“Hearing with the Commissioners of the Postal Regulatory Commission”
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House Oversight and Government Reform Subcommittee on Government Operations U.S. House of Representatives
Follow its sittings
Pete Sessions
And I'm sure the Postal Service has lots of opinions that they cannot always express. But, that's what today is about, to hear from the Postal Regulatory Commission. I'm delighted that they're here. At this time I would yield to the distinguished member from Maryland, my friend, the subcommittee ranking member, Mr. Mfume. Gentleman's recognized.
Kweisi Mfume
Thank you very much, Mr. Chairman. Good morning, everyone. I want to thank Chairman Sessions for calling this hearing on what we all agree is a very important topic. This is the fourth, in case you didn't know, in a series of subcommittee hearings on the Postal Service. This time with the Postal Regulatory Commission as we can see, and we are at a very critical juncture for the Postal Service, which as most of us know, is facing an estimated nine billion dollar net loss, a nearly 50 percent decline in mail volume since 2006, and is at risk, serious risk, of running out of cash in the near future.
The Postal Service powers communities by providing universal, reliable, and efficient mail services across all 50 states and territories. That's, that's nothing new. That's what the service has been doing since it was created. Mail delivery, as we can all agree, is a public service, and it's a public service to all Americans, and it relies on the Postal Service, its regulatory oversight bodies, and Congress to find a way to work together to ensure its survival. The independent Postal Regulatory Commission, also known as PRC, regulates, as all of you know who are here to testify today, the mail monopoly of the Postal Service.
The PRC regulates and establishes regulations and procedures on setting postal rates and analyzes the Postal Service's finances, service performance, and compliance with the universal service obligation. In addition to that, the PRC has the authority to hear public appeals of post office closures and receives and investigates public complaints alleging that the Postal Service may or may not be violating its statutory regulatory requirements. The PRC currently has, as we know, and excuse the redundancy here, four commissioners with critical expertise in the functions of the Postal Service and is a critical component of the postal system which ensures that rates are fair and maintains a transparent, accountable universal mail system. As the Postal Service faces and comes to grips with its own future, that service must continue to cut costs and to find ways to creatively increase revenue. When Congress passed last, its last major reform bill to support the Postal Service, then Postmaster General DeJoy spent $40 billion on capital investments, reduced performance targets, weakened the service in underserved areas, and any solution that Congress is willing to undertake must include more safeguards to hold this and any future Postmaster General and the Board of Governors to the public by making sure that they're accountable in various ways.
So I'm particularly interested in discussing potential guardrails that strengthen the role of the PRC, and while I'm encouraged by the Postmaster General's efforts to prioritize service performance as he leads the Postal Service during this difficult time, I think even more has to be done. So I look forward to the discussion on how we can all work together to put the Postal Service back on, as they say, the right track. I yield back, Mr. Chairman.
Pete Sessions
Mr. Mfume, thank you very much. So that this subcommittee understands, the gentleman from Maryland and I are very, not only very good personal friends, we try and operate this subcommittee based upon the ability to work together, to talk with each other about even difficult subjects. And while he is given the authority and responsibility, as am I, to hold our own opinion, we try and work together, and I want to publicly thank the gentleman not only for this attribute that he has, ability to do it, but to also let him know that I will continue that as we move forward in this process that seemingly has a lot of work to go.
So, thank you very much, Mr. Mfume. Without objection, Representatives Wittman of Virginia, Budzinski of Illinois, Lynch of Massachusetts, and Bell of Missouri are waived onto this subcommittee for the purpose of questioning the witnesses at today's subcommittee hearing. I am very pleased today to welcome our witnesses who are before us today. Robert Taub is the Vice Chairman of the Postal Regulatory Commission, formerly sitting in the Chairman's seat for over six years and totaling over 40 years of public service experience. I first met Robert a couple hundred years ago when I sat on the Postal Subcommittee of Government Reform at the time that we had a Postal Subcommittee, and Robert, I'm delighted that you are here today.
Ann Fisher. Ann Fisher has been a Commissioner at the Postal Regulatory Commission since 2019. She has served in the federal government for 32 years to include holding a number of positions in the United States Senate and the United States Postal Service. During her Senate tenure, she was the lead Republican aide overseeing passage of the 2006 Postal Accountability and Enhancement Act. Thomas Day.
The gentleman has been a Commissioner at the Postal Regulatory Commission since 2023. He also has served 45 years in the federal government, to include 35 years at the Postal Service where he held a number of senior executive positions. Ashley Poling. Ashley Poling has been a Commissioner at the Postal Regulatory Commission since 2019. Prior to her service on the Commission, she held a number of senior roles to serve the United States Senate and the American people.
So I want to say thank you to each of you for joining us today. It was important for me, as I told Mr. Mfume, as I had discussions with you yesterday to prepare us for today, I felt like that your insight, your opportunity to express your views and beliefs are very important, and it is my hope today that each of you will be able to not only complete the sentence that you start at the end of five minutes, but will make sure those points are well made, and I have a slow gavel, as Mr. Mfume knows. So, I would now ask each of our witnesses to please stand up. Pursuant to Committee Rule 9G, the witnesses will rise and raise their right hand and answer or affirm as I ask them. Do you solemnly swear or affirm that the testimony that you're about to give is the truth, the whole truth, and nothing but the truth, so help you God?
Let the record show that the witnesses answered in the affirmative. Thank you very much, you may now take a seat. We're delighted that you're here, and we appreciate you being here today. I'd like to remind the witnesses that in order for us to maintain proper opportunity for each of our members to come and participate, that we're going to ask that you try and make sure that your time here is succinct and well done. But with that said, we have the clock that you're aware of, the green light, yellow light, red light.
As we get to the red light, please think about closing your statements that you would have. So, we're delighted that you are here, and I now would go to our witnesses, and Mr. Chairman, we'll allow you to come first. The gentleman is recognized.
Robert Taub
Chairman Sessions, Ranking Member Mfume, and members of the subcommittee, thank you for convening this hearing on the state of the Postal Service and the critical role the Postal Regulatory Commission plays in providing transparency and accountability for the American people.
The President designated me Chairman of the Commission for more than six years, from December 2014 until January 2021. For the past two years, I was elected Vice Chairman of the agency by my fellow commissioners who join me here today. We have a vacancy in the Chairman position, so pursuant to law, the Vice Chairman acts as Chairman. As current agency head, my remarks this morning reflect the full Commission testimony. In some ways, not much has changed since my last testimony before this committee more than nine years ago in February 2017.
If anything, the situation has gotten worse. Almost three months ago, the Postmaster General testified here and presented a dismal fiscal forecast. He stated that they would run out of cash and stop delivering mail just under nine months from now. He also presented three doors from which Congress could choose a solution. Two doors leading to continued dismal results and the quickened demise of the Postal Service, such as stopping mail delivery, severely reducing service, closing post offices, and raising prices.
And one he referred to as the Goldilocks choice, which he championed would be just right, solving all the problems. The proposal includes increasing its borrowing cap from $15 billion to $30 billion, among other options, such as reallocating retiree liabilities, diversifying retirement funds, and modifying current actuarial assumptions to reduce pension payments. Our written testimony dives deeper into the many reasons why the Postal Service is in the situation it is in today and highlights how the Commission has repeatedly raised concerns over the past few years. While the Commission broadly agrees with the Postmaster General on some of the causes, some of the Postal Service's explanations give us pause. Its proposed solutions should also be viewed cautiously.
However, we agree with the Postmaster General on the most important solution. Only by first specifically defining what America needs of its Postal Service and what that costs will Congress then truly know how best to fix the fundamental funding structure while preserving appropriate service and delivery standards. Specifically defining the public service mission, that is, the Universal Service Obligation, or USO for short, of this vital government institution should be job one. Before further discussing this important issue of the USO, some words of caution about the Postmaster General's suggested approach in his testimony of just granting the Service more freedom to operate like a truly independent entity and ridding it of any regulatory or statutory requirements, then hoping that will make everything better. That approach, combined with the Goldilocks choice, can generally be described as give us more money with less oversight.
The Postal Service is not an independent private business. It is a government establishment with extensive special legal privileges, including two statutory monopolies valued at nearly $6 billion over letter delivery and mailbox access that no other private sector company is allowed to maintain. This is why Congress established specific and limited statutory and regulatory guardrails and has relied on the Commission for the past 56 years to protect American consumers and businesses from potential monopolistic abuse such as predatory pricing, poor service, and unfair competition by this government establishment operating in commercial markets. The Commission also cautions against endorsing the Postal Service's plan to move full steam ahead with what in essence is the Delivering for America plan, DFA. A plan that promised break-even operations by 2023 and a cumulative 10-year net income of $200 million.
In fact, now in year six of the 10-year DFA plan, the Postal Service has incurred $31 billion in losses and is on the path to losing even more in the remaining four years of its implementation. It is a plan that promised to streamline and save the Postal Service $28 to $40 billion by 2030 as initially estimated. Yet, implementation of the plan has slowed mail delivery across the United States, particularly in rural areas, which to a greater extent rely on affordable and reliable mail delivery. Further, the mounting financial losses continue, a situation the Commission warned about on several prior occasions. Congress has enacted significant financial relief in recent years, including $10 billion in COVID relief, $3 billion for electric vehicles, and approximately $57 billion in balance sheet relief under the 2022 law.
Without these extraordinary measures, postal finances would be even worse. The 2022 law also required Medicare enrollment for postal retirees, which was estimated to generate longer-term cost savings of $2.5 billion over the 2021-2031 period. In addition, in 2021, the Commission provided the Postal Service with additional rate authority above inflation for its monopoly products, such as letters. There are no limits on rates for their competitive parcel and package products. This additional pricing authority helped offset costs related to inflation as well as two sources of cost that the Postal Service argues are outside of its control.
The Commission agreed and we created additional rate authorities targeted at offsetting those specific costs of mail density and retirement obligations. Since the effective date of the Commission's new rules in 2021, the Postal Service has used all this authority to raise rates by 45% for most classes. Rate authority due to inflation granted during that time totals 23%, which means the Commission provided additional revenue-raising authority to the Postal Service of 22%. Looking at the first-class stamp price, the Postal Service accelerated the rate in just five years from 55 cents to 82 cents effective next month, a 49% increase. Now more money is being requested with no fundamental solution in sight.
The Commission is doubtful that just $15 billion more is going to solve the problem. Extend the date of the ultimate crisis, yes, but prevent it, no. Understanding the situation and working to address it, the Commission, building on its record of trying to identify creative pathways forward, undertook a major action in April that fundamentally alters the Postal Service's pronouncements that it could be out of cash in less than a year. The Commission provided the Postal Service with a total of potentially $15 billion or more in relief through 2030 to help avert a cash crisis in the near term by issuing a waiver of our regulations requiring minimum retirement payments. I will say that again so it is very clear how circumstances have changed since the Postmaster General's testimony in March.
The Commission provided the Postal Service a total of potentially $15 billion or more in relief through 2030 and averted a cash crisis in the near term by issuing a waiver of its regulations requiring minimum retirement payments. The Commission's action offers some breathing room and extends the time before the Postal Service's reported insolvency and the stated crisis of stopping mail delivery to at least another several years, provided the Postal Service makes judicious decisions about its expenditures starting now. To be clear, this is not a panacea nor a permanent or long-term fix to the Postal Service's problems, but it does allow Congress an opportunity to enact thoughtful and fundamental change as opposed to choices of desperation.
