in ensuring companywide national excellence. we are very fortunate to have someone who not only experience is what we have been talking about all along, but actually has to work on it in the private sector. let's give a national governors warm welcome to steve w. [applause] >> thank you. we appreciate it. i want to thank -- i'm from austin texas. we pride ourselves on life music. it after last nights show, i know who's king.

i'm delighted to be here today to talk with all of you about the most critical issues we face as a nation. that is the battle for talent. governor fallin, thank you for your leadership on the nga's initiative on workforce and education and congratulations on the progress you will have made in oklahoma. with your dashboard, you are providing a powerful example of how states can address the disconnect between supply and demand. with ok job match come you're helping show states how to improve the way job seekers are matched to jobs based on skills and competency, not just on job descriptions and resumes. it is leading-edge. i would like to recognize colorado as well for doing a great job with the blueprint that ties together agencies businesses, education and

workforce development. that kind of approach will be crucial to attacking the workforce challenges ahead and t is exciting to see the progress being made. i want to wish you a bit further today on the topic of talent and workforce develop. i strongly believe this is one of the top three issues that each of u.s. ceos of your states will be faced to address in the next 4-5 years. i want to talk about how accenture has dealt with this issue and what we have learned in the process. i want to recognize some states that are making progress and i want to share some strategies to help build on the efforts that you already have underway to help you attack this issue. attack is the right word for what states need to do. our companies, our communities our states and our nation are in a battle for talent.

one that none of us can afford to lose. this issue affects all of u.s. leaders of your states -- all of you as leaders of your states. my message to you is this. no matter what you are doing or how well you think you are doing , you only have just begun. chances are, you might not be doing enough. losing the battle for talent will lead to diminished economic prospects for our states in our communities and ultimately it will result in a lower standard of living for people. for most of our history here in the u.s., we could take talent for granted. we had plenty of it. in the future, it will be a scarce resource. strategies that have worked in the past when talent was plentiful are not going to work in the future. as oklahoma and colorado and many states have shown, there

are individual strategies and tools we can use in the battle for talent. it will take your leadership to put all of those strategies and tools together if we are going to win this battle for talent. before we dig into the action, let's ground ourselves and why we care about this issue in the first place. we may not know for certain the full economic benefits of focusing on this battle for talent, but we can be sure what is likely to happen if we don't make it a priority. let me share some sobering findings from the research we have just completed. there is a draft copy in your seats. we will get the final one to you all as and as its complete. for decades, the u.s. economy has produced sustained growth in our standard of living, allowing each generation to be better off than the one before.

our analysis shows that by 2030, our standard of living, instead of rising could actually fall to the level it was 15 years ago. in other words, the standard of living for the next generation could decline to what it was for the last generation. we are headed that way because of trends we are singing tree areas. population, participation and productivity. the first trend is population. not enough people who can work. the working age population is strengthening as a share of the total population. a baby boomers are retiring and are not being replaced at the same pace. by 2030, the percentage of the population will shrink by 9% to

the level it was in 1970. the second trend involves participation. not enough working age people who do work. participation among those old enough to work has declined. the decline is particularly pronounced among our youngest workers. since 2000, the percentage of those of working age were actually working as defined by 7%. that was the lowest it has been since 1977. with the largest drop among young people aged 16-24 years of age. the final trend is productivity. not enough work productivity. on top of the population and participation problems, we are facing unrealized, unreliable growth and workforce productivity. in five of the last 10 years, it has been below 1%.

productivity is critical because if we can improve productivity fast enough, even a shrinking percentage of people at work could generate enough economic activity to sustain a growing standard of living. as each of you as ceos of your states you have to recognize that workforce develop and is a critical component of your business and a key element to running your state. the competition for talent is fierce. everyone sitting in this room is competing to attract, develop and retain talent in your state. let's be honest, those that do this well will have a competitive advantage. those states that are able to consistently develop tools will be more successful in attracting businesses. not only are states competing with states, but collectively, we are all competing in a global

talent who'll. desk global-- level talent pool. -- global talent wpool. there are new countries ready to step into the fray. countries in southeast asia and sub-saharan africa will emerge as major pools of educated low-cost talent in the next 5-10 years. as a country, we have to address this head on. the u.s. can't be competitive global businesses are going to source talent from other parts of the world. yes, there is competition between each of us in the room but this is about american competitiveness on a global scale. we have dealt with this talent issue firsthand.

