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Postmaster General Faces Grilling Over Post Office Changes; USPS Chief: "Will Remain Independent" Despite Close Ties to Trump, RNC. Aired 10:30-11a ET.

Aired August 21, 2020 - 10:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOUIS DEJOY, POSTMASTER GENERAL, U.S. POSTAL SERVICE: Senator, I will go back and get the -- the truck schedule, the analysis that designed the truck schedule that I directed the -- the--

(CROSSTALK)

SEN. JACKY ROSEN (D-NV): Can you commit to transparency, sir? That's all I'm asking.

DEJOY: We're very transparent, yes.

[10:30:00]

(CROSSTALK)

ROSEN: Then (inaudible) that you would provide us your analysis. If you're transparent, then ergo that means you will provide us the data that you used to base these important decisions that impact people's lives. I want you to look in the camera, there are millions of people watching who are impacted every day by what you do. And please understand that.

And so I want you to commit to the American people to transparency, and provide us with the data that has been used to create these decisions.

DEJOY: Ma'am, I don't -- I do not accept the premise, and I will provide you with the transportation schedule that I directed the organization to adhere to. Yes, I will do that.

ROSEN: Well, we appreciate that. I look forward to seeing that. I look forward to having future discussions with you.

Thank you, my time is up.

SEN. RON JOHNSON (R-WI): Is Senator Paul available?

SEN. RAND PAUL (R-KY): Yes, you have me?

JOHNSON: Senator Paul, yes, we can hear you.

PAUL: All right. Thank you, Mr. DeJoy, for your testimony and thank you for taking what sounds like an often thankless job full or partisan rancor. And thanks for bringing your business acumen to something that really (inaudible) from my opinion, is almost an impossible problem, short of legislative reform.

And even with legislative reform, you know, I see it as almost an impossibility, how it actually would balance the annual, you know, operating losses, where you weren't (inaudible) a loss every year. $8- to $9 billion a year is an enormous loss. And I've been of the opinion, basically, we shouldn't give you any more money unless it's attached to reform.

That's the only leverage we have. When the Post Office becomes desperate for money, we should attach things they don't want to necessarily do -- less employees. We started that a few years ago.

We've got to do more of it. The mail keeps dropping. You've got to have less employees. That's where your legacy costs are, too. Over time, you'll catch up on that, but we've got to go to less employees over time.

We also need to look at, the easiest way to continue personalized service to each -- each -- each person individually at their house would be to do it less frequently.

And frankly, people who live 20 miles down a shell road, if you told them they were going to get it twice a week versus six times a week, I think we'd actually live with this. I -- I grew up in a town of 13,000 people. I still live in a small town. I really think people could -- could live with that.

But people should be told of the -- the problem of continuing to run massive deficits, not just in the Post Office, but throughout government, and that really, we shouldn't pass money out like it's candy. We should send it attached to specific reforms.

Could you list some of the legal impediments you have? You're a businessman. If you came in as a venture capitalist, and a venture capitalist group took over the Post Office and named you CEO, what would you do that you're unable to do because it's a government entity now?

What are the governmental or legal restraints that prevent you from actually fixing the $8- to $9 billion annual loss that the Post Office has?

DEJOY: Well, thank you, Senator, for the opportunity to address that. I'm a little bit more optimistic than you, in terms of our ability to meet, you know, at least get to a -- a close point of -- of break -- break -- break even.

Number -- number one, the legislative reform that I would ask is what I said -- said in my written testimony and opening speak -- opening remarks on integration of -- of Medicaid and reform pension -- pension reform.

I would like to be kind of liberated on pricing from the -- it's a very, very competitive market out there now. I would like more pricing freedom of what would drive. That would -- that would help us. I would like some of our unfunded mandates addressed with.

And then within the organization, I would be able, without as much fanfare, to do a simple thing like, say, adhere to our schedules, right? And if we adhere to our schedules, that will -- will improve performance.

In transition, there -- there -- there should be -- there -- there would be an issue, but you know -- and we're seeing that recover right now, and once we get mail -- mail and packages moving at 97 percent on -- with trucks that are moving at 97% on time and we're driving costs out of the system by doing that, that's what I would do in -- in my own business.

And in my own business, I would grab new -- new business -- new business revenue-generating ideas, which we have here, that will drive billions of dollars of -- of -- of contribution to the cost to serve the American people.

So we -- we have a -- we -- we -- we are in the beginning of having a plan. I'm an optimist about trying to pull this off.

PAUL: I won't ask you your opinion on going from six days to five days, because that's really the job of Congress. But that's estimated to save a billion, billion and a half, and I think at the very least, you have to do it. That could be a one-sentence bill that saves a billion and a half dollars over there and puts us on a better footing.

