorganization Act.
the Postal Reorganization Act m 1970 The Postal Service Is bullying its em-
it expected that labor disputes remain-
ing on the expiration date of any col-
lective-bargaining agreement would be
resolved within the confines of the dis-
pute resolution procedures established
in section 1270 of that act. I believe
ployees. The action was unilateral,
that Is. employees have no way to
fight back, they are left with no re-
course.
It is not my Intention, nor was It the
.. . .. ., . ,1. .,...>. intention of the gentleman from Mas-
that the unUateral chariges that the sachusetts. to take sides in these i
Postal Service intends to implement
ception, because we understand all too are. at worst, illegal under the act. and
well that schemes that cook up wage at best, clearly contrary to the intent
differentials such as this one offer us a
recipe for madness.
Mr. POGLIETTA. Mr. Speaker. I
rise In strong support of the Conte
amendment, and urge my colleagues to
reaffirm the House's original position
on this important issue.
The facts are clear. The Postal Serv-
ice and the Postal Unions are at an im-
nego-
tiations. What this amendment does,
what I insist upon, as do many of my
colleagues, is a return to fairness In
contract talks— no more, no less.
The Chairman of the Post Office
and Civil Service Committee. Mr.
_^ Ford, put it clearly In a letter he sent
u!ion. however h^ the"co"i^co'mit^t '".^'".^ES^'*^ General Bolger when he
of Congress when it passed the legisla
tion.
Private sector labor law is clear;
when impasse is reached, management
may implement its final offer. The
right to strike, thus Insuring parity of
bargaining power. In this case,
though, the unilateral action destroys
passe In their contract talks, and the parity. The postal unions are barred
Postal Service has gone ahead and uni- from striking. The act's factfinding
laterally implemented a policy that Is and arbitration procedures exist not
one of the main issues of contention— merely as a substitute for private
said. "Whatever is achieved by this
action is being purchased at the cost
of a generation of 111 will and devastat-
ed morale."
I strongly urge my colleagues to sup-
port this amendment. It is by no
means a partisan Issue. It Is a question
a 23-pcrcent wage rate cut for new em- sector labor's right to strike, but also °' Justice. It is a question of living up
ployees.
In the private sector, when manage-
ment imposes its last offer, labor has
the right to strike. In the public
sector, however, we resolve the con-
flict through binding arbitration, as
the law specifically requires. Just as
the public employees do not have the
as a substitute for private sector man-
agement's right to unilateral imple-
mentation.
I believe that the unilateral changes
that the Postal Service intends to im-
plement are Illegal tmder the Postal
Reorganization Act. When the act was
to the spirit of the law as well as the
letter.*
• Mr. D'TMALLY. Mr. Speaker. I rise
in strong support of the Hoyer-Conte
amendment. The amendment would
prohibit the postmaster from using
funds in this supplemental to enact a
passed, it was my understanding, the two-tier pay system within the Postal
right to strike, public-sector manage- understanding of the committee, and Service. Under the Postal Reorganiza
to the understanding of the Congress "on Act. procedures were set in place
that, U any disputes remained upon for resolving disputes between postal
When the House first considered the expiration of any collectlve-bar-
ment does not have the right
Impose its offer.
this Issue during debate on the supple-
mental appropriation bill, it had the
wisdom to Include language prohibit-
ing the Postal Service from acting uni-
laterally and destroying the carefully
crafted balance of power that the law
workers and management. Without
this amendment, the postmaster
would carry through plans already an-
nounced to unilaterally lower wages
and benefits for a new postal workers
by 23 percent, thus creating a two-
gaining agreement, all parties would
be required to respect the status quo
pending exhaustion of the dlsput reso
lution machinery established by sec
Uon 1207.
The provisions of the act that bar class system within the Postal Service,
creates. It's really the only fair thing the right to strike and establish the I believe that In 1970 the Congress set
to do. fact-finding and arbitrary procedures in place a workable system for negotl
This is not a vote on whether or not were meant to be as much a control on
you like the current wage scale for management as on labor. The act con-
postal employees, or even whether you sciously traded away rights usually en-
necessarily support the Postal Onions Joyed by labor in return for fair and
on this point of disagreement. In reall- Just practices by management,
ty. this Is a vote for the process, and Mr. Speaker, support of the Senate
for fairness. I urge my colleagues to language more than condones the
stick with the equitable position that action taken by the Postal Service. It Ignore the system set up by Congress
we first took on this issue, by Insisting applauds and rewards It. I do not to deal with matters of this sort. The
OD tbe House posltloo. think that this Congress should be in issue of the two-tier system was
Mr. MORRISON of Connecticut, the practice of offering such rewards, brought up In the course of negotla-
Mr. Speaker. I rise in support of the I urge this body to vote for the tions to renew the Postal Service
Conte amendment which restores to Conte amendment to send a message workers contract which expired on
H.R. 6040. the urgent supplemental, to the management of the Postal Serv- July 21. That Issue, and Indeed the
Ice that we respect the law and so
should Ik
• Mr. OARCIA. Mr. Speaker, the gen-
tleman from Massachusetts Intro-
duced an amendment regarding the
atlng contracts and wage disputes. As
all of your know, postal workers are
not allowed to strike to gain their
rights. Their only recourse Is the
system we have set up for negotiating
disputes.
We must not allow the postmaster to
the orglnal language passed by the
House of Representatives when It
voted on this bill.
This amendment, the language of
which was deleted in the other body.
prohibits the Postal Service from contract talks between the U.S. Postal
using appropriated funds to Imple-
ment Its unilaterally Imposed two-tier
new contract itself, have not yet been
settled. It Is premattire to say the least
for the postmaster to announce that
as of August 4 of this year new hires
will come In at a much lower wage
than others who are now doing the
Service luid employee unions that puts same work as the new hires would do.
Into perspective the Importance of His action Ignores the process this
97
10, im
CONGRESSIONAL RECORD— HOUSE
24019
j^-
■ss set In place. It Ignores the would be used In the event of a stale-
ColemAn (MO)
„' of workers to bargain for fair mate In bargaining. coiST" '^"
^fttment. and it cuts against a belief Postal Management and all Mem- con»bi»
pat many of us hold strongly— that bers of Congress must realize that our conu
^ple who do equal work should get constituents depend on a reliable ^^"
equal pay. I think we must uphold the Postal Service— and we do have the coreonn
HoyerConte amendment. We must do best In the world. Our constituents couthim
it if we really believe that the laws also have more direct contact with couner
Congress sets in place should be fol- Postal employees than with any other
lowed— even by other Government of- Federal employees— including their
ticials. And we must do it if we believe Representatives in Congress,
that employees deserve the chance to The arbitration process in the Postal
negotiate for a fair wage.* Reorganization Act was designed to D«rt»n"'
• Mr. LEXAND. Mr. Speaker. I rise in insure the continued reliable oper- r^uchic
support of the amendment offered by ation of the Postal Service through a o*"''
my colleague Mr. Conn:. process where impartiality is the rule. ^nlS"
As chairman of the Subcommittee The employees, who are spread cwwuk
on Postal Personnel and Modemiza- throughout the country, need to be as- Dickinjon
tlon I strongly oppose the action taken sured that Impartiality and objectivity 51?^ „
by the Postal Service's Board of Gov- will prevail In settling disagreements pSJiuy
emor? and Postmaster General to uni- that are not settled through primary Domn
laterally impose pay for further hires contract negotiations. D"'""*
of the Postal Service. This action by i am concerned that the Postal Serv- 5?^'
the Postal Service does not conform to jcg's losing sight of that can only Duncm
the sututory standard of good faith, result in strained long-term relations Durtin
the standard in all collective bargain- between the employees and the Postal ^!^
Ing. Service management. Since so much of Dy,o„ '
When this body passed the Postal the mission of the U.S. Postal Service Ectut
Reorganization Act of 1970 it set up a consists of direct service to the public "««»
process of collective bargaining which m every city. town, and WUage. I urge I^^JJ^Jii',
was to be a bUateral process between ^oth sides to place their faith In the Edw.nu<OK>
the VS. Postal Service and the Postal arbitration process and proceed In Emtnmn
Onions, clearly intending that these good faith with one another.* Sf"^H
parties were to be equal partners in m,. WHTTTEN. Mr. Speaker. I yield SJSoa)
the process. The clear intention of the ^ack the balance of my time, and I Evinxn,)
act was that the status quo, that is, move the previous question on the ■'•««''
the contract provisions that the em- motion. F*"h»n
ployees are presently working under. The previous question was ordered. Pirti„
should remain In effect untU the par- -phe SPEAKER pro tempore. The "elds
ties have come to agreement on the question Is on the motion offered by 5^
terms of a new contract. the gentleman from Mississippi CMr. ^.Sw
It Is the responsibility of this body WHmTH). p»«ii«u
to see that the VS. Postal Service ^he question was taken; and the ^^'
compiles with both the letter and speaker pro tempore announced that ^',^\
spirit of the law. This amendment will t^e ayes appeared to have IL romta
require the U.S. Postal Service to f^ CONTE Mr Speaker. I object fnnt.
comply with the mandate and intent to the vote on the ground that a 2?^
of the Postal Reorganization Act. quorum Is not present and make the S!!So.
which is to maintain the sUtus quo p^int of order that a quorum is not odtmon
until the arbitration process is com- present Otkim
pleted. I urge my coUeagues to support ^he SPEAKini pro tempore. Evi- g^^
this amendrnent^* dently a quorum Is not present. ouitricii
• Mr. AJjBOSTA. Mr. Speaker, the xhj Sergeant at Arms will notify GUdmum
VS. Postal Service announced on July absent Members. oonMio
25 that It was unilaterally imposing a ju, „^ ,^ taken by electronic S^Jf^
reduction In pay and benefits, on the novice, »od Uiwe wan—st*s OT8, nays on<UKo
order of 23 percent, for new employees f^Qpt voQng it, aa loUcraK Onmm
and a freeze (or all other worker's pay. •*'-^"*-*"~-"_'-fi't,-*",™,~** °^
The Postmaster General took this irouno. jtoj Gr^
action in spite of the fact that the lack YEAS— 378 ou«rini
of an agreement between the parties Ackermmn Benncu BroinxCAi auDdenoa
In the time provided under the Postal Aidmbbo B.reuttr Brom (CO) Hiii (DO
Reorganization Act had already trig- i|^ ^™" ^"""^ ^'°°
gered the mandatory arbitration proc- Anderson
ess required by the Act. Andrrwj <nC)
The Postal Service contends that it J^^„''^'
has the legal right to Implement its AnUiony
last proposals, or final offer, since the Appioau
parties have reached an impasse. This ^^}''
would be true, and fair, and logical U xSSin
the postal workers were not forbidden sunud
by law from striking. Since they are Bama
forbidden to strike, the act provides an IJJ^'"
automatic arbitration process. The Bedcu
Congress intended that this process Beuensoa
HIUU
Holt
HopUn*
Horton
Hoycr
Hubbard
Huckaby
Hutto
Hyd»
BenncU
Berman
Bevtll
Blatll
BUlrakb
BUley
Boehlert
BogSB
Boland
Bonior
Booker
Boraki
Boaco
Boxer
Britt
Broomfleld
Brown <CA)
Brovn (CO)
BroyhlU
Burton (CA)
Burton (IN)
Campbell
Carney
Carper
Can
Ctiandler
Chappell
Chappie
Clay
Clloger
Coata
Coelbo
Crane. Daniel
Crane. PhiUp
Crockett
D' Amours
Daniel
Dannemeyer Jones (HO
Jones (OK)
Jones (TN)
Kaptur
Kaslch
Kaslenmeier
Kennelly
KDdee
Kindness
Kleizka
Kosovsek
Koller
Kostmayer
LaPaioe
Lafomarslno
Latta
Leach
Lehman (CA)
Uland
Lent
Uvln
Levltas
Levis (CA)
Lewis (PL)
UvtnsstoD
Uoyd
Loeiner
Lan8(LA>
Long (MD)
Lowery (CA)
Lowry(WA)
Lunsren
Mack
Madlsao
Haikey
MarleDce
Martin (IL)
Martin (NT)
Martlnei
Mataul
MavTtHiles
MasaoU
McCain
McCandlea
Mcaast«y
McCoUum
HcDade
McOisUi
MeHu*b
McKenian
McKlnney
HcNulty
Mka
MIUerlCA)
Miller (OH)
HineU
HaU. Ralph MInlsh
Hamilton MitcheU
H«pnm»r<i'hm)rft Moaklcy
Hance
Hansen (ID)
Hansen (ITT)
Harkln
Harrison
HartAcU
Hawkins
Hayes
Hefner
Heftel
Hertei
HichtAwer
Hller
Moilnari
Moiiohan
Montcomery
Moody
Moore
MofTlaoo 1<7T)
Morrison (WA)
Mrasek
Murphy
MuTtha
Myers
Natcher
Nelson
Nichols
03rten
Oakar
Obentar
Obey
Olln
Orttz
Ottln«er
Oxiey
Packard
Panetu
Parris
Paahayan
Patterson
Pepper
Petri
Pickle
Price
Rahall
Ranee I
Ratchlord
Ray
Retula
Reld
Richardson
Ridge
Rinaldo
Ritter
Roberts
Robinson
Roe
Rcctenkowskl
Roth
Roukema
Rowland
Roybal
Sabo
Sawyer
Schaefer
Sdmelder
Schroeder
Sdbumer
Selberllni
Sensenbrenner
Sharp
Shaw
Shuster
Slkorskl
Slslxky
Skccn
Slattery
Smith (PL)
8mltb<IA>
Smith (NX)
anlth <NJ>
Smith. Denny
Snowe
Bolara
Solomon
Spent*
SpraU
St Germain
Staoers
Stanfeiand
Start
Stenholm
Stokes
Stratton
Studds
Sundquist
SwUt
Synar
Tallon
Taylor
Thomas (CA)
Thomas (GA)
Torrleelll
thtaU
Valentine
98
10. im CONGRESSIONAL RECORD— HOUSE 23979
.utlon jervica The previous question wii ordered. tal appropriation blU. Ai my col-
hu><)ic*pped rt- The resolution was agreed to. leagues Icnow. the Senate added 216
/■ ■ ■ ;»;■ hi" 34.SOO.000 ^ motion to reconsider was laid on amendments. Increased the amount of
^Znzn9i<^/i'' 57.500.000 the table. appropriations over the House blU by
jjnt lo CivU Service ^■^^—— 11.600,000.000 The Senate bill was
i-,ment and Diabll. „,„^,^ REPORT ON RESOLUTION PRO- Zl\o^l^T^''^'}}l^„''"' """^ °''"
/Pund 238.081.000 vTniNr, FOR rnN<;ini:-RATTOV 'he 302 budget aUocatlon.
icy for IniematlomLl nJ?H 5 ,^,^ r a? Vi^R^A «m '^he conference report we bring you
development.... IIS^HSSJ n^^^S iJ^ <^1^? '■^^^ has corrected much of that. The
yrcased pay costs 2.087.932.000 DERNESS ACT OF 1983 ^^^^ totals are as follows'
Ov?fl2ri"n°c!«?"""' ".in^oSSS; *^ ^''^ "' Louisiana, from the p,„,d.nts request ' M.343.780.170
eSicuSL (511.450.000) Committee on Rules, submitted a priv- House p«sed-. -.. 5.M4.624.400
House-passed 5.384.624.400 lleged report (Rept. No. 98-980) on the Senate passed 8.983.228.070
Senate-passed 6.983.228.070 resolution (H. Res. 573) providing for Conference •treement 5.817.318.000
Conference agreement... 5.817.318.000 the consideration of the blU (H.R. Compared to:
Compared to. 1437). the California Wilderness Act of Presidents request -S26.428.170
House-passed +432.693.600 1983, m the House, without interven- House passed +432.693.600
Senate-passed -1.165.910.070 ^^ ^„j,j,„ ^^ j^e Senate amend- Senate passed -1.164.910.070
Mr. Speaker. I yield such time as he ment thereto, which was referred to ^^- Speaker, to reach this agree-
may consume to the gentleman from the House Calendar and ordered to be ment we were In session until after
Massachusetts CMr. Coinx.l printed. midnight last night.
