URBANSKI: Hello, everyone, and welcome to DC Direct, where we talk to movers and shakers in Washington about issues affecting direct marketers. I’m Al Urbanski, Senior Editor of Direct Marketing News. Today we are pleased to have with us Senator Tom Carper, a tireless friend and champion of the U.S. Postal Service. His and Senator Tom Coburn’s Postal Reform Act failed to gain any traction in the last Congress. But no sooner did the gavel fall on the 114th Congress, than Senator Carper announced his intention to pass postal reform as quickly as possible. He introduced his iPOST bill last year and last week the Senator presided over a hearing of the Governmental Affairs Committee where hopes were expressed to pass iPOST by this April. Senator Carper, welcome. It’s a pleasure having you with us today.
CARPER: Al, thank you so much.
URBANSKI: Senator, many of the postal players I speak with have doubts that a bill can be passed in this Congress this quickly. I know you were a fighter pilot in Vietnam and if there’s one thing I know about seasoned military men, it’s that they don’t enter a battle without a plan and a conviction that they can win. So I’m sure you have a timetable in mind for getting this done. Could you lay that out for us, how this could get done by April?
CARPER: Sure. First of all, I was a P-3 aircraft mission commander. I served three tours over in Southeast Asia during the war and retired as a Navy Captain. I loved what I did. Our job was to hunt for Red October nuclear subs. One of the things I learned in the Navy, Al, is just don’t give up. You know you’re right, you’re sure you’re right, just never give up. And there’s a guy named Wayne Gretzky, he was a pretty good hockey player in his day. You might have heard of him.
URBANSKI: Oh, yeah.
CARPER: He used to say, “I missed every shot I never took.” And we’re going to take a shot and we’re going to take it again and again and again. This is worth fighting for and worth pushing for and that’s what we’re doing. Tom Coburn and others joined me to try and pass the kind of legislation that wouldn’t just allow the Postal Service like to, you know, drag by, just to get by. We wanted to enable them to be successful in the digital age, in the 21st century, and to find new and innovative, creative ways to take a 200-plus-year-old distribution network, a legacy distribution network, and find ways to make money out of it and serve businesses and people in this country.
URBANSKI: So as far as just the blocking and tackling, okay, because you’re going to have to get this into your committee again. You’re going to have to mark up the bill. You’re going to have to get some, probably some more sponsors behind it and then get to the floor of the Congress. How’s that going to get done by April? Is that a possibility?
CARPER: Well, we think so. And we had a great hearing. There’s a lot of consensus. I think there were seven or eight witnesses and two panels and there was great consensus, including some people who previously — we had a fellow who was heading, I think it was American Newspaper Association.
CARPER: National Newspaper Association. And he said, “Earlier I was opposed to what you and Dr. Coburn were trying to do, especially on the exigent rate case.” He said that the newspapers that he was there representing are concerned enough about making sure that the Postal Service has the wherewithal and the resources they need to improve service. He says, “Service is more important to us and if it means taking the exigent rate case and then eventually going into a new price process in a couple of years, we’ll do that. We’ll do that.” But they want the service, they want it to be better. You need predictability and certainty. And if we maintain the exigent rate case for a couple more years then that provides for a couple more years of certainty. But there has to be better service. And if you’re going to provide better service, the Postal Service needs the money to invest in their fleet, which is dilapidated, in their mail processing centers, which don’t really handle very well large packages and parcels. And also in their post offices. There’s a lot that goes into better service.
URBANSKI: A lot of people in the meeting, that were in that meeting expressed, the Postmaster General and Fred Rolando from the union said, “Look, we need this. We need this cash flow to keep operations going. And there was the gentleman from the Newspaper Association. But there were very many mailers that did not sign onto those four points of consensus. These are business people who, you know, a lot of them had to roll back their plans last time. However, they were all planning, as you can imagine, and waiting for the day when [the surcharge] w asgoing to roll back. And what they’re going to do is, you know, from what I hear from them, spend more with the Postal Service. They’re against seeing that, the exigent rate come back. Is that a clause that must stay in or is that something you can work with as far as passing a final bill? And if that’s something that stands in the way of getting a pass this year, is it something you’re flexible on?
