strategy. .. attack the enemy strategy, and i think as look at our mutual interests, it is in our interest to counter north korea strategy whether its nuclear, whether it's, you know, anything that they do diplomatically, their

blackmail diplomacy and the like. and i think i agree with you that a partnership is needed to do that. so my hypothetical is, in a strengthened partnership would we be more proactive and could we attack the north strategy, that is certainly continuing, to create and stability in northeast asia. >> days, whenever i listen i learn new language. now seung-jo coming out so often find i admire your wisdom. thanks, dave. >> where to start with north korea? it's not a government in a sense, and i'm telling you things you already know. you have served their much more than i did.

it's a government unlike any other government in the world. it's desperately hard to deal with and they are more -- they are more of a criminal cartel holding half of korea hostage. nobody, we criticize the chinese for valuing -- we fall into the same category. defeating their strategy in one vulnerability is, what's it called, 05 course on the, the luxury goods? 39. sometime in the past, we sanctioned boggle delta asia and that had the effect of driving up the supply of hennessy brand cuban cigars and other things to north korea. and it caused a definite reaction. i think we scared ourselves and

we effective backed off of the sanctions. i don't have a good answer to your question, hypothetical or not. the other thing that i think does not get the attention it deserves is what else is going on and what north korea's nuclear program. north korea and a.q., from pakistan to nuclear proliferation into the room of an entrepreneurial enterprise. and much of it still goes on. a reactor in city was destroyed that was of north korea design. a reactor in iraq was destroyed. that was of north korean design. north korea has a habit of dealing with not only rogue regimes but with rogue nonstate elements. and the fact that they have a proven record of selling anything they can sell in order to get money ought to be of a

concern but every time korea does a nuclear test, he used to be every figures, now they have broken that pattern. we make protestations of that getting serious on counter proliferation and somehow it just drifts away again. one of these days we will make up and find more than one new member of the nuclear club, and that would be something i think that if we really, if we found we were we could really clamp down on both seaboard and overland proliferation of nuclear material and designs, that would be one way where we could defeat their strategy. but i wouldn't look for that anytime soon. >> any questions? go to the line, please. >> thank you, general, for clarifying a lot of issues in the complex relationship of

apartheid arrangemearrangeme nt. i would like to make first clear, general jung's presentation, that the rok-u.s. alliance is the bedrock for the future and koreans are eternally grateful for you as for what they've done to the korean war and after that as well. in this relationship of apartheid, even with this historical disputes between japan and korea, some things americans side tend to overlook. looking at it from korea inside, america, the big brother dealing with lesser problems of japan and korea. south korea feels that if we have been treated like stepson, stepchild. 1907 there was a memorandum which united states conceded to japan that create would be

henceforth under the japanese influence. which eventually led a few years later to annexation. in 1945 at the conclusion of world war ii, united states by in my view, a historical calculation, eager to involve soviet union to violate their non-western treaty from japan and defaulted themselves so will have american soldiers would bleed a little less. not only gave in to some external demands for drawing of the 38th parallel, actively pushed for it and helped to create that division that's now reaching 17 years now. and the korean war took place in japan handsomely harvested great

economic benefit, supplying war materials, devastated japan's economy, was given a lifeblood on the blood of south koreans and north koreans. so, you know, take a position. president obama asked the prime minister, president park to sit down and deal with each other. somehow work it out so that they could be good friends to all those. i think the u.s. should do a little more than that. i think u.s. should do a little more active persuading of japanese side to see how actually it's been grossly unfair, fairly unfair to maybe both but understand korean side as well. if there's a way to i think it

was pointed out in previous paper presented as well, how this also has some bearings of what you should do for korean unification. this is a point often overlooked. it's not some historical -- [inaudible] only gives america headache. america has been in part an active participant in the making of this historical animosity. the solution of which requires a bit more active involvement on the american side. thank you. >> thank you, jay. >> points well taken. i have no issue with the korean view of korean history.

>> mike? >> you mentioned the american viewpoint of buzzwords and where our policy is. what is the american definition of rebalanced? what do our friends and foes in the asian pacific defined the american house of rebalanced as? >> the best definition of rebalanced i think was the original one, the one that secretary clinton published in foreign policy. the problem, one of the problems, is that the only visible action that people see within the rebalanced are the military imaginations over okinawa, guam, 2005 in the

marines going to be pointed like a dagger at the heart of beijing and all these things. it's the only matter of discussion. so it puts the military in the unfortunate position of being perceived as not only the lead on our but the only part of our policy which then works to the tremendous disadvantage of the military. we need to do, we need to get much more active about promoting trade deals. we need to get much more active about promoting business. we need to get much more active diplomatically and politically so that we can talk about more than just ships, airplanes, and troops. the military is an essential part of our policy, but it's not the only one, and it can't be perceived as the only part of

our policy without great damage. >> larry? >> i want to go back to the question about history. i won't go into a lot of details, but it seems to me that u.s. policy on this japan korea issue -- history issue needs have a stronger element of what i would call tough love towards both the japanese and the south koreans. the target of tough love, it seems to me, would be on the japanese side, the history revisionists who are growing, who are exercising more influence in japan today. target on the south korean side would be those south korean

officials and think tank people and others who advocate and promote a policy of what i would call total confrontation with japan, criticizing japan on every conceivable issue they can think up, challenging japan on issue after issue after issue. an example of that being what recently went on down in the capital of my present home state, richmond, virginia. seems to me, the u.s. needs to be expressing its own unhappiness and directly challenging these elements in both countries. to tone it down, to back off. the kinds of things they are

doing and hope to do more in the future. we have not done that, and i think because we're not done that, and there are many things we could do by the way which i don't have enough time to detail now, but by not doing these things, this issue has gotten worse and it has approached, as general gregson pointed out, a point of really debilitating security and military cooperation now among tokyo, seoul, and washington. >> thank you, larry. anyone -- grace, please. please line up. >> hi. my question also gets to the historical discussion. and that is, do you think united states should specifically

pressure japan to be more germany like in apologizing what happened with world war ii? after all, it's korea has suffered far more from what has happened because of japan, not only the colonialism and the aggression in world war ii, but it was korea that divided, not japan, after world war ii. and that makes it like jeremy, i believe was the body. korea has paid a huge price for what japan has done and for how things settled down after world war ii. >> thank you, grace. ben? follow-up question. >> i would like to ask a statement to general jung.

