Sep 7, 2020
The mail has been slow this summer, no doubt about it, but did the Trump administration slow the mail down on purpose in order to interfere with mail-in voting? In this episode, listen to highlights of recent emergency Congressional hearings in order to learn what's really going on at USPS. The sabotage is real, but the situation is different from what you probably think. Special guest: Alexis Claypool Glaser
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Signed into law on December 20, 2006
Votes: Passed the House by voice vote. Passed the Senate by Unanimous Consent.
Four people have their names on the law: 2 Republicans, 2 Democrats
Source: @realDonaldTrump, Twitter
Source: @realDonaldTrump, Twitter
1:34:35 Rep. Jim Cooper (TN) Mr. DeJoy, as a megadonor for the Trump campaign, you were picked along with Michael Cohen and Elliot Broiding, two man who have already pled guilty to felonies, to be the three deputy finance chairman of the Republican National Committee. Did you pay back several of your top executives for contributing to Trump's campaign by bonusing, or rewarding them? Louis DeJoy: That's an outrageous claim, sir, and I resent it. Rep. Jim Cooper (TN) I'm just asking a question. Louis DeJoy:* The answer is no. **Rep. Jim Cooper (TN) So you did not bonus or reward any of your executives. Louis DeJoy: No. Rep. Jim Cooper (TN) Anyone that you solicited for contribution to the Trump campaign? Louis DeJoy: No, sir. Rep. Jim Cooper (TN) Not in whole or in part? Louis DeJoy: Actually, during the Trump campaign. I wasn't even working at my company anymore. Rep. Jim Cooper (TN) Well, we want to make sure that... campaign contributions are illegal. So all your campaign are legal. Louis DeJoy: I'm fully aware of legal campaign contributions. And I resent the assertion? So what are you accusing me of? Rep. Jim Cooper (TN) Well, I'm asking a question. Do your mail delays fit Trump's campaign goal of hurting the post office, as stated in his tweets? Are your mail delays implicit campaign contributions? Louis DeJoy: I'm not going to answer these types of questions. I'm here to represent the Postal Service, it has nothing to do with... All my actions have to do with improvements in postal service. Am I the only one in this room that understands that we have a $10 billion a year loss. Right. Am I the only one in this room that has looked at the OIG reports that have stacked up? Rep. Jim Cooper (TN) Will you give this committee your communications with Mark Meadows, with Treasury Secretary Mnuchin, with the President. Louis DeJoy: Go ahead and do that. Rep. Jim Cooper (TN) Mr. DeJoy, is your backup plan to be pardoned like Roger Stone? You have two seconds to answer the question. Louis DeJoy: I have no comment on that.
1:36:50 Rep. Greg Stube (FL): I as a veteran who served in Iraq in support of Operation Iraqi Freedom to compare postal workers to our military service members in Iraq or Afghanistan, quite frankly, to me is offensive. Last time I checked Postal Service drivers weren't getting their vehicles blown up by IEDs are being shot out as they drove around and delivered mail. So to try to compare our military service members who sacrifice on the battlefields across this world to our postal service members, that is frankly offensive as a person that had served.
1:54:45 Louis DeJoy: It was the summertime, mail volume was down significantly, so it was not...we're getting ready for the peak season and an election is three months away. It was a good time to start to try and roll this out that we are getting the request was just run your trucks on time, put a plan to run your trucks on time.
1:56:05 Rep. Gerry Connolly (VA): Do you not tell the Board of Governors this month, in August, that in fact you have had contact with a Trump campaign to ask them to stop their attacks on the Postal Service and voting by mail? Louis DeJoy: I have put words around to different people that this is not helpful to... Rep. Gerry Connolly (VA): You did have contact with the Trump campaign, for a good purpose? Louis DeJoy: I'm trying to think...when you say the Trump campaign, I've not spoken to Trump campaign leadership in that regard. I've spoken to people that have filled that out that are friends of mine that are associated with the campaign. Rep. Gerry Connolly (VA): One of them was Steve Mnuchin. Louis DeJoy: Steve Mnuchin is Secretary of Treasury. Rep. Gerry Connolly (VA): I know. Louis DeJoy: Yeah, I never spoke to Steve about telling the President to not do something.
2:19:20 Rep. Jamie Raskin (MD): What do you make of the former Chairman of the Board of Governors, Mr. Fineman calling Treasury Secretary Mnuchin involvement's in the selection process 'absolutely unprecedented.' Louis DeJoy: Stephen Mnuchin had nothing to do with my selection. Okay. I was called by Russell... Rep. Jamie Raskin (MD): Did you talk to Secretary Mnuchin about taking the job? There was report that you had lunch together to discuss it? Louis DeJoy: Totally inaccurate and outrageous. Rep. Jamie Raskin (MD): You've never talked to him about it, before taking job you never talked to him about taking the job? Louis DeJoy: I talked to him about the job after I received the offer. I did not accept the offer immediately. Rep. Jamie Raskin (MD): Okay, but you never spoke to him before about his soliciting your interest in the job or... Louis DeJoy: He did not solicit any interest. I kept my interest, which as you identified, he did not know that I had an interest. I had a perfectly good life prior to this, but I was interested in helping and I was called by Russell Reynolds out of the blue.
2:53:00 Rep. Ro Khanna (CA): Thank you, Mr. DeJoy for being here. I want to see if we can find some common ground to resolve some of the differences. Can you begin by sharing with the American people in this committee, the unofficial motto of the postal service? Louis DeJoy: No rain or snow, sleet nor hail will make our delivery? Rep. Ro Khanna (CA): Yes. It's about service. Correct, not about profit. Do you know how many veterans served in the postal service? About? Louis DeJoy: 100,000? Rep. Ro Khanna (CA): Correct. Do you know what percentage of veterans about rely on the postal service for their prescription medicine? Louis DeJoy: I don't know. Rep. Ro Khanna (CA): It's a high number. It's about 80% of veterans. So I guess my beginning I want to ask you this, you know, our defense department. We don't tell them you have to go sell weapons to make revenue to serve the American people. We don't say that about our health service, or the National Institute of Health. Why should we have a different standard for the postal service? Why do you have to go and make a profit instead of just serving the American people, sir, it's interesting and good question. And it's not that we need to make a profit. It's to be self sustaining, which means at least cover your costs. But why it's such a small. I'm not a legislator, I'm the Postmaster General Do you know? I mean, do you know the history? Do you remember the time in the Postal Service history where that wasn't a requirement? Louis DeJoy: I do in the 70s. Rep. Ro Khanna (CA): Actually, it was from 1840 to 1970. We funded the Postal Service, we didn't require them to make a profit because we thought people should in rural America and other places and our veterans should serve and one of the reasons people serve in the Postal Service who've served in our military is they view it as public service.