(Mr. CONTE asked and was given ^^_^^___ Major items in the bill are:
permission to revise and extend his re- , , _ ,_ Pood stamps I700.000.ooo
marks.) GENtltAL LEAVE Public Law 480 175.000,000
Mr. CONTE. Mr. Speaker. I rise in Mr. WHITTEN. Mr. Speaker. I ask DOD— operaUon and
support of this resolution, which unanimous consent that all Members „'?^'*°*"" 275.»oo.ooo
makes in order the consideration of may have 5 legislative days In which to SSz^h ^J""^^ — 'SSS'SS
the second supplemental appropria- revise and extend their remarks on the pEMA^meigency — food '"•"~'*~
tion bill for fiscal 1984. conference report and amendments re- and shelter 70 000 000
I hope It is clear lo all Members that ported In disagreement on H.R. 6040, Veterans programs 48s!»«8!ooo
the only question before the House is: and that I may include extraneous and (Loan defaults) (lOO.oooiooO)
Shall the House consider the supple- tabular matter. (Compensation and pen-
mental? The rule does not waive The SPEAKER pro tempore. Is sions) (284.900.000)
points of order or otherwise affect the there objection to the request of the (Readjustment benefits). (82.200.000)
consideration of the conference re- gentleman from Mississippi? Strategic petroleum re- .,.,0-,^
port. The rule only waives the 3-<lay There was no objection. gjf^ -r^';^ ^biii 45».iwww
rule so that this conference agreement .^^.^.^^ grants 25 000 000
can come before the House for action. ^^^^ ^^.^ ov H B P»°>^y sMui'iii^«"!"__ eoioooiooo
The conference agreement conuins ^9111*^*^^Sm^m=pl ^^ Rehablllutlon services
the recommendations of the conferees .„„U^i^°^lP„ "i^Vir^'fSr^ ^^ handicapped re-
on 216 individual amendments. The APPROPRIATIONS ACT. 1984 search 34.200.000
supplemental contains funds for food Mr. WHITTEN. Mr. Speaker, I call Corporation for PubUc
stamps, veterans' benefits, and pen- up the conference report on the biU Broadcasting (1984/S/6). 57.500.000
sions. and civil service retirement. (H.R. 6040) making supplemental ap- u^ment and 'dSwilS
The P(30d Stamp Program is effec- propriations for the fiscal year ending (yj,j 238 081000
lively out of money. There is not September 30, 1984. and for other pur- Agency for Intematlonai
enough money to make the allocations poses; and pending that request. I ask Development 195.095,000
to food stamp recipients for the unanimous consent that such confer- Increased pay costs 2.087,932,000
month of September. ence report and all amendments in dls- Department of Deleoae-. (1.576.482.000)
The three veterans' programs agreement be considered as having Civilian agencies (511.4SO.000)
funded In the bill are very close to been read. It is essential that these fimds be
running out of money— veterans' com- The Clerk read the title of the bill. made available for the remainder of
pensatlon and pensions, veterans' re- The SPEAKER pro tempore. Is the fiscal year for entitlement pro-
adjustment benefits, and the veterans' there objection to the request of the grams and others will be exhausted
loan guarantee fund. gentleman from Mississippi? early In September. Here we provide
And the bill contains funds for the There was no objection. funds until the new fiscal year which
Federal pay raise that went Into effect The SPEAKER pro tempore. Pursu- begins October 1, 1984.
last January, and to pay the dvU serv- ant to the unanimous-consent agree- As this list shows, funds provided
Ice retirement and disability fund for ment. the conference report is consid- here reach every part of the United
the additional personnel benefits that ered as having been read. States and touch the lives of most of
must be paid because of that pay raise, (For conference report and state- our people. As I have pointed out
which took effect under existing law. ment, see earlier proceedings of the many times, whatever our situation.
When we vote on the rule, we are House of today. Friday, Aug. 10, 1984.) whatever our debts and obligations. It
not voting on the supplemental or on The SPEAKER pro tempore. The Is imperative that we look after our
any of the Individual programs In it. gentleman from Mississippi CMr. country. Its protection and develop-
We are simply voting to bring the bill WHirtEM) wUl be recognized for 30 ment— that we l(5ok after the well
before the House for Its consideration, minutes and the gentleman from Mas- being and health of our people and
I will vote "yes" and I urge my col- sachusetts [Mr. Conn:) »111 be recog- their education,
leagues to do likewise. nized for 30 minutes. In my own area, I point out that we
Mr. LATTA. Mr. Speaker, I have no The Chair recognizes the gentleman provide for assistance on the gulf
further requests for time. from Mississippi (Mr. WHimw). coast, provide further study of plans
Mr. LONG of Louisiana. Mr. Speak- Mr. WHITTEN. Mr. Speaker, I yield to provide flood protection In the
er. I have no further requests for time, myself such time as I may consume. Pearl River Watershed which to a
and I move the previous question on Mr. Speaker, I present the confer- great degree surrounds our State Cap-
the resolution. ence report on the second supplemen- Ital of Jackson.
99
Mr. McHuGH. I thank you all very much, first of all, for being
here this morning and taking time out of your schedules. I and the
subcommittee appreciate it. But also to you and to CRS for the
very fine work you've done in response to our request to look at
this issue.
I want to assure you, as we go forward, your report is going to
be very valuable to us in helping us better understand the menu
of options and roads to addressing the question. And we are very,
very grateful for that, even at this early date in point in time.
I would yield to either of my colleagues. The gentlelady from
Florida or
Mrs. Meek. I'd just like to commend CRS. In keeping with your
usual style of being exceptional in your presentation, I like the way
it was organized. It was easy to follow and sequential.
Thank you.
Mr. McHuGH. The gentleman from Texas.
Mr. Green. Mr. Chairman, I don't have any questions, but the
reports are very good and I'm just glad that CRS is not furloughed
because obviously they're here today.
Mr. KlEFER. We regard ourselves as essential to serve the Con-
gress during this period.
Mr. McHuGH. Let me begin on a rather broad basis. You are all
very well-respected analysts in your field, and come with admirable
credentials. Through your association and probably other endeavors
in your life, but certainly through CRS, you had an opportunity to
study a lot of different issues.
I'm guessing that this may be the first time you've had the op-
portunity, however, to look at the U.S. Postal Service in any pro-
longed way. I'd be fascinated to hear what, if anything, as you went
through this, struck you positively, negatively, surprisingly, about
this whole system. Did anything stand out? We're among friends,
you may speak.
Mr. Gelb. I am relatively new to the topic, and what struck me
is that even after helping to coordinate a 70-odd page report, I real-
ized how many things we might have covered and maybe one could
say should have covered, and didn't, even with whatever time we
had, more detailed analyses of the alternatives which, when I was
going through that, there are so many variables, so many if s, so
many possible alternatives one could have structured. Aiid, as I
said in my comments. Congress has the option to custom design al-
most anything. That struck me as just an incredible range of possi-
bilities, given whatever objectives Congress may choose. And in ad-
dition— I'm sorry, I lost my train of thought, to be honest.
Mr. KiEFER. Could I add a comment, Mr. Chairman?
Mr. McHuGH. Please.
Mr. KlEFER. I served primarily in the role as a reviewer in this
project and went through it two or three times in its whole and
made review comments that caused my colleagues some extra work
sometimes. But that gave me the opportunity to see the forest as
opposed to each one of the trees. And I was struck in that process —
also as you indicated, not being an expert in the Postal Service, but
with economics training generally — I was struck with the very dif-
ficult issue that you focused on in your introductory comments £ind
have also been clear in the earlier testimony and discussion, and
100
that is the difficulty in organizing this particular service in that
there are elements of a public service and a public objective to be
achieved here.
Perhaps the nature of that has changed over time, but nonethe-
less, there is a public interest and there is thought to be a Grovem-
ment interest in the provision of a service to be universally avail-
able and at certain prices and certain quality of service. The con-
flict of those objectives with the objectives of trying to make this
service operate more in a businesslike manner and attempting to
increase its efficiency and move more in the direction of a private
sector operation is at the center of the difficulty that you all face
as decisionmakers. The difficulty that tension creates for the cur-
rent postal operation also impinges on any decisions you make
about changing its structure.
Mr. McHUGH. Any suggestions?
Mr. KlEFER. The decisions are all yours.
Mr. McHUGH. You sound very unlike my wife.
Does anyone else have any general observations about what im-
pressed you or failed to impress you most?
Yes, Mr. Gelb.
Mr. Gelb. I'd like to add that I also was struck by the universal-
ity of the problem in other countries. I didn't touch upon that in
my necessarily condensed statement, but as Representatives
Rohrabacher and Crane referred, other countries have made var-
ious steps to try to improve their systems. But all this, whether one
agrees with the measures that they took or not reflects the com-
monality that all industrial countries have this problem of having
established a national postal service of some type and, given
changes in the world around us, are faced with competition and
other problems and have seen fit to make some modification in
their systems. So we are — the United States — ^isn't in this alone in
a certain sense.
Mr. McHuGH. The gentleman from Texas.
Before I yield to the gentleman, I would like to acknowledge
gratefully the presence of the gentleman from Maryland, Mr. Ehr-
lich. And any opening comments the gentleman would like to
make?
Thank you.
The gentleman from Texas, Mr. Green,
Mr. Green. Thank you, Mr. Chairman.
Let me just throw out a question, because last year I had the op-
portunity to visit with both the chairman and the British Postal
Service officials and talk to them about their privatization efforts.
To a regular person it seemed like their Postal Service was much
more all encompassing than ours. They were talking about tele-
graph and telephone. And when I asked them, I said: Well, are you
thinking about privatizing your First-Class, your actual postage de-
livery? And they said: Oh, no, we're talking about telephone and
telegraph, which has never been part of our Postal Service in our
country anyway.
And I know two of the sponsors were here and talked about other
countries that are privitizing and Argentina comes into mind.
In response to the last question, could you tell us some of the in-
dustrialized countries, are they going to the point that is suggested
101
by the bill today, or are they really just talking about privatizing
from the more structured view that some of the industrial democ-
racies in Western Europe have had for years, where, we've always
had a Postal Service, but never, included telephone and telegraph
and other things. Could you just do some comparison with other in-
dustrialized countries?
I know our two sponsors talked about Sweden and other ones
who are actually giving up their monopoly on First-Class, although
the monopoly on Second-Class and other was given up a number
of years ago. I think it's only First-Class that's retained.
Mr. Gelb. The broad tendency is, one, to retain universal service,
whatever the nature of the resulting entity, whatever the changed
structure is. All the postal services are required to provide univer-
sal service. Under them, mentioning the Representatives Crane
and Rohrabacher's bill and the employee ownership aspect, none of
them provide for employee ownership. One or two or three privat-
ization moves are not of that nature.
In terms of the electronic messaging and participation in that
kind of activity, a couple of them, to my recollection, are partly en-
gaged in that. For example, they accept electronic messages at the
sender's post office, send it electronically to the intended receiver's
post office, and there it's converted into hard copy and sent by the
usual delivery system.
The others, some of the other countries permit their postal sys-
tems to engage in other kinds of activities, related or not, business
activities, deliveries, commercial delivery services, even separate
electronic services, and so on. Of course, it wouldn't be the same
country that would be in the partial electronic service. So that
there is some, among other industrial countries, there is some
move £md there is some permission to allow their postal authorities
to engage in other businesses other than strict delivery of mail as
we have — as we usually understand strict delivery of mail to be.
Mr. Green. OK. We're talking about two different things,
though. We free up our Postal Service to do other things by statute,
but the bill we're considering today is actually a private corpora-
tion. And do you know of any of the other industrialized countries
that are doing that? And you particularly said that none of them
would eliminate universal service. Is that correct?
Mr. Gelb. Correct.
Now, I'm going to have to refer to my own report to see which
countries actually — now Argentina, to my knowledge, at this point
only plans to privatize. And then the Netherlands is partially
privatized.
Mr. Green. You could consider that our Postal Service could be
partially privatized then, because of competition with UPS and
Federal Express.
Mr. Gelb. Then we are — I was speaking of the privatization of
the Government authority itself.
Now, I certainly, I — there is no disagreement that in terms of the
delivery of messages in the system as a whole, part of that eco-
nomic activity is in private hands, given, you know, Federal Ex-
press, et cetera, yes.
Mr. Green. OK. Thank you, Mr. Chairman.
102
Mr. McHuGH. All of the bells and buzzers indicate that we do
have a vote. It's my understanding that we have a single amend-
ment vote on a larger bill and I at least will be back.
If I could impose upon your time even further, if we could just
stand in adjournment for a brief time, I will go over and vote as
quickly as I can and come back. I know the other members of the
subcommittee had pressing schedules, but I hope they can join us.
So if we can stand in recess for hopefully no less than 10 minutes,
no more than 15.
Thank you.
[Recess.]
Mr. McHuGH. If we could reconvene the hearing.
I didn't quite make my self-imposed deadline but not too bad for
a man of my advancing years.
Mr. Gelb, you were responding to the gentleman from Texas, Mr.
Green, about the structure of some of the overseas privatization ef-
forts in other Postal Services. I understood you to say you weren't
aware of any employee stock ownership efforts. Is that true?
Mr. Gelb. That's right, yes.
Mr. McHuGH. There are, however, are there not a number of
stock corporations where the sole holder of those stock issuances
are the Government in question. New Zealand comes to mind. Is
that true?
Mr. Gelb. I don't know if they are — I don't know for sure if — I
want — I'm sorry, could you re — could you repeat the question?
Mr. McHUGH. Yes. It was my understanding, and I may be
wrong, that's in part, why I'm asking the question. Are there a
number of overseas privatization, technically privatization efforts,
where the owner of the privatization effort is the Government in
question, so that the corporate — the postal corporation issues stock,
that stock is then totally held by the Government?
Mr. Gelb. With respect, Mr. Chairman, if the Government owns
the stock, I don't know how that would be a privatization.
Mr. McHuGH. Well, that was going to be my question.
Mr. Gelb. I mean, there are — in the case of the Netherlands, I
am advised during the intermission that by now they sold off about
two-thirds of their postal authority, but it would mean that the
shares are now approximately one-third held, one-third held by the
Government.
Mr. McHuGH. Which effort was that; Netherlands?
Mr. Gelb. The Netherlands.
Mr. McHuGH. Yes, well, then let's revert, for a moment. If
they've sold off two-thirds, at one time they held all three thirds.
Yes?
Mr. Gelb. Well, I am not familiar with the precise procedure
that was followed. It is possible that at the time they decided to
even partially privatize, that they issued stock at that point and
then sold 30 percent of it to private individuals or organizations.
Mr. McHuGH. Well, the question I wanted to pursue, and just for
the record now that I've totally confused everybody, is that I'm
wondering if there is a hybrid of privatization that somehow keeps
Government in some way associated with the effort.
The gentlelady from Florida was talking about who's responsible,
is there any connection with the Grovemment and does the Grovem-
103
ment have over a privatized Postal Service the opportunities to try
to assert a national good, if you will, whatever that good might be.
As I understood Mr. Rohrabacher's response, no, that wouldn't be
the case. I was wondering if there was a middle ground. And that's
something we'll have to pursue.
Mr. Gelb. Well, apparently if that is the case, unless and until
the Netherlands or any other country sells off 100 percent of own-
ership of a partially privatized postal authority, well, then I would
assume that the public interest is being now represented by the
ownership of the third.
Mr. McHuGH. How did those other postal services treat the re-
quirement that we have in the United States of universal service
at uniform price? I mean, do they just rely upon competition to de-
liver the mail at the best possible service or is there a mandate
even in privatization that they require universal service?
Mr. Gelb. There's a mandate even in privatization, at least so
far as what we would call First-Class mail or letter mail, is a bet-
ter term to use.
Mr. McHuGH. Yes. And that seems to be a pretty universal re-
quirement among these other
Mr. Gelb. Among the — among the 9 or 10 countries in the study
that I used, and one or two others — other studies — it seems to be
a universal practice to have universal service among those coun-
tries I am aware of.
Mr. McHuGH. At the same time, while they are operating under
the universal service requirement, do they or do they not also have
monopoly protections on that particular class, obviously?
Mr. Gelb. In some cases yes, in some not. I think in — in a lot
of these cases — or in some of the cases, although privatized, in a
few cases that are privatized, totally privatized, the privatized en-
tity is, either was, or has come to be, such a dominant firm in the
industry that it's virtually effectively a monopoly, even if the law
doesn't give it monopoly power.
Mr. McHuGH. OK. We have a third panel here today, comprised
of individuals who at least in part I expect are going to make some
comments about the management structure of the Postal Service.
As you're well aware, we have the Postmaster General as well
as a Board of Governors. How often is that kind of dual layer of
administration found in other nations, if at all? Is this somewhat
unusual in your study?