i grew up in korea during the korean war era. at the time north korea, it only major enemy. to care and then to fight. so now it's time has changed. nobody want to -- korean peninsula you have sticking for peaceful unification. then the great influence of both korea and american society tried to been on basis of military group their own interests were specific. they were willing to accept north korea as partners in korean peninsula to coexistence. american military grew. they have great influence

politically, government or society. they have great influence. [inaudible] coexistence in korean peninsula. that's my question. >> thank you, ben. okay, general. >> grace, i said it's not a comfortable place for americans to be put in the middle of these historical issues because we didn't live them. they have no objection to agree working at historical issues with japan in whatever method korean and japan wants to work at these issues. my objection is when the historical issue becomes the only conversation, when there is a profound need to work on matters of mutual interest, not only in the region, not only model focus on the peninsula on north korea, but the whole range of security issues i tried to

offer in my remarks. and a second question, not sure i got all of it, but i heard coexistence, two nations on the peninsula. was that part of the question? >> american military grew. they're ready to offset north korea is subject to coexistence. [inaudible] >> go to the microphone, please. >> no. north korea is a major enemy. doesn't matter if korea or north america military grew bigger doing good job as america grew. but now they have the role changes. it's not politically, but as a military group, general jung say as long as they are not posture they can coexistence. but one of the building,

blocking blocks, to peacefully in korean peninsula i think it's military group. they are active or retired. so i want to know as lifetime of american -- [inaudible] willing to accept north koreans, kim jong-il and ruling party at the core -- korean peninsula. coexistence, partners. >> no. >> thank you, ben. >> that was a very short answer. peter, do you have something else in your mind? okay. john, all the way from new york. >> first for general gregson, and then the second question for both the generals.

in the unified korea, to the united states, and should they, make assurances to china that they will not move or build military installations up a the 30th line? and the second question is, this september the inchon area, will hold the asian games and the north korean athletes as has been reported in the press will participate. so how do you address security concerns when north korean athletes will participate, in comparison to when north korean athletes will not participate in such a major international gathering? thank you. >> i would defer the hard question to the senior general here. on the question of what the u.s. role in the unified korean peninsula would look like, that

depends an awful lot on the nearest neighbor, china. and a corollary to china's the valuation of stability, above all other things, is u.s. absolute lack of success in getting china to talk about anything other than the current situation. so we are left with one of these, one of these things where everybody, republic of korea, the united states, other countries have some idea about this, but absently no ability to plan together on it. so you can postulate any number of scenarios about how korea unifies, some more adventures than others, what would happen after that will depend on the situation at the time. i don't think there's any way to

make a prediction on what it would look like. >> general? >> your question is about the inchon asian games? >> correct. >> the basic principle of the reunification of korea is a kind of peaceful unification. we do not want war. we oppose war. so if they like to participate in asian games i believe korean government will welcome them. korean government, government of korea will support them. in a course of going to reunification, i believe we need more contact instead of hostile act of these each other, we need more contact with each other.

thank you. >> thank you. >> that was a great that general jung brought up about contact. for all of the criticism over i believe it was -- the case on and are so complex, i can imagine how under any other circumstances we can get so many workers from republic of korea inside north korea, and that contact has to count for something. i think -- [inaudible] right. the next great hope for penetration into north korea is the proliferation of mobile telephone devices. maybe that will help, but as you all know better than i do, that is a tremendously closed and controlled society, unfortunately. >> okay, ben.

>> general, you say the short answer no, then not mean they not supposed to do peaceful unification in korean peninsula. so i mean maybe definition, specific problem? military group interest problem? still not ready to support peaceful unification in korean peninsula. so that can be one of the building blocks for the peaceful unification in korea and asia, don't you think? >> i can imagine the circumstances but if the republic of korea can establish and negotiation shall with the leadership of north korea, that results in a peaceful settlement, i'm sure the united states would go along with that. but absent an exploration of what the other circumstances would be, if your question was are we willing to count, let's say, the north korean regime

remaining in power, considering what that regime has done to their own population, no. when we get into north korea, i think the world is going to be profoundly shocked by the damage that's been done to the population there. i mean, we get stories from the periodic defectors that are just eye watering, and to agree a priori before we know how korea is going to be unified that we will count the coexistence of regime villages take us right back to where we are now, no, that would be my vote. >> joseph, do you have any questions? joseph from osv. it's really uncommon opportunity

asking to great generals questions. >> this is for general jung. what is the korean perception of the pacific rebalance? >> would you like something slowly? [speaking in native tongue] >> thank you, joseph. you made a very short question but it is very difficult -- [laughter] -- to answer. short answer. we support the policies of united states.

we usually have a very close coordination and dialogue with the government of the united states. so i don't believe that is appropriate as a civilian. [laughter] to say about the policies. spent i think your answer is supporting what i said that we haven't explained this well enough yet. we are not following up enough on it yet, that we need to do more. we need to put more visible activity behind our rhetoric on this. >> plus the generals are now civilians. >> no, but i'm so comfortable with the united states having more emphasis to aid pacific

region. >> thank you. larry, please. >> let me just say in connection with korea, there are a couple of things i think that we can clearly point out as an element of what can be called u.s. rebalance in asia. although i think that term really is inaccurate, and i wish it had never been used, frankly. we never really withdrew from asia. we have, however, made some changes in our military policies and dispositions, including changes related to korea. and i would point out a couple

of things which i think are very important in relation to korea itself. number one, the conclusion an announcement a year ago of the counter propagation agreement between the u.s. and south korea. it seems to me one should not underestimate the importance of the counter propagation agreement in line with what general jung talked about earlier in terms of north korea and propagation dangers. to south korea. that agreement in essence is an amendment to the 1953 mutual defense treaty. add that it specifies more realistically if you will, or more specifically a particular type of north korean armed attack on south korea.

and armed attack is the term around which the mutual defense treaty is centered. and also the agreement lays out the rok and the u.s. devising specific counter actions in relation to any future north korean provocations. so this agreement is a big change and a very important change. and what it means in terms of history is about north korea, for nearly 40 years enjoyed what i call a free ride, in terms of being able to commit provocation after provocation against both

south korea and the united states without any fear of retaliation. .. and i was very happy to see that. this is something i've talked about another forums for quite some time.

to see b-52s conduct in exercises near the korean peninsula and to watch the way i believe those exercises shut down the north korea grad in april of last year. i think frankly was every balance was needed and i think does fit that definition. [inaudible] >> yes, lieutenant gregson, thank you very much for your comments. my question is addressed to both generals. so part of the seoul tokyo washington entire lateral partnership and appointed mutual interest may be north korea's human rights violation. in a speech by ambassador rice last or she mentioned that the leak between human rights and

security is obvious, it's natural, it is they are. this that violate human rights of their own, people within their own country are most likely to be difficult partners to work with on security issues. she specifically mentioned iran and north korea. as you mentioned earlier, you recently came out with a report finding systematic growth symbolized red attacks against the civilian population amounting to crimes against humanity's, which washington, tokyo and seoul all voted in favor of all the findings and recommendations. now it seems there are rumors that the six party talks may reemerge for whatever reason after the coi findings come after the provocations, the six party talks might reignite. so my question is in the backdrop of the coi findings in

the link chain security and human rights, do you think the u.s. or korea should move forward in six party talks about bringing up human rights in any security discussions about lateral, multilateral discussions? thank you. >> thank you, daniel. >> from a u.s. if, i think that we should bring up human rights more often than we do. not just with her at korea. it is who we are. we have a democratic government just like the republic of korea. if the administration doesn't bring it up, our congress are laboring to. whether we want to make this a centerpiece of the six party talks or whatever that would be more of a tactical decision, but

we -- we need to make sure that this is on the table whenever we are negotiating with these folks . >> having dialogue is always better than fighting. so, i support therese m. the six party talk. you mentioned about the trilateral club ration among korea, japan and the united state. a military perspective, those kind of cooperations is very beneficial for u.s., korea and japan. but to have that cooperation,