we grew from 103,000 to 177,000 people. at one point, we really did not fully recognize the talent management as a key priority in our business. i can tell you are talent strategy has never been more important. we now have more than 293,000 employees in 123 countries. we hire over 165 people per year . we have to compete every day to get talent we need and it's only getting harder. nomad or what the location is come every company is in a constant battle for talent. businesses are constantly looking at and evaluating talent pools. in 2006, we created a delivery center for technology projects

to serve clients nationwide. we did extensive research and scouting around the country and we narrowed the selection to a couple of geographic locations. as the valuation ran down -- as the evaluation wound down, we considered the standard of living in the area and the labor cost and we looked at basic things like accessibility and how close the area was to a major airport. ultimately, the deciding criteria was education infrastructure and our assessment of the continued pool of educated talent. in oregon, we are working with the indian reservation to help create technologies third 100% native american owned i.t. center that serves people across the country.

we saw an untapped pool of talent and provided business training on an ongoing ba sis. what is true for eccentric is true for most businesses today. we are all in a constant search for those talent pools. if you're not spending money to develop talent pools that need employer needs. you might as well be wasting your money. the keeper states will be identifying those pools of talent and matching them up with their capabilities and employer needs. as one ceo to another, you have the opportunity to be that hinge that joins together businesses that are looking to partner. this battle for talent is just as important as managing your health care costs or dealing with natural resources issues or focusing on revenue generation.

we know that states that get it right will excel. those that recognize this is an important and those who take steps to aggressively attract and develop and deploy talent will be our country's economic leaders. those states that get it right will be the most competitive. they will attract both businesses and workers and those states that don't will increasingly find themselves falling behind. we have already seen some examples of states doing things right. take new york. when they were trying to land global foundries, a leading manufacturer of semiconductors the state had to show that it's deep talent pool to meet the company's needs. a research organization called burning glass technologies used its analytic tools with the state employment system to pinpoint a talent rich location in upstate new york.

that is where an 8.5 billion dollar computer-chip manufacturing plant is now under construction. proof positive that real-time talent information can be a competitive advantage. or take south dakota. they pulled together a workforce cap net of all agencies -- cabinet of all agencies. they bring together business education and community members. oklahoma has its dashboard colorado has its blueprint and minnesota has career one-stop.org. in every one of your states, you have taken important, but only initial steps to compete successfully in the battle for talent. we know the winners will be those states that do this challenge -- view this challenge

as a constant journey and not a single destination. there is also some international examples we can draw on. take germany. they have acted aggressively on its talent strategy. 2000 three germany faced and on implement rate of 10.3%. well before the great recession. at the time, the german federal employment agency was considered bloated and bureaucratic and the government set out to completely redesign their approach to labor markets. they wanted to move away from legalistic administrative agencies to performance driven organizations. they wanted to focus on meeting up lawyer demand, not just job seeker needs. they want to integrate job seekers into the economy as quickly as they could. their ultimate goal was to become the most effective broker possible between labor supply and demand by bringing together a combination of policy

modification, process changes and new technology. within 36 months, germany lowered unemployment by 33%. going fromdoubling the number of jobs filled per year. in the last five years, when most of the countries in europe experienced a fiscal volatility of the great recession, germany has had a relatively low and steady unemployment rate and the german economy was the engine for recovery in europe. we need to be aggressive in our talent strategy up we are going to win the battle. one governor we interviewed said am "i'm spending hundreds of dollars on workforce develop and and i don't know what the hell i'm getting." that is as direct as you can be. that is the right talents.

we need specific challenges that deliver clear outcomes and that has to be our northstar. where can we start? we identified four strategies that we think governors can deploy now and win the battle for talent. it's about four things. analytics, pipeline, pathways and focus. analytics -- this is about real-time information and insights into supply and demand of talent. i'm not talking about jobs data. we have lots of data on jobs. little information on talent. let's start with a job, a welder. in virginia, over the last year there were 1100 jobs posted to hire welders as defined by the standard job classification system. that is a healthy number.

be grossly understates the demand for talent in welding third our research partner identified that in the same year, there were 1100 and two welding jobs posted and another 3300 postings that required welding talent. the landscape for jobs in welding looks much different when you look at talent needs rather than just job titles. consider in other job, computer programer. most use a single classification for computer programmer. hardly anyone hires just a computer programmer these days. instead, they are looking for system administrators, network administrators java programmers or other skills and competencies related to computer technology. imagine the competitive edge you could gain if you had analytics

producing real-time information on the skills and competencies that are in demand. another thing you could do with the up-to-date talent information is assessed the degree at which your education system is producing the talent that your economy really needs. i'm not talking about whether you are getting the quantity of graduates you need. we have the data to answer that question. i'm talking about using real-time information to assess whether or not your education systems are producing the quality of talent you need. when i say quality, it doesn't have to mean a four year college degree. this is about skills and capability. google, for example, has said publicly that they will hire people with the skills they want regardless of whether they have a degree or not.