Mr. Gelb. The — in the other countries that the report looked at,
there are varying degrees of Government supervision of the postal
authority. I didn't get into the management structure of the postal
authority itself. In some varying degrees, the postal authority has
to present its budget to some supervising Government authority
and the extent to which that occurs varies among these countries.
Mr. McHuGH. Would any of you, and I don't mean to single out
you, Mr. Gelb
Mr. Gelb. That's OK.
Mr. McHuGH [continuing]. But you took a look at an area that
at least for this point in time is one of the more interesting, were
you able to give an evaluation as to how these privatization efforts
are going? It's one thing to privatize. I mean, whatever the defini-
tion we may accept on that in its varying degrees, and I think we'd
104
all agree that, and I said this before, privatization like beauty is
in the eye of the beholder — it depends what you do and how far you
go along the scale. But how are these Postal Services doing, first
of all, compared to what they were before? And second of all, com-
pared to the United States?
We hear, for example, that the United States statistically is one
of the most productive, one of the least cost in terms of the price
of a stamp in the world. Those who don't particularly find them-
selves in support of privatization would say therefore why would
we do it just to say we did it? What's your impression of
Mr. Gelb. I didn't — the sources I looked at did not have any cov-
erage as to the relative success or lack of success, however one
might define it, whatever criteria one might use so far as how well
or how poorly those privatization efforts have gone. So I'm sorry,
Mr. Chairman, I can't answer your question.
Mr. McHuGH. That's a fair response. Let me throw out a general
question. And it leads into all kinds of other areas, but let me put
the whole plate before you and see what you'd like to do with it.
You undoubtedly heard Congressman Rohrabacher predict what
the next 5 years and beyond would be like, vis-a-vis postal activi-
ties, the delivery of First-Class mail versus electronic utilization.
How would you describe the current Postal Service's ability to com-
pete in those emerging technologies? And how do you foresee their
future vis-a-vis declining market share in that area?
Mr. Gelb, Well, it appears that the Postal Service right now is
effectively prohibited from participating in the electronic source of
communication. And so I — in fact, Bemevia McCalip told me that
a number of years ago it made some effort to engage in some elec-
tronic form of communication or participate in that, and was told
it should stop doing so by Congress because it was competing with
the private firms.
And so it seems — it seemed to me that right now it can't. It ap-
pears that it wants to broaden its base by — ^you probably read in
yesterday's newspaper or heard otherwise, that it's planning to go
into selling prepaid telephone calling cards, which I guess is some
attempt to go into the telephone business. But other than it seems
to me a relatively indirect means of doing so, its options right now
seem to be, my observation, pretty low.
Mr. McHuGH. Ms. McCalip, were you going to add something?
Ms. McCalip. Yes, I might add that in the past the Postal Serv-
ice has ventured into other areas, such as electronic messaging un-
successfully. Generally they have had mixed success in dealing
with other areas other than their core business of delivering mail.
For example, in 1982 when they initiated electronic-computer-origi-
nated mail, which was ECOM, there was a lot of controversy, there
was a lot of conflicts.
The Postal Service apparently did not adequately adjust its rates
£ind the businesses that it competed with were dissatisfied. They
eventually terminated that program because it was not profitable,
it did not pay its own way, and showed no signs of doing so.
So they are, as I understand it, getting into — I don't know if I
can actually say it's electronic messaging, but in the long term
there are plans to offer a kiosk system, which would allow access
to Federal information through that system. I understand that is
105
a long-range plan. But nevertheless, they are looking into remain-
ing competitive in the electronic field.
Bernie was trying to explain the system that I understand the
Postal Service will be offering soon, which will allow the Postal
Service to sell telephone plastic cards which will be issued by
American Express. And that is more or less like a stored value-
added card, which will allow access to long distance calls through
any telephone. But in terms of venturing into electronic messaging
at this present time, I don't believe the Postal Service is doing so.
Mr. McHuGH. At the risk of getting myself in trouble, my grand-
father who heard about karoake just before he passed away, said
it seems to be the worst of two worlds, bringing together people
who can't drink with people who can't sing. But how would you
react — and I don't mean to suggest they shouldn't — this is why I'm
going to get myself in trouble.
I found it a very intriguing proposal when it came over my desk
yesterday. And the reason I set the stage in that fashion was, as
I understand it, there are other efforts internationally much along
these lines, where other postal services do indeed in Europe, for ex-
ample, sell phone cards such as this.
Did you come across that in any of your
Mr. Gelb. I didn't, but the material wasn't such that it nec-
essarily indicated it covered every single activity of these postal au-
thorities. So I couldn't say yes or no based on the material. But I
wouldn't be surprised if it were the case.
Mr. McHuGH. OK.
The question that faces this subcommittee, among many others,
is that do we allow or require the Postal Service to go into the elec-
tronic field?
There are those who say that it is totally inappropriate because
the Postal Service was never designed to do that; that in large
measure, and I suspect in part, Ms. McCalip, this is what hap-
pened to the Postal Service in 1982: it's an untested field even now
in 1995 in large measure, and we shouldn't be speculating with the
Postal Service in those areas.
Conversely, other people say as we look toward the future, a la
Congressman Crane — this is going to be where communications are
headed. And if we still expect the Postal Service do its job of hard
copy delivery, which I happen to believe is going to continue for a
long time no matter how revolutionary the electronic revolution
might be, we need to let the Postal Service compete in those areas.
How would you respond to that dilemma?
Mr. Gelb. It's — it's kind of a choice — it's kind of throwing to-
gether two problems or concepts in a sense. One, you're trying to
deal with what do we perceive to be the role of Government in pro-
viding postal service — and I'm using postal service in quotes — ^be-
cause there is the other part of the conceptual dilemma, is how
broadly do we define postal service?
If a company that was making horses and buggies in the late
19th century viewed itself as being in a horse and buggy business
and automobiles came along, then it went out of business, if it
viewed itself as providing transportation for individuals, then it
might have thought of producing automobiles as well and then sur-
vived well into the 20th century. So, it's partly a decision by the
106
country as to what extent it sees the pubUc service role of commu-
nication between all its inhabitants and businesses as a sufficient
public good to maintain a Grovemment presence, and on the other
hand, whether it views — how broadly it views postal service or
communication service as to whether sending e-mail — some Grov-
emment participation in sending e-mail is a justified activity in
terms of binding the Nation together as the Postal Reorganization
Act phrases it. So that's about the only way I can respond.
You have to realize that there are two continuums involved. One,
what do you perceive to be the extent of the role of Grovemment
service, and one, what extent, how broadly or narrowly do you view
the communications market?
Mr. McHuGH. Any other panelists like to respond to that?
Mr. Kaiser, you had rec — ^you recommended that the Postal Serv-
ice followup regularly and meaningfully on the findings and rec-
ommendations of the Inspector Greneral. What led you to that con-
clusion? Please expand on that a little bit for me.
Mr. Kaiser. There were a series of suggestions that we had and
one of them has to do with improved management and concern for
waste, fraud, inefficiencies, and abuse. And clearly the offices of In-
spector General are premier offices in detecting and preventing
such problems within an organization.
Quite often what we have seen, ever since the establishment of
the statutory offices of Inspector General back in 1978, has been
that they've been neglected by Congress and often by agency heads
and officials. And these offices should be a key focus for any over-
sight that is done by agency management, top level management,
as well as the Congress.
The U.S. Postal Service received an OIG in 1988 through some
amendments that were in fact enacted by your full committee,
House Committee on Grovemment Reform and Oversight. So it has
a new statutory IG that was created at that time. But I have no
specific illustrations where the recommendations might have been
ignored or avoided by the Postal Service IG. But clearly, that's a
key ingredient to combating those problems.
Mr. McHuGH. And for the record, how would you respond to the
choice of retaining the current structure within the Postal Service
or making it more independent outside the Service?
Mr. Kaiser. Well, the current Postal Service IG is relatively
independent, has the statutory protection so that the Postal Service
IG can hire his or her own staff. They're to be given complete ac-
cess to all the records and materials and reports that the agency
has, direct access to the agency head, reporting directly to the
agency head and to Congress. So there are a variety of protections
that the statutory IG in the Postal Service already has.
The one difference is under the current structure, the Inspector
General is an appointee of the Postmaster Greneral after consulta-
tion with the Board of Grovemors, as I recall. Another change
would be to make that Inspector General nominated by the Presi-
dent and confirmed by the Senate, the way Inspectors General are
at the larger Federal agencies; clearly the Postal Service is a fairly
large Grovemment operation.
107
Mr. McHuGH. Well, I want to thank you for your time. We could
continue this for some hours, but obviously you all have schedules
to keep, as do others here, and we should be moving along.
But let me restate my appreciation to you and to CRS. Your com-
pilation of data has given us an invaluable resource and a valuable
point of information from which I know we will draw in the future.
I will ask that we leave the record open. Also, we may submit
to you some written followup questions? If you'd continue your gen-
erosity should that occur, and perhaps respond to us on those in
the future we would appreciate that, too.
So with that, thank you all very much. We appreciate your being
here.
Mr. KlEFER. Thank you very much, Mr. Chairman. We would be
very pleased to assist you in your work on this subject as you go
forward.
Mr. McHuGH. Thank you, sir.
Mr. KlEFER. Thank you.
Mr. McHuGH. Our final panel here today is made up of former
postal appointees and executives whose collective experience spans
the quarter century of existence of the Postal Reorganization Act.
The subcommittee welcomes former Postmaster General Tony
Frank; former Postal Rate Commissioner, Patti Birge Tyson; and
former Senior Assistant Postmaster Greneral and Kappel Commis-
sion executive director, Murray Comarow.
I want to particularly thank, well, all three, but a special regard
to Ms. Tyson and Mr. Frank, for flying from Chicago and San Fran-
cisco respectively at their own expense, I might add, for the benefit
of this subcommittee. And we are deeply appreciative to you two
as well as Mr. Comarow for being here today.
And I say with great certainty these three witnesses have seen
the Postal Service operate from the inside and I know their testi-
mony will be invaluable to the subcommittee in our continuing ef-
forts to develop reform initiatives. So with that, thank you again
for being here.
And I would in the order of left to right, for no other reason than
precedent, that, I'd ask Mr. Frank — ^well, before we do that, again
according to the rules of the subcommittee, if all three of you would
rise and swear the oath.
[Witnesses sworn].
Mr. McHuGH. Thank you.
The record would show that all three responded in the affirma-
tive.
So, Mr. Frank, welcome. Thank you for being here and we're
looking forward to your remarks.
STATEMENTS OF ANTHONY M. FRANK, FORMER POSTMASTER
GENERAL; PATTI BIRGE TYSON, FORMER POSTAL RATE
COMMISSIONER; AND MURRAY COMAROW, FORMER EXECU-
TIVE DIRECTOR, KAPPEL COMMISSION, AND FORMER SEN-
IOR ASSISTANT POSTMASTER GENERAL
Mr. Frank. Thank you very much, Mr. Chairman, and Mr.
Green. It's a great pleasure to have been invited back here after
3y2 years not back in this city.
108
I gather there are two questions which need to be addressed
here, and I'll attempt to do so.
I have submitted a brief statement for the record and my oral
statement will be even more brief.
I believe the first question is, should there be a commission to
take a look at the Postal Service 25 years out from its inception?
I do think it's important to do so, to have an outside commission.
Unfortunately, I gather that the conmiission is caught up in a
pro-union, anti-union consideration as to whether it should be
formed, and I deplore that. I think, in the main, unions of the Post-
al Service are well organized and function well in the best interest
of everyone, not just their members. So I'd like to see the commis-
sion formed.
The second question is, should the Postal Service be privatized?
And my answer to that is absolutely not. It should not be
privatized.
As you already pointed out, Mr. Chairman, the mission of the
Postal Service is universal service at a uniform rate. That can't be
done if it's privatized.
I think what's needed here is not drastic surgery. I think what's
needed here is a mid-course correction, with a relatively few items
at that. The first is pay. I'm so pleased to hear that the Senate
passed a pay increase for the Board of Governors of the Postal
Service. It hadn't had a raise since inception 25 years ago, as I
point out in my paper. Either they were dramatically overpaid then
or they're dramatically underpaid now, and obviously we all know
which it is.
I am disappointed in the quality of the members of most of the
Board of Grovemors. I think in some measure it's due to pay. I be-
lieve that the board has turned out to be, as blunt as my last
name, supine. I think there are items that are not even referred
to them for consideration, and I pointed out the recent $2 billion
gift to the American Postal Workers Union, wasn't even given to
the Board of Governors and to the best of my knowledge, no Grov-
emor has ever complained about not having been able to deal with
that. Well, that just is not something that could happen in the pri-
vate sector.
So I'd like to see the Governors be a little bit more businesslike.
I'd like to see some pay increases for the management along the
lines of the original charter. The original charter said that the pay
of the officers and employees shall be commensurate to private sec-
tor, and that's clearly not happening.
I guess the average CEO in the private sector gets paid too
much, some 80 times the average worker. But here in the Postal
Service, it's two or three times that of the average worker, which
is probably too little for the dimensions of the responsibility.
Speaking of the Postal Workers Union, I'm glad to see that lead-
ership of that union is just as feisty as ever, and that they continue
to believe the best defense is a good offense. It's pretty amazing,
although reminiscent, for me to come back here. I've been here less
than 12 hours, and I've already been compared to Charles Keating
and Dr. Kevorkian. That brings back memories.
It also brings back memories in the sense that the broad-side at-
tacking me contains not one fact. It doesn't deal with any of the
109
statements that I made, which I think would be more appropriate.
I do beUeve that the people of the United States would be well-
served by more contracting out, not displacing any existing work-
ers, but just contracting out in new areas, which is what we tried
to do with remote bar coding, when I was there. And to try to bring
the employment of the Postal Service down by attrition. The attri-
tion is on the order of 50,000 employees per year.
We don't need early outs. You don't need layoffs and you don't
need RIFs in order to reduce the employment of the Postal Service.
You just need to go with attrition.
When I was there, we were doing about 1,500 to 1,800 positions
per month without any dislocation, without any pain, without any
strain, without any early out bonuses. I'd like to see more contract-
ing out.
And last, as I believe Mr. Comarow, whose name I misspelled,
will point out, the inclusion of the idea of the Postal Rate Commis-
sion in the original legislation was an afterthought, and not a very
good one. What's happened is that the Postal Rate Commission in
the area of competitive products, not monopoly products, but com-
petitive products, has given a private monopoly to the United Par-
cel Service. Thds is not in the interest of the American people, with
price increases quite frequently, with enormous discounts to vol-
ume users and no discounts at all to Aunt Minnie. I think that
needs to be changed.
I think the only area of oversight of the Postal Rate Commission
when it comes to competitive products, should be to make sure that
it stands on its own two feet and doesn't take money from monop-
oly products. This present system, despite my admiration for Ms.
TVson, is not a good one. Ten months, thousands of pages, lots of
work for the postal bar, and then nothing, no function before the
Postal Rate Commission for years and years. They say the devil's
work is done by idle hands. Perhaps whoever coined that might
have been thinking about the interim period of the Postal Rate
Commission.
In conclusion, Mr. Chairman, I think some of these areas need
to be revisited. I hope that you can still pass legislation allowing
the remote bar coding to be contracted out, as the GAO, I see joins
me in the Dr. Kevorkian catalog of being a "lap dog," pointed out
that it's important to do.
I would point out that I have the highest admiration, I have no
ax to grind at all, for the most of the management and certainly
all of the employees of the Postal Service, hard-working, caring,
doing a difficult job, doing a routine job day after day, and doing
it well. They need to be given some assurance that these discus-
sions on bill 210 are just that, a yearly occurrence, and that their
jobs are not in jeopardy. People can't do the best job that they can
if they see there's another shoe to fall. So in summary, no drastic
surgery, some mid-course correction, hopefully by a commission.
I would just note for you parenthetically, when we had the earth-
quake in San Francisco in 1989 at the World Series, that Congress-
woman Pelosi made a compilation of communications and com-
plaints to her office in the aftermath. Over 50 percent wanted mail
service reinstituted as quickly as possible. It's a very, very impor-
tant function to the American people. It's not going to disappear.
110
First-Class mail is essentisil and people miss it if it's even post-
poned for a day or two.
