Across 28 states. And i want to be clear that we are believers in print. We believe that print is here to stay but it is e volving. We worked with the Postal Service on innovative ideas that entail things like mobile devices qr codes and interactive print to make print a more viable part of the multichannel world. And so print is here to stay and we have to make sure we have the ability to deliver efficient manner. What is at stake here that the Postal Service is a 65 billion business supporting a 1. 3 trillion industry that provide 8. 4 million americans all of which accounteds for the it is about deciding whether or not we want to have the post office selffunding, sustainable, or whether we want to offload the problem on to the taxpayers. In term of decline and involve and access capacity. Pricing in 2007, the significant increase that happened then along with the recession lead to a permanent reset within the printing and mailing industry. The last rate increase before the cap was in the implemented in 2007, which was double digit in size lead to double dejt decrease and volume. On heat of the case, the Great Recession continued rerogues of volume out of the volume of not only the post office but our industry. The too command as price increases will not provide additional revenue but further erosion of demand. Access capacity are the problem it must be fixed. The Postal Service has the capacity to produce approximately 300 billion pieces of mail. The projected volume in 2013 is closer to 150 billion. This is an unsustainable fact that leads to fast outweighing the actual demand. If they removed the cost delivering them will be closer. Quad graphic has a love experience. When the Great Recession happened and the industry lost the volume, because we had a strong Balance Sheet and strong business we were able to take advantage of it. We were about 1. 7 billion company we acquired a 3 billion competitor who had gone through bankruptcy and lots of issues. We knew that the opportunity was cob sol dedication because we knew the industry had to. There was access capacity. We took on the hard work of closing over 21 plans throughout our networking to make sure that we have the remaining business the resulting business of the combination would be sustainable on to the future. The private sector Economic Activity is at risk unless. Congress act to ensure the Postal Service is sustainable. The Postal Service reform cannot wait until the last minute as it hurls toward insole vent sincerity. The crisis of confidence is already costing the industry customers and volumes as marketers decide how best to spend the advertising dollars. Fear of large increases in price will scare volume away. Our industry changes rapidly customers in the Postal Service need to be nimble and flexible. They must be allowed to make the Business Decisions that are necessary without artificial con straibt in order allow it to happen. For the reform need to be legitimate we agree there need to be six key provision of it. To stream line the operation to rise size the capacity. Maintain a postal rate structure with cpi cap. Change it in five days and something the industry hasnt been clear on. I think we feel in conjunction with the rest of the reform were willing to support five day deliver i are and can adjust to it. A return to the u. S. Passengers side overpayment to the federal retirement system reamtize from ten to forty years without impacting what is due to the employee and provide the u. S. Passengers side the ability to shop Different Health care benefiting. Something they have experience of doing. And our cost happens to be 12020 to 30 lower of all industry. Theres not only shift things. I thank you, mr. Chairman, for the time and i urge you to move this along adds we are at the stage where our customers are concerned. Thank you. Thank you. Thank you for adopting Senior Member cummings proposal. Especially using the demographic. I think thats a huge step forward. The Postal Service was not broken in 2006 Congress Passed paea. As consequence of the legislation is nearly broke. But t still to the broke even today it delivers mail to every address the United States and delivers six days per week at less than half the cost of mail and other industrialized nation. As a matter of fact, we looked at england, england is. 6 of a pound. Its a dollar a letter. There are no discount. I think the discounteds are appropriate and taken whole Postal Service everything is operating properly and needs to be some adjustment to save this grand institution. Congress needs to legislate to remove the burden of Health Benefits prefunding. That and few other changes they can continue to provide excellent and universal service to the american public. Individual Mail Processing plants and post offices should not be judged in isolation. They are a necessary part of the universal service networking. Like the point out that over 250 plants have already been right sized. Were to the point now where the more right sizing that we get, the more the mail is delayed. In other words, if the mail is delayed two or three day, by going other plant and getting to the point where it becomes loses the value to the customer and we lose the opportunity to keep the customers that we have now if we keep right sizing. Right sizing is not wrong. Its not inappropriate as long as it doesnt damage the product. The product needs to be universal service overnight or two days at maximum. Small officers were the mail is going is just as important where the mail begins. Without the networking none of the networking pieces will work. All the pieces fit together. Cut backs due to financial pressure cause a severe cut in service. The situation will only get worse if postal manage system permitted to course. The could be as little as 46 million. Although this may sound