businesses are increasingly skeptical about the value of degrees being handed out in our high schools and colleges and they want workers with skills certified skills, not people with degrees. the second idea is around pipeline. building reliable talent supply systems . only 18% of employers surveyed in our research reported they had a great deal of access to job candidates with the right skills. this is especially important in your small and medium-sized employers. these companies are critical to your statehouse economy and individually, at a competitive disadvantage in the battle for talent. you can help them come together and combine the demand for skills and competencies and build supply pipelines with your

education workforce. talent pipeline partnerships like this can help address employer needs, especially in high growth sectors. we have seen how this can work with the business and higher education forum. it is made up of fortune 500 ceos, college and university presidents and other leaders. they solve the demand for qualified cyber security professionals grow from 2007 to 2013. two times faster than all other information technology jobs. in response, they developed a program that enabled the business and higher education community's to work together to recruit and prepare and lace low income and underrepresented minority students in cyber security jobs.

last month the former cj million dollar grant from the u.s. navy -- the forum received a million dollar grant from the u.s. navy. i know in the past, business has been reluctant to come together like this. the past is over. the u.s. chamber of commerce foundation is launching a nationwide initiative this fall to give businesses -- get businesses engaged in building these kind s of talent supply systems and are learning. the business community recognizes this. businesses are more ready than ever to partner with governments that they can count on for the talent needs they have. third is about what we call pathways. every job seeker needs a personalized roadmap showing how

her or his talents can be put to work. in a survey we just did, 46% of college graduates reported they were underemployed and working in jobs that did not require their college degree. another 13% were unemployed. no graduates and no job seeker for that matter should find themselves lost in today's job market. we have the technology and we have information to actually provide every job seeker with personalized roadmaps showing them implement pathways that are open to them given their individual skills and competencies. these roadmaps show jobseekers what they could do with their skills based on what others have done. they provide real-time information on how to navigate from jobs the jobs marketplace.

they show them how to get the skills and competencies they might need for the next job they want. how does that happen? we work with a company that has built an inventory of millions of resumes that allows them to look at the skills and competencies of an individual and tell them what path others with those same skills and competencies have already taken. this really opens up the world of possibilities for jobseekers and get them to think about the full range of possibilities open to them. these same pathways also show them what skills they will need to require the next job -- to acquire their next job. states need to focus on outcomes. the federal government operates 47 different workforce programs with budgets of more than $18 billion annually.

these programs drive funding at the state level. within states, multiple departments and agencies have their own funding to make their own decisions and implement programs across state, regional and local levels. individually, any of these programs may be great. collectively, they don't add up to a winning strategy. it now is the time to get all of these programs and funding streams focused on a small set of central outcomes. one outcome we should start with is raising the standard of living. the workforce innovation and opportunity act was just passed this week. it gives you a greater authority and flex abilityibility to do that. it recommends establishing incentives to increase a line

between education and the workforce. those are great ideas. building on those recommendations, you could also develop a single measure of return on investment for workforce and talent spending. you could use this to compare programs and also to show taxpayers the value of those programs. you could create a unified enterprisewide budget for workforce and talent related programs. this would include workforce development, employment coming human services and education. it used that budget to get the greatest return you can. you might consider creating an executive level coordinating role. ethe bottom line is that states with an integrated and unified approach to talent focused on a single outcome of increasing the standard of living will be better equipped

to compete in the battle for talent. ultimately, it's about four tools. analytics, pipeline, pathways and focus. where and when do you start? as you bring together your secretaries and commissioners involved in workforce and talent agenda, ask them a few questions. what is our state's talent strategy for the next 3-5 years? how will it meet the skill and competency needs of our economy and ensure our future prosperity? how will we get real-time information and analytic insights we need? how will we assure employers that we have pipelines to the talent they want? how will we provided jobseekers with roadmaps showing the possible pathways for putting

their talents to work? how will we integrate and focus all that we do on a single set of outcomes? let me make one prediction. they will tell you we've got this covered, we've done a study, we build a strategy we've deployed programs. while they may be doing a number of good things, they are probably not doing enough and they are not getting the results to convince people that you are winning the battle for talent. in a recent survey 72% of the respondents said they were very skeptical that government was acting fast enough to meet future employment and skills challenges. meeting those challenges is tough. we learned the hard way at accenture. in a difficult journey before we found a way to get it right. i personally experienced the