So what do we need to do to face the 21st century? I think we
need to take the power for pricing on competitive products from the
Postal Rate Commission. I think somebody needs to reason with
the leadership of the APWU that service is important, and the bet-
ter the Postal Service does, the better their members do. I think
we need to have some private sector pay for the Grovemors and for
some of the managers, and finally I think we need do somewhat
more contracting out.
I believe the Postal Service will be here, as you've suggested, for
decades and decades more, doing its job. Delivering hard copy to
the American people is not going to disappear, despite all types of
electronics. And I commend you and your subcommittee, Mr. Chair-
man, for taking the time and effort to take a look 25 years later
at how the institution is doing.
Thank you.
[The prepared statement of Mr. Frank follows:]
Ill
CONGRESS OF THE UNITED STATES
HOUSE OF REPRESENTATIVES
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
STATEMENT OF ANTHONY M. FRANK
(Former Postmaster General of the United States 1988-1992)
BEFORE THE SUBCOMMITTEE ON THE POSTAL SERVICE
NOVEMBER 15, 1995
112
THANK YOU MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE FOR GIVING ME
AN OPPORTUNITY TO SPEAK TO THE QUESTION ON WHICH YOU WISH AN
OPINION - SHOULD THE POSTAL SERVICE BE PRIVATIZED? MY ANSWER TO
THAT IS NO. IT SHOULD NOT BE PRIVATIZED. THE MISSION OF THE POSTAL
SERVICE IS TO PROVIDE UNIVERSAL POSTAL SERVICE TO THE AMERICAN
PEOPLE AT A UNIFORM RATE. HOWEVER AND IT IS A BIG HOWEVER, I DO
BELIEVE THAT IT SHOULD BECOME MORE BUSINESS LIKE. THERE ARE A
NUMBER OF ACTIONS THAT WOULD MAKE THE POSTAL SERVICE MORE EFFICIENT
AND MORE ABLE TO SERVE THE AMERICAN PEOPLE WITHIN ITS PRESENT
STATUS .
1. FIRST, THE PAY AND THE QUALITY OF THE BOARD OF GOVERNORS
MUST BE MATERIALLY IMPROVED. THE COMPENSATION OF THE NINE
OUTSIDE MEMBERS OF THE BOARD OF GOVERNORS HAS NOT
INCREASED SINCE 1971. EITHER THEY WERE ENORMOUSLY OVER-
PAID IN 1971 OR THEY ARE DRAMATICALLY UNDERPAID NOW.
OBVIOUSLY IT IS THE LATTER. THIS LACK OF PAY AND LACK OF
STANDING, I BELIEVE, HAS LED TO THE PRESENT SITUATION IN
WHICH THE BOARD OF GOVERNORS IS BASICALLY NOT A FACTOR IN
THE POSTAL SERVICE. TO BE AS BLUNT AS MY LAST NAME, THIS
BOARD OF GOVERNORS IS SUPINE AND IS NOT, GENERALLY, OF THE
QUALITY REQUIRED TO OVERSEE A SIXTY BILLION DOLLAR
BUSINESS WITH SOME 800,000 EMPLOYEES. FOR EXAMPLE, THE
RECENT MISTAKEN DECISION TO GIVE REMOTE BAR CODING
BACK TO THE AMERICAN POSTAL WORKERS UNION WAS NOT EVEN
BROUGHT TO THE BOARD OF GOVERNORS, AND TO THE BEST OF
MY KNOWLEDGE THERE HAS NOT BEEN ANY REMONSTRANCE BY THE
BOARD AS TO HAVING BEEN BYPASSED. THAT WOULD NOT HAPPEN
WITH A MORE EXPERT BOARD.
2. SPEAKING OF PAY, THE PAY OF THE SENIOR MANAGEMENT SHOULD
BE MORE COMMENSURATE WITH THE PRIVATE SECTOR. RIGHT NOW
ANY OUTSIDE POSTMASTER GENERAL MUST WANT TO DO PUBLIC
SERVICE AND THEREFORE BE WILLING TO WORK FOR A SALARY
THAT IS QUITE OFTEN NINETY OR NINETY-FIVE PERCENT REDUCED
FROM HIS OR HER PRESENT RATE OF PAY. THAT IS NOT THE WAY
TO BUILD A LONG-TERM MANAGEMENT. THIS ABSENCE OF PAY
ALSO RELATES TO SOME OF THE SPECIAL AREAS OF THE
POSTAL SERVICE INCLUDING MARKETING AND FINANCIAL. THIS
COMMITTEE CAN EXAMINE NUMEROUS EXAMPLES, SUCH AS FANNIE
MAE AND THE STUDENT NATIONAL MARKETING ASSOCIATION, THAT
THRIVED AFTER PAY LIMITATIONS WERE REMOVED.
3. THIRD, THE POSTAL SERVICE NEEDS MORE CONTRACTING OUT - NOT
LESS. THE RECENT DECISION ON REMOTE BAR CODING SYSTEMS
(RBCS) TO TURN THIS ACTIVITY BACK TO THE AMERICAN POSTAL
WORKERS UNION WAS A MAJOR MISTAKE ACCORDING TO THE GAO,
WHICH INDICATED THAT IT WOULD INCREASE COSTS ON THE ORDER
OF TWO BILLION DOLLARS OVER THE NEXT TEN YEARS. ANYONE
113
MAKES MISTAKES, WE ALL HAVE. OUR OBLIGATION IS A) TO
CORRECT THEM AND B) NOT TO MAKE THEM AGAIN. UNFORTU-
NATELY THIS ACTION, WHICH I UNDERSTAND WAS TAKEN TO
APPEASE THE APWU (WHICH APPEASEMENT NEVER WORKS) NEEDS
LEGISLATIVE ACTION TO BE REVERSED, AND THAT LEGISLATIVE
ACTION SO FAR HAS NOT BEEN COMING FROM THIS CONGRESS.
IT DOES SEEM TO ME THAT THE PHILOSOPHY OF CONTRACTING
OUT IS SQUARELY IN THE PHILOSOPHICAL POINT OF VIEW OF
THE MAJORITY OF THIS CONGRESS AND I URGE THE SUB-
COMMITTEE TO TAKE ANOTHER LOOK AND SEE WHAT CAN BE DONE
TO SAVE TWO BILLION DOLLARS FOR THE AMERICAN PEOPLE.
SPEAKING OF THIS UNION, IT IS THE MAJOR SOURCE OF
FRICTION BETWEEN THE USPS AND THE AMERICAN PEOPLE. I
AM A BIG BELIEVER IN UNIONS AND I WORKED WITH AND
COOPERATED WITH UNIONS DURING MY FOUR YEAR TERM. BUT I
DID NOTE THAT THIS PARTICULAR UNION LEADERSHIP IS THE
ONLY ONE THAT NEVER SPOKE ABOUT SERVICE TO THE AMERICAN
PEOPLE AND WAS THE ONLY UNION THAT, FOR EXAMPLE, CHOSE
PUBLIC CONTACT PEOPLE AT THE WINDOW AT THE POSTAL SERVICE
PURELY ON THE BASIS OF SENIORITY. NO PRIVATE SECTOR FIRM
COULD OR WOULD PERMIT SELECTION OF ITS PUBLIC CONTACT
PEOPLE ON SENIORITY BASIS ALONE. THIS UNION HAS ALSO
SUED TO PREVENT LABOR MANAGEMENT COMMITTEES AND BASI-
CALLY AS NEAR AS I CAN TELL THE LEADERSHIP OF THIS UNION
HAS THE ATTITUDE THAT IT IS THE RESPONSIBILITY OF THE
UNION NOT TO COOPERATE WITH MANAGEMENT. THE POSTAL
SERVICE CANNOT AFFORD THIS DIVISIVE ACTION ANYMORE.
WHENEVER THE DEFICIENCIES OF THIS UNION LEADERSHIP ARE
POINTED OUT THE LEADERSHIP ATTACKS, WHICH THEY WILL IN
THE CASE OF THIS TESTIMONY AND AS IT DID RECENTLY TO THE
GAO. THE GAO REPORT ON THE TWO BILLION DOLLAR GIFT TO THE
UNION WAS REBUTTED- ON THE BASIS THAT THE GAO IS A LAP
DOG. WELL, WE ALL KNOW THAT THE GAO IS NOT A LAP DOG.
WHAT WE KNOW IS THAT IT IS AN INDEPENDENT AGENCY THAT IS
ONLY REVILED WHEN IT HITS A JUICY TARGET, WHICH IT DID.
FOURTH, ALLOW THE POSTAL SERVICE TO BE COMPETITIVE IN
COMPETITIVE PRODUCTS. I NOTE, DESPITE THE ABSENCE OF
INFORMATION FLOW TO ME SINCE MY LEAVING IN 1992, THAT
EXPRESS MAIL, PRIORITY MAIL AND PARCEL POST REVENUES
COULD BE MUCH HIGHER. IT IS IN THIS AREA THAT THE POSTAL
SERVICE CAN EARN A SUBSTANTIAL AMOUNT OF MONEY, IF
PERMITTED TO DO SO, WHICH COULD LENGTHEN THE INTERVALS
BETWEEN POSTAGE INCREASES. THIS LACK OF COMPETITION HAS
GIVEN A VIRTUAL MONOPOLY TO FEDERAL EXPRESS AND TO UNITED
PARCEL SERVICE, AND THE LATTER, PARTICULARLY, HAS RAISED
ITS CHARGES MUCH MORE FREQUENTLY THAN THE POSTAL SERVICE
EVER HAS. THE REASON FOR THIS IS THAT THE POSTAL RATE
COMMISSION DOES NOT PERMIT THE POSTAL SERVICE TO GIVE
114
QUANTITY DISCOUNTS. TO GIVE YOU AN IDEA, GENERALLY
FEDERAL EXPRESS CHARGES MORE THAN FIFTEEN DOLLARS FOR AN
OVERNIGHT EXPRESS DELIVERY AND YET IT OFFERED A $3.75
RATE TO THE FEDERAL GOVERNMENT. ON THE OTHER HAND THE
POSTAL SERVICE MANAGEMENT WOULD BE CIVILLY AND PERHAPS
CRIMINALLY LIABLE IF THEY GAVE ANYBODY ONE CENT OFF.
THE SOLUTION IS TO CUT BACK THE RESPONSIBILITIES OF THE
POSTAL RATE COMMISSION, WHICH, MR. KOMOROW CAN TELL
YOU, WAS AN AFTERTHOUGHT IN THE 1971 LEGISLATION. THERE
IS NO REASON FOR THE POSTAL RATE COMMISSION TO OVERSEE
PRICES OF COMPETITIVE PRODUCTS, AS LONG AS THOSE PRICES
ARE NOT SUBSIDIZED BY OTHER CLASSES OF MAIL.
MR. CHAIRMAN, IN THIS BRIEF PRESENTATION I HAVE SUGGESTED SOME
IDEAS WHICH WILL MAKE THE POSTAL SERVICE MORE EFFICIENT AND MORE
PROFITABLE, LEADING TO FEWER POSTAL INCREASES AND MORE TIME BETWEEN
POSTAL INCREASES, AS WELL AS BETTER SERVICE TO THE AMERICAN PEOPLE.
I AM DISAPPOINTED THAT NO SUBSTANTIAL CHANGES APPEAR TO BE ON THE
HORIZON AS FAR AS LEGISLATION THAT COVERS THE POSTAL SERVICE. I
THINK IT IS HIGH TIME THAT THIS AREA BE RF-VISITED, AND I
COMPLIMENT YOU AND YOUR SUBCOMMITTEE ON BEING WILLING TO DO SO.
MR. CHAIRMAN, I FOUND THE WOMEN AND MEN OF THE USPS TO BE INTEL-
LIGENT, HARDWORKING, AND DEDICATED. THEY DESERVE AND NEED TO HAVE
SOME OF THE CONSTRAINTS INHIBITING THEM TO BE REMOVED. THEY ALSO
NEED TO BE ASSURED THAT ANY CHANGES WILL NOT AFFECT ANY EXISTING
EMPLOYEES ADVERSELY AND THAT ANY CHANGES, BY HELPING THEM TO SERVE
THE AMERICAN PEOPLE, GIVE THEM ASSURANCE THAT THEIR JOBS ARE SAFE
BECAUSE THEIR ORGANIZATION IS MEETING THE NEEDS OF THEIR FELLOW
CITIZENS.
THANK YOU.
115
ANTHONY M. FRANK
10 Windward Road
Belvedere, Ck 94920
December 21, 1995
The Honorable John M. McHugh
Chairman
Subcommittee on the Postal Service
2157 Rayburn House Office Building
Washington, D. C. 20515-6143
Dear Chairman:
Thank you for permitting me to testify at your recent hearing.
This letter is in response to your "questions for the record",
1) I believe the 1970 Act reasonably allocated responsibilities
for the USPS. For example. Oversight Hearings that involved the
Postal Service have averaged about 40 per year, I understand,
since 1971. Given a higher quality Board of Governors, which I
believe is underway, and less interference and more help from the
Postal Rate Commission, the Postal Service is presently properly
structured. Instead of re-Cabinetizing, I believe that it should
be further de-Cabinetized in that the Postmaster General's salary
is wrongly tied to Cabinet salary levels. I have never seen the
USPS be less than totally responsive to Congressional inquiries
and attitudes.
2) I understand that the PRC is the only instance in which one
federal agency oversees aspects of another federal agency. While
I believe the Governors, with help, could handle all rate making,
my proposal is that the PRC remain and that they have, only, the
responsibility for rates on the major monopoly cases of the USPS.
The Board of Governors would have responsibility for pricing non-
monopoly items as well as experimental classes. To repeat my
testimony, the PRS has deliberately or inadvertently given United
Parcel a monopoly on packages in this country, which has been
exploited to the detriment of all those involved.
3) I am not an expert on overhead costs, but I believe that it
would be useful to have the Congress revisit these statutory
criteria. At the least the Congress could re-validate these cost
allocations.
4) The USPS at present submits a "breakeven" rate request to the
PRC every three or four years. Traditionally, the unspoken
116
The Honorable John M. McHugh
December 21,1995
Page Two
scenario behind this requirement is " make money in the first
year, break even in the second year, lose money in the third year
and refile for rates in the fourth year". While, over time, the
Postal Service should only break even, it needs also to make a
profit in order to a) extend the rate cycle and b) recoup some of
the negative net worth that has been built up over the present
system. This is far from recommending the USPS be converted
into a corporate entity dedicated to making a continuous maximum
profit, such as Fannie Mae or Sallie Mae. Because I don't
believe the USPS should be privatized, I see no need or purpose
for employee stock options. I continue to believe that bonuses
based on pre-set objectives makes sense for all permanent USPS
employees.
5) Right now any unusual profits or efficiency is "taken" by the
PRC at the next rate case. I believe profits above the figures
submitted in a major rate case should be allowed to remain with
the USPS in order to lengthen the rate cycle and to reduce the
negative capital of the USPS, as well as to provide for bonuses
and research and development.
Thank you for your insightful questions. Should you wish further
amplification, please do not hesitate to ask.
Sincerely,
AMF/sp
4^^^
117
Mr. McHuGH. Thank you, Mr. Frank. I appreciate your being
here.
Ms. Tyson, welcome, and we're looking forward to your com-
ments.
Ms. Tyson. Thank you.
Mr. Chairman, I would request that you include my entire state-
ment in the record, but I will condense it in the interest of time.
Mr. McHuGH. Without objection.
Ms. Tyson. I'm delighted to be here and have the opportunity to
comment on postal reform, and I am honored to be a part of this
distinguished panel.
The gentlemen with whom I sit have each in his own way made
a substantial contribution to the Postal Service. And although our
views may differ about rate-setting, I want you to know that I
share a sense of friendship with each of them.
Despite the monopoly protections, the Postal Service has a pleth-
ora of serious problems, just as any institution does. It is having
great difficulty competing in an economic climate where its com-
petitors have more flexibility to benefit from emerging technologies
and changing market conditions.
Costs are soaring and the rate of growth of First-Class mail, the
monopoly class, which pays 70 percent of institutional costs, is fall-
ing off. The Postal Service wants more discretion over postage rates
in order to meet rapidly changing market conditions.
Your record reflects these things, but does this mean that the
Postal Reorganization Act is ripe for reform? I am not quite sure
the time is right, even though the political climate of the times fa-
vors change.
As this subcommittee takes up the thorny issue of postal reform,
I think it is important to acknowledge the successes of the Postal
Reorganization Act. It is also important to observe the state of the
world around us, a world beset by rapid and revolutionary change
in technology.