2:54:50 Rep. Ro Khanna (CA): Your perspective is that these mail sorting machines aren't required, because packages need to be delivered and open up floor space. It's your testimony that you didn't direct it, correct? Who directed it? Louis DeJoy: I didn't, have not done and investigation. It came probably through our operations. It's been a long term and you don't know who directed it. You don't know who implemented it. Louis DeJoy: Well, there's hundreds of them around the country in different places. It was an initiative within the organization that preceded me.
2:56:15 Rep. Ro Khanna (CA): So if it costs less than a billion dollars, regardless of whether it's efficient or not, what is the harm in just putting those machines back until Election Day, just for the peace of mind for the confidence of the American people? Louis DeJoy: Well, first of all, sir, we've heard all statistics about the mail and the votes and so forth. Right. And we don't need the machines to process it. But you make a statement about for a billion dollars, if we just gave you a billion dollars, you're not going to give us a billion dollars. We're going to make a request. You have no way of getting us a billion dollars. We haven't been funded in 10 years. You can't pass any legislation that helps the Postal Service. Rep. Ro Khanna (CA): If I can just finish this point. We give you the money. Do you see my point? Louis DeJoy: It's a hypothetical, I'm not willing to...you haven't given us any money, you haven't given us any legislation and you're sitting here accusing me with regard to the machines as the committee. Rep. Ro Khanna (CA): But what is the harm? I think most Americans are trying to understand what is the harm in putting these machines even if the machines in your perspective don't do anything, what is the harm to do until Election Day. Louis DeJoy: In Washington, it makes plenty of sense, to me it makes none. Rep. Ro Khanna (CA): You haven't explained why and then final question. Louis DeJoy: Because they're not needed that's why. Rep. Ro Khanna (CA): But if it will restore people's faith in a democracy and avoid a polarized electorate, I would think it... Louis DeJoy: Okay, get me the billion and I'll put the machines in. Rep. Ro Khanna (CA): Okay, well, that's a commitment. We'll find a way to get you the money.
3:17:20 Rep. Glen Grothman (WI): You right now have I'm told about $14 billion in the bank. Do you anticipate the election causing that to be rundown at all? Or do you anticipate it going up, would have any dent on it? Louis DeJoy: I don't think it will have too much of an impact in either way. Rep. Glen Grothman (WI): Okay, so if you had 14 billion in the bank, now, you're still going to have 14 billion on as you know, on December first. Louis DeJoy: That it this point we lose, we will probably lose 10 or $11 billion this year. So depending on how package volume stays, we could have less cash. And if I may, having $14 billion, we also have, I have $12 billion worth of liabilities that need to be paid at some time over the next six months. We have $135 billion of liabilities, we wanting a 633,000 person organization that does not get funding even though the federal government ends in September, they have an expectation of getting funding. We don't have an expectation of getting funding so we have to drive cost out and increase revenue. And that's the big difference that we have than any other agency. So for $14 billion, while it sounds like a lot of money, it's not a lot of money for what we do.
3:22:10 Rep. Debbie Wasserman-Schultz (FL): I want to take this opportunity to enter into the record Madam Chair, on August 18 2020 emailed from USPS Director of Maintenance Operations Kevin Couch. Madam Chair. The email reads "please message out to your respective maintenance managers tonight they are not to reconnect, reinstall machines that have been previously just been disconnected without approval from headquarters maintenance no matter what direction they are getting from their plant manager." Mr. DeJoy, yes or no. And you've indicated in this committee hearing that it's not your job to decide about whether sorting machines are on or offline. But at the same time you told Mr. Khanna that you won't bring them online because they're not needed. So yes or no, have any plant managers requested mail sorting machines be reconnected? Louis DeJoy: First of all, Rep. Debbie Wasserman-Schultz (FL): Yes or no. Louis DeJoy: I disagree with the premise. Rep. Debbie Wasserman-Schultz (FL): I'm not asking you anything other than, reclaiming my time Madam Chair. Yes or no? Madam Chair Reclaiming her time, yes or no answer. Rep. Debbie Wasserman-Schultz (FL): Yes or No. Have any plant managers across the country in the USPS requested mail sorting machines be reconnected. Louis DeJoy: How would I know that? Rep. Debbie Wasserman-Schultz (FL): You're in charge? You don't know whether there are there are plant managers that have requested. Louis DeJoy: No I don't know that. Rep. Debbie Wasserman-Schultz (FL): But let me let me just assure you that there are plant managers that was reported in the in the press in both Washington. There are plant managers in Texas and Washington. And I have articles that I can show you that have asked to have sorting machines reconnected and brought back online. And they've been too scared to come forward to say so. So you've you've indicated that it's local leadership in this hearing, I heard you say it's not your job to decide whether the sorting machines are brought online or not. Someone needs to mute Madam Chair. Madam Chair, please, please mute. Madam Chair People that are listening, please mute. Rep. Debbie Wasserman-Schultz (FL): I probably I need probably about additional 30 seconds from the interruptions added back onto my time, please. You have said in this hearing, it's both not your job to make decisions about sorting machines, and at the same time, you've said that you're not going to bring them back online because they're not needed. It can't be both.
3:40:50 Louis DeJoy: Across the country, our employee availability is down three, 3 to 4% on average across the country, but the issue is in some of the hot spots in the country areas like Philadelphia, Detroit is probably 20, the averages cover that and that could be down 20% and that's given us this, contributing to the delivery problem that we're having.