[10:35:02]

I think you could go further and -- and instead of assessing people more of a postal charge if they live 20 miles down a dirt road, simply just have less frequent delivery, and I think that alone would be tolerable.

They'd still have personal service, but it would be less frequent, and I think you could make up for a large amount of your shortfall if you went, actually, below five days for some very rural areas.

DEJOY: Yes.

PAUL: It's been contested, or it's been said that some your competitors, you -- you -- use the Post Office for the last-mile delivery, and that we don't charge them an adequate amount. They're sort of using the Post Office to subsidize last-mile delivery. Is that a problem?

Do we charge your competitors enough when they get a package shipped to an area, and then they use the Post Office for the last mile? Is that competitively bid? Do you think that's a problem? Should we do anything to fix that?

DEJOY: So -- so Senator, if -- if -- if I may, when I first came here, coming -- when I first got this assignment, that wasn't -- that was a -- an obvious thing to me -- you know, cut to -- cut back five days, or four days -- whatever.

And as I've worked through the process and -- and researched and -- and studied the organization, I think the six-day delivery, the connection that the -- that the postal letter carrier has with the American people that gives us this highly-trusted brand, and where the -- where the economy's going in the future, I think that is probably our biggest strength to capitalize on.

You talk about one -- one and a half billion dollars to take a day away. I'm sitting here on a transportation schedule change that could get us $2- or $3 billion, all right, and improve service, and improve the connection to the American people. So there are lots of people--

PAUL: I'll believe that when I see it. I don't doubt you, but I do doubt the government and the Post Office history.

So what about the last-mile delivery by your competitors? Are we getting a market rate from them?

DEJOY: We -- we -- we are -- we are studying the -- it -- it -- so I -- I don't believe -- my general view is you -- again, I've been here 60 days and I've looked at that. There -- there are -- we make broad- based deals across the whole country that deal with average -- that -- with average rates.

There are -- there are areas that we could -- we could push them -- push them up, and we're studying that. My -- it is -- it -- I -- I don't believe it -- that is -- on the surface, it's not the -- it's -- it -- it's reasonable business gaps that may exist, is how I describe it.

PAUL: All right, well, thanks for trying to fix sort of an, perhaps, unfixable problem, and hang in there. And just the partisan barbs, hopefully, they will be portrayed for what they are: partisan barbs that really aren't trying to fix anything, but they're just doing electoral politics by way of attacking you. So I apologize for that from our colleagues across the aisle and wish you the best. Thanks.

DEJOY: Thank you, Senator.

JOHNSON: Thanks, Senator Paul. Senator Romney, are you there?

SEN. MITT ROMNEY (R-UT): Yes, I am. Can you hear me, Mr. Chairman?

JOHNSON: Loud and clear. Go ahead.

ROMNEY: Good, thank you. Look, I want to begin by expressing my appreciation to the thousands upon thousands of letter carriers, and I -- I also want to note as well that the postal workers that made our vote-by-mail system in use a reliable and a very successful system, I think, for the entire nation.

Mr. DeJoy, assuming as I do that you've been truthful in your testimony today, I -- I can imagine how frustrating it is to be accused of political motives in your management responsibility. At the same time, of course, you can certainly understand that there

-- there've been pretty good reasons for people to think that -- that you or your colleagues are purposely acting to suppress voting, or that you're going to purposely prevent ballots from being counted, and -- and any surprise of such concerns has to be tempered by the fact that the president has made repeated claims that mail-in voting will be fraudulent, and that he doesn't want to get more money to the Post Office because without more money, you can't have universal mail-in voting.

But saying -- putting that aside, let me -- let me note that a great deal has been made of the fact that you contributed to President Trump's campaign. I would note that you also generously contributed to my campaign. Some people would say that you contributed to both sides.

(LAUGHTER)

Let me -- let me turn then and just note -- let me not that like others today, I state the obvious when I say that reliable, valid voting is essential to democracy here, and of course to other places around the world.

And particularly with COVID still raging, the mail is essential to -- to our voting system, and therefore to democracy. Can you -- do you have a high degree of confidence that -- that virtually all the ballots that would be mailed, let's say, seven days before an election would actually be able to be received and counted?

[10:40:10]

I mean, is -- if people vote within seven days of the election, are they -- are they highly confident, are you highly confident that those ballots would then be received?

DEJOY: Extremely highly confident. We will scour every -- every plant that, you know, each night leading up to Election Day. Very, very confident.