There are several areas where we disagree with the Postal Service on how it got into the position it's in now or how it will get out of it. However, I'd like to focus on the areas where we agree with the Postal Service and the singular action the Commission believes is critical that Congress enact: define the universal service obligation. Clearly defining the USO means describing what the country needs from our Postal Service and setting up a system to fully pay for it. We fully agree with the Postmaster General on this point as he testified, quote, "Just tell us what you want us to do and how to pay for it, and we'll do it," end quote. It really is just that simple.
As the Government Accountability Office testified to you that same day, the existing Postal Service operating model is unsustainable. The Commission strongly agrees, and we have urged action in this regard since 2008. This position has been echoed in recent years by the GAO, the Postal Inspector General, President Trump's task force on the postal system led by the Secretary of the Treasury, among others, which is that the United States needs to clearly define the public service mission for this wholly government, not private, establishment. In other words, what is the universal service obligation? Defining the USO involves answering tough questions, but in doing so, it also and perhaps more importantly forms the basis for the infrastructure and financial arrangements needed to ensure our fellow Americans receive the postal services they need.
Those tough questions may include: how many days of delivery each week are needed in 2026 and beyond? What are acceptable delivery service times across the nation? Does the Postal Service need to offer fewer or more products and services? Should delivery service and access be the same across the nation? The Commission has extensive experience evaluating the USO.
In the 2006 postal law, Congress directed the Commission to produce a comprehensive report on universal service, and it identified seven specific attributes that comprise the USO. I think it's important to name them. One: geographic scope. Two: range of products. Three: access to services and facilities.
Four: delivery frequency. Five: affordable and uniform pricing. Six: service quality. And seven: an enforcement mechanism. The first four of these attributes—geography, products, access, and delivery frequency—directly impact the costs incurred by the Postal Service.
The fifth attribute, pricing, directly impacts the revenue of the Postal Service, and the sixth attribute addresses service performance. To date, however, other than mandating six-day-a-week delivery, Congress has not specifically defined the other features of the USO. Once the Postal Service's duties under the USO are defined, the costs for providing them can be assigned and a viable financial structure can be established to support the level of universal service required. Only by defining the USO clearly can we begin to design a system that will fund the services required. It is our nation's mission statement for the Postal Service, and it needs to be clear.
The law requires the Commission to annually estimate the USO costs, and we currently estimate that the total cost of the USO is more than $6.6 billion. Unlike many other countries, the USO within the United States is largely undefined and instead is comprised of a broad set of policy statements with only a few legislative prescriptions.
In the absence of a clear definition of the USO, particularly given the current financial challenges, each of us, including the Postal Service, will have different views of what services and operations it must provide to fulfill the USO, and all our views will have different price tags. As part of the financial pressure of generating sufficient funds to remain solvent, make capital investments, and pay retiree costs, the Postal Service must fund this $6.6 billion annual and growing cost for its universal service obligations. Given the Commission's substantial work on the USO, we would welcome the opportunity to collaborate with this committee on designing a viable solution with a possible legislative approach detailed in the written testimony. We appear before this committee today fully aware of the difficulties that lie ahead. I believe the Commission has a clear understanding of the serious and numerous financial challenges that face America's postal system.
As you all know well, the mail stream of today has been diminished by electronic means of communication that replace mail. They replace stamps, and thus they replace the revenues necessary to operate our key mail delivery system. Some may even suggest that the time of the Postal Service has passed. But the fact is, for all the challenges the Postal Service of the 21st century faces, it still retains an integral place as a key cog in how American businesses conduct their affairs and how Americans all across this land communicate. The US postal and delivery sector represents a nearly $2 trillion a year industry with almost 8 million jobs, making it vital to our economy.
However, the Postal Service is in a serious financial crisis, operating under an unsustainable model, and the Commission, along with the GAO, the IG, President Trump's Treasury Task Force on the postal system, and the Postal Service itself, have all pointed the way forward. Define the USO, again, as the Postmaster General testified here in March, quote, 'just tell us what you want us to do and how to pay for it, and we'll do it,' end quote.
Pete Sessions
Mr. Chairman, thank you very much. As I suggested to you yesterday and reiterated this morning, I think your presentation was necessary, balanced, and contained certainly a challenge for this subcommittee, members of Congress, and certainly the American people. Thank you very much.
Thank you, Mr. Chairman.
Ann Fisher
Ms. Fisher?
Good morning and thank you, Chairman Sessions and Ranking Member Mfume, for holding this hearing. The Postal Service faces an incredibly tough mandate. It must operate like a business by funding itself through its own revenues, yet it must serve the public as a universal service provider, delivering to every single address regardless of profitability, all while under persistent financial distress. I fully support the comments of my longtime colleague, Vice Chairman Taub. At its core, the question this committee is before this committee is whether the current rate system and broader statutory framework give the Postal Service a realistic path to long-term solvency while preserving universal service.
With the 2006 enactment of the Postal Accountability and Enhancement Act, Congress directed the Commission to establish a ratemaking system designed to achieve a set of interlocking objectives laid out in the law. Particularly relevant to the discussion on postal finances is objective five: to assure adequate revenues, including retained earnings, to maintain financial stability. True financial stability requires a system that can lawfully generate the reserves and retained earnings needed to invest in vehicles, facilities, and modern infrastructure. Without long-term viability, the universal service mandate cannot be sustained. If objective five were the only objective the Commission had to consider, rates would need to rise about 50% to add 10 billion in net income and a $1 billion buffer.
Fortunately, that's not the way the rate system is designed. Objective five must be balanced with seven other objectives that call for, among other things, maximizing incentives for operational efficiency and cost reduction and maintaining predictable, stable rates and high-quality service standards. The Commission cannot simply allow the Postal Service to price its way out of structural deficit without seriously eroding the very mail volumes that still fund the universal service. Members of Congress routinely hear from their constituents about service problems. High-quality, reliable service is the expectation, but that carries an undeniable multi-billion dollar cost.
In postal economics, cost efficiency trades off with service quality. Leaner networks cut costs, but high-reliable service demands significant operating premiums. High-quality service is not just management; it requires costly operational buffers, extra staff, overtime, and added transport. For a cash-constrained Postal Service, every gain in service scores has a direct price tag. About 70% of postal costs are labor.
This past fiscal year, overtime jumped by 5 million hours even as total hours fell by 12 million and headcount by 15,000. Yet higher benefits, more career conversions, and volatile overtime still drove compensation costs up. In 2020, the Commission modified the rate-making system and granted the Postal Service additional flexibility to raise market-dominant rates above inflation to help address structural deficits. We had to strike a very careful balancing act, allowing prices high enough to cover the actual costs of processing and delivery, but not so high that they accelerate volume declines and drive customers out of the mail altogether. Those tools have helped stabilize revenue, but they cannot overcome the combination of declining mail volume, rising structural costs, and balance sheet obligations.
The Postal Service was designed to be self-funded but has not reported an annual profit in roughly the last decade. Over just the last three years, cumulative net losses total about $25 billion, underscoring that the current trajectory is not self-correcting. Given this backdrop, the Commission has had to make difficult decisions. Vice Chairman Taub noted the waiver we recently granted the Postal Service, allowing for emergency liquidity relief. The Postal Service is also seeking congressional assistance in the form of an increased debt limit, an annual appropriation to fund universal service, and other items, all of which deserve fair consideration.
I hope that issuance of the waiver, though, will provide Congress with time to decide what the nation needs from the Postal Service and how best to finance that mandate. From a regulatory perspective, short-term liquidity fixes are not a substitute for a sustainable long-term funding model for universal service. On a personal note, I want to thank Chairman Sessions for his recent visit to South Dakota. Having spent much of my life there, I have observed firsthand how the slowdown in rural and remote mail delivery can affect daily routines. The concern is not only slower delivery times but also reduced access.
Last year, the Postal Service closed 14 postal counters in Sioux Falls' Hy-Vee and Lewis drugstores, leaving two full-service post offices to serve the state's largest city. A local newspaper quoted a Postal Service representative as saying the 14 closures better enabled the Postal Service to fulfill its commitment to serve our communities with efficient and reliable access to retail services. It seems to me the opposite is happening because for many residents, access has become more limited. At the same time, the broader delivery landscape is evolving.
And my mother, who lives even further away, receives necessary medication via a private carrier. My point is that while delivery options and consumer expectations will likely continue to evolve, rural and remote communities still rely on the Postal Service for affordable delivery of mail and packages. This presents both a challenge and an opportunity to evaluate the current needs of Postal Service stakeholders. I encourage Congress to consider this evolving landscape when determining how best to ensure a responsive and viable Postal Service into the future. Thank you.
Speaker 6
Ms. Fischer, thank you very much. The gentleman, Thomas Day. Mr. Day, you're recognized.
Thomas Day
Good morning, Chairman Sessions, Ranking Member Mfume, and members of the subcommittee. Thank you for calling this hearing to discuss the current situation confronting the Postal Service. I look forward to the opportunity to discuss the critical role of the Postal Regulatory Commission as well as what I believe it could do to assist in securing a sustainable future. I've been professionally associated with the Postal Service for 42 years. Following nine years in the US Army, I began my postal career in 1984, and in 35 years in the Postal Service, I served at all levels of management from frontline supervisor to senior executive vice presidents.
I also worked all aspects of operations and virtually most, if not all, of the supporting functions as well. I'm in full agreement with the factual background that Vice Chairman Taub's testimony provided. The summary of performance and the path forward to achieve resolution and improvement. I would like to emphasize a few points, however. I fully agree we must define the scope of the universal service obligation.
It's important to understand, and this complex task will likely take some time to be completed. In the meantime, there are other critical steps that can be taken to improve the Postal Service, to reduce cost, improve service, and ensure a safe and secure work environment for its employees. Under current postal leadership, there is a clear effort to improve service and reduce cost. More than just an effort, real results are being achieved. That said, continued use of the network created for Delivering for America plan, DFA, cannot achieve an optimal solution.
As indicated in the advisory opinion of the PRC back in January of '25, the DFA plan is fundamentally flawed. The flaws in the DFA limit what realistically can be achieved. To be clear, under current effort, improvement will take place. It simply will not be the best it could be achieved. I could go into a lengthy academic discussion explaining the deterministic models that the Postal Service utilized as opposed to the stochastic models that they should have utilized.
What it ultimately comes down to is variation. Variation throughout the network. No two places are the same. At each of the Regional Processing and Distribution Centers, the RPDCs, there's a unique community to be served. The density of population varies, the types of roadways and traffic vary, and even the types and amount of mail vary.
Despite this variation, the Postal Service decided to implement a single uniform format for RPDCs. A seemingly arbitrary 50-mile radius. Beyond 50 miles, most mail goes to the Regional Transportation Optimization, the RTO network. Most RTO offices have a single truck each day to both pick up mail from the previous day and to drop off the mail for delivery that day. An example used during our advisory hearing was Miami, Florida.
When you look at the Miami, Florida RPDC location, if you go 15 miles to the east, you're in the Atlantic Ocean.
Go 15 miles west, you're in the Everglades. Just one example of how a uniform 50-mile radius is objectively and fundamentally flawed. Only four of the RPDCs of the 50 or so that are out there are in new locations. The overwhelming majority of the RPDCs and the hundreds of the local processing centers, the LPCs, were all placed in the existing network. The DFA network simply modified transportation routes between existing facilities and processing operations within those existing facilities.
Properly modeling and designing an optical network does not require an overwhelming investment. Modeling, design, and implementation of an optimal network should improve service, reduce cost, and provide employees with a more stable work environment. The PRC was clear in its advisory opinion. More than a year later, the facts and data are clear. We were correct in what we stated last year.
It is almost certainly a better solution for the Postal Service to step back from DFA and properly design and implement an optimized network within the physical network that already exists. It will take some time to study and approve the implement of a revision to USO. As that effort is underway, properly designing and implementing a revised postal network is critical. This is of value for the immediate future, but it also will create a framework for future updates as change will continue to take place throughout the postal industry. Proper network design and updates will be needed for the foreseeable future.