and there are some thing to solve before we have the cooperation. it is a kind of historic issues as we discuss as a whole. >> thank you commented now. jay. >> we are discussing the concerns. i was going to hold a come of this since we have time cards are relatively minor questions. one, the defense minister kim jong when it is a big departure from the past in case of any provocation from north korea, major or minor, south korea will react, not just proportionately, but even disproportionately going to the roots of the provocation. it has been bad and it has been said that because of that there has been some restraints on the

north not to do that. but recently, there's soupy further testing of the minor provocation instead of 200 rounds, two rounds. instead of 400 shots, four shot and so on. so, where's south korea and military posture in reaction to north korea's provocations brown a rant? and second question is, militarily dealing with her at korea, the main problem is lack of intelligence. dealing with north korean military must be looking the tory dark project in a black box in a dark room at night and we know very little. but whatever policy we have bush, vis-à-vis north korean military, there's uncertainties involved from the lack of intelligence. sort of lesson the confidence

with which we can push our policy and comment on that. >> thank you, jay. >> your first question was about our reaction to the north korean provocation. you are right, you mention that mr. kim jong when expressed a clear policy how we are going to respond to the north korean provocation. but i don't believe it is the opinion. it is the whole policy of the republic of the korean military. as dr. stubbs expansion --

niksch mansion in the past, when north korea made any provocation, our interest was -- was two factors. first one is how we are going to deter the further provocation in the second one is how we are going to de-escalate the situation. but if we have too much emphasis, north korea has the freedom to have provocation again. so as the chairman, we should address decisively if they made any wrong behavior, it should

have.com the clients. terrorist policy. do you understand what i mean? and it could be the answer to your question. i don't believe it is wrong. the iraqi military is still respond to any decisive way. >> thank you. >> comments? >> just in general, i am really glad dr. niksch brought up the provocation response policy and capability. it was long, long overdue. i don't remember all of them, but the attack on the korean cabinet and rancor come in the on the house on the u.s. side, and be sure to put low, shoot and from the ec 121 reconnaissance airplane, the

murder of our nature are on a face. it is impossible to ask republic of korea or the alliance not to respond to these means because that just invites an escalation. we stop at the china 43 sailors killed in instead and was followed up with the shelling of più ido. this is nothing than any country can put up with. and we have the ability and we need to exercise it as dr. niksch mentioned. we have to know where the artillery came from. we have an ability that filled with the china and. we have the ability to track the submarines. we seem to have stopped for the moment, the operations forces into the republic of korea, responding doesn't cossacks collation. a lack of response in my mind

causes escalation or invites escalation. >> well, thank you very much, ladies and gentlemen. the meeting is adjourned. in the back we have wine and cheese. let's go have a good time. thank you very much. [applause] [inaudible conversations] [inaudible conversations] the maximum news out of

washington, secretary of state john kerry today announced to testify before congress about the benghazi terrorist attack against u.s. consulate. upon hearing the house government oversight it can make their life that released a statement that reads today the state

>> when i'm visiting the little town of troy, when i would visit running him, i saw signs that said white man, colored man, white women, colored women, white reading, colored waiting. i would ask another, asked my father, my grandparents, great grandparents live. davis said that is the way it is. don't get in trouble.

for one day in 1855, 15 years old in the 10th grade i heard about rosa parks. i heard the words of martin luther king jr. the words of dr. king inspired me to find a way to get in the way. some of my brothers and sisters and cousins went down to the little town of troy in 1956 to the public library, trying to check out some books, trying to get library cards. we were told at the library and at the library for white only and not for collards. i never went back in july 5th, 1998 for a book signing of my book, walking with the wind and hundreds of blacks and whites citizens showed up. find a lot of books, had a wonderful reception. the end of the book at the end

of the reception, they give me a library card. that may not sound that important, but when people tell me nothing has changed in mississippi, change in the america south, i stay calm and walk in my shoes. >> that is a portion of congressman lewis' recent commencement address to university of mississippi commencement address. >> but if we don't step up enforcement by, the enforcement that brings the media attention. so if we are going to say, the only thing we'll relied on to make these universities and colleges do what they should be doing as for them to get a bad story. first of all, that is a lot of

victims. you know, that to me would hit depressing conclusion. so we have got to figure out some way to up the ante that is short of waiting for another tragedy to hit the front pages. >> i would also say less a dollar amount, or folks with the department of ed. again, the changes i've seen institutions start to make her when they're immediately an investigation. we don't know if the finest 35,000 were upwards of a million. so i would almost rather see an investment in an bigger. >> in all fairness, the fines will be paid for. we've been assured a genetic government. we can't just endlessly handed out. they can fund their own enforcement. that is the justice in every survivor can back that up.

>> thursday, house oversight and government to committee to assess the future of the u.s. postal service immunization and the postal delivery industry. witnesses testified on behalf of the post service included chief information officer, james cochran and inspector general, david williams. other witnesses included executives from stamps.com, impact systems and logistics

inc. this is an hour and 40 minutes. >> good morning. the committee will come to order. as is traditional within the oversight committee, would like to start by reading our mission statement. we exist to secure to fundamental principles. first, americans have a right to know if the money washington takes is well spent and second, americans deserve an effective government that works for them. art duty is to protect these rights. our solemn response ability is to uphold the government accountable to taxpayers because taxpayers have a right to know what they get from the government. we worked tirelessly in partnership with citizen watchdogs to deliver facts to the american people and a genuine reform to the federal property. as the mission of the oversight reform committee. at this point i would like to recognize myself for an opening statement, which is in a different book.

the stats suggest one is not always fair. today we will examine reason that is by a number of private sector companies incentives to develop innovative coastal products. while the internet has been booming for the national global economy, it's been a mixed blessing for the postal service. first-class mail volume is down more than 33% from its peak in 2001 and continues to drop. however, package that is growing rapidly thanks to e-commerce. americans are rapidly changing how they communicate with one another in the postal service has struggled to adapt. however, that does not mean we are living in a post-u.s. postal service world. the postal service has a better rule in our economy and our nation, 49 connecting -- affordably connect in the most remote parts of the country. despite innovation of the postal service is important. but in an infrastructure in this

country are moving not just bits of data. the postal service and private sector companies had begun others to create new postal products to preserve existing mail volume or create new demand for mail and possibly streamline the way mail is handled. the suffers target every aspect of the postal service's current operation and improved innovations to new mail piece design, online postal, e-commerce return the two states and greater consumer targeting for advertising. today i'm looking forward to hearing by the sector come isn't discussing matters to develop new postal products and services, specifically what problems at fannie had they countered along the way working with the postal service to develop and implement these innovative products? now, if ever is the time for the postal service or embrace innovations presented by private sector come needs. private sector companies are more than willing to spend millions of dollars to test and implement new products and design that can help bring future revenue to the postal service.