ROMNEY: I very much appreciate that. That is a -- that is a commitment. I hope the American people, as they see news reports of this hearing and of others that are going to come (ph) in the House, will underscore the fact that if they get their ballots in at least seven days before the election -- and probably even closer to the election than that, but that the -- that the person who's running the post office is saying he is highly confident those ballots will be received by the various clerks in a timely way. That is -- that's key to us.

On a separate topic, you mentioned that there are delays in the system, and that's of course to be expected. Are there -- are there greater delays in certain areas than others? So for instance, are delays greater in rural areas than they are in the rest of the country?

DEJOY: Senator, I -- we -- there's -- I think more urban areas where the coronavirus, you know, the intimidation of the coronavirus, which scares our worker -- employee -- employee availability average has dropped across the nation, about four -- about four percent.

But when you can go into some of these, what I would say, "hotspots:" Philadelphia, Detroit, they're as much as 20, 25 -- 25 percent. And we have routes, we have -- like Philadelphia has 750 routes, and we have days where we're short 200 carriers.

And this can go on for a while, so that's where -- that's not the only contribution, but that's a -- when -- when the American people see two, three days that they haven't seen their carrier, that's -- that's the -- that's an issue.

And I would say it is -- I think there's at least 20 of those around in descending, you know, level of consequence around the country. So.

ROMNEY: Yeah, thank you. I will -- I will just end by saying, like a number of my colleagues who have already expressed this -- this point, I would very much look forward to seeing -- and I'm not talking about by Sunday, I just mean at some point -- seeing a plan developed by someone of your expertise on logistics, for how we can get the post office to be more economically advantaged.

But -- but at the same time, maintain a level of service which -- which is essential for a functioning economy and -- and that's a real challenge. But as someone who's done what you've done throughout your career, I expect you to be up to the task and -- and like Senator Paul, I am -- I am anxious for there to be a -- a recognition on the part of Congress that for us to demand certain service levels may require us to make legislative changes.

S- please -- please feel welcome in our committee or in the House for -- for letting us know what we need to do to make sure that you can do the job we've asked you to do. Thank you, Mr. DeJoy, I appreciate your service.

DEJOY: Thank you, sir.

JOHNSON: Thanks, Senator Romney.

Senator Enzi?

SEN. MICHAEL ENZI (R-WY): -- we appreciate you, Chairman Johnson, for holding this hearing.

And I especially appreciate the postmaster general coming to this hearing, knowing what kind of a target he will be. It's got to be really difficult to only be in office 60 days and being expected to solve all of the problems of the Postal Service. It's been in a crisis for many years.

Senator Collins used to head this committee when it wasn't called Homeland Security. It was "Government Affairs," and she has worked on the post office all of that time and has a pretty good bill that she's worked on with Senator Feinstein that I hope people will take a look at.

I'm not sure that anything can be done in a bipartisan way, particularly if one of the participants -- Susan Collins -- is up for election, because that might help her in her campaign.

But she's been dedicated to this, it isn't a new idea that she had, it's something that she's been working on and it has a lot of good ideas in it. I -- I feel -- I really appreciate postal workers.

[10:45:00]

In Wyoming particularly, they're doing an outstanding job in spite of all of the difficulties of the pandemic. My father-in-law was a postal worker, and he was before the mail sorting machines. And he was pleased that he was able to memorize all the zip codes in Sheridan -- in the Sheridan area and handled the sorting.

Of course, now, local mail isn't postmarked locally. These are problems -- I didn't realize that you personally deliver everything, that you personally fix the sorting machines. it was all news to me.

And detailed analysis, how much detailed analysis can you do in 60 days, particularly as I suspect that maybe people aren't wanting to share information with you? I hope that those postal workers out there that are dedicated will actually do something to help out on it.

And of course, you've been accused of picking on veterans and picking on seniors. And I have to admit that I have felt picked on not by you, but by the Postal Service recently. And I was glad to hear your explanation that you're having some difficulty with people to deliver the mail in light of the pandemic. I don't think a lot of people understand that, I didn't understand that.

But I know that we had a package that we were expecting that was being traced, and we paid extra to have it traced. And we know it sat in the D.C. post office for 11 days before it was delivered to us.

There have been days that our mail wasn't picked up, so I'm glad to know that -- the reason behind that. And to find out -- this is the big surprise -- it wasn't you. I thought you caused all of that.

Mail sorting machines. In Wyoming, I don't think we sort any mail in Wyoming any more, all those got moved to other centers. And I thought it was being done pretty efficiently in Wyoming.

And what I also learned was that when you move a sorting center under the union requirements, if the people don't want to move, they don't have to move and they still get paid. That's not going to save any money.