3:49:50 Louis DeJoy: I had nothing to do with the with the collection boxes, the sorting machines, the postal post office hours or limiting overtime, the change I made was asked the team to run the trucks transportation on time and mitigate extra trips based on a review of an OIG audit that was absolutely astonishing in the amount of money we were spending and the number of late trips and extra trips we were running. It was a plan that was rolled out with operations in is very, very important aspect of the network. It's a very people ask why do trucks matter? Why did on time trucks matter? They do matter. It's a fundamental premise of how the whole mail network is put together. If the if the trucks don't run on time, the mail carriers can't leave on time they're out there at night. They have to come back and get more mail collection processes or late, plant processes distorted. I see several billion dollars in potential savings in getting the system to connect properly. And that's why we ran out and put a plan together to really get this fundamental basic principle. Run your trucks on time. I find it really... I would not I would not know how to reverse that. Now, what am I to say? Don't run the trucks on time. Is that the answer that we're looking to get me to say here today?
3:58:50 Rep. Jackie Speier (CA): Mr. Duncan, you've also been active in President Trump's campaign. And as a director of American Crossroads superpac. Is that correct? Robert Duncan: I'm the director of American Crossroads Super PAC. Yes. Rep. Jackie Speier (CA): And you've contributed over $1.9 million to President Trump's campaign. Robert Duncan: That's not correct. Rep. Jackie Speier (CA): Not you personally but the PAC. Robert Duncan: I don't know the answer to that. Rep. Jackie Speier (CA): Well, the records show that.
4:02:20 Louis DeJoy: Before I went into... In the Postal Service, you file your forms the day you arrive at work, I filed my forms. I was going to a meeting on Amazon, I owned stock someplace in a call at Morgan Stanley, and I was...that they told me I had to either recuse myself from reviewing a number of contracts or sell the stock. I called our broker to sell the stock. We actually had calls. Rep. Jackie Speier (CA): Mr. DeJoy, I'm gonna have to Louis DeJoy: but I did not buy options. I actually bought call calls that Rep. Jackie Speier (CA): It's on your statement. Louis DeJoy: I bought covered calls back and at a loss. That's what I did to get completely out of stock. I had to unwind covered calls. Rep. Jackie Speier (CA): You still have those calls, do you not? Louis DeJoy: No, I had to pay more money for the calls than I sold them for. I think you should get an understanding of what a covered call is before you accuse me of any improprieties.
4:49:00 Louis DeJoy: We got to this specific change. The production schedules within the plants were not aligned with the transportation schedules going between the plants. About 10% of the mail was not aligned. The production plants were getting done late and the trucks were leaving. And this was not a mandate that every truck leaves on time, we still have a significant amount of trucks that run delayed and a significant amount of extra trips. Judgments were made at each individual plant that provided for transitional issues and doing it. We will get this back. We're working very hard and it will be a successful endeavor for the United States Postal Service.
4:52:20 Rep. Alexandria Ocasio-Cortez (NY): Mr. DeJoy when, when your announcement in your new position as Postmaster General was announced, you know, there was some folks that were flagging concerns that you would be the first Postmaster General in two decades without previous experience or service directly in the USPS. But to be fair, and as you mentioned, you do have extensive career experience in supply chain logistics, correct? Louis DeJoy: I do. And in fact, you serve the CEO of your own supply chain company new breed logistics for 30 years, correct? Louis DeJoy: I did. And that was up until about 2014 when you merged new breed logistics with another company XPO logistics were you also served as CEO for a year and then served on its board of directors until about 2018 when you submitted your resignation. Correct? Louis DeJoy: Yeah.
5:10:40 Rep. Rashida Tlaib (MI): On June 24th 2020, you bought between 50,000 and 100,000, in what you refer to as, quote covered calls in the Amazon Corporation. But let's be very clear, Mr. DeJoy, no matter what financial maneuvering you performed to try to hide it. The fact is that you have financial interest in Amazon. So Mr. DeJoy, yes or no? Are you aware that Amazon uses the US Postal Service for 40% of its shipping? Louis DeJoy: I disagree with the premise that I bought stock and... Rep. Rashida Tlaib (MI): Do you know that 40% of its shipping? Louis DeJoy: I know there's a lot of shipping with us. Yes. Rep. Rashida Tlaib (MI): Okay. And I understand it. Your Amazon covered calls expires in about October of this year. So you'll have to make a decision regarding this financial interest and may potentially have sensitive information about Amazon's business with the US Postal Service which may influence that decision. This appears to be a classic example of conflict of interest, insider trading. Yes or no, will you commit right now. divest any and all financial interest in Amazon to avoid illegal insider trading. Louis DeJoy: Ma'am that was a lot of time on an issue that doesn't matter. I don't own any Amazon stock. Rep. Rashida Tlaib (MI): You have financial interest. You can call it whatever you want. Louis DeJoy: I don't own anything with Amazon. You can continue to... Rep. Rashida Tlaib (MI): Until you do that. Your financial interest in Amazon will continue to be problematic and illegal and a conflict of interest.
5:16:25 Rep. Katie Porter (CA): Did you actually read and independently analyze the major overhaul plans before you ordered them to take effect? Louis DeJoy: Again, I will repeat that I did not order a major overhaul plans, the items you identify were not directed by me. I did. And we don't need much analysis to get to run your trucks to a schedule. Rep. Katie Porter (CA): Reclaiming my time. Mr. DeJoy, could you please tell me who did order these changes if he U.S. Postmaster General did not because these changes have resulted in and you have set yourself in this hearing. Louis DeJoy: The Postal Service has been around for 250 years. There were plans there were many, many executives, almost 30,000 executives within the organization, and there are plans that existed prior to my arrival that were implemented. Rep. Katie Porter (CA): Mr. DeJoy If you did not order these actions to be taken. Please tell the committee the name of who did. Louis DeJoy: I do not know. Rep. Katie Porter (CA): Mr. Joy Did you analyze these plans before they went into effect? US Postmaster General supervise whoever did apparently... Louis DeJoy: As I've stated numerous times the plans were in effect and being implemented before I arrived. Rep. Katie Porter (CA): Mr. DeJoy, do you take responsibility for these changes? Louis DeJoy: I take responsibility from the day I sat in a seat for any service deterioration that has occurred. You're asking about operational changes that go on throughout the whole organization around the around the country. Rep. Katie Porter (CA): I'm reclaiming my time sir. Mr. DeJoy, will you commit to reversing these changes. Louis DeJoy: No.