Thank you again for the opportunity to testify before this subcommittee. I hope my testimony is informative and I look forward to any questions you may have.
Pete Sessions
Just say thank you for your service to the United States government and the people of the United States. Thank you very much. Ms. Poling, you're now recognized.
Ann Fisher
Thank you. Chairman Sessions, Ranking Member Mfume, and distinguished subcommittee members, thank you for taking the time to hear from the Commission on this critically important issue, the future of the United States Postal Service and the role of the Postal Regulatory Commission. First, I would like to echo the statement of the Vice Chairman and state for the record that I appreciate his strong and steady leadership during these rapidly changing times in the postal community. The situation facing the Postal Service is a five-alarm fire. Volume of traditional mail continues to decline, a result of both ongoing electronic diversion and an acceleration due in part to the Postal Service's aggressive pricing strategy.
And at the same time, service quality continues to suffer, as the leadership of the Postal Service has decided to slow service standards for several mail products over the last five years, including twice for the flagship first-class mail product, while also lowering its service performance targets. What this means is simple. The American people are paying more while fewer mail pieces are being delivered in the expected timeframe.
As declining mail volumes and an increasing number of delivery points continue to put financial pressure on the Postal Service, the incentive to underperform service expectations can be expected to increase. It is likely time for Congress to consider authorizing additional oversight to ensure the Postal Service meets its statutory obligations to the American people, especially if those obligations are spelled out in an explicit universal service obligation. With that in mind, I would like to focus the remainder of my remarks not on what aspects of the Postal Service's broken business model Congress should address, but on why addressing the sustainability of the Postal Service is so critically important, even in a world dominated by electronic communication. Especially for the nearly 66 million rural Americans, the Postal Service continues to fill an important role, not just as a communication channel, but as a lifeline for rural residents ordering pharmaceuticals and other necessary medical items and an economic engine for local small businesses reaching their customers. And every year, there are numerous stories of letter carriers saving the lives of elderly residents throughout the country, simply by showing up at their doors every day and noticing that they haven't collected their mail.
I started my career in postal issues working for several senators from states with large rural populations, including Montana, North Dakota, and Michigan. I saw firsthand the impact of missed daily mail deliveries and how a post office can serve as the beating heart of a rural community. And in many areas of this country, the Postal Service is the most visible daily interaction that people have with their federal government. In this way alone, it continues to bind the nation together. And it's important to remember that the Postal Service is first and foremost a basic and fundamental service provided to the people by the government of the United States.
As Congress works to clearly define the scope of the USO, it is important to acknowledge that the Postal Service has a number of resources that can be utilized for the benefit of the American people. A nationwide delivery network serving every community from New York City to Nome, Alaska, a physical presence in almost every community in the country with over 30,000 post offices and almost 163,000 delivery vehicles making daily rounds to every address. And a large workforce of highly trusted, dedicated public servants. Each of these assets could be leveraged to provide value-added services to the American people. Although the Postal Service Reform Act of 2022 granted the Postal Service additional authority to provide new products and services to federal, state, local, and tribal governments, a recent Office of Inspector General report notes that the Postal Service has barely begun to scratch the surface on these new revenue opportunities.
So a critical question for Congress as it approaches the issue of universal service is not only where and when it wants the Postal Service to deliver to the American public, but also what it wants them to deliver. There is hope for the future, but congressional intervention to address the root causes of the Postal Service's problems is a prerequisite to meaningful reform. So what do you do when a fire threatens to rage out of control? It is my belief that now is the time for everyone to grab a bucket and work together to secure the future of the Postal Service that provides high-quality universal service to all parts of our country. And the Commission stands ready to assist in any way we can to help preserve this 250-year-old national treasure.
Thank you again for convening this very important hearing.
Speaker 10
Want to thank you also for your service to the American people and to thank each of you for being here today. We will now move to the members' opportunity to engage you and we will move first to the distinguished gentleman, Mr. Burchett from Tennessee.
Tim Burchett
And I said, I remembered I was sitting on a corner in Belfast, and this guy was saying, "Yeah, mate, I'm about ready to get out of the music business." I said, "No, Bono, you need to stick with it." And literally weeks later, people came up to me and said, "Did you really know Bono?" And I go, "No, no." But anyway, gullible folks.
Anyway, thank y'all so much. I'm a big fan of the post office. I was, back before my congressional career, I was a prolific Ebayer. I had over a thousand sales, and I agree with what one of y'all said about the postman coming to people's houses. They are, they're really a lifeline for seniors, and sometimes it's the only contact they have with the folks out there.
And I've had, I've had my share of tussles with your all's higher-ups because of some management decisions, but that's not with y'all. But anyway, this is for all y'all. What's the market dominant products offered by the United States Postal Service?
Robert Taub
Congressman, those are the overwhelming majority of letter, flats, periodicals, newspaper, magazines. So when you think of your first-class letters and cards, that's a market dominant product. The result is based in statute, which is the idea that if the Postal Service either has a statutory monopoly over that, for example, letters no one else can deliver, or there's an economic test in law, but the Postal Service has market dominance at a level that they can raise prices substantially, either degrade service without the significant risk of losing business. That's the statutory test. It's regulated as market dominant.
If it's not, it's competitive where they have immense flexibility to price like parcels.
Speaker 11
On what you said there, does every category of marketing mail make money, including the flats?
Robert Taub
Flats is one of the areas, marketing mail flats, where they are losing money, but the rest of marketing mail is actually contributing quite a bit to the overhead.
Speaker 11
Okay, given that those are unprofitable, would y'all recommend the Postal Service phase out or restrict some of those products?
Robert Taub
What we have done in the rate system that we've designed is require the Postal Service to increase those rates to better cost coverage as well as look at reducing the costs. There is in fact in the 2022 law a requirement that the Postal Service study this to get to that issue. We have looked at it. Unfortunately, it is a perennial problem that we've been concerned about for quite a long time.
Speaker 10
And what percentage of the postal employees fall into the collective bargaining agreements compared to possibly the non-postal federal employees?
Robert Taub
Certainly the large bulk of their workforce, I don't have the percentage offhand, we could get to you, are collectively bargained employees. Those are the clerks, the carriers, rural and city, and the mail handlers. That is the bulk of the Postal Service workforce.
Speaker 10
Now does the high percentage of union folks give the Postal Service more or less flexibility to adjust postal functions?
Robert Taub
The collective bargaining requirements have been embedded in the statute since Postal Service was created, so that does create a mandated process that would be different than other federal employees where they're not under collective bargaining restrictions and mandates.
Speaker 11
And this may be, may have to go under what you said you're going to get for me, that what's the Postal Service, how much, what percentage of the Postal Service operating costs go to labor, and how can the federal government decrease that amount?
Robert Taub
Generally speaking, historically, the postal service roughly 70% of the costs are for labor. It's a very, you know, handicraft-focused business, but generally it's been about 70% of the total costs of the postal service are for labor. While revenue has been increasing over say the last decade, the expenditures have been going up more than that. Just in the last five years their costs have been going up 10%. Variety of factors, but if you've got 70% of that bogey as employee costs that is going to be obviously a driving expenditure.
Speaker 11
Now I know that Chairman Sessions served with him or grew up with him, but wasn't Benjamin Franklin the first Postmaster General?
Indeed, yes, 1775.
We made sure it got in there.
Article 1, Section 8, Clause 7, yes.
Tim Burchett
Okay. One last question. I've got seven seconds. What action can Postal Service take right now to extend the timeline before running out of money and does Congress have to intervene?
Robert Taub
We provided a waiver of a regulation we required that required payments into the retirement. If the governors of the Postal Service choose to activate that waiver, which means notifying the Secretary of Treasury, that's going to be free that frees up 2.4 billion this year. We did it with a time limit of till 2030. That's potentially 15 billion dollars of breathing room in the near term, but it doesn't solve the problem by any means, but gives them more time.
Speaker 11
All right. Thank you, Mr. Chairman. Just for the record, I'm a fan of the post office obviously and the people that work there. I'm maybe not a fan of some of their management in the past, but I would hope that we could work together on both sides of the aisle to help alleviate some of these problems because the post office is a godsend for a lot of people and a lot of people in my rural folks in my area get their medicine and things like that and when it's delayed, their medicine's delayed and that that hurts me. So, thank you.
Pete Sessions
I want to thank the gentleman. I think that the witnesses who are here as well as others know that Mr. Burchett attends each of our hearings, has a view that I think is very important and I want to personally thank you for being involved. I think I've told this to the young Congressman and he's agreed. We're all part of the problem, not just each of us individually or as a as a group. Each of us are going to be a part of that solution.
I told him that I appreciate him staying at the table to to make sure we get closer to that. So, sir, I want to thank you very much. The gentlewoman Ms. Norton is recognized.
Eleanor Norton
Thank you. I want to begin by thanking Postal Service employees for their dedication and hard work. In 2020, the Postal Regulatory Commission granted the Postal Service the power to raise mail rates above the rate of inflation. Over the past six years, the Postal Service has repeatedly exercised that power to impose higher costs on American consumers. Since July 2021, first-class mail rates were increased by 42% with an additional 5% increase scheduled next month.
At the same time, delivery standards have gotten worse. First-class mail now takes three to five days to deliver, whereas previously it took two to three days. President Trump's reckless actions and misguided policies have resulted in sharply higher gas, grocery, and other prices and Americans are paying more in postage for worse service.
This is simply not acceptable. Millions of people across the country rely on the Postal Service to be an effective, affordable way to pay their bills, file their taxes, and run their businesses. Higher prices mean shutting out many Americans from full participation in our society. Vice Chairman Taub, as the Postal Service Commission reviews and approves postal rate changes for the Postal Service, to what extent are you weighing the deterioration of service?
Robert Taub
All right, Congresswoman, we take that very seriously and we are deeply concerned about that. As you referenced, about five years ago, the Commission modified, as is a requirement under the law, the market dominant or price cap system for these market dominant products where the Postal Service has captive customers, those that you were talking to, you know, who have no other alternatives than the mail. That had been locked at CPI. There's nine somewhat conflicting objectives in law that the Commission must balance, and those include things like rate predictability, stability, includes the financial stability of the Postal Service and a variety of others. We looked at that system and found it wasn't meeting those objectives, so we provided the Postal Service, as you indicated, some additional rate authorities above inflation to capture costs that are outside of their control.
They made clear they were going to be judicious in their use. They have been maximalist in that use, and as you indicated, we are seeing degraded service during that time. So in essence, folks are paying more for worse service. And hearing those concerns, we started a review earlier on this system, and we identified one of the changes that we actually promulgated in January was limiting the Postal Service, again on this market dominant side, competitive products they can change daily, to once a year. They were in many cases doing twice a year increases, which really are a tax on the American businesses and consumers throughout this United States by a government agency twice a year, and we limited that to a once a year.
But we did not change the maximum ability to go above inflation, nor the other many flexibilities that the Postal Service has for pricing.
Eleanor Norton
Commissioner Day, the universal service obligation guarantees that all Americans, regardless of location, can access public services at uniform rates. What steps will be required to preserve the universal service obligation for future generations?
Thomas Day
This is part of what the Vice Chair had already said, excuse me. As we look at the USO, we're going to have to clearly define that. It is an open issue. At this point, the Postal Service has been able to redefine, as you've already just said, to go from overnight to three-day, to a two-day to five-day service, and even change the service measurement system. Pardon me.
The reality is we're going to have to work our way through that. I don't have a definitive answer at this point in time. It has to be done in conjunction with all aspects of the universal service obligation.