I've asked for the analysis on some of these changes that have drastically affected Wyoming and -- and which, of course, were not done under you, it was done under previous administrations, and I know that they want to save money but they've got to do some analysis that'll actually save money.

You used to be able to put money in a collection box -- or put an envelope in a collection box for a local delivery and they got it the next day. Now, you put it in my community for local delivery, it goes to Denver

first, it's sorted and comes back to Gillette, sometimes postmarked in Denver. That's not good management and it -- and as an accountant, I know that postmarks make a difference.

So I'm -- I'm concerned -- I have a lot of concerns and I'm only pointing these out because I know that you've only had 60 days to work on them and your plate was already full but I'm trying to fill in a little bit more.

And again, appreciate that -- that you're -- you're willing to -- willing to take on this -- I guess you'd have to call it an adventure, not a job, cause it would be too tough as a job -- but I know you've made some sacrifices to -- to get to this.

I hope that you will take a look at the urban areas. We've been picked on in the rural areas for a long time but we have some really efficient people out here that are -- are dealing with long distances and -- and doing it very well but when I go to my post office in DC, I find that there's only one person working at the counter and if the person that comes up to the counter needs a box to mail it in, the boxes are not out where people can actually get them so the person behind the counter has to leave and go get a box, and when they bring the box back it still has to be sealed and addressed and they don't move them over to the side to see if they can wait on the next customer. Everybody waits at social distancing.

I've been to the post office before at -- during my lunch hour and found that the postal workers decided that was their lunch hour, as well. No business lets their employees sit down and eat in front of customers during -- during their lunch hour.

Well, enough of my, I guess, trying to -- trying to defend you here but -

(CROSS-TALK)

DEJOY: Senator, if I may, you know, the -- and thank you for that -- that -- the support.

[10:50:08]

But if I may, the day I take the seat, as with any organization, the day you become CEO, you're responsible for everything that -- that goes on around you and I have big enough shoulders to -- to deal with that.

But what -- but more important about what you said in the beginning, about legislation, you know, not -- not moving, we, the organization, needs to -- and this board (ph), we will move forward.

We have to, cause without legislation, without any assistance, we will run out of money -- and nine months, 12 or -- we talk -- we talk about a 633,000 person organization and nine months worth of cash and everybody thinks we're OK. That's outrageous thinking. And so we need to -- we will -- and that's kind of a difference -- than -- when we -- we are move -- as I said in my opening remarks, the Board of Governors, we will do what we need to do to stay -- you know, to meet our operating objectives and meet -- get -- get to self- sustaining of -- no -- manner. So thank you.

ENZI: I -- I appreciate your willingness to be here and I hope that you will take a look at the Collins, Feinstein bill and give us some analysis on that and I recognize that you have to rely on postmasters across the United States doing their job to manage their own business. So thank you -- thank you for taking this job.

JOHNSON: Thanks -- thank you, Senator Enzi. Senator Hawley?

SEN. JOSH HAWLEY (R-MO): Thank you, Mr. Chairman. Thank you, Mr. DeJoy, for being here. Let -- let me see if I can ask a few questions to get started that will maybe help clear out some of this misinformation that we have heard repeated over and over and over again in the media and some of it echoed today.

Just to be clear, will USPS have enough cash on hand to support operating expenses through the November election?

DEJOY: Yes, sir.

HAWLEY: Has the Postal Service seen an increase actually in total operating revenues in the most recently reported quarter relative to last year?

DEJOY: Yes, sir. Small, but yes.

HAWLEY: Has the Postal Service seen its overall cash on hand position increase since the start of the pandemic in March to a level of approximately $15 billion? Is that right?

DEJOY: Somewhere between $14 and $15 billion, yes.

HAWLEY: So if I've understood your testimony correctly today, what I've heard you say and also what I've read in your written testimony, your -- your testimony to us is that the Postal Service has the wherewithal and it has the resources, it has what it needs in order to deliver the mail safely and on time through the November election? Just to be clear about that, is that right?

DEJOY: So yes -- yes, Senator. There's (ph) two separate things, though -- they'll deliver on the election and cash to operate the business in the future are two separate things, but yes, we have plenty of cash to operate for the election.

HAWLEY: (Inaudible) on that second point, since you bring it up. What's your estimate of -- of the amount of additional assistance that you require as you look toward the future past November and into the months and years to come?

DEJOY: I think we have had -- so A, the biggest thing we need is legislative reform and free -- get the PRC (ph) to decide but I -- I estimated about $10 billion -- we estimated about $10 billion cost on the COVID expense side and what I would like to see is the note that we have negotiated with Treasury be used to have -- get long term financing to buy new vehicles.