5:19:25 Rep. Katie Porter (CA): Do you own any financial interest, whether options or stocks covered calls, bought or sold? Do you own today any financial interest in Amazon? Louis DeJoy: I do not.
5:20:55 Rep. Mike Quigley (IL): You've accepted the responsibility for the delays. But we're still not clear what exactly what changes took place and what were yours. Under Miss Lawrence's questioning. You said you stopped the pilot program. When you stopped everything else. Let me ask you, what in your mind, were you stopping besides the pilot program? Louis DeJoy: I stopped the removal of collection boxes around the country. I stopped the process of reducing hours at postal retail centers and I stopped the removal of the flat and mail sortation boxes, machines. Rep. Mike Quigley (IL): So, your argument for doing that is that you saw... that it wasn't working or? Louis DeJoy: No they... I met with with with the speaker and Senator Schumer and we just collectively thought about the heightened discussion that was going on around the nation. Rep. Mike Quigley (IL): And respectfully, Sir, why that and not the overtime issues and not the sorting machines? Why did you pick those and not the others which seem to have pretty dramatic impacts? Given the fact that things didn't go well, wouldn't you want to look back coming from the private sector and say, gee, maybe that is impacting us negatively. Was there some other reason you're thinking, well, no, I'm not going to change those. Louis DeJoy: Not changed their truck schedule and the... Rep. Mike Quigley (IL): The overtime, the sorting machine over time. Louis DeJoy: I've spent $700 million and, we have spent 700. Rep. Mike Quigley (IL): You recognize that there are many including in my district, post office locations which are cutting back on overtime. They're following somebody's order in and you won't mention who that is. So back to accountability, you got to admit your own it right. Louis DeJoy: How do you know that they're cutting back on overtime? Rep. Mike Quigley (IL): Imagine or let me put it another way. Are you certain that they're not cutting back on overtime? Louis DeJoy: The direction was given to stop cutting back on overtime in postal retail centers. Rep. Mike Quigley (IL): When was that done? Louis DeJoy: I haven't done an audit yet. But I would believe they're pretty compliant. Rep. Mike Quigley (IL): Wait, when was that order given? Was that part of the order you just talked about? Louis DeJoy: I don't know what you're asking. Rep. Mike Quigley (IL): Are you saying when you stopped everything else, it included the overtime issue as well. Louis DeJoy: There was no directive to reduce overtime anywhere within the organization. Rep. Mike Quigley (IL): And are you certain that no one was cutting back on overtime. Louis DeJoy: No, I'm not certain that's part of the problem at the Postal Service, sir. That's what I'm trying to get my hands around there was a lot of... And that's why I did the reorganization. Rep. Mike Quigley (IL): Respectfully, you can imagine, though, that... Louis DeJoy: There's a lot of judgment made in local areas that is not a normal... Rep. Mike Quigley (IL): You're being selective on what you're taking credit for and not and a cynical person could say, you're just trying to avoid going before the regulatory body, because these aren't changes. But when your own, as you say, you're Republican, when your own party says, did you stop these changes? You said yes. And in your documents, you talk about the fact that there were changes. You can't have it both ways. There were changes. You seem to have a line there that you don't want to have, because it means you have to go before the regulatory board and you don't want to do that. Louis DeJoy: It sounds like... Rep. Mike Quigley (IL): It sounds like what happened. Louis DeJoy: It sounds like a weak theory to me.
5:24:50 Rep. Mike Quigley (IL): Have you communicated with anyone in the administration? Since you were considered for this spot about how to operate? USPS? Louis DeJoy: No. Rep. Mike Quigley (IL): No one has communicated with you who works in any way with the Trump administration. And you haven't communicated in any way with anyone who works in the Trump administration or the Trump campaign about how to operate post office. Louis DeJoy: The only time I communicated with someone in the Trump administration was Secretary Mnuchin, when we were negotiating, negotiating the terms of the $10 billion note and my discussion in general, it was early on in my arrival in generalities were that I think that we have some opportunities here, looking to try and grow revenue, improve service and get some cost out. Rep. Mike Quigley (IL): And what was the direction the other way? Louis DeJoy: There was no direction. My Postal Service's mind to run there was no direction. Rep. Mike Quigley (IL): My time has expired.
12:30 Louis DeJoy: Our business model established by the Congress requires us to pay our bills through our own efforts. I view it as my personal obligation to put the organization in a position to fulfill that mandate. With action from the Congress and our regulator, and significant effort by the Postal Service, we can achieve this goal. This year, the Postal Service will likely be ported loss of more than $9 billion. Without change, our losses will only increase in the years to come. It is vital that Congress enact reform legislation that addresses our unaffordable retirement payments. Most importantly, Congress must allow the postal service to integrate our retiree health benefits program with Medicare.
18:45 Louis DeJoy: We deliver to 433 million pieces of mail a day. So 150 million ballots 160 million ballots over a course of a week is a very, very small amount adequate capacity plus mail volume is down as you said 13-14% this year.
20:45 Louis DeJoy: Today there is about 140,000 collection boxes out in the United States. Over the last 10 years, about 30... averages about 3500. So 35,000 of them have been removed and it's a data driven method I have I haven't reviewed it but every year they look at utilization of post boxes, they look at where they place new post boxes, they look at where communities grow. So 35,000 over 10 years. Since my arrival, we moved 700 post collection boxes, of which I had no idea that that was a process. When we found out, when I found out about it, we socialized it here by some of the leadership team and looked at the excitement it was creating, so I decided to stop it, and we'll pick it up after the election.