Eleanor Norton
Thank you. Commissioner Poling, aside from raising mail rates, what other options are available to the postal service for generating additional revenue?
Ann Fisher
Thank you so much. You said, I just want to make sure I had the question correctly. You said aside from raising mail rates, what other forms of revenue raising are available to the postal service? Is that correct? Okay.
I'll just go ahead there. I was just going to say, yes, so I think the postal service, one of the things I talked about in my testimony is I think they have a tremendous ability to go forward and and pursue these additional revenues. The Office of Inspector General, I think, did a fantastic report kind of seizing on in the 2022 law, you know, it has been expanded in terms of working with state, local, and tribal governments in terms of doing these added revenues. So I think that's something the postal service should really be pursuing. I would also say, I think there's untapped potential looking in younger generations as well.
I think we need to look at Gen Z. We need to look at millennials. We need to look at what is it sort of that people want from their postal service. And ultimately, that's why we need to define this universal service obligation.
Eleanor Norton
Thank you. As I told Postmaster General Steiner when he testified before the subcommittee in March, postal services must be accessible, reliable, and affordable. Raising prices and lowering delivery standards will not save the postal service from its current financial predicament. And I look forward to working with each of you on a more sustainable long-term solution and I yield back.
Pete Sessions
I thank the gentlewoman and also want to thank her for being at each and every one of these hearings about the postal service and I appreciate her service to the country also. We now move to the distinguished gentlewoman, the chairman of the Rules Committee, the gentlewoman from North Carolina, Mrs. Foxx.
Virginia Foxx
As many people know, I use the post office a lot for all kinds of things, especially personal issues, and so do my constituents. We want the postal service to ensure business functions are done, people receive medicine, pay bills, stay connected with their loved ones. However, during the last several years, the postal service's financial problems have not abated. Even though Congress provided one-time relief in 2022, the postal service continued down its unsustainable path of huge annual losses. With no end to the losses in sight, it's increasingly clear the postal service has lost its way.
Rather than a disciplined, efficient operation, the postal service resembles a bloated federal jobs program that delivers higher postage rates, delays, and deteriorating service. The postal service must return to its core mission of providing reliable, affordable, universal mail service. Vice Chairman Taub, I'm concerned that the postal service is spending money duplicating functions that the private sector can provide better and at lower cost, such as package labeling technology and IT solutions. Does the commission evaluate whether the postal service is duplicating capabilities that private companies have already invested in and developed?
Robert Taub
We don't have that direct authority in the law, but I will say, the law requires and we, I mentioned, modify the rate system, there's a requirement of law called worksharing. And it really is based on this idea of a vibrant public-private partnership where if the private sector can do it for less cost than the postal service, it makes total sense to have the private sector doing that.
Virginia Foxx
Well, does, does the law allow you to seek more transparency from the Postal Service on how existing commercial technologies can improve service and reduce cost? I would assume it does.
Robert Taub
Uh, you know, those, you, it's the separation between regulator-operator. And so some of what you're describing are operational decisions by the Postal Service to invest, whether it's new technology or invest in a whole middle-mile network, which the current plan is doing, uh, with promises that that's going to be more efficient. And so, for example, we opened a docket early on when the signs were clear that this plan that I think we all hoped would, uh, provide the results was not. And so indeed, uh, Dr. Fox, you are right on that, uh, that is part and parcel of why the Commission needs to exist is that, uh, providing transparency to the American public that otherwise, I would suggest, we may not even have an opportunity to truly get at.
Virginia Foxx
So what problems arise when the Postal Service invests in technologies that can disrupt private sector solutions, especially when those companies' products are regulated by the Postal Service itself?
Robert Taub
Yeah, uh, deeply, you know, just go down the list. Not only that is then, uh, adding and saddling the Postal Service and the ratepayers with more costs that otherwise could be inflected, uh, by leveraging the public-private partnership, but it's affecting the private sector of the United States, a government establishment in commercial marketplace. We do have authority based on the 2006 law, uh, to police through complaint where the Postal Service is using its regulatory authority to unfairly compete with, uh, the private sector. And so those, those are areas that, uh, we've had a chance to police, but we have not actually adjudicated, uh, many of those complaints. But that is a deep concern and we do have authority over that.
Virginia Foxx
So the Postal Service keeps raising rates on mailers well above inflation, which is unsustainable. Businesses in my district must make tough decisions such as laying off staff and newspapers and magazines must cut print days, which results in less local news and information reaching constituents. Everyone involved pays more for a worse product. What remedies do you believe should be implemented?
Robert Taub
We have an open docket right now that's ongoing looking at that market dominant rate system and whether there should be changes, uh, including those additional rate authorities above inflation that I mentioned we provided the Postal Service. I would note Postmaster General testified, uh, and has continued to allude to, uh, pending in that pending docket, the Postal Service has filed their perspective as to how we should modify that. And their recommendation is that we should get rid of any price cap limitations on the Postal Service, just trust the Postal Service to, uh, raise rates as they deem appropriate. And in the alternative, if we don't do that, their petition suggests that we, uh, grant them, uh, upwards of 23% one-time authority to do that. That's pending before us.
It's an ongoing docket. Like everything we do at the Commission is in the light of day where we get notice and comment, Administrative Procedures Act. Any party, including the Postal Service, if they don't like our final decision, can take us to, uh, the DC Circuit. And I would suggest, uh, a little different than the Postal Service itself, which is exempt from the Administrative Procedure Act, we're there to really represent the public interest. And so we are looking at that issue right now.
Speaker 18
Well, I thank all our witnesses. I thank the chairman and I will be submitting some questions, uh, after the hearing. Thank you.
Pete Sessions
Chairman Fox, thank you very much. We'll look forward to getting those questions and of course, uh, each of the witnesses will be expected to respond back to those as I know that they will. Thank you very much for your constant feedback, uh, to me since the day I took over this job. Virginia Fox has made sure that she's a regular visitor with me on these issues.
Thank you very much. Gentlewoman yields back time. The gentleman from Florida, Mr. Frost, you're recognized.
Maxwell Frost
Thank you so much, Mr. Chairman. Um, I want to start by talking about the Regional Transportation Optimization Plan, the RTO, that might impact 72% of all post offices. At a previous subcommittee hearing, I was able to ask the Postmaster General about the RTO plan directly, and now I just want to hear from you all. Commissioner Poling, does the PRC believe that the RTO plan will achieve its projected cost savings and improve the financial health of the Postal Service?
Ann Fisher
Thank you, Congressman Frost. Um, the Postal Regulatory Commission issued an advisory opinion in January of 2025, and in that advisory opinion, we actually did find that the changes the Postal Service was making would disproportionately harm rural America. RTO was among among the things that we were looking at, right, when we made that determination. Um, unfortunately, and the thing is, I think we're all here wanting to make sure the Postal Service is better, wanting to improve it. I don't think it brings any of us any joy that some of our findings were right in that advisory opinion, but as things have been borne out to date, yes, I think the RTO is something that has proven to be very challenged.
Um, and, you know, again, in the advisory opinion process, the Postal Service has the ability to look at our recommendations, but they don't have to follow them because it is advisory in nature.
Maxwell Frost
Um, how might the RTO or similar restructuring activities negatively affect mail delivery times?
Ann Fisher
I think that's a really good question. I think we've seen obviously service standards change and be degraded drastically, particularly over the last five years. Two times service standards have already gone down. So I worry a lot about what does a local citizen know about their delivery times? We actually did make a recommendation in our advisory opinion that said maybe you should put something to the Postal Service, put something maybe on these blue boxes saying how much longer it's going to take, right, when we're adding in these extra days of delivery.
To date, that has not been taken into account. Again, I think the biggest thing we have to think about is what what is it that citizens expect from their mail, what do they need from their mail? And frankly, they need to be they need to be given a lot more transparency from the Postal Service. They need to understand how long it's going to take something to be delivered, and right now I worry about that disconnect between maybe what the Postal Service is saying with service standards and these changes that have been made and then the actual experience that customers are having on the ground.
Maxwell Frost
100%. And you know, part of the reason I ask is I'm concerned about time-sensitive mail, and specifically, you know, of course, bills and paying for things, but also we have elections coming up, and so mail-in ballots and different things like that. And so I'm just concerned about the RTO's the RTO plan and its impact on on elections and working people and how they use the Postal Service. I also want to spend a few minutes talking about the importance of having an independent United States Postal Service and a knowledgeable PRC. Vice Chairman, can you speak a little bit about your qualifications and experience that you feel prepared you for this role?
Robert Taub
Sure thing. The Chairman had mentioned he's had the honor and privilege enjoy of working on postal issues for nearly three decades when he came to Congress and was assigned to the Postal Service subcommittee on this committee at the time. I happened to be its staff director, and so have been on this journey of trying to help ensure that this important vital service to America is delivered. The statute in 2006 when it was modified to create the Postal Regulatory Commission did add qualifications in statute for Postal Regulatory Commissioners. Includes experience in things like public administration, accounting, economics, law.
And so like a lot of the three and four-letter independent regulatory agencies in town, the idea is we have a multi-headed agency that bring differing perspectives. And so I think, you know, that is in many ways the strength. And it's an honor working with my colleagues here today. I know we were all appreciative the chairman for Public Service Recognition Week a few weeks ago came to visit the good hard work and folks at the commission who do that work.
Maxwell Frost
Thank you. I mean, it's clear that you all care about the financial health of the USPS and the qualities you all possess are also important qualities for nominees to the Postal Service Board of Governors as well. I'm very concerned about the president's, the president seeming to nominate people to the board that have his best interests in mind and not the best interests of the USPS, like his most recent nominee, Anthony Lomangino, who is also one of his top donors. He's a co-founder who put millions of dollars into a super PAC to help get the president reelected. Look, I think it's important that we fill vacancies on the Postal Service Board of Governors with Senate-confirmed appointees that meet the qualifications and experiences to help serve the needs of the people, not the president.
The Postal Service is not a business opportunity. And independent government boards must remain independent. Thank you and I yield back.
Pete Sessions
Thank you very much, gentleman yields back his time. And I also want to thank the gentleman from Florida. He attends each of our hearings, stays up on these issues, and I believe brings a balanced comment to people on this issue. And I want to thank the gentleman. We now move to the distinguished gentleman, former chairman of the Policy Committee for the Republican Conference, the gentleman Mr. Palmer.
Gary Palmer
Thank you, Mr. Chairman. The Postal Service carries roughly $101 billion in unfunded retirement benefits. It, you had to, you're spending about $10 billion a year trying to meet those obligations. It's a huge hit on your, your annual fiscal year budget. And back in April, you had to suspend contributions out of concern that, that you would run out of cash.
I, I just wonder from each of you how much thought you've given to the recommendations from the Inspector General to about diversifying your retirement investments into other assets beyond Treasury securities. Begin with Mr. Taub.
Robert Taub
Congressman, it, one of those things, all of the above, all of those ideas are worthy to be considered by Congress. We would simply suggest before Congress jumps into those decisions, we first focus on what is the public service mission that America needs from its Postal Service, defining its universal service obligation.
Gary Palmer
Well, if you're going bankrupt, which you're headed in that direction, if you were a private company with a hundred, over $100 billion unfunded liability, you've got to start thinking about this differently.
Robert Taub
Exactly, that goes to the heart of defining the mission. But Congressman, you're right on, there is on that balance sheet an enormous debt to the American taxpayer for the retirement obligations that they have not paid for over a decade. The commission added additional rate authority for those market-dominant products that if they chose to do it, they could finally start making some payments, which they did do. We stepped in earlier this year at their request to look at that and waived that requirement. But you're right, it's on the books, but they've been in essence not paying that in some ways I'd say in essence unilaterally.