Our economy is now a global economy. Telecommunication is
binding the world together in a way we could not foresee just a few
years ago. It is difficult to envision exactly what our national needs
in terms of hard copy delivery service will be 20 years from now.
The real issue for this subcommittee is whether fundamental public
policy issues underlying the monopoly status of the Postal Service
demand organic changes, or whether lesser changes, perhaps with-
in the existing statute, can effectuate improvements to keep the
Postal Service operating effectively and charging fairly for its serv-
ices.
I believe that the framework of the Postal Reorganization Act
currently provides a system under which the Postal Service can
evolve further and make substantial improvement. The most basic
problem of the Postal Service is controlling costs. The rulemaking
process exposes some of the problems in cost control, but congres-
sional oversight rather than legislative change is more likely to
help the Postal Service analyze and manage its rising costs.
Many calls for postal reform may ensue from basic frictions
among competing interests. The Postal Service very much wants
more flexibility in the ratemaking process, and freedom from some
of its attendant rigidities. While ultimately legislative change may
118
be required to relieve the Postal Service of some of the Commission
requirements in minor rate and classification proceedings, some co-
operative efforts are underway to affectuate improvements. Cer-
tainly the Postal Reorganization Act did not contemplate the cur-
rent complexities of the rate-setting process.
The problems of inflexibility and rigidity are not really inherent
in the relationship between the Postal Service and the Postal Rate
Commission. In fact, the Senate report accompanying the Postal
Reorganization Act envisioned the Commission as a true partner of
the Board of Grovemors in every aspect of postal operations. The
act requires that all rate and classification proceedings of the Post-
al Rate Commission, no matter how minor, be conducted under the
requirements and protections of the Administrative Procedures Act.
The two agencies have begun to explore ways to streamline con-
sideration of minor matters. This area may turn out to be one
where some legislative change is in order. But I think it would be
wise to encourage the Postal Service and the Postal Rate Commis-
sion to work together to develop some new procedures which may
survive judicial testing. Through this process, you will find valu-
able information on which to base legislative refinements if nec-
essary.
The Joint Task Force on Posted Ratemaking, in which I partici-
pated, was an informal discussion group which focused on improve-
ments to the ratemaking process within the current statute. We
made a number of recommendations for changes which would en-
hance flexibility, predictability, and accountability in the rate-set-
ting process, and which could be achieved by rulemaking.
The ease with which this representative task force reached our
conclusions, all of which were based on consensus, was cause for
encouragement. This kind of informal working group made real
progress in terms of a fruitful dialog between the Postal Service
and the Postal Rate Commission.
Some of our recommendations have been the subject of a Postal
Service request for a Notice of Proposed Rulemaking by the Postal
Rate Commission. The Commission issued that notice for comment
last month. These procedural recommendations represent a move-
ment toward cooperation.
The preface of this recent rulemaking gives the flavor of the
problem the Commission wrestles with as it seeks to streamline the
process without violating the Administrative Procedures Act. The
postal rate-setting process is a formidable barrier to innovation by
the Postal Service. The Commission and the Postal Service find
themselves in a catch-22 situation regarding experimentation and
innovation. In order to proceed with an experiment in rates or serv-
ice offerings, the Commission requires the Postal Service to show
that it will not lose money or engage in cost shifting and cross sub-
sidization among classes. Because the nature of the effort is experi-
mental, adequate data will not have emerged. I am happy to see
that the October 13th Notice of Proposed Rulemaking treats this
problem to some extent, for innovation is crucial to the future via-
bility of the Postal Service.
To give the Postal Service very much discretion over its rates will
elicit outrage on the part of many of the parties at interest, who
have huge vested interest in postal rates and value the public rate-
119
setting process. Greater experimentation with rates will reveal
some of the effects of change and hopefully will tell us if more rate
flexibility will indeed make the Postal Service more competitive.
There is, in fact, one area where I understand the Postal Service
has complete rate discretion, in the area of international postage
rates. Your subcommittee might want to analyze the international
rate structure as it affects the U.S. Postal Service as you con-
template the future of the Postal Service in the global economy.
The universal hard copy delivery service provided by the Postal
Service and protected by the private express statutes is a fun-
damental strength of our economic system. I believe the current
structure should be modified only after the most careful delibera-
tions have achieved consensus. This is not a process that will begin
and conclude in a single Congress. It may well be a process for a
bipartisan citizens commission whose charge will be to determine
our future national needs and envision a Postal Service well-de-
signed to meet those needs.
I believe there is much that Congress can do in terms of over-
sight to help the Postal Service realize its potential. You can be re-
lentless in your demands that the Postal Service and the Postal
Rate Commission work cooperatively in improving the rate process.
You can require that the Postal Service present a realistic plan for
controlling costs and improving productivity. You can perform peri-
odic review of the Postal Service's financial plan and you can hold
the Postal Service accountable for its financial performance.
The discussion about major postal reform often takes dramatic
proportion and obfuscates basic issues of cost control and flat rates
of productivity. Your subcommittee is to be commended for taking
on the contentious subject of postal reform in comprehensive way.
The Postal Service of today will be well-served by a close connec-
tion with this subcommittee whereby you take a detailed interest
in the structural problems of the Postal Service and work together
through the oversight process. You will thereby be establishing a
substantial public record valuable in shaping a truly effective Post-
al Service for the future.
That concludes my remarks.
[The prepared statement of Ms. Tyson follows:]
120
TESTIMONY OF
PATTI BIRGE TYSON
BEFORE THE
SUBCOMMITTEE ON THE POSTAL SERVICE
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
U. S. HOUSE OF REPRESENTATIVES
WASHINGTON, DC
It is a pleasure to have the opportunity to comment on the subject of postal
reform. For six years, from 1985 to 1991, 1 served as a member of the Postal Rate
Commission. Following that service, I was one of eight members of the Joint Task
Force on Postal Ratemaking, which issued a report to the Board of Governors of
the Postal Service and the Postal Rate Commission on June 1, 1992. My
comments here will reflect my experience and observations during that time.
The development of the Postal Reorganization Act of 1970, now twenty-
five years old, is well documented. The law evolved as the result of the
recommendations of a blue-ribbon Presidential commission. The Post Office
Department, running huge deficits, was in crisis. There were service breakdowns,
and the parties at interest were warring as Congress struggled to set postage rates
and appropriate funds to keep the Department running. The legislation had
bipartisan support and was designed, with the blessing of Congress, to "take
politics out of the post office." The new U. S. Postal Service was created as a self-
supporting business-like entity to provide efficient universal mail service to the
nation at a reasonable cost. The monopoly protection for First-Class letter mail
continued.
Congress also saw fit to establish through the Postal Reorganization Act an
independent ratemaking body to review and make recommendations concerning
the rate and classification requests of the newly created Postal Service. Thus the
Postal Rate Commission came about from the need to counterbalance the
monopoly status of the Postal Service with an independent rate setting authority in
121
order to protect consumer and competitor interests. Until the monopoly status of
the Postal Service is eliminated, the Postal Rate Commission has a vital role to
play.
Despite its monopoly protections, the Postal Service has a plethora of
serious problems, just as any institution does. It is having great difficulty
competing in an economic climate where its competitors have more flexibility to
benefit fi-om emerging technologies and changing market conditions. Costs are
soaring, and the rate of growth of First-Class Mail, the monopoly class, which pays
70 percent of institutional costs, is falling off'. The Postal Service wants more
discretion over postage rates in order to meet rapidly changing market conditions.
Does this mean the Postal Reorganization Act is ripe for reform?
I am not quite sure the time is right, even though the political climate of the
times favors change. As this Subcommittee takes up the thorny issue of postal
reform I think it is important to review the successes of the Postal Reorganization
Act. The Postal Service of 1995 processes an enormous volume of mail ~ more
than 178 billion pieces annually. Its scope is so vast that it cannot be compared to
any other national postal service, although it often is. The Postal Service is no
longer the beneficiary of major Congressional subsidies ~ it is by and large a self-
supporting institution. Its rates of postage are fairly set and reasonable. Reliability
of delivery is not optimal but it is pretty good. Even though the Postal Service
itself is not satisfied with its performance, most of the mail gets there, and a lot of
it gets there "on time". It is an imperfect institution operating imperfectly, but it is
an indispensable pillar of our nation's economic strength.
It is also important to observe the state of the world around us, a world
beset by rapid and revolutionary change in technology. Our economy is now a
global economy. Telecommunication is binding the world together in a way we
could not foresee just a few years ago. It is difficult to envision exactly what our
122
national needs in terms of hard-copy delivery service will be twenty years from
now.
The real issue for this Subcommittee is whether fundamental public policy
issues underlying the monopoly status of the Postal Service demand organic
change ~ or whether lesser changes, perhaps within the existing statute, can
effectuate improvements to keep the Postal Service operating effectively and
charging fairly for its services.
I believe that the framework of the Postal Reorganization Act currently
provides a system imder which the Postal Service can evolve and make substantial
improvement. The most basic problem of the Postal Service is controlling costs.
The rulemaking process exposes some of the problems in cost control, but
Congressional oversight rather than legislative change is more likely to help the
Postal Service analyze and manage its rising costs.
Many calls for postal reform may ensue from basic frictions among the
competing interests. The Postal Service very much wants more flexibility in the
ratemaking process and freedom from some of its attendants rigidities. While
ultimately, legislative change may be required to relieve the Postal Service of
some of the Conmiission requirements in minor rate and classification
proceedings, some cooperative efforts are underway to effectuate improvements.
Certainly the Postal Reorganization Act did not contemplate the current
complexities of the ratesetting process. The problems of "inflexibility" and
"rigidity" are not really inherent in the relationship between the Postal Service and
the Postal Rate Commission. In fact, the Senate report accompanying the Postal
Reorganization Act envisioned the Commission as "a true partner of the Board of
Governors in every aspect of postal operations." The Act requires that all rate and
classification proceedings of the Postal Rate Commission, no matter how minor,
be conducted under the requirements and protections of the Administrative
123
Procedures Act. The two agencies have begun to ejqjlore ways to streamline
consideration of minor matters. This area may turn out to be one where some
legislative change is in order, but I think it would be wise to encourage the Postal
Service and the Postal Rate Commission to work together to develop some new
procedures which may survive judicial testing. Through this process, you will find
valuable information on which to base legislative refmements.
The Joint Task Force on Postal Ratemaking in which I participated was an
informal discussion group which focused on improvements to the ratemaking
process within the current statute. We made a number of recommendations for
changes which would enhance flexibility, predictability and accountability in the
rate setting process and which could be achieved by rulemaking. The ease with
which this representative Task Force reached our conclusions, all of which were
based on consensus, was cause for encouragement. This kind of informal working
group made real progress in terms of a fruitful dialogue between the Postal Service
and the Postal Rate Conmiission.
Some of our recommendations have been the subject of a Postal Service
request for a Notice of Proposed Rulemaking by the Postal Rate Commission. The
Commission issued that notice for comment last month. These procedural
recommendations represent a movement toward cooperation. It might be helpful
to your record, Mr. Chairman, to obtain a copy of the Report of the Joint Task
Force on Postal Ratemaking issued June 1, 1992, and the Postal Rate
Commission's Notice of Proposed Rulemaking of October 13, 1995 (Docket No.
RM 95-4). The preface to this recent rulemaking gives the flavor of the problem
the Commission wrestles with as it seeks to streamline the process without
violating the Administrative Procedures Act.
When I first arrived at the Commission in 1985, 1 was surprised by the .
degree of institutional hostility between the Postal Service and the Postal Rate
124
Commission. It had evolved over a period of years and was complicated by
numerous judicial and administrative precedents. While on-the-record rulemaking
is fundamental to the protections of the various postal interests by our current
rulemaking process, the strict sx pailfi rules of the Commission have precluded
some informal collaborations on technical matters which would benefit all parties.
The Joint Task Force Report (at page 58) addresses this issue:
Notwithstanding our support for continuation of the ex parte rules,
we believe that uncertainty over their scope may have unduly
hindered legitimate discussion in the past. In the absence of practical
guidelines on permissible discussion, it appears that an institutional
reluctance to risk possible error may have developed. In our
estimate such "overapplication" of the ex parte rules does not serve
the ratemaking process well because needless silence on legitimate
issues of mutual concern fosters misunderstanding and suspicion.
The postal ratesetting process is a formidable barrier to innovation by the
Postal Service. The Commission and the Postal Service find themselves in a
Catch-22 situation regarding experimentation and innovation. In order to proceed
with an experiment in rates or service offerings, the Commission requires the
Postal Service to show that it will not lose money or engage in cost-shifting and
cross-subsidization among classes. Because the nature of the effort is
experimental, adequate data will not have emerged. I am happy to see that the
October 1 3 Notice of Proposed Rulemaking treats this problem to some extent, for
innovation is crucial to the future viability of the Postal Service.
The Postal Service needs more flexibility to experiment with changing
technology and service iimovation, just as it needs more flexibility to deal with
rates for the competitive services. Iimovation is essential in a rapidly changing
marketplace, and the Postal Service and the Postal Rate Commission need to be
creative in designing experiments which achieve a broad range of experience in
different geographic locations, at differing experimental rates, and which will fall
125
within the current requirements of the process. Greater effort must be made, and if
the process will not permit experimentation, then the Congress may want to
develop legislative changes which will permit the Postal Service to test new
approaches.
To give the Postal Service very much discretion over its rates will elicit
outrage on the part of many of the parties at interest who have huge vested interest
in postal rates and value the public ratesetting process. Greater experimentation
with rates will reveal some of the effects of change and hopefully will tell us if
more rate flexibility will indeed make the Postal Service more competitive. There
is, in fact, one area where I understand the Postal Service has complete rate
discretion ~ in the area of international postage rates. Your Subcommittee might
want to analyze the international rate structure as it affects the U. S. Postal Service
as you contemplate the future of the Postal Service in a global economy.
The universal hard copy delivery service provided by the Postal Service and
protected by the Private Express Statutes is a fundamental strength of our
economic system. I believe the current structure should be modified only after the
most carefiil deliberations have achieved consensus. This is not a process that will
begin and conclude in a single Congress. It may well be a process for a bipartisan
citizens commission whose charge will be to determine our future national needs
and envision a Postal Service well designed to meet those needs.
The political climate of the times favors change, but I believe there is much
that Congress can do in terms of oversight to help the Postal Service realize its
potential. You can be relentless in your demands that the Postal Service and the
Postal Rate Commission work cooperatively in improving the rate process. You
can require that the Postal Service present a realistic plan for controlling costs and
improving productivity; you can perform periodic review of the Postal Service
126
financial plan; and you can hold the Postal Service accountable for its financial
performance.
The discussion about major postal reform often takes dramatic proportions
and obfuscates basic issues of cost control and flat rates of productivity. Your
Subcommittee is to be commended for taking on the contentious subject of postal
reform in a comprehensive way. The Postal Service of today will be well served
by a close connection with this Subcommittee whereby you take a detailed interest
in the structural problems of the Postal Service and work with them through the
oversight process. You will thereby be establishing a substantial public record
valuable in shaping a truly effective Postal Service for the future.
127
FACSIMILE COVER SHEET
To: Hon. John M. McHugh
Chairman
Subcommittee on the Postal Service
Committee on Government Reform and Oversight
U. S. House of Representatives
Washington, D. C.
ATTENTION: MS. JENNIFER TRACY
Phone: 202/225-3741
Fax: 202/225-2544
From: Patti Birge Tyson
1530 North State Parkway
Chicago, IL 60610
Phone: 312/335-8553
Fax: 312/335-8557
Date: February 6, 1996
Number of pages, including this cover sheet: (^
COMMENTS;
Pleaae find following my responses to
questions ensuing from November 15
hearing on postal reform, which you
transmitted to me under cover of your
letter of November 27.
128
Questions for the Record for the Honorable Patti Birge Tyson
Should something as important as setting rates and prices for a monopoly be left to a
temporary 3-body panel of administrative lawjudges? Admittedly, some commissioners
may not have had expertise in the area upon their ascendency to the Commission,
however, a professional staff of 50-60 certainly provides the necessary back-up. In
addition, the PRC addresses the rate issues as presented to them by the Postal Service
which has hundreds of support staff working on a rate case. Wouldn't a 3-body panel of
ALJs be overwhehned by this task? If rate setting is left up to an ALJ panel, how long
should this process take? Are there analogous Federal or state regulatory proceedings? If
so, how long do they take?