like a great deal of money. Its only about poe l revenue. More than open mystic cost savings are build on retick lousily high activity increases. Im sure the member of the committee have seen numerous press account as i have that report strong complaint from postal customers by about delayed mail because of the networking consolidation. We received an article today about the fact that corporations finances have been damaged by delay mail. Their account receivable are not receiving the money in a proper time frame. Mail is being delayed more than the Postal Service thought it would be. When the Mail Processing facility is closed. Its stoant a back to the original processing. For an on time delivery. In places they try to discourage. It mailers cannot do that they cut off mail and delay it a full additional delay. They delivery standards where the Postal Service is intended to delay mail one or two days the actual effect is greater. The Postal Service plan to deliver tuesdays mail on wednesday or thursday. Often it doesnt get delivered until friday. Mail intended for delivery rate in the week is not being delivered for the following week. These are unnecessary cuts and sf to the public. Congress should require it provide overnight delivery of first class mail and local delivery area. Congress should reject the proposal to create a new class of business mail. The congress should not require the changes that postmaster general is asking but allow it. Or what theyre going to unveil next year. Thats why we are careful and addressing the legislation now. Lets get this done. These guys can plan what their going 0 to put in the system. We continue want to if we can d then a lost 20 volume. In a sen we would have 20 of the letter carriers in other words there would be even though its not allowed on the current collective bargaining. 20 of letter carriers would have nothing to do and 20 of the volume wouldnt that be true . If we lost 20 of volume. It would be devastating to the finance. I want to understand from labor stand point if we want to maintain the maximum number of efficient workers in retail operation, and carrying the mail to every point in the nation, the maximum number of people being used is based on the maximum volume. Isnt that true . Thats true. Another means to help reduce the work force to match the current volume and keep the price low or as low as for your union and all the other training. Of course thats what has been going on for the last ten years. The union reduction and productivity increasing in consolidating the plans. Okay. When you sort of sneered a little bit. Just a little, about the money savings if indian correctly what youre saying is you would like to have an active role. Youre not objecting to the postmaster finding ways to deliver the same amount of mail with lower total costs in maintaining that volume. Well, it may be done in lower labor and i did nation. Lower cost. We have done a lot of that in the last contract. We saved them 3. 5 million. I talk about raising the rate im not talking about 120 . I think i would say just as much as i want to just look at or even if you did all of the maneuvering you could do under current law it would still be on 4eu6d billion on revenue you are losing more than 12 readjustment of retirement. It to me thats 20 . You have to get it from somewhere. If you dont get it the American Association mailer you have to get it from somebody elses mailer. There are reductions were talking about here in refinancing the longterm Health Insurance for the retiree. Right. Talking about all of that is on the table. Absolutely. It would not throw all the cost save pings. Okay. I want to understand the point i was making. Hopefully all three of you are going agree. The last desirable part of any reform is the rate increase that drives down volume. Is that agreed . Thats the last thing you really want. If you can find savings without incoming cost savings you can find savings without reducing those things which drive people to use your service. Thats the best solution. Correct. It would also include the fact not slowing the mail down. It would drive the committee is very concerned about all the quality of service. The quality of sf. We want to find it and make sure the final legislation provides the guidance that is going assure quality of service. Understand i flew to alaska and i understand their need for a certain type of delivery. They are less concerned about speed. Others are more concerned about time perhaps than whether they can get a can of coke or case of pepsi. A mr. Ranking member,ic it would be better when we pick you up when we come back. I want to thank you you all. Well stand in recess until after the last vote. [inaudible conversations] i was intrigued weve had the discussion before and ive been very willing to give you that jurisdiction if we can. Whether we are working on a government wide attempt save in Health Care Cost. The question i have if we were again, ill be back in a minute, im sure. If we were to give you that authority, allow you to do it, and essentially give you back both your prefunding would the federal government be off the hook in if so how would we eliminate the liability iflet say twenty years from now there wasnt enough money and ultimately people retired postal workers look to the federal government as the bailout. You might remember the railroad retirement. We, mr. Chairman, we are put together a proposal on the health care. What we proposed we would take our plan over Postal Service wide, the key to success that plan would also be able to be recover the retiree. We had discussion with the union service. Theres been discussions that e tried to organize that. Because there has been an concern for the employee not from my perspective, were okay to as long as we get the saving. The savings which is key to us. It. I could put a chart up here. Sure. Yes. If i can explain this chart is the key to thed billion savings. If you look on the far left, you see that representative represents the average Health Care Cost for 65yearold and older on Postal Service retiree. We pay 70 . They pay 30 . If you take a look at the con ciewnt bar on the right, the largest bar. Thats represents the where we are from the funding perspective right now. We have done about 49 billion in the bank with another 46. 