Gary Palmer
We're not going to let people who've spent their career delivering the mail lose any of their retirement benefits. But at the same time, you can't let the obligations for the retirement benefits bankrupt the entire operation. So do you think we're at a point where Congress needs to consider amending federal law to allow the Postal Service to diversify its retirement investments? Because everyone that has looked at this believes that this would significantly reduce the burden.
Robert Taub
Yes. Yeah, that would be again, trying to help the Postal Service and like it's been looked at. I think it's a reasonable suggestion. Obviously, the Secretary of the Treasury would have some equities here that would need to be at the table. But from our perspective, while it's outside the direct lane of the Commission, definitely all of the above things that can help it.
But on the retiree, the action I was mentioning gives all of us as policymakers in Congress a little bit more breathing room as opposed to reaching for choices of desperation right now.
Gary Palmer
Yeah, well, the fact that you had to suspend the employer contributions is indicative of how dire the situation is. And Mr. Chairman, I think maybe we ought to try to do look at this in a bipartisan manner to give the Postal Service the ability to diversify its investments. Because everyone who's looked at this agrees, unless some of the other commissioners disagree, and I haven't heard from them, that this would largely mitigate the problem. My other question, and anyone can respond to this, is what other cost-saving measures is the Postal Service considering?
Robert Taub
The Postal Service, as you mentioned, not only unilaterally separate from our actions suspended the 200 million every two weeks for their current FERS employees. The Postmaster General just recently issued a directive where they were not going to hire new positions. They would still backfill and limited expenditures on certain things like travel and all of that. So Postmaster General has announced certainly the FERS withdrawal gives them quite a bit of money in the payment. But they are undertaking right now efforts to conserve cash, which again changes that being broke at the end of the year to a little more breathing room, but it's not a permanent fix.
Gary Palmer
Well, I thought I saw some smiles and nods from the other witnesses. I do appreciate your response to my question, my concerns about this. And I think there's some opportunities here for us to work together on this issue that could really help the Postal Service when they're, Mr. Chairman, they're spending 10 billion dollars a year just on the unfunded part of the retirement obligations. I appreciate the witnesses being here and I yield back.
Pete Sessions
I want to thank the gentleman, Mr. Palmer, not only for his comments and insight, but this is part of that huge issue that each of our Postal Regulatory Commissioners have spoken of today, something that has been important for the Postmaster General, that the dialogues between our staffs, the dialogues between each of us. And that is why it was referred to as a five-alarm fire this morning, that we do need to pay attention to. It is not one subject, it is a big subject. And it is the purpose of these hearings, Mr. Chairman Palmer, is to do exactly as you suggest, and that is to get into the intimate details of the piece parts about how we're going to pay for this, because it's a big system and there's a lot at risk. And I appreciate the distinguished gentleman for taking time to be here today.
I next would like to go to the gentlewoman, Ms. Randall, to be recognized at this time. Gentlewoman is recognized.
Marie Randall
Thank you, Mr. Chairman.
Like so many rural communities across the country, the Postal Service is crucial to folks in my district. Tribal members, veterans, military families, aging neighbors across Washington's 6th rely on the Postal Service to deliver life-saving medications, to pay bills, to stay connected to their communities, especially in a place where reliable internet is hard to come by. One of my constituents recently wrote to my office after experiencing multiple serious delays in just the span of one month. A certified check sent from Carlsbad to her credit union was expected to arrive in a few days. It took weeks.
A priority mail check sent from Squim also took roughly two weeks to arrive, and a bill mailed to her waste and recycling provider still has not arrived more than two weeks later. It's not just frustrating. For a household trying to deposit a tax refund, pay bills, and manage daily life through a mail system, they need it to be reliable. And in a universal vote-by-mail state like Washington, those same delays raise concerns, especially when our democracy and free and fair elections are under attack. If people can't trust a check or a bill will arrive on time, they're going to ask the same questions about their ballots.
And no one should have less reliable mail service because they live in a rural community, on tribal land, or at the end of a long delivery route. Universal service has got to mean universal service. And right now, the numbers that Congress gets are too broad to show what people in individual neighborhoods and on routes are actually experiencing. National average doesn't tell us whether ballots are moving on time in Kitsap County, where thousands of military families rely on dependable mail service. It doesn't show us whether mail is reaching communities in Forks and Quileute at the edges of the Olympic Peninsula.
We need to know how the mail is performing community by community, particularly when we depend on it for our ballot delivery. That means looking at the three-digit zip code data and service performance across every congressional district. Commissioner Poling, in a universal vote-by-mail state like Washington, how should Congress be thinking about Postal Service performance as part of election access and voter confidence?
Ann Fisher
Thank you, Congresswoman Randall, I appreciate the question and it's certainly very timely. Service performance, and I also just wanted to say I really appreciate what you said about the rural nature of your district and what you deal with. Working for the states of North Dakota and Montana, I really got to see it many times when I was out there and could really appreciate the lifeline that the Postal Service is. So I really do understand and I appreciate everything you said there. I would say this: so the Postal Regulatory Commission, through our annual compliance determination process, we do measure the service performance of election mail.
So that will come out, of course, a little bit later. I wish it were a little bit more in time, but the nature of our process measures the prior fiscal year. But I will say this, I think something that's very encouraging about election mail historically is that service performance for these ballots is historically so much higher, right, than even any other kind of mail. And I think that's because the Postal Service, they do something called extraordinary measures during elections, I think where they really are paying attention to that. If I could, I think the greater service performance issue that we're dealing with is a little bit of what you, I mean, this is absolutely a part of it, kind of in the, under the umbrella, if you will.
customer experience. That's where I think we really need to figure out, um, what it is, right, that the American people need from their postal service. And we also need more reliable information and transparency about what's going on. Um, unfortunately I can't get into a lot of details, but the commission is currently looking at service performance, um, through a service performance measurement docket, which really is getting at that idea, right, between what's happening on the ground and maybe what the postal service is saying. So, I think all of these things need to be really carefully looked at by Congress and I do echo what the vice chairman said very strongly that this universal service obligation is something I think that needs to be tackled.
Marie Randall
Absolutely, thank you. And I think understanding, you know, having more access to the data that will allow us to see how, um, those performance standards break down community by community will be really helpful for us and our, um, the work that we are doing on behalf of our constituents. Absolutely agree. But we'll continue to track this, the results and, and stay in close contact because mail is a lifeline for folks in communities like mine and all across the country. Thank you.
Pete Sessions
Gentlewoman yields back her time. Thank you very much. The gentleman from Texas, Mr. Gill, you're recognized.
Dan Gill
Yes sir, thank you Mr. Chairman. Thanks for, uh, holding this hearing and, uh, doing a great job leading this, this subcommittee and, uh, allowing us to get some, some meaningful work done. And thank you to the witnesses for taking the time to be here. Ms., Mr. Taub, I've, I've got a, a couple questions for you. Do you know how much the, uh, US Postal Service lost in fiscal year 2025?
Speaker 23
Nine billion. And what, roughly how much did it lose in the last three years?
Robert Taub
Uh, last three years, uh, you're looking at roughly, uh, twenty-some billion. Uh, you know, the, uh, again, go off the top, but we know they've lost thirty-one billion dollars, uh, in the five years, uh, since they've undertaken this DFA plan.
Dan Gill
Thirty-one billion in, in five years. And despite, um, massive financial relief, uh, in the wake of COVID, uh, and the Postal Service Relief, uh, Reform Act of 2022, we're still seeing massive budgetary holes. Is that correct?
That is correct.
Speaker 25
Got it. And, and how much do you expect Postal Service to lose over the next several years? Do you have an estimate that you could sort of walk us through?
Robert Taub
Uh, don't have a, uh, good estimate, but I, uh, would, uh, feel very comfortable assuring you it's going to be considerable.
Dan Gill
Yep. And, and your testimony alludes to the fact that the USPS believed the Delivering for America plan would lead to the Postal Service breaking even by 2023. Is that correct?
Robert Taub
Uh, that was the, uh, initial estimated plan in addition to a, uh, promise of twenty-eight to forty billion dollars of self-help, uh, by 2030.
Robert Taub
Uh, well, certainly it would seem to suggest a, uh, flaw in the plan. Uh, the Postal Service certainly points to a variety of factors which are true: inflation, uh, circumstances change. Uh, but at some point after year after year after year, when it seems that the initially estimated predicate of building out a middle-mile network to save twenty-eight to thirty, forty billion dollars is not occurring, uh, it, it just raises the question: is it time to reassess if this is the right path we're on? Uh, and, yeah.
Dan Gill
And, and what about some of the underlying assumptions on mail volume and, uh, package growth, pricing? Can you walk us through some of those and, and what you expected and, and what turned out to be the case?
Robert Taub
Again, Postal Regulatory Commission is not the operator. Uh, we're regulator and provide transparency. And so the DFA plan as the operator's plan, uh, you know, moved forward and continues to this day. But it was, as you alluded, predicated on the idea of, uh, building out a middle-mile network to capture what was expected to be, uh, significant growth in the competitive parcel package market.
And with each passing year, we see that market actually becoming much more competitive. In fact, the volume that the Postal Service is getting from this is dropping off, and although revenue is significant in that area for the Postal Service, in no way can it make up for the large amount of contribution to the overhead cost that the market-dominant products, letter mail, periodicals, magazines, those are the type of marketing mail, those are the ones contributing to the overhead. So the whole predicate of the plan, while I think all of us had hope that it would play out, doesn't seem to be where things have gotten us or going.
Dan Gill
And can you help me understand how employee count and mail volume have trended over the past few years? Do you know how many employees did the USPS have in 2010?
Dan Gill
About 624,000 employees, so a reduction of 45,000 roughly. Do you know how mail volume trended during that period?
Dan Gill
Yep, declined by about 36% during that period. Do you think that the difference between the decline in mail volume and the decline in employee count had something to do perhaps with the decline in profitability?
Robert Taub
Certainly, you know, one of the measures that the Postal Service has used since 1963 is what they call total factor productivity to measure the efficiency of the Postal Service. The last several years have seen the worst in a five-year period, and in fact, you know, two of the worst since it was being measured. The second of the three was in 1979. And so if you've got volume going out and yet your, you know, what you've got, your inputs, shall we say, to handle that not going down as quickly, the math just doesn't work.
Dan Gill
Right. And what do you think is sort of the obvious policy response to that from the post office standpoint?
Robert Taub
Well, certainly when you see, while revenue has gone up, expenses are going up faster, got to be a focus on where can things be saved. And yet, as I said, this DFA, immense amount of capital investments, and for the foreseeable future, they're looking to continue those at, you know, questionable levels of sustainability, four to five billion dollars going forward in the future.
Speaker 26
Yes, sir. And my time is up, so I'll yield back to the chairman. Thank you.
Pete Sessions
Mr. Gill, I want to thank you for taking time of not only attending each of our hearings but coming with contributions that I consider enormous and successful, and thank you very much. Mr. Bell, we have waived you on for the purpose of questioning, and now the gentleman is recognized.
Tyree Bell
Thank you, Mr. Chairman. I want to take a moment to talk about something my constituents have been raising with me since I came into Congress. Their mail isn't showing up when they need it, whether it's prescriptions, tax returns, bills, or letters from their loved ones. People in St. Louis don't know where their mail is, where their mail is, or when it's coming. Last year, the USPS Inspector General's Office conducted an audit of seven delivery facilities across our region.
They found delayed mail at every single one. My constituents didn't need an audit to tell them that; they've known it for years. But now it's documented, it's on the record, and there's no excuse for it not to be fixed. That's why I introduced the St. Louis Up to Par Act to address accountability for documented systemic failures like these. My constituents in St. Louis aren't following postal policy debates in Washington; they're just trying to get their mail.