in the tech community, often misused the word disrupt it and disruptive is not necessarily a bad thing. it is a change. my wife, when she was in her junior league jesus referred to the way we've always done it and that we've got to be very wary of falling into the trap of that is the way we've always done it. it comes in its continued to be shut down or steamrolled by the service bureaucratic red tape before they have a chance to get off the ground, featuring a vigorous public elsewhere to present fresh ideas. in addition i hope to hear success stories from private sector come to me is that work postal service and how future entrepreneurs and innovators can creep or remarkable about the environment in the postal service. there is need for innovation whether cluster boxes or secure package delivery for better access to postal databases like changes of address, there's many areas rate for innovation. my fear is a government watchdog and taxpayer with our reform and innovative new postal products, the american people will be

blessed in the beaufort taxpayer bailout and that is the last thing we need right now. i look forward to hearing from our panel and believe there are smart ways the postal service can lower its costs and improve service to innovation and private partnerships. i hope we bring to light today and find a way to move the postal service closer to internet speed. before i recognize the opening statement, i ask unanimous consent that their college in texas, mr. nagar bauer be allowed to participate in the hearing. without objection, so ordered. mr. lynch, your opening statement, please. >> thank you, mr. chairman. i want to thank you first of all for holding this hearing for postal products in the united states. to think our panel of witnesses and innovative individuals for helping the subject of work. in november 2013 the postal

service with online retailer, amazon.com to test on a package delivery in select markets. otherwise known a seven day delivery. the amazon pilot program is proven by the successful and is the primary reason why the postal service has recently demonstrated the ability to grow revenue in the face of the most difficult initial conditions. in its quarterly financial report released on a night of this year, the agent recorded a revenue increase of $379 million over the same reporting period last year. his third straight quarter of revenue growth due in large part to 252 million or an 8% increase in shipping a package revenue. in light of these results, we are now expanding to several other cities across the country and the agent is working to establish similar partnerships with other companies. this serves to illustrate the agency connects. positive result and builds upon

what it already does best, utilizing an paralleled in universal work that is survived -- excuse me, driven by hard-working, dedicated workforce to deliver mail to the american people now seven days a week or it's an example of integration rather than degradation or existing postal products and services and we are well served to take a similar approach as we continue to undertake the task of reforming today's postal service. as evidenced by yesterday's markup in her full committee, chairman issa puts forward misguided proposals that presume we can enhance the viability of the postal service by degrading the very services that have come to define the agency nasa and the american people. i simply do not agree we can reform the postal service for the better by eliminating the current mail ordering by mandating us wholesale conversion to curbside clusters and asking postal customers to pay a so-called legacy fee in

order to retain their dual delivery service. such proposals would only place a greater business advantage and severely damaged long-term viability. instead, we can encourage the postal service to build upon it postal projects and services in order to further set itself apart. i commend ray can never come in for his strong and continued leadership in this area and i'm proud to their -- cosponsor this legislation, h.r. 2690 innovate to delivery act. this thoughtful and alternative approach to postal reform and establish a chief innovation officer to lead the development of innovative postal products and services that fall in line with emerging information technologies and changing market trends. would also require the chief innovation officer to ensure such projects maximize revenue to the postal service. postal innovation will be a key a necessary component to postal reform, package and mail delivery.

i understand they're a variety of goods on how best to facilitate in a manner that will please the postal service on a more solid financial footing. i very much look forward to discussing issues that there would live. i look forward to your rig put an ideal but the balance of my time. >> thank you, mr. lynch. members have seven days to submit statement that we now recognize our panel. mr. james cochran is the executive vice president or the united states postal service. >> excuse me. sir david said lance's inspector general of the united states postal service. mr. will davis' chief executive officer outfoxing. mr. seth weisberg is chief legal officer at stamps.com. mr. patrick adenauer's director of engineering and technology medpac systems and chief

operating officer of new logistics inc. pursuant to committee rules, all witnesses will be sworn in before they testify. would you please rise and raise your right hand. to each of you solemnly swear or affirm that the testimony you're about to give me the truth, the whole truth and nothing but the truth? let the witness reflect that all witnesses answered in the affirmative. thank you. you may be seated. just a little housekeeping matter. it was my understanding the house will have those around 10:40 and it would be a rather long series of those. so i want to get everything covered if we can get it done by 10:40 you all don't have to sit around for over an hour while we go about and i might feel to make an earlier flight back to texas. so would be a win-win if you abided by the little timer here that gives you five minutes for your testimony peer will then come and ask questions.

your entire written testimony is part of the record and available to this committee. we will start with mr. cochran. you're recognized for five minutes, sir. >> good morning chairman farenthold, ranking member lynch and members of the subcommittee. thank you raclette mirna postal products for the 21st century. my name is jim cochrane an executive vice president of the united states postal service. oversee the integration of technology innovation in all aspects of our business. during my 39 years at the postal service have developed a broad perspective on the business that would serve to market place and customers. this is essential if technology now places a foundational role in virtually every postal product we service. the rich and technology so excited and oftentimes also with potentially disruptive effect. effectively tracing the emerging disruptive continuum is a responsibility in a matter of survival for the postal service.

postal service operates the largest technology infrastructures in the world. it's ported and codeveloped by the ministers are to technology companies as well as many small business peppered russian sites. our goals are simple. everyday we focus on how we can innovate technology and new partnerships to generate revenue, reduce expenses, and a world-class customer experience. though our goals are simple and business model is complex and diverse. for nearly 40 years the postal service workshare program had shared the response ability for efficiency and innovation. this is guided by the prophets and ran are enhanced with our partners are profitable enjoy customers receive an increase value proposition . mail service providers, transportation companies and parcel of the graders all play a vital role and together we built an industry around the market and. disruption in the highly competitive package market is an

excellent example of how customers demand above did we adapt. german by e-commerce and free shipping there's been a traumatic shift to more ground-based solution. personal select is an innovative product to enter the market demand. if the workshare program that leverages the world-class processing and transportation network of consolidators such as logistics with the unmatched reach by delivery network including a great customer solution. they also enable a competition where ups and fedex are traditional competitors and provide network logistics and the postal service provides the last mile service, creating a win-win for shippers and consumers. ..lves same day delivery, sunday delivery, parcel lockers, delivery customization and constant realtime tracking. customers are demanding these new sflss without an increasing cost again we adapt or face

irrelevance. make mail more valuable engaging and interactive through intelligent mail bar codes and financial incentives for mobile optimize mail we're creating both digital reflection for hard copy and a digital action for response. we're building new digital products that will leverage our brand of privacy, security and trust. we welcome creative ideas from individuals, companies and entrepreneurs regarding new business concepts and technologies. our unsolicited proposal program provides the public a venue to submit new technologies, ideas, to advance the mailing industry. in order to be adopted, these ideas must align with the postal service mission, have a clear path to profitability and generate postal revenue. and they must not damage our respected brand or conflict with existing products or services. the postal service receives ideas from a variety of sources. some of these ideas are not new concepts. some are already being pursued intern. the role of the postal service and american life and business is changing at a rapid