boom and bust of the economy and it became crystal clear that we needed a more aggressive approach in finding and hiring talent. we needed a town strategy -- talent strategy that was second to none. we have a three-year plan outlining steps to become more successful at securing the talent we need. we have analytics that forecast our needs across our business and we have a recruiting organization that is constantly challenging themselves to get the best evil on the planet -- best people on the planet. your state might consider that kind of tenacious, lead from the top focus and commitment to talent. start with a strategy that clearly spells out how your state will attract, develop and deploy talent in a meaningful way beyond the town strategy. -- the talent strategy. on your workforce and talent programs.

pick up the phone and ask the tough questions about where the money is going and why. find out how your programs and budgets align to that strategy. winning the battle for talent is every bit as important as other key issues like health care natural resources and taxes. it's crucial to your states prosperity. when states make real headway on workforce issues, i believe they will see economic expansion well beyond the average. as ceo of your state, make those calls on monday and asked those challenging questions and don't accept quick, easy answers. when it comes to talent, there is no quick, easy answer. thank you very much. [applause] >> thank you, steven.

that was great information and we appreciate you sharing all that. i was thinking about all the different steps he went through i think it matches up with what governors are doing right now. all governors want to know what and lawyers need as far as talents and work skills. you have certain things you need within your company. a different industry might have different skills they need. what is the best way to get that specific information from you? we talked to the energy sector in the health-care sector manufacturing sector. how do we get those specific numbers and our companies willing to share -- our companies willing to share that information? guest: i think companies are increasingly willing to share that information. they are because they don't have a choice.

if they are not, they are probably already on the path to moving their business elsewhere. i would suggest that if a company is not willing to share that information with you, they have already developed a talent strategy that will move their talents to another state were up shore. -- or offshore. you have a very di different industries. the way to start is from an economic standpoint to understand top-down what are the industries and what is the primary industry that your state is focused on. our energy guys in oklahoma are moving into oklahoma city. they say we need energy talent. you don't need financial services or any of this. that is where they are focused. i suspect that most states could

prioritize two or three areas where you could focus on specific industries. i would not walk by the challenge of aggregating small business and medium business talent needs. while it might be more fragmented, having something focused on aggregating their needs and giving them a chair and voice at the table can go a long way toward retaining that talent. that is probably the fastest-growing segment of business in any given state. >> governor nixon. >> thank you for your focused presentation today. i would hope that you and other significant leaders in business would continue to press our community with the same level of focus we have here. all of us are trained to get our college is thinking more about

directly tying into business as opposed to that theoretical way that often times college campuses and the paneling their duties -- end up handling their duties. i appreciate -- it helps us in our context. talk to us for a second about wage rate, compensation, things of that nature. you talk about educated low cost talent. there are a lot of folks trying to figure out how to make money and raise a family and make more money later and all that sort of stuff. from our perspective, it's that initial cost that we deal with. the people in the talent pipeline are focusing on getting more economic dependence as they move through that pipeline.

-- economic independence as they move through that pipeline. where are we going in the pension system and all that stuff? how much are we going to pay these folks? >> great question. i start with wage determination is tied in a business context specifically to skills that are needed and in demand and are possessed by those people. a pipeline of potential workers is focused on increasing their human capital value -- how do i as a person increase the value i am going to bring my employer versus just coming in and being trained on the job?

as an employer, i value that a lot more. people talk about the manufacturing environment in the u.s. in the last 10 years, it has moved to a technology environment. the days of manual manufacturing are done in vietnam and they are done in china and they are done elsewhere. the reason those jobs are coming back is because we have been able to supply the manufacturing world with high-tech, educated people that work on the factory floor. 20 years ago, that did not exist. we have to understand that there is a direct correlation between wages being paid and the talent level of that person. we have to constantly push that talent level to be more relevant to what employers really want. if employers see high-tech manufacturing as computer systems skills, we have to move

the talent coming out of high school in our community colleges in that direction so you have that pool of talent. then, you have a fair wage for fair skill. >> senator walker. >> just to follow-up on governor nixon. the four things you outlined in this report are pretty consistent. i was thinking, it really is focusing on ways we need to do a better job connecting the skills to people who are looking for a job or are looking for a better job, the skills they need to match up with the jobs that are open or will be in the next few years.