CARPER: No, I think that that’s — I think the chairman and I are, the reasonable thing to do is not an unreasonable thing to do. For years mailers have said to the Postal Service and paper industry has said to the Postal Service, “You’ve got too many employees.” Well, they don’t anymore. They said to them, “You’ve got too many post offices, full-time post offices.” Well, they don’t anymore. They said, “You have too many processing centers.” They don’t have them anymore. They have right-sized the centers. They’ve cut facilities and people, frankly to the bone. And it’s affecting service. We want to make sure that the service gets better. One of the ways to do that is to make sure that we enable the Postal Service through access to technology vehicles, technology in the processing plants, technologies in the post offices themselves.
We can’t just can’t have it both ways. It has to be sharing the responsibility. The other thing that’s a huge issue here is the integration of the healthcare costs of post retirees with Medicare. Medicare pays, as you know, Al, they pay more money I think into Medicare, the Postal Service does, than anybody — maybe any other employer in the country.They don’t get fair value. The Medicare Part A, Medicare Part B, most of the pension retirees use that but Medicare Part D, which is prescription medicines, almost no postal retirees use that. So the Postal Service is effectively overpaying into Medicare so that their competition can underpay. That’s just not right or fair or equitable.
URBANSKI: Yeah, and I don’t think you’re going to get any argument with that from the mailers, I mean with those four points of consensus. The one sticking point, you know, from our readers that I speak with, you know, is the rate increase. Their thinking is, hey, we are the main volume customers of the Postal Service. And they have this feeling that it’s all on their backs with the rate increase. But I spoke with one who actually represents an association of some very big mailers who said, you know, who might have even been at that last hearing. He said the one thing he didn’t hear brought up was the PRC’s annual compliance report, when you bring up service. He said there were some offers, some guarantees that the Postal Service had made and it’s in the compliance report that they did not come through. It was if mailers did X, you know, with work share, we would provide this. His thing was mailers did provide X, but the Postal Service fell short. And his direct quote to me was, “No other business I know says to its customers, ‘We screwed up but you gotta pay.'” And I’m just saying when you come to the markup, you’re probably going to hear some of that sentiment from some of the mailers. What’s your answer for them? Does the Postal Service, aside from financial dealings, need to go a step further in making sure they provide those guarantees?
CARPER: Well, I’m not prepared to answer that specific question. I’ll just go back to what I said before. The Postal Service has to provide better service. In my own family, like where we live in Wilmington, Delaware, two out of the last five Saturdays we never got any mail. We went on vacation last August and I put in a stop order to stop delivering for 10 days. And the mail kept coming. And that’s just my own experience. We have people who call our office in Delaware on constituent service requests, problems, concerns every day. And there used to be we wouldn’t hear from somebody like every week, much less every day. So there’s real problems with service and it’s not just residential customers, it’s not just business customers. It’s across the board.
And I want to make sure we hold the Postal Service responsible. But you need to have the resources to be able to make the kind of investments in their vehicles and their infrastructure to provide better service. Pat Donahoe said to me the last year that he was Postmaster General, it was becoming clear that we weren’t going to be able to do postal reform. He would say to me, “I would just love to my last year be able to get this legislation done and just focus for the rest of the tim on service, providing better service.”
We need better service and the Postal Service honestly, they’ve cut, they’ve cut, they’ve cut. We’ve got to stop cutting. And they’ve got to stop cutting and be able to grow, be more innovative and to make the kind of investments they need to provide better service.
And by the way, [Maine Senator] Susan Collins, who is one of our co-sponsors, and she knows probably more about Postal Service and postal reform than I do, she and I worked on this legislation for a long, long time in the last decade. And she was opposed to the exigent rate being extended. And she has sat that aside. She just says we need to do this and that’s part of the plan. So we’re delighted that she’s a co-sponsor .