pace. citizenthe citizens are using technologies to communicate, transact business. ever-changing technology presents the postal service with opportunities but the success is dependent on how fast we can evolve. we remain guided by our imagination and commitment to providprovide the value and sere upon which american business and consumers depend. they are in the legally restricted business model. we have the responsibility to provide universal service for the nation that do not have flexibility to efficiently carry out its mandate therefore we need comprehensive legislation to return us to financial viability. such legislation should provide clear authority to offer products and services that allow us to take full advantage of the infrastructure. further we urge congress not to make the postal service to ask

for more difficult placing further restrictions on the ability to innovate and compete. the posta postal service compett we also compete fairly consistent with our legal obligations. mr. tremaine we look forward to continuing to work with you and the committee to accomplish reform legislation and to continue to deliver innovation to the american public. i would be pleased to answer any questions you may have. >> mr. tremaine -- could you bring the microphone a little bit closer to your mouth. members of the subcommittee proposal industry has a long history of recommending the private sector and others to spur innovation. in the airline industry's postal n. .-full-stop a related advancements and handwriting recognition technologies. the innovators and electronic

postage starting and mail-order industries and the postal service imposing the zip code across the country to the benefit of businesses and researchers. innovation is more important in today's age of the digital globalism and the ungovernable internet has changed the world but great opportunities and enhanced capabilities exist alongside the awkward systems and unfamiliar risks in the listed logistics systems and in this environment the job of the infrastructure like the postal service is to support a citizen as they try to compete and position themselves but it also takes care to assure the market forces prevail and are not underlined. to continue in this role understanding the changing world and rapid adaptation are increasingly critical and diverse the postal service faces the tricky challenge of modernizing traditional products

as it provides support services for emerging technologies on the ability to innovate and embrace the innovations of others. as a result of continual strengthening of the postal posl service's process for innovation will be needed to input is seeking to understand the frustrations into supporting emerging needs of people and commerce. the company has a strategy for fighting the poin the point of s and the staff to join the innovators in that navigating huge postal structure and remain with them until the proposal is resolved. for assessing the financial viability of the proposals developing the ability to engage in the rapid prototyping of the new products and operational innovations and protecting its property and respecting that as others. when pursuing innovation to partnership in the private sector and the government are important and bringing the new

ideas in the risks and leveraging the cost of the research and development investment. there are several opportunities where it seems particularly rich. support for e-commerce and the government transactions at the front and. for the instrument at the back end by assisting with the packaging of the shipment of parcels using the micro warehouse and virtual post office boxes and platform services to help small businesses and innovators with logistic shipping solutions and providing seamless digital and physical access to the postal service network for the public and the commerce by linking together its website and post offices into digitally enabled carriers and conducting digitally analysis of the vast data generated throughout the network through the operational

efficiencies, revenue ideas and business intelligence. intelligence. together these opportunities can tighten the integration of the data streams and the supporting matter. the internet from a smart devices, search engine stand at the cloud storage have laid the foundation for the changing world, an aspect of what will come next on top of the foundation will likely be an ecosphere that continues to be ungovernable and chaotic within the changes, learning curves and substantial creative production. the ability to propel progress in these areas will depend in part on the competency of the postal infrastructure to support american commerce and citizens through the coming era that will combine the new technologies that include additives manufacturing also knowmanufacts three d. printing. the internet links the ubiquitous sensor nets and augmented realities and smart

devices with data analytics, advanced robotics that incorporate machine learning and nanotechnology. the world posts were slow to grasp and adopted the role in the early phases of the digital age and were partially constrained from doing so. the next phase of the technology will likely be more disruptive than we see today. the postal service must be agile and to develop an intuitive sense of the changing role added challenges facing american businesses and citizens. the key aspect of the social service ability to transform us to include stronger competencies for embracing and implementing innovations. thank you mr. chairman. >> we will now move to the private sector folks. >> thank you mr. chairman. innovation. it's in the title of today's hearing. you have heard it spoken about at least a dozen times and in the earlier testimony.

i feel the need to go off script and a movie is the only thing that comes to mind. it's one of my favorites actually, it's the princess bride and there is a scene where he's caught up with a band of criminals and there is a mastermind and he keeps using the word inconceivable when all of his plans do not go as planned and he looks at him and says you keep using that word and i do not think that it means what you think it means and that is a little bit how i feel about the word innovation. i don't think that it means what you think it means. the reason for this is innovation at its heart is disruptive and it destroys things. it kills jobs. if you think that is a bold statement, consider the fact in

1926 the index was formed and the average tenure at the time of the companies was 60 years. today it is less than 15. in fact since the inception there's only one company that remains on the index ended at the general electric. one single company. all the other companies are gone but for all of its destructive capabilities there is almost an effective pursuing innovation is indeed the narrow path of putting off old business models and securing the cash flows and grasping for something that is uncertain. the promise of innovation comes in the form of new jobs, new

marketplaces for every job, every company, every market that is destructive through embracing innovation, two more of them pop up in its place into the markets and ideas and concepts at work forces that simply could not have been found and that what happens in that process is the incumbent usually fail, they go the way of all of the other companies on the s&p 500 so as we talk about innovation we have to understand that truly increasing it means a fundamentally different postal service. it means that in ten years it looks almost unrecognizable from the postal service today but that doesn't mean that it's worse off. in fact, it doesn't mean jobs have to be destroyed in the postal service. it means new ones can be created. but make no mistake.

innovation will come. description will come and in that regard it's a bit like junk mail. it's coming whether you like it or not. so as we talk about innovation and embracing it, we need to understand that it means hard a fundamental chord changes to the business model and embracing it means instruction, but it also means new markets, new jobs and opportunities. thank you. we are internet-based software that allows customers to print their own postage using their existing computer and printer. stamps.com serves over 500,000 registered customers primarily small businesses. in 1999 we became the first

company to offer the software only solution enabling the customers for the first time ever to print real postage from any internet connected pc and the printer. years ago pc postage accounting for one quarter of a billion dollars of annual postage sales and last year it accounted for over three and one quarter billion dollars. stamps.com posted joe was more than 35% year-over-year. that is consistent double-digit growth every year even through the heart of the recession. virtually all of the priority and express growth in the recent years has generated through the postage industry channel. the recent study showed revenue through the industry channel costs 2 cents per dollar of revenue compared to 47 cents per dollar through the u.s. retail

outlet. pc postage produces secure sender identified mail which is important for security against biological or other attacks. it provides customers with cutting-edge technology without the postal service having to pay for research development, support or maintenance. stamps.com has launched an enterprise services targeted at organizations with multiple geographic locations and features enhanced reporting that allows a central location such as a corporate headquarters, greater visibility and control over postage expenditures across the entire network of locations into the e-commerce with multiple stores can use stamps.com to consolidate all of the orders so that they can ship them out. they can indirectly import all of the data from the most

popular on the ite online marketplaces and automatically print shipping labels. all of the data including the tracking automatically posts back to the stores. stamps.com automatically keeps them informed, orders the carrier pickup, sends an electronic manifest to the postal service and generates a form so all the carrier does is scan it once and all of the packages automatically into computer systems. pc postage is based on a public-private partnership with the postal service regulating the industry participants. products must complete extensive testing and evaluation in the areas of operational reliability, financial integrity and security. the postal service also partners with the industry to achieve

mutual goals of improving the customer experience, increasing revenue and minimizing cost. the cio on the panel into so many of the dedicated veterans who've ably worked with us for many years deserve much credit for the success story that is the partnership between the postal service and the pc postage industry. we believe public-private partnerships are the best path forward in technology innovation as it becomes increasingly important for the future. having the postal service created some technology is not the best approach. instead, it should provide incentives for the industry innovation. this allows customers to pick the best technology solutions for their needs. we provide jobs both in industry and the postal service. every package produced is ultimately delivered by the city or a world leader carrier.