those four things are keys. when you started out with is one part of it. maybe a suggestion is -- you talked about the drop-off in the future. the things that we mentioned that are connecting people currently looking for work or a better job or the skills they need -- that still does not fully address the drop-off will occur in the next three years of people who just are not there whether they are trained or not. a suggestion i would make, we have talked about these things in the past. we have talked about three categories. military personnel. we have about doubled the unemployment rate among military personnel coming back from iraq and in a stand and places like that. tremendous opportunity for people on the assignment. it is more than just the skills we have. secondly, people with disabilities. i know jack talked about this last year.

we have a better bottom line in our state. there's a tremendous opportunity to take people who are currently at the sidelines. there is a disconnect between matching their unique abilities into the workplace. often, they are overlooked in terms of workplace opportunities. the third group -- back in the 1990's, when the nga was involved with welfare reform they granted a waiver for childless adults when it comes to things like food stamps. we just opted out of that waiver. this past year, it is costly. it cost us about $17 million. there are 46 states that still have a waiver that do not take that. that is because you have to pay. you have to pay for employability skills. groups like that -- people who are temporarily on government assistance, ways to

transition into the workplace -- those are groups like and help to move your chart up there of people who will be in the workforce the future. >> great observation. we talked about this before. the recession started with a number of the nga staff. i think you have to crawl before you walk here. if you go back to two industries that have gone on similar journeys -- you look at financial services and retail. both have kind of gone through a very fragmented, data rich in iron man. -- environment. they apply analytics more aggressively to get predictive information. getting predictive information is going to be a 10-20 year journey. we have to identify the pools and stand up first to get the underemployed busy and then

become predictive with where we believe is mrs. are headed and what their needs are. it is going to be a 2-3-step process. this is a 10-20 years journey. you do not have to look any further than industry to see how they have evolved over time. thank you. >> governor herbert? >> thank you. thank you for being here and talking about an important issue. i had the opportunity as governor of utah to meet with many of the ceos in our state. we meet with different sectors of the economy try to stay in touch with what their concerns are and what we are doing right and what we can do better. clearly, as we talk about the talent pipeline, that is probably the number one issue for entrepreneurs in utah. we're trying to address that issue with education skill gap

. areas where we are trying to improve that and minimize the impact. things that we really need to have better handles on. i looked at your challenges in your book here. let me challenge you on a couple of areas, if i could. the first is job seekers not finding the jobs that they want. i understand there is that challenge. do not look to government for help. my experience is that many look to government for help. we have the department of workforce services. we help people with identifying where they are lacking in guilt help them get back to school, community college, vocational training. we have a significant our reach with our veterans. i expect it to be no different than many other states here. my point is that there are many people out there who look to government to help them get back

into the workforce. another point is that employers cannot find the skills they need. that is what we have observed. then they say do not look to government for help. again, my experience has been that they do look to government for help. they're putting increased pressure on us to improve education, decreased the skills gap, have better alignment with what they're looking for. we have custom fit programs were businesses and manufacturers say we need to have help for specific needs. can you put some together? some kind of experience to help train employers. we have to have some custom fit work. we look to government for help. i do agree with your last point. we're are very skeptical about government acting fast enough. many are doing their own thing.

they do not think the government act fast enough. maybe not as effectively or efficiently. i do think that they're looking to government. what am i missing here? at least in my experience, i think people are looking to government sometimes even too much. >> yeah. i think you would have to segment the populations we are talking about, governor. the people who are looking at him leaning on government for help are the underemployed and unemployed. i think they will be a different segment than the college graduate. they are out on monster.com every single day just looking for jobs. very few of those people are coming to government for unemployment insurance or unemployment benefits. at least in our experience, so far. maybe that is different. if you look at the less skilled and less educated, they absolutely are relying on government.

you have to talk about the segments of the population -- we should have been more specific about who they still rely on in government. point taken on that. on businesses not relying on government, i would tell you the same thing. there are a lot of businesses that will meet with government. in my restaurant i have 60% turnover in my bar or restaurant i am not going to government to ask for help in terms of developing new skills. that is just not going to happen. i will continue to go out and use any resource i can to replenish that talent when i need it. so i think businesses have started a dialogue. i think the larger businesses really want to source talent in the united states. i know that for a fact.