33:58* Rep. Scott Peters (CA): Are you limiting overtime or is that being suspended right now and people will work overtime if necessary to move the mail out efficiently every single day. Louis DeJoy: Senator, we've never eliminated overtime. Rep. Scott Peters (CA): It's been curtailed significantly is what I understand. Louis DeJoy: It's not been curtailed by me or the leadership team here. Rep. Scott Peters (CA): It's been curtailed significantly. It's gone down. It's been limited. Will you commit to... Louis DeJoy: Since I've been here we've spent $700 million on overtime. Overtime runs 13% rate before I got here and it runs at a 13% rate now.
35:00 Rep. Scott Peters (CA): Will you be bringing back any mail sorting machines that have been removed since you become Postmaster General, will any of those come back? Louis DeJoy: There is no intention to do that. They're not needed, sir. Rep. Scott Peters (CA): So you will not bring back any processors. Louis DeJoy: They're not needed, sir.
35:30 Rep. Scott Peters (CA): Did you discuss those changes or their potential impact on the November election with the president or anyone at the White House and remind you you're under oath? Louis DeJoy: I have never spoken to the President about the Postal Service other than to congratulate me when I accepted the position. Rep. Scott Peters (CA): Did you speak or discuss any of these changes with Secretary Mnuchin? Louis DeJoy: During the during the discussion in negotiating the note, I told him I'm working on a plan. But I never discussed the changes that I may, to set up, working on a plan for to the to improve service and gain cost efficiencies. But no grave detail other than that, that was about it.
38:08 Rep. Scott Peters (CA): You have your word that you're not going to mandate that states send out any ballots using either the more expensive first class mail, and will you continue the processes and procedures to allow election mail to move as expeditiously as possible and treated like first class? Louis DeJoy: Yes, sir. We we will deploy processes and procedures that advance any election mail in some cases ahead of first class mail.
1:01:15 Louis DeJoy: Like take the Alaska bypass plan discussion that's an item on a table, that's an unfunded mandate. It costs us like $500 million a year. And what I asked for was all the unfunded mandates, right? That's a way for us to get healthy. Pay something for the unfunded mandates. If we just throw 25 billion at us this year, and we don't do anything, we'll be back in two years. If then maybe we should change the legislation and not make us be self sustaining.
1:55:50 Louis DeJoy: They're 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 say keep it simple go right to the delivery units where carriers go out in the morning and carriers then could come back at night. This whole thing is in a lined schedule in theory on paper, and there's lots of imbalances that we were finding as we went through this process, but the big thing to try and get everything aligned around is that transportation schedule. And now we have taken that up and all that mail that was going left well that was on that truck was also late mail. Right now we have advanced the mail we just some of the mail that coming off the processing lines. We found these imbalances and we did not as great a job as we shouldn't recovering for it, but we will. I'm seeing improvements right now. Once that comes together now we'll be moving around the country at 97% on time and I'm very, very excited and committed to trying to do that. And that, again, enables us to balance the front end and the back end, the delivery end of the system and saves us all that money that you saw in the in the audit report and it's it's in billions, not millions.
1:58:45 Louis DeJoy: This this is very doable, FedEx and UPS do it.
17:00 David Williams: I recently resigned as the vice chairman of the postal Board of Governors when it became clear to me that the administration was politicizing the postal service with the Treasury Secretary as the lead figure for the White House in that effort. by statute, the Treasury was made responsible for providing the postal service with the line of credit. The Treasury was using our responsibility to make demands that I believe would turn the Postal Service into a political tool in its long history, as an apolitical public infrastructure.
17:45 David Williams: Clearly the President was determined that the postal service should inflict harm on Amazon delivery by sharply raising parcel shipping prices on everyone by 400% or more.
18:30 David Williams: The President eventually admitted that he was withholding COVID-19 relief funds from the Postal Service so that it could not reliably enable voting in his upcoming elections.
18:40 David Williams: The Treasury Secretary also insisted that all republican appointees on the board of governors and the Postal Regulatory Commission come to his office and kiss the ring and receive his blessing before confirmation. This continued context with him away from the full board continued issuing orders and expressing his approval and disappointment in their performance.
19:00 David Williams: The Secretary was keenly interested in labor agreements, postal pricing increases, and especially volume discounts being given to Postal Service's largest customers Amazon and UPS and FedEx. The Postal Service replied to the early demands from the Secretary, explaining the two provisions he was asking for were illegal, but the concerns were ignored.
19:30 David Williams: Ironically, the actual fiscal concern was not whether the Postal Service could zero out its $15 billion line of credit. The Postal Service keeps a huge cash on hand account. They could always pay off all our most of that loan. The real concern was that the Treasury had borrowed and spent our $300 billion pension and retiree health Fund. The interest rate set by Treasury for itself was so low that the funds were dying. As the funds been invested in a retirement fund, the liability would be fully covered by now.
20:30 David Williams: Additionally, post offices should be allowed into related business lines and become a single neighborhood point of access for government services that cannot be put online. Postal carriers going to every door can provide personalized services to challenged and elderly Americans that would enable citizens to live in their own homes independently. Post offices and carriers can also support and resupply the new army of workers that are officeless, are working at home, while providing work opportunities to those living in rural areas.
21:45 David Williams: I recently resigned as the Vice Chairman of the Postal Board of Governors when it became clear to me that the administration was politicizing the postal service with the Treasury Secretary as the lead figure for the White House in that effort. By statute, the Treasury was made responsible for providing the postal service with the line of credit. The Treasury was using our responsibility to make demands that I believe would turn the Postal Service into a political tool in its long history, as an apolitical public infrastructure.
23:30 Mark Dimondstein: But our ability to reliably continue to serve the people and serve the country is under threat in several ways. First and most urgently is the effect of the pandemic on a Postal Service's finances. The sharp economic contraction that began in March also affected the mail. Letter mail is contracted over 30%. And even with a surge in package volumes, the postal service projects because that won't list the postal service projects it will suffer $50 billion of lost revenue over the next 10 years directly due to COVID and will likely face a cash shortfall as soon as March of next year. Simply put, because the United States Postal Service normally runs its operations with zero tax dollars, that pandemic related lost revenue places the continuity of a central Postal Service is at serious risk and that's why we've worked so hard along with so many others to secure a minimum of 25 billion in emergency COVID relief and it's backing the bipartisan unanimous request to the postal Board of Governors.