growth means more packages to deliver, more letters to the liver, more volume to service. thank you for the information to testify today. >> thank you. am i pronouncing that correctly clicks >> it gets mangled quite often. >> my radio days came back to safety. >> thank you mr. tremaine and numbers of the committee. i'm the director of engineering and technology. we are a small startup company that produces impact the future of prescription packaging. impact was invented by a 71-year-old navy veteran from a small town in 85 population. this is the vowel. this is our vowel and this is the position. we have many advantages. the most important are this is

temporary and that is not. this bottle of water is relevant, this prescription is not. for the supply chain we have more security in this than we do in this. we also have a lot more label space so it's easier to read. last it is much more compact. it's made in the united states in pennsylvania. we are adamant about u.s. production. we have another advantage and that is the reason i'm here today. the usps provides a favorable rate with what is called a machine double flat box. this is machine double and this is a parcel. it's $2.22 into the over-the-counter rate is $1.56. it'the 29% savings to the taxpar for every prescription

medication in the united states is classified as a machine double flat. realizing what we had and considering the government as one of the largest users via mail we sent opportunity to save the taxpayers money and provide a better and safer though to the post office so working with the manufacturer in news work we developed this envelope that means all of the mechanical requirements. we tested it in the fort worth, verified that it worked and we received our approval on june 17, 2011 that a piece of mail had been approved. over the next 18 months we continued to improve our product and refine it and came back to a product that looked like this, smaller, lighter, cheaper. we did 2 ounces out of this

envelope. we put a package together that we could do at 50 each second. this one was 15 permit it to be because the six per minute. we resubmitted the package plus some of the internal improvements we also wanted to test this. the packages were rejected but only the new package but the existing factor as well. this had been approved once but for a completely different reason and it wasn't the fact it doesn't be the mechanical requirements which have been like this and this committee, te dimensions and the left. it's that a box and an envelope is not machine double that's why we rejected. we were shocked we had already been approved. we went back and solicited and sent a letter to the father of

the flat rate box. i love them and use them all the time and we thought we had a sympathetic ear. we were referred back to the male standards and we got a very curt response that basically said, and i quote, thank you especially for your persistence. unfortunately the piece with its content qualifies as a parcel. if you change the contents please contact us again. if we change the content from this to this -- the entire point i'm sorry is into this, the point is this this is a better and safer because it can be sent to 29% cheaper. that's the point. after feeling very frustrated with our entire experience and we went to the post office for a reason. the post office provides value and is the only agency that can

legally put prescription drugs and a mailbox and not leave it on your doorstep. that is an important factor in the safety and of leaving drugs on the doorstep. we want to work with the post office. we begged and pleaded. we want to use the post office and it felt. we went to the private sector ups and said we will take it no questions asked because we know how many of these weekend on an airplane and get second day service at a dollar a piece. thank you members of the committee. >> thank you very much. >> today i will describe to the subcommittee how the united states postal service has partnered with intel to make ite it possible for my company

logistics to develop innovative products responsive to the needs of direct-to-consumer retailers, anany factors, distributors and providers. thank you mr. chairman and members of the subcommittee for allowing me to speak on behalf of newgistics to define the operator at newgistics, a privately held company based in austin texas able to put 400 people on payroll. we were formed in 1999 on the premise we could develop a way to return merchandise to retailers. today we are a provider of technology solutions for direct-to-consumer retailers, manufacturers, distributors and providers. our success is no small part to the postal service and its willingness to listen and work with private entity is to develop innovative solutions. more specifically we offer a national integrated delivery and return service for the customers and work with the postal service

to provide a delivery that would provide the information making the use of innovative technologies we concluded they wanted to return packages easily and make the returns more efficient and cost effective. therefore we developed a proprietary return solution making the use of the barcodes on the label. those intelligent barcodes provide us and customers with detailed information that enables our customers to manage their transportation return processing resources. as we evolved we discussed the possibility of creating a convenient process for handling returns of large merchandise that make use of the label. based upon the collaboration of the postal service, they

delivered one of the most innovative products the postal return service under which they are allowed to retrieve the parcels from the designated postal service facilities. the retrieval of the returned personals allows us to provide advanced data and customized return services to the retailers. the postal service was receptive to working with us and beginning in late november of 2001 we had numerous meetings in the postal service following those meetings in may of 2003 the postal service sought permission from the recommissioned test and approval was granted in september of 03 and the testing began in october. after two years in 2005 the postal service had permission to become a permanent class of mail. they approved on on about march 3, 2006 and we were able to implemen implement it returne

version including the newgistics in the program. the solution simplifies prepaid returns at their home and workplace and drop-off. it also gives confidence, the return to be handled viciously. in addition it parcel delivery, fulfillment and e-commerce solutions to the customers. put simply the postal service has been and continues to be a willing and important partner in the effort to develop innovative solutions that bring significant value to the customers and their consumers. likewise, they've been successful in the postal service perspective based upon the recent available data the

service continues to grow and the postal service fiscal 2013 handled more than 50 million packages and generated postal revenue. thank you again for the opportunity to testify before you today. >> normally i would ask the first round of questions. >> thank you mr. chairman for your indulgence. i appreciate that and i thank the members of the panel further help. it's been an interesting discourse so far. when i think about the future, the next iteration of the postal service, i tend to think about what they've got going on in

switzerland. one of our local companies have a system that they have rolled out where it's called the digital mail scan where i can pull up my e-mail as it arrives at the regional facility i can go on my website and see the mail before it's due up third and if i don't like what's there i can click on it and say do not deliver. so when you say junk mail is coming, not necessarily. it's not as inevitable as we would think. you can click on it and tell them not to deliver it comes of it as a sort of new iteration in the postal service that's out there, and i think that's going to be coming to the united states at some point and that is really disruptive. it would be great for the

environment because of the huge drop in the mail volume because people won't be getting the mail that they don't want in their mailbox and down here in dc at my apartment that is 90% of what i get is stuff like that and, you know, if my wife and my girls couldn't go to the sale information they get every single day i would be saving a ton of money so the volume will drop but that is really disruptive change into that is what we will have to deal with at some point. with a chairman o the chairman l committee has in mind is putting out about 1.5 million of these

boxes into neighborhoods all over america in the urban areas and towns he wants to change the addresses into cluster boxes so that even if it is 100 addresses it comes to 1.5 million if you make them bigger you can drop that to make it 750,000 but that is a huge expense even where it is feasible and once we have the 1.5 million boxes all over america how much flexibility do we have in light of the technological changes coming? putting a steel box in the middle of the neighborhood and telling senior citizens you can walk a quarter of a mile to get your mail, it is disruptive in a way, that that isn't innovation.