we personally hire 5100 people per year off of college campuses. and another 6000 in the u.s. just from experience in the market. we want to source our talent. the talent that we have is just competing and finding it in the marketplace. if businesses are willing to have a dialogue, we have to connect closer. we have to connect them closer and actually tied at in. this is where you guys can step in. if a senior business person senses that there is a commitment from the top of the state to really change and put change on the table and do some creative innovative things, trust me, that partnership will form and will flower. >> thank you. >> thank you so much. let's give them a big round of applause. they give for the big information. [applause]

committee come to order. and that includes the former senator from connecticut, who is sitting in the audience behind senator markey. chris, nice to see you. i think all of us were forward thinking until you and eddie showed up. it will be a close call now. see if we can't get it through. try to get it done. senator markey, i don't know what kind of time frame you're on. if you can give me something, i want to be respectful of your time. i'm going to give a statement for probably the next 45

minutes. probably the next five or six minutes and then introduce our witnesses, our nominees and at some point in time if you'd like, you can go first in introducing ms. kennedy or you can go later. what works for you? >> whatever is most convenient for you mr. chairman. honestly. i'm here at your discretion. >> all right. that was very senatorial. all righty. let me give my statement and senator coburn is flying in from oklahoma. i think his plane will be in around, a little before 3:30 and he'll join us as quickly as he can. but we're meeting today to consider four nominations to fill vacancies in the postal service's board of governors. important positions. we're considering these nominations at what is a very challenging time for the postal service. i would like to quote albert einstein who used to say inadversity lies opportunity.

while there's adversity for the post office, there's great opportunity as well. and we'll talk a little bit about that when we get under way. the postal service operates at the center of a massive printing, delivery and logistics industry that employs millions of people. i've heard as many as 7 mill orion or 8 million. even greetsing cards and wedding invitations are lost to many other forms of communication i think the future is bright in many ways. advertising mail is still a popular and effective opt kwn for mailers. i'm reminded every day when we check our mail. e-commerce and package delivery are booming make 7 postal service a vital partner for businesses both large and small. even the postal service's traditional competitors rely on it to carry out the last five miles or the last ten miles or even further to rural communities around our country. for many -- for years many people have questioned whether the postal service has a future.

these developments i've mentioned tell me at least that it does. and potentially a very bright one. but all of this is at risk if those of us here in congress continue to prove incapable of making the kind of tough decisions necessary to make the postal service competitive in the years to come. as important as the board of governors is congress holds the keys to the postal service's future. the men and women on the board including those before us today, should they be confirmed have little chance of success unless we do our jobs and pass comprehensive postal reform legislation. the postal service today carries barely enough cash to make payroll. its line of credit with the treasury is maxed out at $15 billion. and has been incapable for years of making capital investments. including the technological investments necessary to compete with a u.p.s. or a fedex. things are so bad, that the postal service has letter carriers an the streets today

driving inefficient, sometimes unsafe vehicles that guzzle gas, that break down and are older than a lot of members of my staff. that's just -- that is just not acceptable. some observers point to the boom and package delivery in thed fact the postal service occasionally makes a small operating profit and say things are okay. they argue that tough decisions aren't necessary and that we should be happy with the postal service that just limps along. for me that's not acceptable. for dr. coburn, far be it for me to speak from him, that's not acceptable to him either. postal service is not acceptable to a majority of this committee either. postal service is just one major international crisis, one recession or one big spike in gas prices away from failure. on top of that, with a few tools at their disposal and efforts to keep the postal service afloat postal management announced just the other week that it would be closing an additional 82 mail

processing plants across our country and further slowing down mail delivery in every community in the country. this comes after the loss of about half the postal service's mail processing capacity in recent years. at a time when the future holds so much promise for the postal service, this is a potentially devastating blow that will further sap the confidence, the public has in the postal service and its ability to remain relevant. if we a postal service that our constituents can rely on, that families can rely on, that businesses can rely on and one that has a chance of continued progress we see in package delivery, we need to pass a bill. not just any bill. a bill that looks like the one that's been reported out by a strong margin in this committee and sent to the full senate. i think our committee has done its work on this issue to date. in february, we sent a bill to the full committee that would save the postal service billions of dollars in pension and health care costs, including by

allowing it to take full advantage of the investment in its employers have made over the years in medicare. postal service pays more money into medicare than i think any employer in the country. they don't get full value for that. and it's not fair. there's a serious equity problem there. our legislation would also give -- provide the postal service with immediate cash infusion through refund of its overpayment in the federal employee retiree system and free it to compete in new lines of business. more important lie, our legislation would preserve existing service standards including the 82 plants and saturday mail delivery for the time being to allow the reforms to bear fruit, to raise revenues and hopefully provide a profitable future for the postal service. i think our legislation is solid, comprehensive and realistic response to a very real crisis. in my opinion it's the only one introduced in the house or senate in recent years that would actually work. and dr. coburn and i i think a majority of our committee, are

