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Congress Seeks Consensus on Reform

Several important items came out of an April 4 postal oversight hearing held by the House Government Reform Committee under the direction of chairman Dan Burton.

Burton, R-IN, said he and ranking minority member Henry Waxman, D-CA, have agreed on the need for postal reform. They also agreed to assign the responsibility to develop legislation to Rep. Danny Davis, D-IL. Burton made clear during the hearing that all parties with an interest in postal reform should contact Davis with their views on how the legislation should be structured.

Three parties testified at the hearing: the General Accounting Office, the U.S. Postal Service and the USPS’ Board of Governors.

Perhaps the most important item learned was that Burton is extremely well-informed on postal matters. Based on his questioning, it’s clear he takes this issue more seriously than some of his colleagues on the committee. My own congresswoman made an uninformed opening statement. She then disappeared for most of the hearing. And we got the usual histrionics from the Georgia representative concerning the Board of Governors-directed study of the potential savings from eliminating one day of delivery service.

We learned that the GAO’s head, comptroller general David Walker, was up to date on the postal service’s problems. According to Walker, the USPS’ financial outlook has worsened much more quickly than anyone expected and, given postal regulatory restrictions, it isn’t clear how the postal service would address these challenges. Walker said the USPS’ “deteriorating financial situation calls for prompt, aggressive action, particularly in the areas of cutting costs and improving productivity.” He said the postal service was being added to the GAO’s “high-risk list,” so it will receive additional attention.

For the USPS panel, postmaster general William J. Henderson and chief financial officer Richard Strasser sat at the table, but Henderson answered the questions. He said the postal service needs a market-based, rather than cost-based, rate-setting process and a different method of negotiating contracts with its unions.

The last panel consisted of members of the Board of Governors, led by vice chairman S. David Fineman. They echoed Henderson’s call for more freedom in rate-setting and complained about the Postal Rate Commission’s reduction of the R2000-01 revenue requirement. Fineman repeated the call for a change in the way labor negotiations are conducted. When asked for a specific recommendation, Fineman was vague but mentioned the 1926 Railway Labor Act, which gives the president the power to delay a railroad strike and extend negotiations through a federal mediator.

Burton asked the governors whether they spent much time with postal customers. The chairman, obviously aware of the adage about asking questions one knows the answer to, strongly suggested that the governors spend more time with customers.

The USPS and the board have some serious thinking to do, as Burton is expecting them to make a legislative recommendation.

When Marvin Runyon was postmaster general, then-House Speaker Newt Gingrich told him that any USPS reform proposal would be dead on arrival. Therefore, the postal service refrained from making one. But times have changed. However, given the usual need for checks and balances, crafting legislation will be difficult, especially the USPS’ call for market-based product-pricing flexibility and a change in labor negotiations.

Most postal revenues come from products over which the USPS has a monopoly. To gain pricing flexibility, will it agree to strengthened oversight from a new Postal Regulatory Commission as Rep. John McHugh, R-NY, former chairman of the House subcommittee on the postal service, had previously recommended in his legislative reform proposal? Or will the postal service propose some easing of the private express statutes or its monopoly control over the mailbox?

Similarly difficult questions abound involving changes to labor negotiations. McHugh was unable even to get a study of labor relations included in his reform legislation, presumably because of labor’s objections. With both houses of Congress almost evenly divided, it’s expected that USPS unions, with about 700,000 members, will have what amounts to a legislative veto over changes they dislike. It will be interesting to see what the postal service is willing to give up to get a Railway Labor Act-type of settlement.

However, the first item of business for the Board of Governors should be selecting the next postmaster general. Whoever becomes the CEO needs to have a say in the critical strategic issues that will be resolved (hopefully) through legislative reform. That person needs to be put in place.

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