About 36 percent of postal costs are "institutional or overhead," meaning 4ey cannot be
attributed to any particular type of mail. By law, these costs are assigned in accordance
with nine congressionally mandated criteria (found in 39 '"""^ 'BfiWb)ClV(9'). Has the
Postal Rate Conomission properly assigned these costs according tathese criteria? Should
these statutory criteria be revisited? ■*
129
m
Ansver to Question 1:
Early in ite hietory, the Postal Rate Commission (PRC)
employed an adoiiniatrative lav judge (ALJ) to hear evidence, but
that practice was soon abandoned, as the ComtniseloB' found it more
expeditioue and helpful to question witnesses directly. While other
agencies do use ALJa to decide rate cases, in. these eases both the
ALJs and the aigencies are independent of the regulated industries
involved. What's more, the unique quality of the U. S. Postal
Service (USPS) and its monopoly over First Class letter mail dis-
tinguish it from other entities with governmental rate-setting
authority.
As long as the USPS has this monopoly status, an independent
rcvle* of rates is mandatory. This independent function is best fulfilled
through a careful examination of fairness in an open evidentiary forum.
I prefer to see such hearings conducted by a diverse panel of PreeidentJally
appointed members rather than by a board of mid-level civil servants,
particularly when the rate decisions are subject to review by the USPS
Board of Governors. Postal Service rates and fees have significant
implications for our national economy. The objectivity of scrutiny
provided by submitting rate cases to an independent body is,.e fundamental
Bt)^pgth of the current process.
The Postal Bate Comfflission is constituted by law as a continuing
body. The terms of ite members are overlapping to assure continuity
in its proceedings. The normal role of an AUT is to decide cases in
accordance with existing agency precedent. An ALJ panel would be unlikely
to look forward to the next case, developing lines of inquiry; it would
40-147 0-97
130
Answer to Question 1 (cont.):
in all likelihood stick rigidly to existing agency precedent. New
policies and improvements to the process would not be implemented.
Emerging patterns and efflcienclefi would not ensue.
The Postal Rate Coratuission has developed a huge body of
precedent and information, as well as skill in technical analysis.
It has accumulated institutional wisdom and experience valuable
in analyzing the lengthy and complex cases presented by the Postal
Service, whose corps of skilled staff have spent months in preparation.
It has launched lines of inquiry which have illuminated the record.
The PRC, with the benefit of a small but expert technical staff, has
proven ability to deal with USPS cases within the ten month period
permitted by law. To tackle the thousands of pages of testimony and
technical date of a general rate case would be an almost insurmountable
task for inexperienced ALJe. In fact, rate cases before other agencies
sometimes take years rather than months to conclude. The Postal Rate
Commission has demonstrated an ability to handle its ease load in a timely
fashion, with fairness to all parties.
It would be a step backward in this sophisticated technical
process to revert to a lesser panel for recommending postal rates, which
have a farreaching effect on us all. To substitute ALJs for the Postal
Rate Commission would eliminate the current independence in the rate
setting process.
131
Anaver to Question 2:
I think the Postal Rate Commission has done an excellent
job over the years in assigning instititlonal costs in accordance with
the 3622(b) criteria. I furthermore believe that the Commission
l8 uniquely qualifi&d to weigh the criteria and achieve a fair allocation
by virtu*-of its establishment as a panel of five Preeldentlally appointed
members constituting a continuing body. (See 39 OSC 3601-2.)
The criteria as presently stated give the Commission
flexibility in their application so that Comaieslon decisions csnbe
responsive to evidence In the case at issue and to changing times.
There Is always a benefit to the process in Congressional review of
longstanding statutory criteria. In such a review, you will find
that the debate about the allocation of institutional costs focuaaa
on the relative weight the PRC assigns the criteria in allocating
these coats.
The USPS serves a number of basically different functions,
and the relative weight given to the institutional cost allocation •
criteria varies from one major class of mail to another. Quality of
service is very important to First Class and .Express mall. In second
class, the educational, cultural, scientific and informational value
Is highly relevant. Some think that pricing should be more demand
oriented , but demand pricing presumes pervasive competition.
I have always believed that the flexibility of the
3622(b) criteria was a strength of the statute. These criteria
«M^4e indicate the dealre of the authors of the atatute that
132
Answer to Question 2 (cont.):
factors beyond economic theory be taken into account in pricing.
The criteria eeem compatible with the USPS mission of binding the
nation together.
~ END —
133
Mr. McHuGH. Thank you very much. We appreciate your com-
ments.
Mr. Comarow, welcome.
Mr. Comarow. Before I submit my views, Mr. Chairman, I'd Uke
to say that I represent only myself at this hearing. While teaching
for many years, a few clients, including Advo, consult with me from
time to time, but I do not represent any client or any organization
before this subcommittee.
With your permission, Mr. Chairman, I'd like to submit my pre-
pared statement for the record and speak informally.
Mr. McHuGH. Without objection, so ordered.
Mr. Comarow. As you were kind enough to say, Mr. Chairman,
I was the executive director of the Kappel Commission more than
a quarter of a century ago, which made certain recommendations
which, with some changes by the Congress, ultimately resulted in
postal reform in 1971.
I believe that the accomplishments of the Postal Service after
postal reform have been very considerable and the fact that I have
criticisms of management dating back to the very first collective
bargaining agreement after postal reform does not take away from
the enormous and impressive accomplishments made by the Postal
Service the past two and a half decades.
Despite management errors, such as the matter of the remote
bar coding incident, which Postmaster General Frank referred to
earlier, it is my thesis that if through some magic you could get
the 10 or 20 finest managers in the country to take over the Postal
Service, they would probably do a better job almost by definition.
But they could not meet the congressional mandate for efficiency.
Now, I've been asked to give my views on a variety of matters,
and of course I will be glad to do so. And I hope that they will be
taken seriously. But my primary recommendation to this sub-
committee is precisely the same as my copanelists, both of whom
have recommended the establishment of a commission. I believe
that that is the overriding necessity.
Let me speak briefly to the various issues which face this sub-
committee and the Congress and which would face such a commis-
sion if it were to be establi3hed. Take the matter of privatization.
The word has been abused and misused constantly. Should any
part or all of the Postal Service be spun off" to the private sector?
It's a different question than contracting out. It's a different con-
cept than commercialization. The Crane bill, which purports to re-
quire privatization, has a very interesting provision which would
retain the existing special protection for small post offices.
Now, we can debate whether or not small post offices which lose
a lot of money should or should not have special protection. But my
question is, can Congressman Crane truly regard this bill as pri-
vatization when it requires the subsidization of one kind of cus-
tomer?
My personal view is that privatization would be a bad idea. But
I believe that it, together with all other issues, should be consid-
ered by the commission which I propose.
Second issue, should universal service, whether or not at uniform
prices, be required by law? My personal opinion is that it should.
134
No one has demonstrated that privatization and the abolition of
universal service at uniform prices would benefit the American
user of the mails. The burden of proof is on the individuals who
seek to make such changes, not upon those of us who have serious
doubts about it.
I have not seen one iota of evidence from the proponents of pri-
vatization, and I have heard many of them, not only the Congress-
men who appeared before this subcommittee this morning. I have
heard them promise that privatization would result in better serv-
ice and lower prices.
And when I question them about the basis for those predictions,
they tell me that they have faith that it will occur. Well, faith is
a wonderful thing to have, but I would like to see some evidence.
Should the private express statutes be rescinded or modified?
Probably not very much, in my personal judgment. But again, this
ought to be a matter for the commission.
A number of labor issues. Should the binding arbitration provi-
sion be retained? The Kappel Commission, as you know, Mr. Chair-
man, did not recommend binding arbitration. It recommended col-
lective bargaining and that if an impasse should be reached, the
matter should be referred to the President who would be free to do
whatever he thought necessary in the public interest. He could call
in the Mediation and Conciliation Service, he could unleash the
Labor Secretary, he could call the parties in and jawbone them to
death, as Lyndon Johnson used to do. He could do anjdhing, or
nothing, which would also be a powerful weapon.
Having an arbitrator, and it really comes to one, set prices, is
what has been happening. It is not the Postal Service, it is not the
Postal Rate Commission. Prices are fundamentally set by an arbi-
trator who not 1 American in 10,000 can identify.
Why is that? Because almost 82 percent of all postal costs are
represented by labor. And the dramatic comparison is the figure
that existed in 1968 when the Kappel Commission did its study.
The figure at that time was 83 percent. So billions of dollars spent
in automation have not succeeded in reducing the degree to which
the Postal Service is labor-intensive.
Should postal unions have the right to strike? I don't think so.
I don't think that any Federal employee should have the right to
strike. If people do not like being deprived of that right, they
should not join the Federal service.
Now, there is a theory that if binding arbitration should be elimi-
nated, it is only fair, the union representatives argue, that they get
the right to strike. This kind of equilibrium sounds pretty good on
the surface. I don't think that it is a fair or sensible equilibrium.
In the private sector a strike is an economic contest between
management and labor. Labor has the right to withhold its work.
Management has the right to close the plant. Can you imagine, Mr.
Chairman, of any Postal Board of Governors or Postmaster General
closing post offices because a strike is in progress?
If there is to be a right to strike, which I think would be a bad
idea, should management have the right to hire permanent re-
placement workers? I would say so. But I do not think that there
should be a right to strike at all.
135
The salaries and pay and benefits of public employees should be
set by public officials, not by arbitrators. There's a comparable pay
provision in the Postal Reform Act which was the subject of the
greatest giveaway in postal history. It was clearly intended by
those who drafted that act, and I played a small role in that re-
spect, that comparable pay meant compensation comparable to
similar work in the private sector.
But in 1971, in the very first negotiation, tough union nego-
tiators who knew what they were doing, got the Postal Service to
agree that it meant comparable to pay in other large industries,
which had nothing whatever to do with sortation and delivery of
mail. Subsequent arbitrators built on that, and that is part of the
reason, together with arbitration, for the present salaries of the av-
erage clerk and carrier which exceed $45,000 a year, including
fringe benefits. But not including overtime.
Work rules and grievance procedures have been described by Mi-
chael Motley of the GAO in one of his reports to the Congress, as
one of the reasons why the labor situation in the Postal Service is
as bad as it is. That same report does not excuse, for a moment,
management shortcomings. But those Byzantine arrangements
should be totally abolished by the Congress with instructions to
start from scratch. The Congress has the power to do that, and I
think that it should.
Board of Governors; I'm always uncomfortable talking about the
Board of Governors, because I think they're very good people.
They're intelligent people, they work hard, their salaries have been
a disgrace. But most of them have not had the kind of heavy cor-
porate experience that would help them manage the activities of
such a large organization.
I believe that the Board of Governors should be comprised most-
ly, not entirely, of people who have had that kind of experience.
And I believe that the Congress should establish guidelines in leg-
islation which would make that requirement clear, and that the
President should establish some kind of an advisory group, perhaps
similar to the kind of advice that Presidents get when appointing
Federal judges, to ensure that these congressional guidelines are
honored.
Postal Rate Commission; I do not think that there should be a
Postal Rate Commission. Once again, this does not reflect ad-
versely upon any of the commissioners or the good people working
there. The Postal Rate Commission is a full-time body. I have no
doubt that a three-member panel of trained administrative law
judges could be borrowed fi'om other regulatory agencies, with per-
haps a few technical experts, economists and accountants and such,
to give fiill due process to mailers. I do not think that there is a
reason for a Postal Rate Commission.
Small post offices, I've already touched upon and will not repeat.
Mailboxes; should residential deliverers — should all deliverers
have access to the mailbox? I don't think so. Let the commission
look at that.
Should the Postal Service have the right and the capability to bid
against private companies for major contracts? Of course it should.
For all practical purposes, they do not today have that capability.
136
Should they be permitted to offer new products and services? Of
course they should. But exactly to what degree? Without limit?
Certainly not.
Should some active and aggressive entrepreneur running a major
post office decide it would be a moneymaking opportunity to sell
sandwiches in the lobby? I don't think so. The Congress or the
Commission should be able to set parameters and guidelines on
how far the Postal Service can go in offering new products and
services.
The Congress should stop using the Postal Service as some kind
of a cash cow. The infamous $11.6 billion hit was raised again in
the course of the reconciliation process. That simply is not fair to
postal customers. Any time the Postal Service gets that kind of a
nit, it is nothing more or less than a hidden tax, not on the tax-
payer, but on postal customers.
Until postal reform, Mr. Chairman, the taxpayers supported the
Postal Service. And they did not know that. Now, if you have the
ratepayers, the customers, support the taxpayers, that is just as
bad, and I don't think that that is good Grovemment.
The Post OfRce is losing market share in five out of six of its
markets. It is faced with severe competition from e-mail, faxes, 1-
800 numbers, and it will be in serious trouble unless it can be
given more tools to do the job. A Presidential or congressional or
joint commission comprised of top executives who have no special
connection with the Postal Service, and perhaps a senior union
president, again with no special connection to the Postal Service,
and one or two other distinguished Americans, seems to me, Mr.
Chairman, is the kind of body that ought to look at this extremely
complex and interlocking set of issues.
Thank you very much.
[The prepared statement of Mr. Comarow follows:]
137
Statement of Murray Comarow
House Committee on Government Reform and Oversight
Subcommittee on the Postal Service
November 15, 1995
In 1967, President Lyndon B. Johnson appointed a Commission on Postal Organization,
chaired by AT&Ts Frederick R. Kappel, to "determine wdiether the postal system as presently
organized is capable of meeting the demands of our growing economy and our ejqjanding
population." In June of 1968, the Commission found that it was not.
The men who reached that conclusion included six heads of major corporations; the dean
of the Harvard Business School; two prominent Democrats; and the president of the AFL-CIO.
Their view, identical to the Hoover Commission's two decades earUer, was that "the procedures
for administering the ordinary executive departments of Government are inappropriate for the
Post OflBce."
Having rejected political management, the Kappel Commission was equally clear in
rejecting privatization. Leaving the door open for fiiture consideration, its report stated that
"[Tjransfer of the postal system to the private sector is not feasible, largely for reasons of
financing; the Post Office should therefore continue under government ownership. The possibility
remains of private ownershq) at some future time, if such a transfer were then considered to be
feasible and in the public interest."
Murray Comarow is a lawyer and Distinguished Adjunct Professor m Residence at The
American University in Washington, D.C. He was the Executive Director of President Johnson's
Commission on Postal Organization, and Executive Director of President Nixon's Advisory
Council on Executive Organization.
138
The Commission recommended:
• A self-supporting government corporation.
• Elimiiution of patronage, vviiich controlled all top jobs, all postmaster
appointmraits, and thousands of other positions.
• That rates be set by a Board of Directors "after hearings by expert Rate
Conmiissioners . . . subject to veto by concurrent resolution of the Congress."
• That labor-management impasses over contracts or pay be referred to the
President, who "would be free to establish v«4atever ad hoc methods he chooses
to resolve the matter. The uncertainties for both parties . . . make for more
meaningfiil bargaining and are, in our view, a source of strength."
The Commission's proposal earned the support of Presidents Nixon and Johnson. Further,
in an unprecedented display of unified resolve, the chairmen of both political parties— Thruston
Morton and Lawrence F. O'Brien— co-chaired a citizen's committee to si^>port postal reform. The
Nixon administration's efforts were spearheaded by Postmaster General Winton R. Blount. The
labor and patronage issues were particularly difiBcuh, but ultimately the Congress enacted postal
reform with a number of changes, of wtich two were criticaL binding arbitration and a politically-
appointed, fiill-time. Postal Rate Commission.
Other changes included fecial protection for small post offices, and nine presidentially-
appointed Governors (as contrasted to six recoimnended by the Commission).
139
The resuhs of the 1971 reorganization have been impressive. Political appomtments,
other than the nine governors, are unlawful (In &ct, should a member of Congress or other
official try to influence an appointment or promotion, the Postal Service must return the
recommendation "marked as in violation" of Section 1002 of the Act.) Thousands of good men
and women— especially women—now have jobs once reserved for patronage appointees.
The "self-supporting" requirement of the Act has also been effective. Before postal
reform, mail was delivered at hidden cost to the ta?q)ayer. The Congress sinq)ly appropriated
whatever it took—up to 2S percent of postal costs— to cover the annual hemorriiage of red ink.
The eight-cent stanq), for example, was really ten cents, eight cents paid by the customer, two
cents by taxpayers, without their knowledge.