So today I want to hear from the Commission about what it can actually do when the Inspector General identifies problems like these.
Ms. Poling, is it fair to say that the Commission's oversight authority is primarily focused on national performance metrics rather than operational conditions at individual facilities?
I would say that's fair.
Tyree Bell
And when the Inspector General documents failures at specific facilities, the way they did in St. Louis, what role does the Postal Regulatory Commission play in making sure these findings lead to real changes on the ground?
Ann Fisher
That's a great question. I would say currently we don't have a specific role when it comes to that, those exact changes on the ground. Where we do have a role, and we're actually the only ones that do, is in the advisory opinion process. So when the Postal Service decides to make a nationwide or substantially nationwide change in service, they have to come before the Commission. It is advisory, as it sounds, but that is where we have our team of technical, legal, economic experts really dig into how these changes are going to affect the entire country.
And that does flow down, right, to St. Louis and how it would affect you all. But I think that's somewhere that could stand to be strengthened, frankly, that part of the process. I think it would be very helpful, again, my own personal opinion, for the Commission to have more oversight when it comes to that process.
Tyree Bell
And that gap is exactly why we introduced this Up to PAR Act to require USPS to report directly to Congress on whether the fixes they promised are actually happening on the ground because you can't fix what you don't measure. That's all I have, Mr. Chairman. I yield back.
Pete Sessions
Thank you very much, gentleman yields back his time. So that the gentleman Mr. Bell's aware, there have been many discussions not only that members have had with me on a bipartisan basis, but also internal I've had them somewhat with Mr. Mfume about the need and the desire to look at specifically St. Louis, not only from a perspective of a regional center part of the country, but how it feeds many other people. It is a huge hub for the Postal Service and comes into interaction with days that it takes to receive mail back and forth. So I want you to know that Mr. Mfume and I will update you on the plans for what would be a visit by myself and our staff, including Mr. Mfume if he were to be able to break free.
Speaker 31
And Mr. Chair, if I may also say, this has been a bipartisan effort even amongst our congressional district. And so I appreciate your remarks.
Pete Sessions
Well, Mr. Bell, thank you. In fact, Mr. Mfume and I insist on making sure that it is something not just bipartisan, but also players in the arena be able to talk to each other, whether it be Postal Service or other people who are engaged in that area also. So Mr. Mfume has told me that you would be here, your needs, and we will get back to you. And I want to thank the gentleman for being here.
Thank you, Mr. Chairman.
Speaker 30
Yes, sir. Gentleman yields back that time. The gentleman now Mr. Jack is recognized.
Brian Jack
Thank you very much, Mr. Chairman. And I'd like to start with actually a very positive story related to your leadership. You held a hearing with Postmaster General a few months ago, and at that hearing you provided me an opportunity to share with him a challenge that I was experiencing in my district.
There was a post office in my home county that burned down three years ago, and it had suffered delay after delay, setback after setback. And because of that hearing, and because of the Postmaster General's leadership, and also that of Kayla DuFrene, who works for him, they swiftly reacted, and this past Monday, I was able to reopen that post office to the delight of many in my community. And to Mr. Mfume, if I could share with you, turns out that the city councilman in Tyrone, Georgia, actually grew up in Baltimore and is a big fan of you. So you also made me look good, for which I'm grateful. But if I could start with Vice Chairman Taub, just to follow a little bit on the line of questioning from Mr. Gill, in a vacuum, do postal services products turn a profit?
Robert Taub
They certainly are marked up in a way to cover their costs and contribute to the overhead of the Postal Service. There are a few products that are underwater. Marketing mail flats are one of them, and a couple others that are the entire class of periodicals, magazines, have been a perennial problem for 20 years in terms of covering their cost. And then there's an Alaska bypass that the last few years those costs have risen. Except for those three, on the market dominant side, while the volume continues to go down, they are contributing to the overhead.
And of course, on competitive products, while not the same level of volume or kicking into the overhead, they are not only covering the cost but contributing to it. It's just while that's the good news on the revenue side, the expenditure side of the equation is going up faster.
Brian Jack
And could you break us, I know you've spoke about it at length today, but talk through a few of the expenditures that in recent years have really exploded in cost to the Postal Service and help us identify what those are.
Robert Taub
Certainly when you look at the Postal Service and their cost structure, and this has been generally the case for decades, is about roughly 70% are for labor. And it's just the nature of the operation and how it works. And certainly a lot of this plan the Postal Service has been on is about trying to achieve savings in the transportation area. While they have achieved some, they certainly aren't what they predicted or hoped. But when you're looking at, you know, rack and stack and hey, where are the areas we need to look at for expenditures, certainly labor logically is going to be the largest cost structure that drives the cost of the Postal Service.
Brian Jack
I'm curious, have you looked into other countries, and I'm curious, are other countries experiencing similar difficulties with their own postal service systems?
Robert Taub
Definitely. It's the nature of the world we live in now, which is just the unrelentless decline throughout the world of folks mailing letters less and packages growing more. I would say, however, Congressman, that most other countries have gone through the hard exercise of defining through the regulation, licensing, contract, and in statute what they expect of their national postal administration that must be done for the American public, in our case we need to do that, but for their citizens. And a lot of that is much more narrow and defined. And so right now we have a situation where except for six-day, it's more, hey, binding the nation together, you know, and left to the Postal Service to self-define that.
And that I think is creating some of the challenges for us as a nation and the concerns we hear at the Commission and have been expressed today about service.
Speaker 33
If no action is taken, describe a state of the Postal Service two years from now, five years from now.
Robert Taub
I think the very end of the Commission's testimony that I provided is an article from almost exactly 15 years ago by Bloomberg Businessweek with an old mail truck crunched on the front that says, end of the mail as we know it.
End of 2011, they're broke. The numbers have gotten worse, and so, you know, there is at some point something's got to give. These bills that have talked about that have not been paid for retiree benefits for in 2022 law recalculated the retiree health benefit payments, but it kicks in again in 2031, that'll be $31 billion. So the question is, can they do what they've been doing for the last 15 years and just not pay it and figure that OPM and Treasury will pay those bills when they come due, or at some point is, you know, the bill going to be coming due? But you add on those obligations on top of the requirement of 6.6 billion a year and growing of meeting the universal service obligation mission.
So our concern is unless we do the hard work of defining the mission and figuring out what that costs, the public service mission for this government entity, and then figuring out a funding structure, we're going to be here in 2, 5, 10 years, you know, somebody who's doing this job in my case with the Postmaster General 15 years will be attaching an article like Bloomberg News and, you know, it's like a baggage carousel coming around.
Brian Jack
Well, thank you for your testimony to all the commissioners, thank you for your testimony, I yield back.
Pete Sessions
Gentleman yields back his time. Mr. Jack, I want to thank you also for taking time to have this be important to you and your constituent and certainly this subcommittee, thank you very much. We now, it looks like that we would go to the distinguishing ranking member for his time. Gentleman's recognized.
Kweisi Mfume
Thank you very much, Mr. Chairman. It's been a good hearing. I want to again be redundant and thank all of the witnesses who have come here and shared their time and their thoughts and their energy. And I want to thank members on both sides of the aisle who have been coming and going because of congressional schedules today but found it important enough to be here to participate to some degree. There's a lot to pick through.
I mean, there really, really is, and I'm going to try to do this without any kind of metrics or order, just based on what I've been hearing and what I know the challenges are both for this committee, for the United States Congress, and for the post office that we love and must find a way to keep. And Mr. Taub, you began this by saying clearly that the post office is not a private business and that one of the things or several of the things we've got to protect against are monopolistic abuse, predatory pricing, and that you are very doubtful, as I am with you, that this $15 billion will solve the crisis once and for all. That's I think that's poppycock, that's just not going to happen. So I want to come back to that, but I would also want to point out and to thank the others for going on record with some profound thoughts and assessments about what we can do, what we ought to do. And one of the things that continues to come up is the need for a definitive service obligation, a universal service obligation, one set of rules, one set of practices, one set of standards that no matter where we are, we can all adhere to.
And the construction of that is really where I'm finding most of my appeal about all of this, that if we don't do that, then we've just not done anything. I mean, we've just kicked the ball down the road. So I want to come back to that, but I do want to thank several of you for providing, Ms. Fisher, that's who I want to thank.
Thank you for laying out some of the challenges that sometimes we don't always think about: this whole notion of vehicles and facilities and facility upkeep and compensation cost and volume declines and cumulative net losses, not the least of which Mr. Taub referenced when he talked about the retiree benefits which are going to kick in. Those things really ought to frighten all of us to know that if we are very, very serious, we can't do anything unless we address all of the things that are in front of us. And it may in some instances be so large and voluminous that many members of the Congress will defer to this committee and say, "Well, that's your job." Yeah, it is the committee's job, but it is also the job of the full Congress once we're able to construct and put forward, with input on both sides of the aisle, a universal service obligation that is functional. It's got to be adopted and passed.
I want to thank you for that, Ms. Fisher. And Ms. Poling, thank you for switching things around also and to point out while we have these challenges that there are some built-in advantages that we ought to recognize to the extent that they might be able to help us. And that is the network of physical vehicles, the significant fleet, the highly trained workforce, the fact that we are in every community in the United States with a presence. And off the top of my head, I don't know how you sew all of those things together except that if we are looking at them as interconnecting possibilities and interconnecting assets that in the construction of this universal service obligation we ought to take those into consideration. Now let me just say one thing about challenge.
I appreciate the chair giving me some extra time here. Commissioner Poling, businesses across the Baltimore area that I represent, including newspapers and small mailers and others, are paying more for worse services. That's been talked about over and over again today. In fiscal year 2019, a single piece of first-class mail was delivered within three days 80% of the time. Last year, under the five-day standard, not the three-day but the five-day standard, on-time delivery had fallen to 73%.
So that's a significant decline in service for a significantly higher price. And all of us in the greater Baltimore area are feeling that disparity, as they are in other areas as has been talked about today, and feeling it in different ways, not the least of which is the fact that in three weeks throughout the state of Maryland we've got voting that will be occurring, a great deal of that by way of the United States Postal Service and mail-in ballots. Now this is not for you, but just maybe the Postmaster's listening today. We'd like to at least call your attention, sir, to the fact that Maryland, like other states, really are concerned about ballots and ballots arriving on time and other things. So here's what I want to do.
Mr. Taub, I want to end up with you where I started. I've got a question because I was really perplexed when I heard the President talking about the idea of floating the Postal Service into the Department of Commerce as if that was going to heal many of the things that you've already pointed out are challenges, and that the Postmaster General called for significant changes in how PRC regulates the Postal Service. In fact, former Commissioner DeJoy went further by saying that the Commission, all of you, are an unnecessary agency.
That's his own opinion. Many of us disagree with that. But again, if we're to get to where we want to get to, which is a definitive, well-defined, structural, legal universal service obligation that we all play by, one set of rules, some of those things have to be taken into consideration. And I would ask you just quickly, Mr. Taub, is that an idea that continues to resonate and are commissioners being forced to sort of consider that?
Robert Taub
I'm unaware of efforts there in that regard, but I would say to your other point, I think it's always important to level set and remind folks why we exist. Congress created the Commission in 1970 when it got out of the business of setting postal rates and recognized they weren't going to turn over rate-setting authority to the Postal Service as a government agency with the authorities we had. 2006, last major change to the statutes, Congress gave the Postal Service more flexibility to price products, introduce products, compete in the marketplace. They didn't then say, you know what, trust the Postal Service, they'll do it. That's where we turned into the Regulatory Commission.