HAWLEY: Can I just ask you about that, since you bring up the note from Treasury? So the CARES Act authorized $10 billion in -- in borrowing authority. I understand that -- that to -- you reached -- USPS and the Treasury Department came to an agreement late last month in principle over what that would be -- what that would look like.

Can you give us a sense of -- of when -- this $10 billion that was authorized to loan, when this is likely to be made available to you, what you see as utility adds (ph)? Just give us an update on where that stands.

DEJOY: So we have -- we have a -- a terms of agreement and all we would need to do is when we request it, get a final document audit (ph), but the terms have been agreed. I mean, the issue here with borrowing money is you need to know how you're going to pay it back and, you know, at this particular point, you know, we -- we -- we're evaluating that but it is available to us pretty quickly.

HAWLEY: And -- and what do you anticipate using it for in -- in the near term, assuming that you do -

(CROSS-TALK)

DEJOY: -- there's pretty specific limitation -- I cannot use it for capital but I can use it to cover operating costs that are closely associated with COVID and we can identify that pretty easily.

[10:55:07]

HAWLEY: Now you said just a second ago, when we first said -- you first introduced the topic of the loan, you said that you had -- you would like additional authority to -- to perhaps use the loan toward vehicles or as collateral for vehicles. Could you say more about that?

DEJOY: Yeah, so we have -- you probably know, we have many 30-year-old vehicles, we're desperately in need of new vehicles. The loan is not for -- for capital. I would like to see the term extended and used as a capital-type equipment loan to buy vehicles and other types of modernization efforts that we have, so longer term than five years.

HAWLEY: Very good. And so you would -- that is part of the -- of the legislative, additional legislative reforms or authorizations you seek, am I understanding you correctly?

DEJOY: Yes, sir. And--

(CROSSTALK)

HAWLEY: Got (ph) it. Go ahead.

DEJOY: -- already been passed in -- in a committee a couple of years ago, what we're looking for. HAWLEY: Right, understood.

Let's go back to some of the reforms that you have recently implemented. To what degree were any of the changes that you implemented over the summer a response to the OIG's recent findings?

DEJOY: I consider the OIG's recent findings as we were doing our own -- my own -- our own analytics. I thought they were for a new -- somebody new coming in. I thought they were a remarkable gift in terms of just laying out the two things with that.

The system was out of balance. The system, the transportation system, 40,000 trucks a day were running -- once you get below, you know, below 90 percent, you can't depend on anything, right? And so that was -- and then it was a policy (ph) gift.

So both things, when I came in here, looking at where the -- where the organization was headed financially and what was the -- what was the thing I could balance -- we could balance around, getting that transportation network aligned, which we will do and -- and saving, you know, a billion, billion and a half to $2 billion, which we -- we can reach for, was a Christmas present, I was elated.

HAWLEY: Very good.

Let me just ask you here -- I see my time has almost expired. But let me just ask you in conclusion, I mean, as you probably know, my home state of Missouri, we have a very significant percentage of our population in rural areas.

It's a part of the state that I'm from, where I grew up. It's -- it is absolutely vital to me that any Postal Service reform going forward continue to preserve the network of rural delivery service, that it preserves the existing delivery and -- and post office box services that are available throughout rural Missouri.

So could I just ask you, are you committed to protecting rural delivery and rural post offices in -- for people like the folks I represent in Missouri and around the country?

DEJOY: So we have an unbelievable asset in our letter carriers, reaching every American each day. And I commit to trying to strengthen that relationship across the country.

HAWLEY: Very good. Thank you very much. Thank you, Mr. DeJoy.

Thank you, Mr. Chairman.

JOHNSON: Thank you, Senator Hawley.

Before I go to Senator Sinema, based on one of the questions and your response from Senator Hawley, you talked about the transportation system just being out of sync. In your written testimony, I just want to make sure that we're talking about the same thing here. You said your on-time trips went from 35,000 per day to 39,000 per day, which means an on -- you know, scheduled time of 89 percent improved to 97 percent.

So is that what you're talking about, your trucks actually leaving on time to get on their routes? And has that -- has that been part of the disruption as well? Is if the letters aren't getting to those trucks in time, they may be left behind for next day's delivery? Can you just expand -- just explain and clarify that a little better?

(CROSSTALK)

DEJOY: Yes, so there - inside the plants there's a production schedule for mail that would meet - that's set up to meet a dispatch schedule for trucks that gets tied to a destination center for - let's just keep it simple - right to the delivery units where carriers go out in the morning and carriers then can come back in at night.

This whole thing is an aligned scheduled in theory, on paper.

And we -- there's lots of imbalances that we -- that we're finding as we went -- as we went through this process.