I appreciate the opportunity to provide testimony on the important issue of postal reform on behalf of the Consumer Alliance for Postal Services (CAPS).

To provide a little background on myself, I was a Member of Congress representing the First District of Missouri for 32 years. During that time I had the honor to chair several subcommittees and ultimately the full Committee on Post Office and Civil Service. I do, therefore, have an appreciation of the challenge the Committees face on this issue and welcome the opportunity to share my views of the important questions raised by the Report of the President’s Commission on the United State Postal Service.

In light of my long involvement with postal issues and my strong belief in the importance of reliable, affordable mail service, I was pleased to be asked to chair the Consumer Alliance for Postal Services. CAPS was created last year, subsequent to the inception of the Presidential Commission, to monitor postal reform developments and provide a voice for the consumer during the Commission and Congressional deliberations. Our members represent a wide spectrum of consumers. They include Consumer Action which focuses on the interests of low and moderate income consumers, the National Farmers Union representing over 300,000 farm and ranch families, the National Committee to Preserve Social Security and Medicare which advocates on behalf of older Americans, the AFL-CIO representing workers, the A. Phillip Randolph Institute, the American Diabetes Association and numerous others.

The CAPS mission is to work to insure that the affordable, accessible, and dependable mail service, that all Americans now have and depend upon, is not in any way shortchanged as a result of "postal reform" efforts. The Postal Service is a public service not just another business and we should not lose sight of its essential role in our society. It should operate in the most efficient and cost effective manner achievable while maintaining the current high levels of service and reliability. We do not believe that the American public should have to experience diminished service now or in the future in the name of "right-sizing" or "new business paradigms". We see no looming crisis or emergency that warrant draconian change.

Initially I want to comment on the Presidential Commission report. The report provides a very useful examination of the current state of the Postal Service and outlines a number of changes in operations and structure that are recommended to improve its long-term financial footing. A number of the recommendations would clearly be of benefit and the Committee should weigh carefully their inclusion in legislation. Certainly we support flexible rate setting and allowing the Postal Service management to borrow, invest and retain earnings. We agree that the Postal Service should not be saddled with the cost of military retirees or forced to escrow funds overpaid to the Civil Service Retirement System Fund.

I must point out, however, the general assessment of my membership is that the Commission’s primary interest, certainly reflected in the witnesses it chose to hear, was the concerns of those business entities that are either large volume users of mail service or compete with the Postal Service.

We are concerned that other aspects of the Commission report would, if implemented, prove inimical to the interests of the postal consumer. The Commission proposes that the mission of the Postal Service be redefined to provide "essential" postal services "by the most cost-effective and efficient means possible" at "where appropriate, uniform rates." Who decides what is or is not essential when it comes to mail delivery and how is the notion of cost-effective to be applied to rural, inner city and less affluent communities? Does this mean some are less entitled to universal mail service or that uniform rates for some areas are no longer appropriate? While endorsing the concept of universal service the Commission seems to be opening the door to less than universal service when it is deemed too costly or inconvenient.

When it comes to the mail what consumers are really concerned about are issues of service and the fair allocation of postal costs.

A point often overlooked is that Americans are very satisfied with the U.S. Postal Service ** and strongly oppose any efforts to overhaul it. The public opinion survey conducted in May, 2003 on behalf of the Commission found that 75 percent of Americans were satisfied with the reliability of their mail service. When asked about changing the Postal Service, 73 percent felt that the Postal Service works extremely well or would only require minor changes. Of those surveyed, 67 percent oppose changing the Postal Service into a private company independent of government funding or management and 50 percent oppose allowing private companies to sort, process and transport mail. A majority of the respondents cite the hiring of more clerks at post offices as the one change they would like to see.

The Commission apparently did not heed the views of average citizens but was swayed by the parade of mailing industry witnesses who trumpeted outsourcing to the private sector as a panacea. Shifting the work to a low wage, untrained labor force is no panacea but rather a prescription for undermining service and reliability. And there is plenty of evidence that this is the case.

Past efforts to outsource work have proven costly and lowered standards of reliability. In 1997 the Postal Service, after a three-year study aimed at improving delivering times, contracted with a vendor to process and transport Priority Mail. The contract was ended three years later after the contractor tried to charge the Postal Service 40 percent more which resulted in the Postal Service paying over $300 million in termination fees and settlement costs. The Postal Service’s Inspector General, in auditing the contract, reported, "Priority Mail processed through the network cost 23 percent more than Priority Mail processed by the Postal Service" and that the vendor "was not meeting overall delivery goals." In addition, the IG report found evidence of abandoned mail and failure to perform required security screenings.

In another instance of private-sector outsourcing, the Postal Service in 1998 engaged a contractor-operated network of Mail Transport Equipment Service Centers to provide vital equipment to supply processing facilities. This project was marked by poor performance and excessive costs. Again, the Postal Service Inspector General issued a highly critical report stating, "the network was not delivering the right equipment at the right time, customers were still not satisfied, employees felt frustrated, and mail operations were still not optimized." The IG estimated cost projections for this undertaking as exceeding in-house operations by $1.1 billion.

These examples argue for caution and prudence before setting in place a framework to largely turn over postal operations to the private sector. The American consumer should not have to face poor and unreliable service in a quest to achieve perhaps illusory cost savings or to steer lucrative contracts to commercial interests.

Much is being made of the urgent necessity to reduce costs in order to secure a more secure financial future of the Postal Service. From the consumer standpoint it is important to look beyond the rhetoric and examine the cost equation in terms of who is really benefiting and what is really necessary.

While it is only prudent to look to the long-term future of the Postal Service and take steps to assure continued financial stability, there is no present emergency requiring drastic steps. Even with a decline in mail volume, the Postal Service has actually been running a surplus due to gains in productivity, reduced expenses and warranted rate increases. The Postal Civil Service Retirement System Funding Reform Act of 2003 will save the Postal Service $5.5 billion this year and next, thus allowing stable rates at least until 2006.

For the average citizen who uses the Postal Service to pay bills, send birthday cards, and mail the occasional package, costs are modest and present no burden. This is true for even the least affluent. The price of first class postage over time has remained well below increases in the Consumer Price Index. The consumer has no complaint on that score and frankly I doubt many people are troubled by the prospect of a one, two or three cents increase in the price of a stamp.

For the big mailer it is a different story. Postal rates are the lifeblood of that industry and it fights for the biggest discount and the lowest rate. Any means to reduce the overhead and workforce costs of the Postal Service and thus forestall a rate increase is clearly their message.

They don’t need the local post office. They aren’t worried about their bills getting there on time. They are not interested in having a helpful clerk explain the least expensive way to send a package. They would sacrifice the muscle and bone of our postal system as long as they don’t have to pay a penny more to dump their credit card solicitations on the American public.

The big mailers don’t want to pay any more and if truth be known, they are not paying a fair share even now. They send first class business mail and bulk advertising mail at heavily discounted postal rates. These rates are given because the mail is pre-sorted but often these discounts exceed the costs the Postal Service avoids by processing pre-sorted mail. There are estimates that the last rate increase could have been one cent less without these unjustified discounts.

The discounted rates mean the Postal Service may be passing substantial costs along to others. It would seem a very apparent first step to help the Postal Service’s bottom line would be to insure these large business mailers pay their fair share and that future postal rate increases take into account their obligation to more fully support the postal system that makes their very business possible.

The members of CAPS are committed to preserving universal service. I know the Committee is equally committed to that goal. Our request is simple: that postal reform legislation not undermine in any way the reliable and accessible mail system we now possess. This great nation can afford a great postal system. To settle for anything less is failure.