So I think that's part and parcel of that seventh feature of those seven features of universal service, an enforcement mechanism. We do everything in the light of day, transparent, accountable to the public. We hear from everyone and weigh what's in the statute required of us. And as long as Congress still feels that's important, I think we have to do it. But I would suggest I think it's also vitally important unless and until someday when the Postal Service is not wielding government powers with special legal privileges, and I'm not suggesting that should be the case, but until then, they're a government agency operating commercial marketplace.
And I think that's why 56 years ago Congress chose to create the Commission.
Kweisi Mfume
And that's why now if we do nothing else, we've got to construct some real universal service obligations so that we know what the path is in front of us. And I raise that because my hope is, as Chairman Sessions has pointed out several times here, we find a way in this committee to work together. We don't always have to do it at the highest speed, but we always end up where we want to go. And this situation really cries out for smart ideas, which I hope all of you will consider forwarding to us and an understanding that this is where it really starts. So that formulation of ideas assists all members of this committee.
I know Chairman Sessions and I both realize the work that you do. We also realize the challenges having gone through so many of these hearings as some of you know. But if we don't do anything here, then the question becomes why are we here? So I'm hoping that this really starts to level set, gives us the opportunity working together to come up with an idea of the things that should go into that construction of the universal service obligation. And then, Mr. Chairman, I just want to commit, rededicate myself to working with you on this.
You know, we've just had so many hearings, but we're determined to find a way to make it work. And I would yield back. Thank you, sir.
Pete Sessions
Gentleman yields back his time.
We also committed we'd do a lot of things as we're trying to do about overpayments, misdirected payments. So we've got a full plate. Yes, I know. And thank you for your friendship to get this done. We now want to move to the what at this time is two remaining members that you have.
Ms. Budzinski from Illinois, you're now recognized.
Nikki Budzinski
Thank you. Thank you very much, Chairman Sessions and Ranking Member Mfume for allowing me to waive onto this hearing. I very much appreciate this opportunity. Secondly, I want to thank Vice Chair Taub and all the commissioners for being here today. It's good to see you again.
The United States Postal Service is approaching a pivotal point in its long and storied history. In fiscal year 2025, the Postal Service lost over $9 billion and lost around $2 billion in quarter two of fiscal year 2026. At the most recent Board of Governors meeting, Postmaster General Steiner reiterated his calls for Congress to work with the USPS to find solutions to the financial issues they are facing. As the co-chair of the Congressional Postal Service Caucus, I am committed to that mission as well. Congress must be working with the Postal Service and stakeholders to protect USPS employees and ensure the Postal Service has a strong financial footing as we enter the 2030s and beyond.
Additionally, any postal reform bill sanctioned by Congress must include provisions that protect and strengthen the role of the Postal Regulatory Commission. Contrary to what some at the Postal Service have said about the PRC, I believe they are a critical oversight body. In the coming months and years, as Congress moves forward with potential reform ideas, I want to emphasize the importance of an independent Postal Regulatory Commission and look to expand its oversight ability. With all of that in mind, my first question is to Vice Chair Taub, I'm sorry, Taub, regarding the Regional Transportation Optimization Plan. I was wondering if you could talk about why you think the Postal Service's analysis on the RTO was flawed and what lessons can be drawn from future network restructuring initiatives that impact rural communities like the ones that I represent in downstate Illinois.
Robert Taub
Sure. The commission under the law, it dates from the 1970s Act and was one of the few holdovers in the 2006 law that left it as an advisory opinion, but recognizing Postal Service as the operator. When they make changes that are generally affecting service nationwide, they have to come to us for advisory opinion. It's a full-blown Administrative Procedure Act proceeding. We sit en banc.
It's on the record. And we, Postal Service came to us as required under the law in December of 2024 and sought our opinion. We provided that in January and cautioned that this plan was, A, predicated on savings that we found were at best illusory and frankly we couldn't really verify. And secondly, deep concern that we were seeing what was going to be created was creating a tale of two Americas, shall we say. Rural America was going to see delayed service, slower service under this plan.
It gives me no joy to say that unfortunately more than a year in under that plan, which they ignored our advice, in fact criticized us that we didn't know what we were talking about, that we're just a burden, has come to fruition.
Nikki Budzinski
Right. Thank you. And if I have a couple more questions if you don't mind if we pause there.
My second question is to you again, Vice Chair. As Congress looks at potential postal reform ideas, I am curious if there are any historical precedents in other sectors that you think could provide a blueprint to ensure the Postal Service is able to continue serving Americans for decades to come.
Robert Taub
Yes, Congresswoman, the Commission's full testimony suggests a possible legislative approach that could be informative if Congress is trying to grapple with the issue of how do we find the universal service obligation. The Federal Communications Commission under the 1996 Telecommunications Act was directed by Congress to define by regulation in the light of day with notice and comment and can be revised by regulation the USO for the telecom space under guidelines and guidance and guardrails that Congress put in place. But Congress did not, you know, was expected to have to go through the hard work of itself of trying to get 218 votes in the House and 51 or 60 in the Senate on all the detailed definitions, but looked to the FCC to do that from a definitional standpoint.
Nikki Budzinski
Okay, I'll be checking that out. Just one question last. Can you discuss what went into the PRC's decision to grant USPS the temporary conditional waiver on amortization payments and how do you think this changes the short and medium-term financial outlook for the Postal Service?
Robert Taub
It was not an easy decision for us because we provided the Postal Service additional rate authority to go above inflation on their market dominant products and if they chose to, it was an opportunity for the first time in over a decade to start paying the obligations for CSRS and FERS that otherwise they've been defaulting on. But we recognized the reality of what we're dealing with, in which we were facing suddenly a cash crisis as the Postal Service announced, and we stepped forward and provided a waiver for a few years. That's 2.4 billion dollars as of September 30th this year and probably payments of about 3 billion or more that's moving, it's in the rate base, it's been collected from restricted cash to unrestricted to allow to pay bills. It's not a panacea or fix, but I think it provides Congress and all of us an opportunity a little bit more breathing room to not reach for choices of desperation but think this through in a little more constructive way.
Pete Sessions
Thank you very much, gentlewoman yields back her time. We've also waived on Mr. Walkinshaw and we're delighted that he's here, the gentleman's recognized.
Felix Walkinshaw
Thank you, Mr. Chairman, appreciate again your willingness to allow me to wave on and thank you all for being here. I apologize that I missed your opening statements, but I did read all of your statements and it's clear that, you know, you've all put forward a range of ideas as other stakeholders have to address the financial challenges, the service failures. But in my view, if we're going to get to meaningful reform, especially if we're going to build the kind of support here that's necessary for meaningful reform, we've got to have clear goals that prioritize both the long-term financial stability and the reliable service because we can't have one without the other. And if we're going to set those goals and evaluate the trade-offs, and there certainly will be trade-offs, we have to have data showing how these proposals, the savings they generate, would affect the long-term finances and service performance of the Postal Service. It's also necessary to have that data so that we can all hold the Postal Service accountable.
And that's why, I think it was in March of this year, when the Postmaster General was here, I asked him if he would be willing to provide this committee with financial projections showing how proposed reforms, including the continued implementation perhaps of Delivering for America and the RTO initiative, would affect the Postal Service's finances and service performance.
He committed, sitting right there, to providing, quote, this is a direct quote, multiple budgets demonstrating the trade-offs among different proposals and their impact on five-year financial projections. Unfortunately, after a few months of asking, we got a two-page response, and I'll just read one paragraph, Mr. Chairman. It says, the Committee on Oversight and Government Reform recently asked for five-year financial projections in the form of multi-scenario analyses. While we do not do such financial projections in the ordinary course of business, we can provide general information that answers many of these questions. They go on to provide some general information that largely rehashes documents that have been released publicly.
They do not answer the question of five-year or even multi-year financial projections, which is frustrating to me. Since they didn't find the time or the interest in providing that data, that in my view I think is necessary to inform our reform efforts, let me just ask you all, maybe you can help me a little bit. Vice Chairman Taub, past PRC reports warned that DFA plan changes would slow service and disproportionately harm rural communities. Your testimony today that I read, I think, says essentially that those warnings were prescient. Unfortunately, in your view, in the PRC's view, DFA has slowed service and disproportionately harmed rural communities, has not achieved the savings that it was predicted or projected to achieve at the time.
And one of the reasons I'm asking for some forward-looking financial projections from the Postal Service is because they have repeatedly failed to deliver on their promises to produce real savings through DFA and other efforts. So, I just want to ask you, you know, do you share that concern? Am I wrong to think that an organization with the scope and scale and import of the United States Postal Service shouldn't be able to, in the course of ordinary, in the ordinary course of business, produce some kind of multi-year financial projections for this committee or for anyone else?
Robert Taub
Congressman, again, they are a government agency working for, on behalf of the American public, and they, it seems to me, should be doing that. And in fact, your suggestion and request was 100% what the Comptroller General, the Government Accountability Office, recommended to the Postal Service in a recent report they issued in December, and the Postal Service's response to the GAO was, ain't doing it.
Felix Walkinshaw
Yeah. I, you know, we have, as you all have pointed out, some important work that we need to do here as members of Congress on this issue. And I'm asking the Postal Service to help us help you, because I can't, and the Chairman, I don't think can, go to our colleagues and say we got to make some tough decisions here without being able to give them some idea that there's a path that's going to lead to a better, a better situation if we're willing to make these tough decisions. I don't know why the Postal Service doesn't want to help us do that. Thank you, Mr. Chairman, I yield back.
Pete Sessions
Gentleman yields back his time. I'm going to thank the gentleman for his insistence to be a part of this, waving on being a part of the answer. And ultimately, it is my hope that you will be a part of and certainly interested in making sure that whatever we do come up with, we will sell and it will meet the needs of the American people and it will be something that we can be proud of. I now would move to the distinguished gentleman, Mr. Mfume.
Kweisi Mfume
Thank you, Mr. Chairman. I ask unanimous consent to enter into the record a statement from Elena Patel, co-director of the Urban Brookings Tax Policy Center regarding today's hearing.
Without objection.
Kweisi Mfume
I ask unanimous consent to enter into the record a statement from the president of the National Postal Mail Handlers Union regarding today's hearing.
Without objection.
Kweisi Mfume
I ask unanimous consent to enter into the record a statement from the National Newspaper Association regarding today's hearing.
Without objection.
Kweisi Mfume
And I ask unanimous consent to enter into the record a statement from former representative Kevin Yoder, executive director of Keep Us Posted regarding today's hearing.
Pete Sessions
Without objection. I also would enter into the record data and informational letter from the what is called the EMA, which is the president Marie Clark, the Envelope Manufacturers Association. Without objection, these will all be entered into the record. And thank you very much. I now will move to my time, and I want to thank everybody.
I think that while this has been a highly successful collaboration, I think that you have seen, each of you have seen, and certainly anybody watching, of the high interest, not just in this subcommittee, but by members of Congress. So I'd really like to engage all four of you, but I would like to start by saying that my attempts at this effort have been to recognize the larger body of people who are engaged in this, not just the Postal Service. We have people who are engaged outside of that, tremendous commercial interest, tremendous interest of large companies in this country. And I have tended to believe that we need to work together, all of us, and that literally everybody, if we work together, could not only find achievement and success, but that would lead to a financial integrity that is more in line with the opportunity to extend each of these businesses, technology, trucking, timing, all of these things could come together, but then potentially the customer, the American citizen who wants, needs, and counts on, as we've heard today from Mrs. Poling and others, that I understand, Mr. Mfume understands, people who live back home. I serve a mostly rural congressional district.