that is going backwards in time. that is extremely costly and efficient and it reduces our flexibility i need the lead in terms of what we are doing next. would the gentleman yield? >> no, you can talk about me when i'm gone. >> it's my pleasure. >> i'm sure it is mr. chairman. so when i think about the idea of going to the five day delivery which is another bad idea but it's popular, the president and the chairman supports it most innovation tries to tie in with what society is doing and it tries to answer the need that out there and where i live which is common

in america today we operate on a seven-day schedule. they've gone to seven days so now the post office in the spirit of innovation is going to close for two days every week? i just think that is the wrong direction. you seem like you are bursting with an urge to answer. >> you have a fabulous example of citizens in switzerland being able to unsubscribe for junk mail and the technology existed in the united states for two years. we brought the technology to the states. in fact we unsubscribed over 1 million pieces of junk mail for the users and we were able to do it through the digital delivery and even though they

unsubscribed from the volume, we can measure the intent and it is the holy grail for advertising and when we measure the intent, we can know exactly what they want and what they prefer or do not prefer. and that type of information is missing. i want to end for the customer. if taxpayer isn't involved here you realize that. they survive on the stamp. that's the way they are supposed to. i want to empower the customers so they don't have to go to any company. they can see the mail that arrives at the original postal center and click off on it if they do not want it delivered. and that i think is disruptive change and innovative change and it will take us to a whole new world and i think that would lower the cost and make it more

efficient and improve the postal service. i'm going to yield. thank you for your indulgence mr. chairman. >> i would normally come back. thank you for that. they released a two-part on the digital age and included in part the report is the idea that the postal service is expanding into the hybrid and reverse hybrid mail service. mr. williams, can you briefly explain what the services are an elaborate on why it may be beneficial for the postal service to expand into these areas?

>> we bb that the ability to print a letter at the point of delivery would keep a part of the mail out of the system and so the idea of saving on transport and fuel and crowding through the network of sorting plants would be a very good idea. in your opinion has the postal service put the cart before the horse about closing the distribution sectors? before they had a real plan to go forward in the volume of the mail.

>> i do think there is excess capacity inside of those centers, but i don't belief that it should as you said spring out in advance of things of the effect and the impact that this would be picking the timing for innovation is devilishly difficult. and if we present something that isn't immediately and braced and we've closed off and burned the ships behind us and closed off the possibility of using the other network it would be a very serious mistake. >> it sounds similar to the business model and one of the witnesses here today mr. davis, your company was a fee-based service gave customers a choice to buy test physical mail, correct? >> and if i am correct if the

model was dependent on the participation of the postal service and infrastructure. it would terminate its digital mail operation through the broad post you informed of the customers about why outfox wasn't shutting down the service and in the post i invite you and your business partner you mentioned the task shows positive signs of success and operational simplicity, but the bill didn't worfolded into accos that correct? you described your visit with the senior leadership as a mr. smith goes to washington moment where the senior leadership made it clear they would never participate in any product that would limit or that

they were immediately shutting down the partnership; is that correct? were you aware that they represented a significant portion of the volume and revenue? >> yes. >> as a self-sustaining entity that has to generate whether they have a right to choose. the postal service has been quiet on this. is there anything that you would like to add? >> the concept of people collecting aol to digitizing has been out there for almost ten years. there are other companies in that space. the approach is one where people sign up and go through what we call a commercial receiving agency that's very commented and happens and buildings all over time in the business.

that required them to go to the mailbox and pick it up but there are companies out there sustaining a business model and providing a digital image of the pieces for their clients on a day-to-day basis. >> thank you for that. although i commend mr. davis in the animated solution for the purpose of not being innovative and at the same time insist that it operates in the business mindset, which is what it was doing in this case. in addition i ask for unanimous consent to enter into the record from the heritage foundation via the postal service was right to

cite. >> with a gentle man yield? i would like to cite with you on this case surprisingly that although it is a shame to see a for-profit entity closed because they are not making a profit, i do agree with you that when this is an innovation that should be on the list of innovations at the postal service, because it falls squarely within their basic requirement, just as the stamps.com is an innovation that the post office ignored to their peril one of the things that we agree on is that a minimum the post office ought to do all of its core jobs of revenue and revenue savings first. but the most important innovation in the company is to do the job that they are paid to do well and innovative and i think we have two witnesses today from the for-profit companies. one that is still thriving and one that isn't in this space,

but they are both functions of the post office to suffer from neglect. so i share with you that in the comprehensive postal reform bill we increase the innovation on the specifics because we hope the post office will innovate within its core in addition to outside of its core doesn't cry out for a public partnership? i would say on the record here today that the job of not outfox proposed it and braced as a core function could far exceed the benefit, and i think that although he disagrees with everything i stand for apparently in the postal reform in the electronic industry that

the first from my colleague but the fact is when he talks about individual -- digital come he talks about the version of mr. davis business plan that they've gotten ahead of us on and he seemed to think that the base would be what he so often cares about the fact is that he's right. he's absolutely right that these innovations were either going to happen within the postal system or the postal system is going to miss it altogether and then be fighting for as you said its core right to decide not to participate in a business. your point was right on. >> i think that i may have an out of body experience that i'm agreeing with you lately so much and i see that my time is up. i yield back. >> thank you very much.

we both kind of get back to the regular order here and i will start with some of my questions. mr. davis, i think most of us appear no the story. you took your time to get a very passionatgive avery passionate t innovation, which i have an joyn joyed listening to. but can you and a minute or so tell us about what's outfox did and what happened in the day could tell us exactly what they wanted and what they didn't want physically, said it i is a hybrh in that regard. he is correct in that this is a fabulous idea. it should be adopted by the postal service, and we started testing it in austin, texas with the idea that we would ask forgiveness so to speak before

we ask permission becausthe aske rules and regulations are so at risk and we did so with a great fanfare, and we were shut down in that meeting with the postmaster general and the senior team, and in that meeting we had a fundamental misunderstanding of who the cost number is in the postal service. i said mr. general what do you mean and he said my customer is a sender that sends mail on the kitchen tables of every american every day and while true, that isn't where the inherited value of the postal service lies. the value lies with its connection with every single american, and so it is my belief that the large organizations and the government of which the postal services in part both do not naturally tended to adopt innovation because it does

disrupt them and so it was my hope and my business partners hope that we could test this on a small scale in the postal service but we were not allowed to and this i is the only way te can do this is if we have a safe harbor that allows them to be disrupted on a small scale and localities around the country detesting ideas. and as i mentioned before our ability to get the customer's choice led to higher value that led to the increased understanding of who the real customer is of the american people and lets you value the opportunity that are beneficial for the end user and for the company and the postal service. >> you mentioned you were not able to get your product classified as a flat and it became a parcel.