URBANSKI: You know, when I was watching the hearing and I heard a lot of the talk about the rates, there’s one thing I didn’t hear brought up, which — and I wonder if this is something that will come up when this is in markup, and that is the Postal Service is a volume business, right? I mean they do deliver all the mail. The more volume they have, the better. First class mail is dropping off. It’s hurting them. Volume is holding steady among standard mail and with the business class mailers. And the one thing I didn’t hear talked about is volume in the economic process. Has anyone performed an economic analysis of whether, the exigent rate drops off, they’re going to spend more? They’re going to volumes because they want to prospect for new business. Has anyone performed an analysis or is there any order for one from your committee just to look at volume versus rate increase?
CARPER: Well, actually if you go back to when the exigent rate increase was implemented, there was a lot of expectation that volume was going to drop off because of that. And my recollection is frankly we didn’t see much of that. So there — there’s actually like — we actually have a chance to raise it, use it — the Postal Service had a chance to use the exigent rate clause and they did and volume didn’t drop off that much.There has been an increase, as you know, in volume, packages and parcels up last year by about 14%. We’ve seen first class mail buys continue to drop, maybe not by quite as much. Some people are hopeful that maybe they’ll actually reach a point where the drop in first class mail actually, you know, levels out.
One of our — one of our colleagues said, I think it was Jon Tester from Montana, may have said at the hearing that people are concerned about data breach and cyber-attack and so forth. The one way to make sure that whatever you’re sending is secure, and that’s to use the Postal Service. That’s like back to the future.
URBANSKI: Yeah, absolutely. So what’s the next step now? This hearing was not a formal hearing. Also, Senator Johnson, who has been a chairman of the committee, had opened it and he seemed,because I know that in the past he was for privatization of the Postal Service. He sounded like he wanted to work toward some solution on this. He wanted some more hard and fast numbers. Are those being put together? Do you believe that needs to be done to clarify things? Let’s face it, when you look at their balance sheet, it’s a pretty complicated thing. What are some of the things that need to be done blocking and tackling to get this thing moving forward and how’s it going to play out?
CARPER: I’ve spoken to Dave and probably half a dozen of my colleagues mostly on the Homeland Security Governmental Affairs Committee, including the chairman. And I said to the chairman, “I’d just like to come over to your office next week and have all your folks go with my folks and maybe” — and he said, “Oh, that would be fine.” And I said, “We’ll just talk this through.” I think we really need to focus with him on the integration of Medicare for the Medicare-eligible retirees in the Postal Service to explain why it’s just wrong for the Postal Service to overpay into Medicare for their retirees not to be able to take full advantage of that. So we’re going to drill down on that, look at how that affects the balance sheet for the Postal Service. The Postmaster General will be joining us and I think we’ll have a good conversation.There’s probably another half dozen or so of my colleagues that I talked to just today that said that I’d like to come and spend some time with them, with their staffs. We’re going to make that happen next week.
URBANSKI: And when do you foresee perhaps a markup of the bill happening?
CARPER: Our next markup, I want to say it’s, I want to say it’s February 11th ot 10th. And so in a perfect world I’d like to have a markup and I don’t think we’re ready to have a markup today. If we appear to be in a place to have a markup on February 9, then we’ll have it. And there’s a lot to do between now and then. And a lot of work has been done, as you know the hearing with Chairman Johnson, there was a lot of consensus. I’ve never seen that kind of consensus in the last four or five, six years on Postal that we had in our hearing.
URBANSKI: Yeah, it’s clear that the issue has become a hot button. Senator, I’m going to let you go. I know that — I know that you’re busy. And by the way, you know, most of the mailers I speak with have high regard for you and respect for your valiant soldiering of this issue forward. So good luck to you.
CARPER: — I wish more of them would say nice things about John Kane, though.
URBANSKI: You’re asking for a lot.
CARPER: Thanks so much, Al.
URBANSKI: Thanks a lot.
CARPER: Take care.
URBANSKI: That concludes today’s session of DC Direct. We were with Senator Tom Carper. Thanks for listening. Please share the link of today’s podcast with colleagues who might find it of interest. This is Al Urbanski signing off for DC Direct.