The Postal Service has much to its credit. Postmaster General Marvin Runyon said on
October 10, 1995, that "we are delivering the best service and financial performance in our
history." The thirty-two cent stamp is the second cheapest in the world, there were no price
increases fi'om January 1991 to January 1995, and the last rate increase was below inflation.
These are no small accomplishments.
One must acknowledge, however, that management mistakes have exacted a heavy cost
fi^om postal customers. Perhaps the most serious and long-lasting blunder was the first collective
bargaining agreement. The statute, in Sec. 101(c), speaks of conq>ensation for postal employees
"conq)arable to . . . condensation paid m the private sector." This was clearly intended to refer to
coiiq>ensation for similar work. Yet the then Postmaster General agreed to interpret the phrase to
mean comparable to wages in other highly unionized industries imrelated to mail sortation and
140
deliveiy. That agreement, plus concessions on COLA, layoffs, and part-timers, laid a foundation
for subsequent arbitrators' awards resulting in today's average pay of clerks and carriers of over
$45,000 a year, including fringe benefits. Most private sector en^loyees doing similar work make
far less.
Professors Michael L. Wachter of the University of Pennsylvania and Barry T. Hirsch of
the University of Florida, and Dr. James W. Gillula of DRI-McGraw HID, co-authored a July 10,
1995, paper which was introduced before the Board convened to arbitrate the dilute between the
Postal Service and the National Association of Letter Carriers. The authors calculated the wage
premium, including fringe benefits, to be 29.5 percent m relation to the private sector. It is highly
significant that new en:q)loyees receive, on average, a 45.4 percent wage increase over their old
jobs when entering the postal work force.
In fairness, I also recall that m the 1971 collective bargaining negotiations, the Postal
Service was hard pressed by major mailers and others to accede to union demands, mailers
yielding to threats of a strike and other forms of reprisal
There were other management &ilures:
• Billions of dollars invested in automation have had little intact on productivity.
The massive 1992 reorganization brought automation to a hah, created serious
service problems, and violated the veterans preference laws.
• An unfathomable decision to divide authority m the field between operation
managers and customer service managers also added to service problems.
(Tliis decision has finally been reversed at headquarters and area levels, and
at some locations.) Equally mystifying was the benign treatment accorded
141
-5-
to managers whose perfonnance at Chicago and elsewhere had reached awesome
levels of incompetence.
• In a vain effort to secure better relations with the American Postal Workers
Union, the Postal Service agreed to use career postal clerks, rather than much
less e}q)ensive transitional eiq)loyees. The increased costs, said the Creneral
Accounting Office, could come to as much as $174 milUon a year.
• The Postal Service's failure to consult with its major customers and supporters
in reject to the recent "Neighborhood Mail" fiasco still has even the Service's
defenders shaking their heads.
There is a body of opinion within the mailing community vMch argues that sound
management is all that is needed to overcome postal difficulties, and that tinkering with legislation
is misguided. I don't agree. It is my thesis that postal executives fimction within a system of
constraints wiiich makes truly effective management inq)ossible. If the nation's very best
executives took on every top postal position, they would do better, sure, but they could not
conq>ly with the statute's mandate for efficiency.
I believe that the time has come for another non-partisan commission to consider the
issues undermining the Postal Service, and affecting the nation's economy. Such a commission,
if it is to be credible, should be composed primarily of top corporate leaders with no special
connection to postal matters. It should study at least the following issues:
142
1 . Universal Service: Should universal service, whether or not at uniform prices, be
required by law?
2. Privatization: Should any part or aU of the Postal Service be sp\m ofiFto the private
sector?
3. Monopoly: Should the Private Egress Statutes be rescinded or modified?
4. Labor: a. Should the binding arbitration provision be retained?
b. Should postal unions have the right to strike? If so, should management
have the right to hire permanent replacement workers?
c. Should the comparable pay provision be redefined?
d. Should work rules and grievance procedures be reexamined?
5. Board of Governors: Is there a way to assure that most appointed Governors have had
e?q)erience in managing major enterprises?
6. Rates: Should postal prices be set initially by the Postal Rate Commission or by a panel
of e7q)ert administrative law judges?
7. Small Post Offices: Should the Postal Service be able to close small unprofitable post
offices without satisfying a regulatory body that legal requirements have been met?
8. Mail Box: Should private deliverers have access to the residential mail box?
9. Competition: Should the Postal Service be permitted to bid against private con^aniues
for major contracts?
10. New Products: Should the Postal Service be permitted to offer new produas and services
to the pubUc?
143
These are coiq>lex public policy/economic questions. They can best be analyzed by a
credible non-paitisan commission, with the stature, patience, and resources to do the job. The
Kappel Commission was universally acclaimed as such a group.
Universal service, privatization and the postal monopoly, in particular, are transcendent
issues which only the Congress can decide. The Private E?q)ress Statutes, ^^^ch go back to the
Continental Congress, created a postal monopoly on letters and addressed advertising mail. All
other delivery functions—parcels, magazines, newspapers, and the like—have long been
competitive. The monopoly is based on congressional decisions to deliver letters at a tmiform rate
to the entire nation.
How inq>ortant is this today? Conservative economists Michael A. Crew of Rutgers and
Paul R. Kleindorfer of the Wharton School &vor commercializing the Postal Service, yet argue
that "universal service must continue to be available to all citizens as a basic ingredient of the
modem nation state." Most major maUers and all postal unions take the same position. The
Postmaster General and PRC Chairman CHeiman, among others, have opined that entrepreneurs
would deliver mail in profitable areas, but would leave to the Postal Service the Hawaii to Alaska
mail, or service in high-crime urban areas. Related questions mchide responsibility for mail
security and for forwarding mail m otir highly mobile society.
In your remarks last May to a Direct Marketing Association conference, Mr. Chairman,
you said that privatization proponents would have to demonstrate how that would impTove
service and keep costs in check. L, too, have heard privatization advocates make such claims, but
they appear to be based on faith rather than on evidence.
144
-8-
A case study in the clash between ideology and reality is Congressman Crane's bill,
H.R. 210, strongly supported by Congressman Rohrabacher. Mr. Crane has introduced this
same bill for years. Its purpose: "To provide for the privatization of the Postal Service."
Section 2(aX4) of that bill directs the new corporation to guarantee the "delivery of postal
services in a manner consistent with Section 101(b) of Title 39, United States Code." But Section
101(b) provides that, "No small post ofBce shall be closed solely for operating at a deficit, it being
the specific mtent of the Congress that effective postal services be insured to residents of both
urban and rural communities." Without getting mto the merits, is that "privatization"?
Labor issues are at the heart of effective reform, and probably create more tensions than
any other. Some see the power shift in Congress as a window of opportunity to "smash the
unions." Pro-union forces have circled the wagons. In both camps, true reform seems to have
taken a back seat. Perhaps a brief historical perfective might help.
Binding arbitration is the price Congress paid in 197 1 for union support. It has been a
boon for postal imions and a disaster for postal customers. The Postal Service continues to be
labor mtensive: in February, 199S, the GAO reported that 81.7 percent of postal costs (S39.6
biUion in 1994) go to wages and fiinge benefits. In 1968, the figure was 83 percent. Binding
arbitration, coupled with the unfortunate inteq>retation of the Act's con^arable pay provision,
are the roots of the problem.
If binding arfoitradon is too deeply embedded to be eliminated, a variation known as
"final offer arbitration" might be considered. In this construct, each party places its "final
offer" on the table~the whole package, or issue by issue. The arbitrator chooses one or the
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other, no "dividing the baby." The theory is that a patty's position must be reasonable if it is to
stand a chance of being selected. This places more re^onsibility on the shoulders of the parties,
where it belongs, and less on an arbitrator. Even this form of arbitration, however, is vastly
inferior to the Kappel Commission's proposal Collective bargaining is fine, but ultimately, public
en^loyees should have their wages set by pubUc officials.
Some argue that if binding arbitration is eUminated, postal employees should have the right
to strike. The seeming equilibrium is &lse. In the private sector, a strike is essentially a test of
economic strength between labor and management. Labor can withhold its work; management
can close its plant. Can you imagine the Postal Service closing its post offices to combat a strike?
Giving postal unions such a right without a balancing power by management would dig even more
deeply into management's ability to manage.
As to work and grievance procedures, the November 30, 1994, testimony of GAO^s
Michael E. Motley before the Senate Subcommittee on Federal Services, Post Office, and Civil
Service clearly revealed, without excusing management shortcomings, that these Byzantine
arrangements are major barriers to efficiency and cost containment. The Congress has the power
to require that they be renegotiated fi'om scratch, and should exercise that power.
The Postal Rate Commission is headed by five commissioners appointed by the President.
Until last month, three were former Senate stafifers. Full rate cases run for ten months. The last
fiill case record in 1990 fills a 10-foot shelf The decision alone ran almost 1,000 pages. Between
rate cases, which come along every three or four years, the commissioners and their fifty or so
staffers do things which many believe intrude lumessarily upon management. The PRC is a
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genuine anomaly; h is the only government agency whose primary job it is to set prices for
another government entity. The charaaer, integrity, and dedication of its men and women is
not m question; its role in the scheme of things is, and that role was estabished by statute.
There is no reason viby a three-member panel of administrative law judges (AUs), with
a few support professionals, could not be borrowed from regulatory agencies such as the Federal
Energy Regulatory Commission to hear rate cases. Their initial decision should be reviewed by
the postal governors, who should be authorized to reject or modify it by a two-thirds vote. The
ALJs would return to their home agencies.
I turn now the the Board of Governors. The law states that "the Postal Service shall be
directed by a Board of Governors coiiq)osed of 1 1 members." Nine are appointed by the
President (the Kappel Commission had recommended six). The nine select a Postmaster General
and Deputy, who become Board members. Of the nine, not more than five may be of the same
political persuasion, and the statute wisely mandates that they shall "represent the public mterest
generally," not "specific interests using the Postal Service."
Meeting two days a month, the Governors deserve the nation's gratitude for years of
service at a pay level ($10,000) wiiich is an anachronistic insuh. The Senate bill to raise the
amount to $30,000 is long overdue and should be enacted. But dbecting the afiEairs of a huge
enterprise is not just a matter of common sense. Some Govemors have been highly qualified, but
many, inexperienced in major corporate activities, don't have the insights gained from r\inning
large companies. They make mistakes, inchiding the selection of Postmasters General. Indeed, of
the eight PMGs hired by the Govemors smce postal reform, only a coiq)le were weD regarded by
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the cognizant business conuminity. The finger points directly at the White House, fi'om President
Nixon to President Clinton.
The organizing principle of postal refonn was to get rid of political numagement and
permit the Postal Service to operate in a businesslike way.* That requires the appointment of
Governors and PMGs ^^iio know how to do this. The subcommittee should consider setting
legislative guidelines A\1uch make this clear and the President should look to an outside panel,
perhaps similar to the American Bar Association's evaluation of candidates for the federal bench,
to advise on the suitability of projective nominees within those guidelines.
Congress erected obstacles to efiScient operations even beyond the binding arbitration and
rate-setting barriers. Returning to the small post office issue, WiUiam L Henderson, the Postal
Service's Chief Operatmg Officer, once estimated that 26,000 small post offices cost over four
dollars for every dollar they take m, and asserted that other ways are available to provide better
service. In the last five years, 727 small post offices have been closed, less than three percent of
the 26,000 estimated by Mr. Henderson. Field managers don't Uke to take on the problem
because it may lead to a two or three year effort before the Postal Rate Commission is satisfied
that all legal requirements have been met.
*The legislative history of the Postal Reorganization Act ofien uses the term
"businesslike." The main House of Representatives committee report stated, "HR. 17070 is
designed to prevent pubUc service form involving pubUc wastefiilness in postal matters. This must
be done ... by requiring postal management to operate efficiently and economicaUy . . . ."
HR. Rep. No. 1104, 91st Cong., 2d. Sess. (1970).
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A recent case: The Postal Service has been trying to close the post office in South
Westerlo, New York, since 1992. In September of this year, aiier public notice, hearings,
questionnaires, and the like, the PRC finally affinned the Postal Ser ice's decision. Its opinion
was 16 pages long; two Commissioners filed an 1 1 page dissent. I don't know vAielhei the South
Westerlo post office should have been closed, but it is plain that this procedure is yet another
roadblock to "efficient and economical postal services."
Congressional resistance is also encountered when postal management undertakes
money-making activities. This is e^ecially true with re^ea to con:q)etitive activities and
experimental rates, >\4uch are difficult to set under existing law. Postal Rate Commission
approval for e?q>erimental rates can take many months.
Recently, a group of business mailers, one of ^\iiom (Advo, Inc.) happens to be a client,
supported the concept of a profit-making postal service, with more fi'eedom to set rates and to
introduce new products and services. (They were immediately attacked, of course, by the non-
profit mailers, but that is another story.) 1 agree that the Postal Service should be able to
negotiate prices, to innovate, and to reward customers who prepare their mail efficently. These
sensible conclusions, however, require carefiilly drawn guidelines and hmits—another reason for
an overall commission study.
Congress has also violated its own mandate of an efficient, self-supporting postal service
by using it as a "cash cow," milking it for billiions of dollars for deficit reduction purposes over
the years. Only last month, certain Members again proposed, during the budget reconciliation
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debate, to milk the Postal Service for 1 1.6 billion dollars, presumably to pre-fimd retirement
benefits. While the proposal was soundly defeated, it keeps rismg fi^om the ashes. It would be,
of course, a disguised tax on postal customers. Before postal reform, taxayers were forced to
subsidize mailers. Forcing mailers to subsidize taxpayers constitutes an equally disturbing abuse
of government power.
De^ite the constraints and obstacles I have discussed, the Postal Service could probably
survive and do reasonably well if its competitive world stood sdH The subcommittee has heard
fi'om previous witnesses that this is &i fi'om the case. Without going into redundant detail, it is
plain that the intensity of technological assauh mcreases daily: &xes, e-mail, and expanding use of
1-800 nimibers are cutting into postal markets. In &ct, more Americans now order merchandise
through 1-800 numbers than through the Postal Service. In 1994, electronic messages grew 122
percent. Add to that the growth of ahemative delivery networks; loss of catalog business to
competitors, such as UPS and FedE^; and the &ct that four foreign postal administrations have
set up U.S. offices to capture the international advertising mail business.
This lethal combination of statutory constraints, weak appointments, con^etitive
technology, and the like, may doom the Postal Service, or reduce it to a shell The Postal Service
is already losing market share to competitors m five out of its six product lines—correspondence/
transactions, expedited mail, pubUcations, packages, and mtemational mail The only vohime
growth has been in advertising mail The Postmaster General is right to have remarked on
October 10, 1995: "[LJegislative reform ... is critical to the fiiture of the organization." Why he
has not proposed ^ecific legislation eludes me. He has publicly e7q>lained that a Postal Service
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package would be "DOA," and urged his customers to cany the balL The can't; their interests are
too diverse.
Be that as it may, I end my statement, Mr. Chairman, with a plea that you seriously
consider the advantages of a non-paitisan commission— presidential, congressional, or joint—to
deal with this vital pubUc issue. My views on the various questions I have discussed were
solicited, and I have iiiq)arted them, but I am much more concerned that the entire matter be
handed over to a distinguished body to develop independent recommendations to the Congress
and the President.
That would not be dramatic. It would disappoint advocates of all strq)es. It would merely
be good government.
151
MURRAY COMAROW
ATTORNEY AT LAW
«990 SENTINEL DRIVE, #203
BETHESDA. MARYLAND 20ai«-SM2
D.C PRACTICE ONLY
Honorable John M. McHugh
Chairman, Subcommittee on the
Postal Service
Raybum HOB, Room B-349C
Washington, DC. 20515
Dear Mr. Chairman:
Pursuant to your November 27, 1995 letter, answers to your fiirther questions
are enclosed.
Smcerely,
"il^tAA^^La^Af^^*"^
152
Responses by Mumy Cotiutow
To Chahman McHogh's Further Quesdoiu
On Testimony of November 15, 1995
(Note: Where appropriate, I have divided each question and req>Qnd to each part
separately; questions are underlined.]
la. What tvpes of new products should a competitive Postal Service be able to offa?
Ihis is one of the questions that should be considered in context, by a. non-paitisan
commission. In general, as I have testified, the Postal Service should be able to offer new
products and services, but guidelines and parameters are essential I would not, of course,
authorize the Postal Service to innovate as it pleased,
l.b. What type nfrcManrn should the PRC place on dcmimA prit-.inp theories?