24:30 Mark Dimondstein: June 2018. The White House Office of Management budget report openly called for the privatization of the Postal Service. White House task force that followed later that year did suggest slowing down the mail cutting delivery services restricting union rights for workers and drastically raising packages.
39:30 David Williams: After my arrival I had asked and others expressed interest in gaining assurance that the postal service would be able to respond to normal levels and enhanced levels of voting by mail. And actually, if an entire state wanted to vote primarily by mail, we received a formal ???, that the confidence level could not be higher that the Postal Service could perform this task and deliver this volume of of mail transactions. They were in the process and nearly completed, briefing each of the states and the voting, the Secretary of State, explaining to them how the flow would work. If they needed a postmark, helping them understand how to get a postmark on their letters. We were told the capacity was always good, but it was especially good now because during the COVID crisis, the degree of advertising mail and other mail had fallen. And so this would give us plenty of capacity. And they said their experience was great. They'd been handling overseas military mail, a more complicated process for years, and that had gone well. Several states were already voting by mail that had gone well. And they felt they were had forever provided absentee voting process. And so we felt we felt very good about it at that time, and that was quite recent.
41:15 David Williams: The board interviewed several firms that managed and handled talent. We selected Russell Reynolds, and they began developing a number of candidates. We heard their names and rather late in the process I heard for the first time. Mr. DeJoy's name. It came through one of the governors and he had somehow, Mr. DeJoy come to his attention. They had lunch together and he wanted to move his name forward. It wasn't clear how the governor had met Mr. DeJoy to me and I don't think anyone was clear on it from the presentations. Rep. Mark Pocan (WI): And who was the member of the board of governors who proposed Mr. DeJoy's name? David Williams: Governor John Barger, he was leading the search, his committee was leading the search.
43:30 David Williams: Actually, it predates the latest $10 billion expansion, goes back to our routine original $15 billion line of credit. Secretary Mnuchin indicated that he wanted to have some say in how the Postal Service ran as sort of being in charge of providing that that account. I don't think that had been done before. It was normally if Congress assigned you that responsibility, you perform the responsibility. He indicated he would like to impose this through the use of terms and conditions on the $15 billion line of credit. We then received shortly after he announced this verbally, we then received the draft terms of agreement. They were very interesting and I hadn't seen anything like it before. He wanted to approve price changes. labor agreements. And perhaps most disturbingly, the very sensitive negotiated service agreements with our largest customers, Amazon, UPS, FedEx and some others. He also was urging that we adopt a pricing methodology called fully allocated cost methodology. That was something that the United Parcel Service had been advocating for a very long time. I think all of us felt that perhaps UPS that influenced him in advocating for that, and it would be really in a ruinous to the postal service to adopt. No one would adopt it, certainly not not UPS themselves, FedEx or Amazon. It would prevent competition in the market where the Postal Service has been gaining market share.
45:45 David Williams: Also General Counsel sent a letter saying that the transfer of our duties and decision making authority to him was illegal. The Treasury went forward not withstanding that. My position was that when they arrived, we should simply refuse that another department cannot impose its will on another department and the federal government. In addition to that, we're an independent entity, and so it was especially egregious.
46:15 Rep. Pramila Jayapal (WA): Let me ask you about Postmaster General DeJoy's independence to run an agency when he has significant financial conflicts of interest. He holds at least $30 million in stock and a postal service contractor FBO, and he owns stock and Postal Service competitors, Amazon and ups. So he stands to make enormous profit. If use of the Postal Service goes down and privatization increases, and he is now responsible for slowing mail delivery right now. Can you provide insight into how that happened and whether a normal background check was was instituted in this situation. David Williams: When it became clear that he was a serious candidate and then obvious that he was the person about to be selected, we did discuss conducting a background investigation of him. None was conducted as of the time I left and I believe that was the night before his selection or two nights before selection.
50:45 Raskin: Do you know why he was selected? David Williams: I don't.
51:30 David Williams: It looked like there were concerns about whether his company was building correctly and performing fully. Those are often wrong, but I think they they sometimes are correct. That contract file needs to be examined, we need to go through whether the Postal Service demanded that he returned any money or any concerns they had with a performance, that's a very normal kind of examination. And I don't mean to say there were there were valid problems, but this would suggest that an examination should be done.
57:00 Rep. David Cicilline (RI): With respect to your resignation, you resigned because it was your determination that what the Postal Service was being asked to do, as a condition of a line of credit, which we included in the CARES Act, those conditions were included, those were developed by Mr. Mnuchin in an effort to control the Postal Service, is that right? David Williams: Yes, I was concerned that the Board of Governors was running an independent organization and instead it had become politicized and the decision making was largely transferred to the Secretary of Treasury.
57:45 Rep. David Cicilline (RI): You were the Inspector General and you were the Vice Chair of the Board of Governors. Have you ever seen or heard in the history of the post office this effort by the President or the executive branch to intrude and take over the operation of the US Postal Service? David Williams: No, sir. I've never seen anything like that.
59:30 Mark Dimondstein: Overtime was running between 15 and 20%. Some of that just the ebbs and flows of mail. Some of its that were generally short staffed and they need to hire. And some of it's the pandemic. We've had almost 3,000 people who have tested positive for COVID. We've had 40,000 people quarantined since March, when that happens. And of course, we've had all the childcare challenges with schools closing. So leave usages up and the overtime is partly used to make up for that and to just arbitrarily come in and say 15 to 20% of the hours of work. However, they're going to work at higher overtime, some combination of the two, but eliminate 15 to 20% of the hours of work, but the work is still there simply means that the work won't get done, backing up, and we've had evidence, we have pictures of parcels sitting there for over a week, they were just never sorted. And that's the mail that belongs to people this country.
1:07:15 David Williams: I was a appointee for both Republican and Democratic administrations. Rep. Mark Takano (CA): Which administrations, if you don't mind. David Williams: Bush, Clinton, as you said, the current president, and then then I also continued service during several other administrations.
1:08:30 Rep. Mark Takano (CA): So President Trump did appoint you to the Board of Governors, is that correct? David Williams: He did.