>> it was classified and became partial. >> that is more of a competitive service for the post office that i think that you mentioned the amount of postage that it would take. >> this is for the prescription of ideals, $2.22. this is the rate that is $1.56. >> but you said that they are delivering them for a dollar. >> they put it on the table for roughly a dollar. roughly the challenge we had when i brought them up was we were a young startup investing our efforts where we have opportunities to generate revenue and while we think this is a great idea and w we put a t of emphasis in this business benefited slightly from that so after a year ago we haven't putt a lot of interest in bringing this to market that we have gone into discussions and had a

couple of potential customers ups won't officially put a contract on the table until they add volumes and units and cost. but they say yes we be leaving the package. we know we can do it for about a dollar. i asked them for the record into this debate could be declined. >> i get the impression you would rather use the postal service. >> i would much rather use the post office. the post office can put this envelope into every mailbox in the united states legally, safely and securely. ups can't do that. the volume is there in the businesses there and i will take this to the degree. drugs by mail for 90 cents. 222. there's hundreds of millions of dollars on the table.

now, as the only plausible reason i can't see the post office as we want to classify it as this, versus this but topline revenue in the parcel is higher. while in the strategic plan of 2013, i got this online and what this says is the post office picks three times more money than the parcel. so the post office makes more money if they are correct. doing this at a lower cost is doing this. three times more revenue. why? it's very simple. it's easy to automate. we've proved that proven we can automate this. the only proof is that a square box in an envelope is in a flat if it meets every requirement. we've tested it.

we volunteered to work with a post office to prove it. >> we took two on your side of the aisle first so if you don't mind we will recognize the chairman and then come back to you. mr. chairman? stomach this is interesting and i will not use out of body but it's an interesting turn of events when he tells me that there is an inevitability that we are going to do with switzerland has done. now, mr. williams, i was mad as hell i at your proposal. i think that your trying to be the chief innovation office offd promoting banking within the office that is reprehensible. i am shocked that an inspector general would go from the waist

and a fraud and abus my fraud ad inefficiency to promoting a specific agenda, and i'm disappointed. notwithstanding that, the post office has every right to propose the activities including postal money orders and other items here and around the world. however i would hope in the future we would be much more than advocate with people like mr. lynch to find everything that reduces cost and allows the post office to break even to be more efficient for the customers but as stated earlier are the shippers. he proudly said i would talk about him after he left. he is never going to be my partner in anything. that's going to reduce labor i'm sorry but he's a lost cause. mr. clay and others are not.

let's go through the numbers quickly. anyone can weigh in that you are a little bit on the hot spot here. six day to five day is on the tt best interest because it avoids another three letter price increase and similar across the board, doesn't it? >> i am uncertain but -- to make looking at the $2 billion versus what the pricing increase did but even if it only seats 2 cents or 1 cent isn't it true that in fact a reduction in the cost that allows you not to have an increase in the price is more likely to avoid a reduction in the volume i think that is a very good proposition, but i certainly follow the train of thought. >> that's why the president has

proposed that. isn't it true that 91 million homes do not receive in the door delivery while 37.8 plus or minus do? that is the curb including the apartment and the condo owners but 91 million plus or minus do not get into their door. >> yes i agree. >> so it's amazing for that ratio of more than two out of every three who are already a part of the savings of not having to walk all the way to the door simply less labor and that's been proven and calculated by both the post office.

about labor savings for less than one third of americans is billions of dollars and ultimately question for you. those billions of dollars of the 15 million less than half of those to be converted escorted over $20 billion in savings into the cost to the post office. let's go through the numbers. you all agree to that whether you like it or not] as you get a value in the secure storage and in avoiding the cost increases where is the negative side of that in fact these are secure storage and individuals in the light will always be able to get to the door delivery that is already based in law. if i'm in rural america but i am

a shot in i cannot expect with no cost to have it delivered to my door today isn't that true? >> it is true and we very strongly -- we did a study as well on this topic and we felt that the amount of savings was enormous depending on whether you picked an extreme model or one that was very moderate there was a huge amount of savings. your proposal as i understand it is on the moderate side. >> we toned it down so that we could say half of all americans can choose if they do not believe it is feasible for them they wouldn't see a change in the first ten years and we believe the communities will over time rush to have secure storage of this is a really cluster boxes. but in fact the ones we should yesterday during the hearing specifically chose ones that are larger because we want to be

fair in the neighborhoods it is hard to place a box have larger boxes in the suburban neighborhoods is easy to do to watwoor four just that occurred before the neighbors. >> look for places where the model is difficult to fit into them for people with special needs. we saw that there was a waiver and a model of consideration in which we think that that is. we think that it could be a game changer and it could save an enormous amount of money. we also want to know that the 37 million that you pointed out are not designed for people with special needs or special requirements or places that are difficult to deliver. it is a historic accident and we like the fact that this imposes a comprehensive plan for the placement of those and the facilitation of people with

special needs and neighborhoods where the model cannot work. >> the fact is that the post office in my opinion is uniquely positioned to provide a postal digital delivery system as an additional feature for the fee to the shipper in other words you may not know where they live, but if i can pay half as much for digital delivery only system and then the digital deliver can choose to have the paper copy delivered and i only pay if the paper copy is delivered, that is a feature in the variation technologically

from your experience but is completely doable isn't it? >> we see all of the equipment and can take pictures of the pieces so in the active test you can get an e-mail each day telling you with an image of the actual pieces that we saw they are going to arrive in the mail box today. it doesn't get into opening envelopes but it is a first step towards getting people the digital image of what is going to come into their box. the rest is what was discussed earlier. they are paid to get into the mailbox and then if you are disrupting that you'd use the term and it does threaten a very extensive revenue stream for us. if the person declined by going

to pay half as much into the person accepts that i'm happy to pay the full boat. it could be a win-win. it would be usable by somebody for half the price. well if delivered let's just say i want a coupon or whatever i paid the full price but to the customers you're extending his options. you could also have a no delete option that must be delivered that you would take full price. those options are not available today and i've got to tell you in my local home when i'm in the district i would love to know digitally everything that is proposed to be sent to me. i have a lost piece of mail. huge advantages to that and i happen to be done to the door delivery here in the district dt and i often get my next-door neighbors mail.

i don't know what causes it but it happens pretty regularly so i take the mail and i walk over and i put it in my neighbors and shoot but the reality is she doesn't know that she's missing her mail until it shows up and i'm gone as you know weeks at a time because i don't actually live here so they lose three or four weeks and sometimes of their mail if they have a digital picture they know they didn't get it. all of these and more are what this hearing is about, mr. chairman. i want you to continue pushing for this innovation. our broad proposal has additional innovation dollars and i would like to close with this, with one thing. i was in business more than two decades exclusively and then i've been in business very modestly by comparison the last 14 years. .. modestly by comparison the last 14 years. but the one thing i know about business is the top line and

bottom line are not uniquely different. that you can increase top line, but if it doesn't flow to the bottom line it is of no value. and you can make cuts and never get to a profit. that it's a combination of the two. the post office has, at its current volume, billions of dollars of excess inefficiency that we all know can be cut. innovation, i think in the case of your product and others, innovation depends on efficient delivery. the more efficient it is, the more promising they will be for innovative products. including -- it amazes me that brown trucks go to any rural or suburban areas. i think they go there because they can't quite get as good a deal as they will be able to get from the post office if these innovations happen. so, ms. norton, i appreciate the extra time. there's nothing more important to me than to try to have all of you be part of it. and, mr. davis, i