interested, are committed to fixing this problem. this is one that can be fixed. and we're determined to do that. working with all the key stakeholders in -- who care about this issue. the postal service indicated there would give the legislation would give it the cash needed to pay down debt. account for its pension and health care obligations, sflft capital and still have as much as $7 billion in -- or more in cash on hand after ten years. i think that's a huge step forward. huge step forward. especially when you are thinking about a fleet of vehicles across the country. a couple hundred thousand vehicles in the fleet. the average age is over 20 years. they are energy inefficient. not configured to be able to carry a lot of packages and parcels. the mail processing equipment a lot of mail processing centers it's not well suited for packages and parcels. we need to help recapitalize the postal service. and the legislation we've reported out of here would do that with $30 billion available

in capital investments for the next ten years or so. i look forward to -- we look ford talk with our nominees today about what they think needs to be done to address the challenges facing the postal service and the skills they think they bring to the table. if confirmed this group of nomes would nearly double the size of the current board. there's an opportunity with this new injection of title combined with the enact of a postal reform bill to make significant process in the very near future. and that having been said, what i think i'll do is just introduce mr. miller dr. miller. and go first with him and steven crawford and then when i come to ms. kennedy, we'll ask you to introduce her and make a couple of ad libs and audibles on top of what you already say. let me start off by just saying thanks very much for your willingness to take on this important responsibility. james miller is currently a senior adviser at the

international firm of -- hush, blackwell. he's a member of the board of americans for prosperity and a senior fellow at the hoover institution at the stanford university. earlier in his career he was the director of omb and the first administrator of omb's office of information and regulatory affairs. for you know purgatory. straight to heaven. mr. miller has eight years of prior experience in the field he's nominated for today. he's itching to get back into the game. i don't know that. he's willing to get back into the game. steven crawford nice to see you. how are you? he's a research professor at george washington institute of public policy at gwu and previously served as vice president at the corporation for enterprise development. from 2008 to 2009 he stefshed as deputy director of the metropolitan policy program at

the brookings institution. mr. crawford is a u.s. army veteran. received a bronze star for his service as an infantry officer in vietnam. somebody who has been a couple years over there myself, a naval flight officer welcome home. thanks for that service and for your willingness to serve us in this capacity. david michael bennett usenior vice president of information management and chief information officer of bae systems. a position he's held since 2010. previously practiced law in various positions with northrup grumman and the u.s. department of commerce. 2012 he received minority business leader award from the washington business journal. great to see you. thanks for your willingness to be with us today and assume this responsibility if confirmed. and to introduce our fourth nominee, victoria reggie kennedy, is my friend my colleague, senator ed markey. >> thank you mr. chairman. and thank you for allowing me to

introduce my great friend, the incredibly talented victoria reggie kennedy. who has been nominated by president obama to serve on the board of governors of the united states postal service. vickie kennedy is a public service powerhouse for our country. a brilliant gifted attorney adviser and public servant. vickie will be an outstanding member of the postal service board of governors. she will bring intellectual rigor, innovative and ideas, leadership and her endless energy to this post. indeed vickie's career is singularly suited to the postal service board at a time when it needs public servants as dedicated and creative as vickie. from our first postmaster benjamin franck lynn to today, the postal service has been an integral part of our democracy. it pushes the frontiers of communication, rain or shine through war time and peace.

vickie will bring that same steadfast service to the board and a wealth of expertise. when she was a partner at a major law firm, she helped banks reorganize and recapitalize. at a time when efficiency n funding are both issues for the usps, her experience will be invaluable. today, vickie helps organizations develop strategies to resolve complex issues and today's postal service has no durth of similar business matters to resolve. like her husband, our beloved colleague the legendary senator ted kennedy vickie believes in the importance of helping government work at its best to serve the american people. and that's why she is the president of the board and co-founder of the edward m. conditiondy kennedy institute. under vickie's leadership this

innovative hub of industry will open next year adjacent to the john f. kennedy library. the institute will provide visitors a state of the art high-tech interactive opportunity to learn lessons from america's past and develop new ideas that can help shape a better future. she can do the same thing for the united states postal service. she is also a trustee of the kennedy center for the performing arts a member of the board of overseers of the museum of fine arts in boston and a member of the board of directors of the national leadership roundtable on church management. she is a soumah cum laude graduate of tulane university school of law. a five beta kappa graduate of tulane and she's received honorary degrees from boston university, northeastern university of massachusetts suffolk university on and on, and that is an impressive list of accolades and a test toomt her intelligence. her character and her accomplishments.