I started when I came into Congress with a rural district. I intentionally went out with a rural letter carrier and intentionally went, saw how he did his work, tried to do well enough to get back, but I had a very sore arm from trying to assist in that delivery. And so I learned firsthand of the importance to the American people, especially in rural areas where someone might be home more often than not. So today I would like to say I'm still at the point that I believe is correct, and that is the United States Postal Service with its young Postmaster General Steiner, and certainly Peter and Michael who represent the Postmaster General are here today, and so is the industry. And I want to reiterate to each one of them that I do believe that we need to work with each other and in concert with each other.
I happen to believe some of the conversation here about working together means that the Postal Service might not take these operations on directly by themselves. The Postmaster General knows that. I've had direct conversations with him.
I think that some of the ideas that the Postmaster General is attempting to accomplish can be made. But I will tell you that if we do not work together, if we do not see each other's not just line of business but import to the value-add solutions, we will be in trouble. With that said, I'd like to go to Ms. Fischer if I can. Mrs. Fischer, you spoke very clearly and some bit of depth that I appreciate about the loss of mail, about the loss of what we might call first-class stamps. I happen to believe that whether it might be magazines, I went to Southwestern University, I got used to seeing a Southwestern University catalog probably two or three times a year.
It was important to my university, it was important to me to stay up. These things have gone away. First-class mail is dwindling. Do you see a world by which we could get back to increasing pieces of mail, envelopes that might come, the availability of technology that would aid and help all of this transformation to be effective and efficient? How do you see increasing parcels of mail?
Ann Fisher
I think we can see a return to that, but first we have to see a lot better service and performance when it comes to the letter mail. My personal observation seems to be that the Postal Service, in chasing revenues because of their dramatic financial losses, has really focused on packages. And I don't know that they'll ever be able to fully compete there. They can compete, but that space is just being inundated with more and more competitors, as I relate, even in South Dakota, as I talked about. But in the meantime, it seems they pay less and less attention to everything that falls under the scope of the market-dominant products, and the magazines, the letter mail, etc., newspapers.
That still has a huge amount of people very reliant upon it, looking forward to it, and the reliability of the service is dramatically lacking. So yes, I do think that can be built back up. There's a tremendous amount of our economy that relies upon that. But we have to get the Postal Service in some sort of shape to where they can try to improve the service and the reliability overall and focus more of their effort on what's happening on the market-dominant side and a little less, perhaps, on the competitive side.
Pete Sessions
Does that mean that there would be some observations about what I would call rural delivery of these packages versus city or suburban large areas, middle areas, parts of the country? How might we look at what you're saying, or how should we look at to evaluate what the Postal Service is looking at for delivery of these packages, boxes?
Ann Fisher
The Postal Service still has, in general, the least costly service available for the delivery of the packages.
But there is an immense effort. I read an article the other day about how both Amazon and Walmart, who have made a concerted effort to build up their space into rural, remote areas. And they've also noticed that it's not just the people who've lived there, but as more and more people telework, they are moving into these rural or remote areas. So Amazon and Walmart are in a race to try and best serve that community. You pay a price for it with your membership with each one, but you can get same-day delivery.
But from the Postal Service, if they could just improve again their reliability and their perhaps their tracking capabilities, it would go far.
Pete Sessions
Good. Mr. Day, I had an opportunity, as you've heard, to go to South Dakota. Part of the conversation in South Dakota was about problems of getting mail in South Dakota. A deeper view of that developed to me very rapidly, and that was it was getting the mail to South Dakota was the delay. In this case, it happens to be a city where I used to live, St. Louis, Missouri.
And it is in the center part of the country, and yet we hear conversation not just from members of Congress that are worried about that effort, and then they don't live in South Dakota, they live in St. Louis. And they're having problems in St. Louis. I just want you to know that I'd like to have you and the Commission to provide to me in writing anything about your observations about the system that the Post Office is using, if you have any insight into that. You might be aware from your great service about that service, about getting to St. Louis, about getting out of St. Louis, about producing things. If you have, do you think you have any observations related to St. Louis or any other hub where there might be difficulties?
Thomas Day
Chairman, I could certainly comment on St. Louis. I've been to St. Louis Processing Center several times. It's been a while since I've been there. It's actually an interesting facility with an older section and a newer section where the floors are actually at different levels. So I've been through it, but it's been a while since I've been there.
It does come to that, though. It is the specifics of this network that's been created under DFA, unique to each one of those facilities. Again, I said it during my testimony, there's only four of all the RPDCs were actually built from the ground up brand new. And actually, the very first one they did was quite a problem for the first couple of years, the one in Palmetto, Georgia. But that said, a place like St. Louis has been around for quite a while.
It's not a new concept. I'll say this, back in the day, I remember when we were first looking at service, whether it was, and this is the old overnight two-three day, there were some places, I happened to be working in Maine at the time, we had to get to Fort Kent every day, down from Fort Kent to Portland, back up to Fort Kent. And that's quite a trip, and you're getting the mail late at night, you've got to turn it around quick and get it back up, and our service wasn't that good. Just wasn't consistent. And what we eventually were able to do was change that.
And it was we could tell the people of Fort Kent, yes, now the standard is not overnight, it's two day, but we can give you some consistency. And so distances traveled does play into it. But when you start moving mail from South Dakota to St. Louis, it's just a lot of time on the road.
Just as a quick thought, one of the things you might do, particularly on first-class individual piece mail, the bill payment, the birthday card, the wedding invitation, is to put it through an initial process, just the initial process in South Dakota to keep your local mail in-state there and then send the rest of the country's mail, wherever that's going, to St. Louis for processing. That gives you good consistent service, hopefully, within South Dakota. So there's different ways to do it, and you've got to find the right mix between cost-effectiveness and your obligation to service. And I think there is no one of those that is the single right answer. What's the right blend?
And I think it's in the name of the organization: it is the Postal Service. Service has always been the key. And I'll just close with this: I've always found in my leadership time at the Postal Service, running districts, running plants, that when the Postal Service provides quality service with consistency, it also has the lowest cost. It's an efficient operation.
Pete Sessions
I believe that's right. Ms. Poling, you have spoken very eloquently about rural customers' expectations and the things which are a piece part to their satisfaction as well as, as Mr. Day just said, the effective operation of money. What conversation would you have with me about a conversation of competition to that what might be called last mile, or the competition angle with the post office and other competing factors, maybe Amazon, maybe someone else, UPS could be, but that's competing in that market? Can you put us in that world of how that works and what those issues might be?
Ann Fisher
I will do my best. Thank you, Chairman. I guess I would start with, you know, I think the Postal Service and, you know, obviously it is such a national treasure and that's why we're here today having this conversation. We all care about it, we want to make sure it stays viable, hopefully for many, many more years. And I think, you know, again, getting back to this universal service obligation, that's sort of why I think we need to start having these conversations.
What I worry a lot about is that in these rural areas, right, it's not always as profitable to deliver to them, right? And so, and unlike the Postal Service, private carriers have the option of deciding not to, right, not to deliver to those areas or to rate or to charge rural surcharges. The Postal Service has to be accessible and affordable to everyone. And I think, you know, this has been brought up several times today, so I will not belabor it, but in our advisory opinion, you know, as the Vice Chairman said this, I thought, so well, you know, it is a tale of two Americas that could start happening, right, between sort of the rural folks and those who live far away, right, and then those who don't. And we don't, again, this is a service that is meant for everyone, that is supposed to be for everyone, that is absolutely supposed to be accessible and affordable.
And I think we need to be doing everything we can right now to ensure that. And I do worry a lot about what happens if we don't have those conversations about the Postal Service and about the broken business model that it has, because again, I worry about the impact that this will have on rural America where it is costly to deliver to those areas. And these folks, you know, it is their lifeline and it is something that they really rely on. So I think all of those conversations need to be had.
I think there's tremendous opportunity to be had with the private sector as well. I think there have been a lot of great relationships that have been created, right, with Amazon, with others. Um, and I think all of those things, nothing should be off the table, I think, as we go forward and have these discussions.
Pete Sessions
Thank you very much. Uh, Mr. Chairman, Vice Chairman, Mr. Chairman today to me, uh, there have been lots of conversations that you and I have had about the post office having to compete, but in that competition, also doing things that they had utilized other people in the marketplace, technology, trucking, all sorts of things of this larger unit that now seemingly the post office is finding a way to bring that internally, whether it's technology or whether it's other things that they do. Do you have insight into that because I have been skeptical. I am for the bigger group of people providing, working together and providing a comfort, technology, time issuance of professionalism. Do you have any insight into that?
Robert Taub
Uh, public-private partnerships, for lack of a better term, are have been really the success story of the US Postal Service since it was created in 1970. I referenced earlier this idea of worksharing, where if the private sector can present the mail or prepare it or transport it in a way that saves the Postal Service that cost or put it further in the system, it's a win-win for the private sector and the Postal Service. In fact, in the early years after the 1970 Act, the Postal Service was pushing back on it and then embraced it. And of course, it was a era of increasing volume, but was a success story. In 2006, Congress recognized that and there's an uncodified part of PAEA, the Postal Accountability Enhancement Act, that in fact directed the Postal Service through a sense of Congress that public-private partnerships are critical, whether it's in the transportation space and leveraging that.
I was concerned seeing over the evolution of the last few years with the DFA before the new Postmaster General took over of this concerted effort to bring more of that in-house and do it there. And it seemed to be upending a success story. It's heartening to see recently the Postal Service just signed a negotiated service agreement with DHL, which is owned by Deutsche Post, which is a privatized post by the way, but an opportunity to open up that last mile that really has been such a strength. And so I think 110% with you, Mr. Chairman, with the thought of your question, which is we really need to be looking at leveraging the success of that public-private partnership and recognizing at the end of the day the Postal Service has a mission to do from the public service mission. That why else does it exist?
And if we make sure that's being done, if there's ways that then we can leverage what's good, efficient ideas in the private sector, it seems to me that that is a path forward as opposed to just bringing it all in-house, particularly if we are doing it in a way that isn't going to sustain what we as a nation need from the Postal Service.
Pete Sessions
And perhaps more importantly, technology keeps on moving and there's lots of people that have technology at their fingertips and that is their specialty. Today we have had an opportunity to hear from you and the four of you I want to thank for your service, not just to the Postal Regulatory Commission, but really to the process.
And I think both Mr. Mfume and I recognize that we want to keep working with the people like you, like the Postal Service, and other groups on getting this right. I really would say to you that I said to you, and you know this, what are the tough decisions that the Postal Service has had to make? What are the really hard questions that they have had to face down? And you gave me a good answer. I want you to know that these are the things that are aimed right at Congress right now.
What really hard decisions are we willing to not just ask the questions, but the decisions we're going to make? And perhaps the one that each of you have put back right at Mr. Mfume and I, or at least myself, what is that standard going to be? What's the plan? What is the service going to look like? What are the... these questions need to be answered before you answer the other.
So, we hear you. We appreciate you. And I want you to know that I think that not just Mr. Mfume, but our subcommittee and other members heard today that if we fail to answer these questions, we will fail to do our job, which the American people have put us to. I want to thank each of you. Mr. Mfume, do you wish to have any time for closing remark?
Kweisi Mfume
No, but thanks. Just want to thank our guests, the witnesses, and don't make this your last time here. We're open to any communications that you may have to help guide us on this path.
Pete Sessions
Thank you, sir. Yeah, thank you. Mr. Mfume and I are going to come down here as soon as we finish this hearing and come down and shake your hand and thank you for being here and get your picture. With that said, without objection, all members have five legislative days within which to submit material and additional written questions for the witnesses that then will be forwarded directly to the Commission. If there is no further business, without objection, the subcommittee stands adjourned.
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