1 beUeve, as does the General Accounting Office, that the PRC shotild emphasize demand
and market &ctors. Increased competition for much of its volume necessitates closer attention to
demand. Idonot advocate any particular "demand pricing theory."
I.e. Is it appropriate under current statutes for the USPS to ofGsr vo>nmp <!;snmiTitinfr tn larpf^
customers?
Sudi discounts are an accepted business practice and are used by the Postal Service's
con^etitors in the parcel, exptes&, and advertising mail markets. The PRC, however, has rejected
discount proposals on the ground that they violate section 403, concerning "undue preferences"
and "unreasonable discrimination." I read the statute as broad oiough to allow volume discounts.
It is not unreasonable to allow the USPS to offer discotmts as its con^etitors do.
Given the PRC's attitude, Congress sliould amend section 403 accordingly.
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2. Some postal critics aigue that first-class mail users already pick up a di^ropoitioiiate
share of the Postal Service's institutional costs. First-class mail constitutes almost 54% of the
USPS volume [wfaidi?] r^resents almost 62% of revenue. However, first-class mail users pksk
up more than 73% of the Postal Service's institutional costs.
2.a. Tf^ this fitmry e accurate and in what wavs would a reformed rate stiucturg niPTIft ffll thlT
breakdown?
Ths focus of the Postal Service's proposal, as I understand it, is to reform the
classifications within each class, rather than to diange class-wide contributions. As I testified on
Noveiuber IS, 1 have long bdlieved lliat customers who prepare th^ mail cfiicieDt^ should be
rewarded. That is consistoit with the statute's mandate for efficient operations.
2.b. \V?iY ^ftnlriTit allocation of institutional and atttflmted costs directly correlate to eadi
class* share of total vohune? How w^lll^? ^Ifilii^^t'^Tl T>f i^tfmaiKl pTiring affect the breakdown?
Medianical allocation of costs on the basis of volume wotild create s^ous problems.
Attributable costs flow from a particular subclass. Tliese costs vary from class to class.
Allocation by vohune without regard to the &aors which generate costs makes no sense.
Further, it would eliminate consideration of subclass differoices in vahie of service, market
characteristics, and inqiact on mail users. This would be the antithesis of rational ratenuJdng as
envisioned by the Kappd Connnission and the Postal Reorganization Act.
3. About 36 percent of postal costs are "instituiional or overhead," mf-aning they cannot be
attributed to any particular type of mail By law, these costs are asagned in accordance with nine
congresfflonalty mandated criteria (found in 39 U.S.C. 3623(bXl)-(9).
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3.a. Has the Poaal Rate rnTnmigiann properiy assjened these costs ar.f.nTr^inf; to these criteria?
Setting postal rates requires balancing &ctors and reasoned judgment I agree, however,
with the General Accounting OfBce that "postal rates should be based to a greater extent on
economic princq)les that consider volume discounting and demand pricing." The nine criteria, on
their &ce, seem consistent with the statute's mandate for efi5cicnt operations. The Commission's
interpretations of these criteria, however, get in the way. It has rejected consideration of
"economic efBciency" in setting rates on the ground that die criteria do not mention this.
3.b. Shft^ilH thft<s^ statutory criteria >'^ Tiwig^cW?
Yes. I agree with the GAO that the criteria should clarify (1) that demand &ctors and
principles of economic efBdency be given greater weight; and (2) that vohrme and frequeacy
discounts be allowed. As the GAO report noted, 'this is not meant to exclude other Actors
addressed in die rotemaking crieria" of the Act
4. a. Should the Postal Service be given the authority to make a profit*)
I sn^ect that this would create more problems than it would solve. Would the Postal
Service have shareholders? Privatization leaves me cold, bat it should be considered, as an
option, by a non-partisan commission. If the Postal Service has surplus fimds, they ^ould be
used to hold rates down, or for research, I would think.
4.b. Do you beheve that an ESOP Prop;^-at" wnnld provide sufficient incMitiye for employees to
participate . . . . ?
Some private sector ESOPs Med to achieve the hoped for benefits, some seem to wort
1 have grave doubts that an ESOP concept would work for the Postal Service, given the size and
nature of its work fcrce. The postal system is too m;>oTtant to the nation's econonqr to be a
155
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laboratoiy e}q>eriiiient in euqjloyee stock owaershq). The consequences of j&ilure are so great
that I would consider such a step to be reckless. \]n li^t of my response, no comment is ofEered
on the rest of question 4.]
5. If vou beligvft t^)at the USPS should make a profit, shmilH there be a cap as to )ffyf mKY
profit would be reasonable? If the USPS were pennitted to make a profit should it be subfected
to a federal income tax? Could there be control of postal rates if the "break even" restriction was
lifted?
As indicated, I do not &vor a profit-makiug postal service. The three questions subsumed
under S. above, reveal only some of the dangers and pit&lls. If the Postal Service geared its
activities to making a profit, rational rate-making could well be inqiossible.
156
Mr. McHuGH. Thank you, Mr. Comarow. We appreciate your
comments as well.
Let me go back to Mr. Frank and work across. Just generally,
you've had some time to reflect upon your service in the Postal
Service. Knowing now what you do, if you knew it then, what
would you have done differently? What could we take from your ex-
periences to our efforts to reform the Postal Service?
Mr. Frank. Well, for one thing, Mr. Chairman, the changes of
management are too frequent. Wlien I came, I was the fifth Post-
master Greneral in 5 years. They used to call me, initially, the Post-
master General du jour. When you have such frequent manage-
ment changes, and with almost all of those changes come almost
total repudiation of what's gone on before you get reorganizations
on reorganizations and you get pro automation and anti, and so on,
the burden of continuity really rests on the Board of Grovemors.
And as Dr. Comarow's already pointed out, the present composi-
tion and way of choosing the GrOvemors doesn't permit very much
ability to provide that continuity. I see enormous expenditures of
money that are occasioned by new Postmasters Greneral that come
in and sweep everything clean. It's a very difiicult situation.
They're not apprised of what's gone on in the past.
We had a situation in 1984, where Postmaster Greneral Bolger
gave a gift to the APWU in the form of penalty overtime in order
to aid in the relationship at the time in negotiation. It didn't work.
Now we have the situation 11 years later, a new Postmaster Gen-
eral has to learn that lesson all over again.
So No. 1 is the continuity. The second element of continuity of
course is the senior management. And again, the top 35 or so offi-
cers have worked their way up through the organization to the
point where they can be fired. That is, when they become officers,
they don't have the protections that everybody else in the organiza-
tion does. So it's very difficult for them to provide continuity, and
in many cases, there are major changes when you get a change of
direction at the top.
Last, I want to give a short answer to your perceptive question.
There is a body of goodwill in the American people and in the work
force and in the mailers that deal with the Postal Service that is
virtually bottomless. And people feel awfully good about their letter
carrier and they feel awfully good about their postmaster.
There's a general reaching out; yet there are 26,000 post offices
that don't pay their own way. The people of those towns, if they
had to, would subsidize that post office because that represents the
town to them.
So I think that that type of esteem and esprit can be built upon
with some more continuity, with some longer-term direction, and
with some more understanding and competence at the Board of
Grovemor level.
Mr. McHuGH. Thank you.
You mentioned about the opportunities of employee attrition,
without disrupting those who are actually on the pa)n*oll, achieving
reductions through other means than RIF's and such. What would
you consider an ideal level of employees?
We have about 800,000, give or take, right now. What would be
your target and why?
157
Mr. Frank. Well, Mr. Chairman, the volume of mail has doubled
since the inauguration of the act, and number of employees has
stayed the same. So, as long as the volume of mail is going up, this
present level of emplojonent makes sense. If the volume of mail
starts dipping, why, obviously the numbers will have to go down.
I believe during my 4 years, we had a 55,000-person reduction
in emplo5mient. We did institute more casuals and more transi-
tional workers, so it's a little difficult to deal with it statistically.
At some time, the decision is going to have to be made, and it's
been proposed by smarter people than I, as to whether the Postal
Service should be exclusively a delivery service, which would con-
tract out all its processing and all its post office public contact
work. I don't believe in that, as long as there's uniform willingness
to provide service to the American people.
So the long answer to your short question, I believe that an attri-
tion reduction of about 1,500 positions per month, 18,000 per year,
coupled with an 1 to 3 percent increase in the mail, is a very
achievable and logical result.
Mr. McHuGH. Thank you.
Ms. Tyson, you didn't know, if you did know it before you arrived
here today, and I suspect you did, Mr. Comarow and others in 1970
didn't envision you to have a job at least through the PRC, because
they didn't envision a PRC. You heard the recommendation here
today that that issue be at least revisited and utilize an adminis-
trative law judge process. How would you respond to that sugges-
tion?
Do you think that's a positive one? Do you think the PRC is
something that should be retained or just generally?
Ms. Tyson. Well, I think there's a vast difference in what the
Postal Rate Commission is doing and what Professor Comarow sug-
gests. I believe at one point in time the Postal Rate Commission
did employ the services of an administrative law judge to take
some testimony. I don't think that worked out too well and the
commissioners decided to do that themselves.
I believe there are substantial differences in the relationships of
the Presidentially appointed panel vis-a-vis that of an administra-
tive law judge to the process, to the Postal Service, and to Con-
gress. And I would invite your scrutiny of what that would, in fact,
mean.
I must say that when I first went to the Commission, I naturally
studied the model of the Commission vis-a-vis the Postal Service,
and I really felt at that time that you could do the job with three
commissioners. After being there for a couple of cases, I was sur-
prised to see the diversity that was brought to the process by hav-
ing five full-time commissioners from different walks of life who
looked at the balance of interests in these cases. And so I have
come to believe that five commissioners are a vital part of the proc-
ess.
I think that if you are entertaining some legislative changes, I
might suggest that you consider a change which would permit a
Postal Rate Commissioner to serve until a replacement is con-
firmed. Right now I think the Postal Rate Commission is consider-
ing a very complex classification case, and I believe they have only
four sitting commissioners, because the vacant seat hasn't been
BOSTON PUBLIC LIBRARY
j5g 3 9999 05983 657 5
filled. In other commissions, generally a conmiissioner will serve
until his successor is appointed.
Mr. McHuGH. Then, and I don't want to put words in your
mouth, but would you endorse the concept that, in your opinion,
there is value to an expertise that is gained through service that
perhaps administrative law judges would not have?
Ms. Tyson. Yes, indeed. I'm sorry if I didn't make that clear.
There is now a vast precedent of administrative and judicial rul-
ings about the process that the Postal Rate Commission has devel-
oped.
The Postal Rate Commission has provided a sophisticated analy-
sis of Postal Service data. There is much that is not available to
the Postal Rate Commission nor the community at large from the
Postal Service, and I think that the analytical product of the Postal
Rate Commission is valuable to the postal community in evaluating
where the Postal Service is and should be going.
Mr. McHuGH. Dr. Comarow, how would you respond to the con-
cerns of those who say that the structure of an ALJ panel, where
they come together for one task and then go back to other agencies,
would prohibit them from learning enough about this very complex
process to make fully informed decisions, whereas the PRC, for all
of its foibles, has a sense of continuity that ingrains a certain
knowledge of the system that's helpful, if not invaluable, in the
rate-setting process?
Dr. Comarow? I am sorry, I thought I said
Mr. Comarow. I beg your pardon. I would respond in a couple
ways. Some of these cases go to Federal judges and Federal judges
have no particular difficulty dealing with these complex rate cases.
There's no question but that any body that exists for a couple of
decades will buildup a certain level of expertise, and there's no
question but that that is useful and helpful. But the notion that
the job could not be done by three judges who are trained in rate-
setting seems to me to be without very much foundation.
As matters stand, the Postal Rate Commission is de facto the de-
cider to the extent that anybody is, because the Board of Governors
needs to have a unanimous vote in order to overturn or modify the
Rate Commission's initial recommendations. They're called initial
recommendations in the law, and they are, but for all practical pur-
poses, 95 percent of the time, that's it.
Mr. McHuGH. You made some very direct comments, and I ap-
preciate them, about the issues of should the Postal Service be per-
mitted to introduce new products, should they be given more flexi-
bility in their rate-setting from top to bottom, and we've heard that
on any number of occasions. But we've also heard that under the
current system there are indeed cross-subsidizations occurring and
that as long as the Postal Service enjoys the protections it does
from not paying taxes, from not pajdng parking tickets, from hav-
ing that First-Class monopoly, and so on, it is unfair to give them
the opportunities to compete without some sort of process, again,
for those who are out there presumably paying the parking tickets,
who are paying their taxes, et cetera. How would you respond to
that, how would you balance that?
159
Mr. COMAROW. That's exactly the difficult and complex balance
that needs to be made by a special body such as the Kappel Com-
mission. And that's the kind of tradeoff that needs to be studied.
I think that there is much to be said for the argument that
you've just paraphrased or repeated, Mr. Chairman. As long as
they have monopoly protection, they should not be permitted to in-
dulge their entrepreneurial instincts in new products and services
without limit.
If the monopoly is to be retained, there needs to be a careful defi-
nition of what new products and services they are entitled to
launch. Otherwise, as you say, they enjoy the protection of the mo-
nopoly and at the same time can compete unfairly with the private
sector.
Mr. McHuGH. Yes, Mr. Frank.
Mr. Frank. I'd just like to point out, Mr. Chairman, that as our
society gets more electronic, we're going to have fewer and fewer
places around this country where people can come face to face with
somebody else. And the 40,000 offices of the Postal Service, I think,
are going to be an enormous asset to the American people over the
next decades.
As bank branches disappear and the gas stations become self-
service, and so on, there are very few places where you can trans-
act business face to face. I just point out to you a couple of ideas
that don't fly in the face of your concern about not paying taxes;
there are thousands of rural communities that no longer have a
banking facility there; couldn't the Postal Service serve as an ac-
cepter and disburser for local people for a bank? Not for the Postal
Service, but for a bank.
They could serve, as you will, as a remote teller station. That
clearly is something that's not being offered in that community
now, and would not be conflicting with the private sector. It would
be consistent and complement the private sector.
There are other such examples. I saw yesterday, I applaud the
Postal Service, that the Postal Service is selling prepaid telephone
cards. I think that makes a lot of sense. And I don't think that's
flying in the face of anybody.
So there are services where I should agree with you, you have
to be very careful that you're not using that monopoly and that tax
shelter to compete with private sector.
Mr. McHuGH. I appreciate that.
Ms. Tyson, from my very limited exposure to this process, it
seems to me that in rate-setting there is a great deal of time
consumed by the arguing among the various interveners and the
Postal Service and the PRC as to the reliability of the data and
who's holding back. To what extent would the interests of everyone
be served if we were able to agree upon a definable set of data that
is, to the greatest extent possible, unquestioned in these instances?
Would that not allow us to greatly compress the 10-month period
that seems to be the norm now in a rate case, or is that just an
impossibility and these going up of data interests simply
unresolvable?
Ms. Tyson. Well, it certainly would short-circuit the process. It
really is not the Postal Rate Commission that necessarily wants to
160
take the full 10-month period. And I understand the last case came
in in less than that.
But in fact, sometimes it's even the Postal Service that wants
time, because each party wants to examine the figures of the other
parties. The issue is getting the agreement. There is a lot of dif-
ference for comparison, and I think that any intrusion on the inter-
est of any particular party as you try to streamline this process
and improve the ratemaking activity, is going to be met by some
protest from one-quarter or another.
Mr. McHuGH. It already has, yes.
The bells that are ringing, £ind we now have less than 10 min-
utes to go vote, are in relation to the Treasury-Postal bill. I don't
think it would be wise for me to miss that vote, given why we're
here today. And at the same time, given the hour, I don't want to
intrude upon your generosity an)rmore in asking you to wait while
I come back. So I think I'm going to adjourn this hearing.
But let me first say to all the panelists, and certainly to you
three good people, how much we appreciate your being here, for
participating, and I assure you we are going to take your sugges-
tions carefully under consideration and we hope as well that as we
go forward that we can call upon you for additional input and re-
sponse and advice. And this will be a — not a short road, probably
not an easy one, and we're looking for all the help and input we
can get. And we truly appreciate your being here today.
So with that, I would say we'll keep the record open for written
comments, and I will adjourn the subcommittee until we let you
know differently.
Thank you very much.
[Whereupon, at 1:05 p.m., the subcommittee was adjourned.]
o
40-147 (164)
ISBN 0-16-055052-1
9 780160"550522
90000
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