9 billion. So 96 billion. We are required to make this we are required to make these payments because this is the most affordable plan that you can get existing in the system right now. The next column over. Im going to cut you one sec. Its at least under consideration to move the entire federal Health Care Health care benefit to one that would put medicare in a position as you were talking about doing. Thats excellent. If we do that with the entire federal work force including postal workers, if i understand correctly it will take a substantial portion if you a, b, and d we pay for everything now. The mailers pay for the postage money. What happens is the farthest hndz you can see we would a small surplus. We would have completely prefunded e. G. Well followup more on that. I i want to make sure indian. Our committee controls the federal work benefit. We are working specifically at the rehabbing member here. I know, he would chime in positively. We are making sure federal government on behalf of federal employees do not pay more or less than lockheed martin, ibm or private Sector Company. Currently as you have said, and we factchecked it. The federal government is more generous to the savings not of the federal worker, necessarily, but of medicare which means were not properly standing. As you have known since the 0u78 all workers paid in to the system. They are fully vested. Mr. Davis, are you ready to go . Its my. Thank you very much, mr. Chairman. Let me thank you you and the Ranking Member for moving this to the point we have actually gotten legislative initiative to take a good hard look at. I want to thank them for being here and testifying. We talk a great deal about the quality of service that is provide. Let me ask you, could universal service be may be contained when the Service Standard requirement are a created through unilateral are done by realizing of the networking that is mail networking and theres the claim that we lose 25 million a day. Is that an assessment we are pretty comfortable with . Thank you, congressman. Let me first of from the on the sf standard. We measure first class mail, commercial periodical. Our people were doing a tremendous job and right now everything we measure is showing us an all time Service Level. Thats from taking the mail all the way through delivery. If all the consolidation we have been doing the people have been doing a good job. One of the things for next year we are looking at the system to figure if theres a way we can maintain current Service Standards and continue it make the consolidation to absorb in the excess capacity we have. Thats the balancing point. No final decision has been made on that right now. We think that as we run through the first set of consolidation and we found the Service Level held high. We check it with the customer and both send mail through the blue mailboxes as well as the commercial mailers. As far as the 25 until a day. Thats a number we have used based on the fact we have we had the loss associated with the prefunding. If you check today, this year were going finish our finances approximately just approximately about a million s better than in the beginning of the year. We had revenue increases especially in the package business. We have also been able to work and take advantage of the negotiated contract with mr. Duff if i and other Union Leaders and able to reduce the rate of pay with the employees. So thats helpful. So its a little less than the 25 million a day right now. Thank you. Thank you. Let me ask you a little bit about fiveday delivery discussions that weve been having. Have you asked for an updated advise i are opinion on the savings of piewfing to a fiveday moved delivery . The last time we had the official discussion with them was last year when they came out with the savings statement of 1. 7 billion. We think its a little bit higher. There have been other adjustments made, as you know. We said we would deliver packages especially medications on saturday too. Are we currently losing money on saturday delivery . Well, you could when you take a look at universal service you could look at pretty much some places you always make money monday through saturday. And other places as far as it is to goat place youre going lose. From a fairness perspective, thats why we have made the it on saturday. Its the lightest day of the year. The lightest day of the week. Its the day of the week where we are fewer businesses open. In order to maintain universal service to hard to reach places across the country. We would go with saturday as standard for everybody. Well, let me just quickly, mr. Duff if i. Continuous decline of mail volume, do you think that eliminating the postal monopoly would create a serious disadvantage for the Postal Service . I think it would create a serious disadvantage for the american public. Keeping the monopoly on the mailbox is what keeps the Postal Inspection Service able to follow through and investigate with lost mail and what have you. Other people have routine access to i think that would key or it your the Postal Service to have the universal Service Needs that right. If it doesnt have that right. That will deor it rate very fast in the country. Thank you very much. Thank you, mr. Chairman. I yield back. I thank the gentleman. We go to the gent gentleman from texas. Than