1:09:30 David Williams: The removal of the 25 billion happened at the 11th hour after everyone was on board. Secretary Mnuchin removed it personally at the very 11th hour. Rep. Mark Takano (CA): So let's be clear. The Board of Governors appointed by the president requested $25 billion to get through a pandemic, a decline in revenues. That was what was the Board of Governors best estimate of what you would need. Is that correct? David Williams: Yes, sir.
1:18:00 Tammy Patrick: Do we know that the majority of voters who vote by mail return their ballots by dropping them in an official Dropbox for the elections office?
1:22:45 Tammy Patrick: Let's go out at two different rates, first class and marketing mail and marketing mail used to be called standard and the delivery timeframes didn't used to be that far apart. It used to be first class mail was one to three days, standard mail or marketing mail was more like three to five days. So that was really a question of one or two days difference. But because ballots were going out with the logo, they were getting the first class service for a discounted rate, which I will say many election officials felt was their right under the National Voter Registration Act, which talks about discounted rates for election materials that are used for voter registration. And any ballot that gets returned undeliverable, as addressed gets used to update the voter rolls. So we do know that that the states that traditionally use that marketing mail rate are the western states that have high volumes of vote by mail. And they have just as recently as this last week for the primaries that have happened in Washington, Arizona. Millions of ballots went out at marketing mail rates, they did not see a decrease in delivery. They did not see delays. The local Postal Services are telling election officials whether it's the secretaries of state or county recorders or registrar's or auditors, that they will get that mail through on time. So I'm not as worried about that part of it. The part I'm concerned about is the message that it gets to the voter. And whether or not the voter is going to still believe local officials all across the country have told me in the last week, the number one thing they're doing is answering the phone with concerns from voters who have put in an application to get a ballot by mail, and now are worried that they shouldn't have done that.
1:27:15 David Williams: There are a couple of very odd aspects to this pullback. One is you don't save money by breaking down machines and putting them away and storing them you spend money. So that was a very odd action normally the reason to keep those machines and plants in place or in the event of a Katrina or a 9-11, or the election or the COVID crisis, removing those is thinning out the Postal Service's ability to redirect mail in the event of an act of an incident like that. The blue boxes were maybe the most interesting of all, though, those were not part of ongoing claims. To my knowledge. As a matter of fact, Secretary Mnuchin wanted that done. His study of the Postal Service asked that it be done. I asked the Postal Service about it and they said it wouldn't save anything and there would be no reason to remove those.
1:29:15 David Williams: The service scores are probably the best objective measure and those are significantly off. Where even though there's less mail, it's moving more slowly. Much more slowly. That's strange and disturbing.
1:33:30 Rep. Ted Lieu (CA) I also want to follow up on your comment today about Treasury Secretary Mnuchin. Is the Postal Service under the Treasury Department. David Williams: I know that, I certainly know that the terms and conditions that originally came over moved all the important decision making from the board to him. I don't know the present case. I don't know presently if that was successful or unsuccessful.
1:35:00 Rep. Andy Levin (MI): Did you participate in any interviews of other candidates for Postmaster General at this time round? David Williams: I did. Rep. Andy Levin (MI): How many candidates were interviewed, do you know? David Williams: I'm gonna have to estimate but I believe it was in the low teens. Rep. Andy Levin (MI): Were any of the other candidates qualified for the job as far as you could tell, did they all need to be assisted in their answers? The way you describe it where a member of the Board of Governors like helped them complete their answers as with Mr. DeJoy. David Williams: There was nothing like that. There were good candidates. Rep. Andy Levin (MI): And so Mr. DeJoy was really the only candidate who stood out to you as someone who was not qualified or capable, or in any event, he stood out. David Williams: I would say that, I would say that's correct.
1:50:35 Rep. Elijah Cummings (MD): Taking all these requirements and trends together, the Postal Service reported a net loss of $5.3 billion for fiscal year 2016, which represents a 10th consecutive year of net losses. We have repeatedly discussed the deteriorating financial condition at the Postal Service in this committee, but the situation is now worsened by unprecedented lack of any Senate-confirmed members on the Postal Service’s Board of Governors. Because many key management decisions are reserved by statute to the Senate-confirmed board members, there are many actions, such as establishing rates, class, and fees for products, that the Postal Service simply cannot take now.
45:30 Fredric Rolando: Over the past decade, postal employees have worked diligently to restructure operations, cut costs, and sharply increase productivity, in response to technological change and the Great Recession. Despite the loss of more than 200,000 jobs, we’ve managed to preserve our networks and to maintain our capacity to serve the nation. But only Congress can address our biggest financial challenge: the unique and unsustainable burden to pre-fund future retiree health benefits decades in advance. No other enterprise in the country faces such a burden, which was imposed by legislation in 2006. The expense of this mandate has accounted for nearly 90% of the Postal Service’s reported losses since 2007. Without a change in the law, the mandate will cost $6 billion this year alone.
33:40 Sen. Tom Carper: Much as the auto industry is right sized itself over the last half dozen or so years, what the Postal Service is attempting to do is to right size the enterprise, and we're trying to not be an impediment. But actually to help you do that. If you go back a dozen or so years ago, your workforce i think is Postmaster General said is about 800,000 people today, it's just under 500,000. If you go back about a half dozen years ago, my recollection is the number of postal processing plants in our country was about 600. We're now down to roughly three, three and a quarter.
46:40 Sen. Tom Coburn: If you look at the private sector. The benefits per employee, average $10,589. At the state and local government level, it's $16,857. At the federal level, it's $41,791. And that's a significant fact we need to bear in mind as we ask the postal service to be competitive.
1:59:30 John Hegarty: 300 processing plants have been eliminated in the past five years, and the employee compliment has been reduced by more than 300,000. Postal employees have already contributed to and sacrificed for the financial turnaround of the Postal Service. My members have had their wages frozen for the past two years, and employee contributions have increased for both health insurance and retirement. About 20% of postal employees including more than 5000 members of my union are working in non career part time jobs at reduced pay rates. And thousands of employees have been involuntarily excessed or transferred to other work locations often hundreds of miles away and have had to uproot their homes and their families because of the closings and consolidations of the postal network. Last week, the Postmaster General testified that the Postal Service has reduced cost by $16 billion during the past few years. As a labor intensive service industry, it should be clear that most of those savings have come from postal employees.
2:20:50 Dean Baker: Just think it is striking I had occasion to be in on one of the mediation hearings back in 2011. I looked at the Postal Service's projection at that time, they're projecting revenue falling to just 63 billion as of 2013. And continuing to decline over the rest of the decade. So it'd be about 59 billion by the end of the decade, we're now looking at revenue of 66 billion. So in fact, there's been really a quite remarkable turnaround. We're looking at a system that does look as though it's quite viable, apart from these retiree obligations. So it's not as though we have an ailing system on its last legs. It looks very much as though we have a system that in principle is viable. That's suffering very much from I would say at least, an excessive burden in requiring it to pre fund at a very rapid rate.
46:10 David Williams: The Postal accountability and Enhancement Act of 2006 requires the postal service to make 10 annual payments of $5 billion each in addition to the $20 billion already set aside for pre funding its retiree health benefits, the size of the $5 billion payments has little foundation and the current payment method is damaging to the financial viability of the Postal Service even in profitable times. The payment amounts were not actuarially based instead, the required payments were built to ensure that the Postal Act did not affect the federal budget deficit. This seems inexplicable since the Postal Service is not part of the federal budget, does not receive an appropriation for operations and makes its money from the sale of postal services. The payment amounts are fixed through 2016 and do not reflect the funds earnings. Estimates of the Postal Service liability as a result of changing economic circumstances, declining staff size or developments in health Care and pharmaceutical industries. The payments do not take into account the Postal Service's ability to pay and are too challenging even in normal times.
1:04:45 John Potter: We hit our maximum number of career employees in late 1999. We had 803,000 career employees. We have been addressing the diversion of mail to electronics and have been managing our workforce very aggressively. Today we have 630,000 career employees. So we've managed to reduce that working with unions and within the contracts reduced by over 170,000 people, the number of employees we have.
1:10:10 John Potter: And when I look around the world and see what other posts are, if you're in Australia and you want to update your driver's license, renew it, you go to the post office. If you're in Italy and you go into a bank, more than likely going to the post office, if you're in Japan and you want to buy insurance, more than likely you're going to the post office. And if you're in France and you have a cell phone issue, more than likely, again, you're going to the post office.
11:00 John Potter: Today, we're experiencing extraordinary declines in mail volume, and resulting losses and revenues. Our projected volume declined for this year, we'll be more than 6 billion pieces of mail below last year. That's the largest volume decline ever experienced in a single year. Despite this decline, we are working to reduce our net loss below our earlier projections. To achieve this, we will reduce the number of career employees through attrition by 20,000 people this year. In addition, we will cut over 60 million work hours compared to last year and we are postponing program expenditures and delaying capital investments. The net effect of these actions will reduce current planned expenses by $2 billion. Those savings combined with a $1 billion dollar infusion of revenue from the early implementation of the rate case means our projected net loss for the year will be in the range of $1.5 billion, instead of what easily could have been a loss of $4.5 billion.
16:05 John Potter: Essentially, the Postal Service could become profit driven, generate returns to finance capital projects, instead of increasing our debt load, introduced flexible pricing based on market demand, and develop better relationships with our employees. These and other long term changes to transform the postal service can only come with legislative reforms.
1:30:00 John Potter: Today we have the same number of people in the postal service as we had in 1991. But since 1991, the number of possible deliveries we have, the number of households and businesses that we've served, has gone up 15.4 million. So every day, six days a week, we're at 15.4 million additional doors than we were in 1991. And we have some 33 billion more pieces of mail.
1:50:35 John Potter: There is a process today to pay down our debt, but there's some $12 billion that we may have by the end of this fiscal year. It's built into the rate process. It's prior year loss recovery. Today, there is no vehicle to consider the health benefit liabilities, or the retirement obligations as part of the rate setting process. So, the vehicles that are available to us today are basically to cut our costs.
13:30 John Potter: For some people, the preferred model is privatization. But this group, the notion of equitable service is not relevant. The simple straightforward answer goes back to what our stakeholders, the people, we reached out to told us. Overwhelmingly, they told us, there was no support for privatizing the nation's mail service. A privatized model would focus on profit. The results might be delivery standards and prices dictated by where a person lives, or where a business is located. Metropolitan areas where volume is greater, would receive better or cheaper service than a rural community. The privilege might stand to benefit from privatization, but not everyday people. It might be fine for a lawyer in Los Angeles, but not for the sales clerk in Omaha. Let me be very clear on this point. Do not, do not intend to recommend that the Postal Service be privatized. I do not believe that the American people want a privatized mail delivery system in this country today. People speak of digital divide, we don't need a delivery divide.
16:15 John Potter: Commercial government enterprise. This is our recommended model, the one we believe would put the postal service on a more businesslike footing, while keeping it dedicated to its mission of universal service. But it's also a model that is markedly different from what we have today. For example, instead of breaking even, our financial goal would be to generate reasonable returns. Earnings would finance capital projects, instead of having to resort to increasing our debt load. Retained earnings would carry us through tough economic times, instead of always resorting to rate increases. In addition, this model will allow us to leverage our vast retail and delivery assets to develop new revenue streams. Our 38,000 retail offices, and our national door to door delivery networks could be made available to private enterprise as a joint profit making venture. As a commercialized government enterprise, we could introduce flexible pricing. Prices for postal products would still be subject to regulatory review. But we would have the flexibility to adjust prices based on market demand. Next, as a labor intensive organization, with 75% of our operating expenses going to labor, this business model will allow us to explore a more progressive way to make collective bargaining work for all parties. Finally, this model will give us the needed flexibility to increase access and convenience to our customers. We will be able to add more locations with long arounds management without the flexibility to close a number of non performing retail outlets and we will be able to invest in new facilities and services. And enter into alliances and ventures with related private sector companies after due diligence was completed. Essentially, this commercialized Postal Service will give us the management tools that are available to private corporations to improve service to our customers manage costs more efficiently, and leverage our assets to generate new revenue opportunities.
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