the postal service needs vickie kennedy. the board needs talented proven leaders who can assess the problems faceing the usps and help the postal service resolve those challenges. that's exactly who vickie kennedy is. we all greatly admire vickie and have complete confidence in her. vickie kennedy will shine on the board of governors and our country will be the better for her service. i thank you, mr. chairman. >> thank you, senator markey. all i can say is after listening to that introduction to our nominees, whenever i'm nominated by some president some day i want ed markey to introduce me too. i think even i could get confirmed with an introduction like that. senator markey thank you so much. it's great to see you. and over to your left shoulder, my old friend crise. thank chris. thanks for joining us. i always feel like i should ask you to come and sit here

senator dodd. i'm told it's against the rules. that's where my shatterheart is. senator markey if you need to leave, we should be done here by 9:00 tonight, but if you need to slip out before then, feel free to do that. before we proceed with your statements, we have this thing about committee rules. committee rules require that all witnesses at nomination hearings like this one give their testimony under oath. i'm going to ask if you would all please stand and raise your right hand. here we go. do you swear the testimony you will give before this subcommittee, this committee will be the truth, the whole truths and nothing but the truth, so help you god? >> i do. >> please be seated.

is it dr. miller? >> yes it is. >> dr. miller. my staff keeps wanting to call you mr. miller. we're going to call you doctor. but you are welcome to proceed with your statement. and if you want to introduce any family or friends here with you today, i would -- i invite you to do that. please feel free. we're delighted you are here and willing to serve once more in this capacity. thank you. make sure your mike is on. >> i should point out that mr. jefferson once said there's no higher honor you can pay a man but to call him mister and mean it. so mr. chairman thank you for inviting us here today. i have a prepared statement. i asked to be included in the record. >> without objection.

>> one of my other favorite jefferson quotes is, if the people know the truth they won't make a mistake. isn't that good? that's good for these days. if people know the truth they won't make a mistake. >> thank you for holding this hearing. thank you for your interest in the postal service. as you point out, the stress of the postal service brings forth opportunities. and the things you can do with this committee and the senate can do and the house can do can make the difference between restoring the postal service to a solid footing and seeing it become a very expensive ward of the state. and i commend you for the progress on s-1486. it's a very large step forward toward the goal of restoring the postal service. and if you confirm me, i will work to obtain that end.

i hope the house will pass a bill and that a conference bill will become law. i want to thank president obama for nominating me. thank majority leader -- minority leader mcconnell for recommending me. >> you are getting ahead of yourself just a little bit. >> and i would like to acknowledge the three distinguished individuals with whom i share this table whom i've gotten to know in the last several months and admire. they will make splendid additions to the board. as budget director for president reagan, i think i knew the hill pretty well, and i think almost -- or most members of congress knew me or knew of me. but that was over a quarter of a century ago. so let me tell you a little bit

about myself. and i have pursued, since graduate school, i've pursued really four different careers. sometimes at the same time. the first was academic. i was trained as a college professor. i taught at two major universities. taught full time. then part time at several other universities. i've been associated with major think tanks, as you noted, the hoover institution but also brookings and the american enterprise institute. i was on the boards of the air force academy and also the board of george mason university. along the way, i have written nine books and over 100 articles in professional journals. the second career was in the federal government. at the department of transportation, i contributed to airline regulatory reform. at the council of economic

advisers, i wrote the chapter on regulation in the 1974 economic report of the president. at the council on wage and price stability, i made transparent the cost and benefits of regulation. back to your quote, mr. chairman. at the beginning of the reagan administration, i co-authored executive order 12291 which established the regulatory review program. i went turnover the federal trade commission, chaired the federal trade commission for four years and we put that agency back on the traditional path of law enforcement. i came back to chair -- to be the director of omb and member of the president's cabinet. helped negotiate graham ruddman hollings which brought the deficit down significantly. and did other things there as well. as you know as you mentioned, i did serve a term at the board of governors, the u.s. postal service, where during the three years of my chairmanship my

colleagues and i -- my colleagues and i produced the forever stamp which i think has been a great success. i had a career in effected politics that was not particularly successful. i ran for the senate u.s. senate in virginia in 1994 and 1996. and i helped my wife's campaign for the house of representatives for the 8th district of virginia in 1998 and the year 2000. i have had a career in business. i have been on several boards of directors of companies. i have had a consulting practice of my own. i headed a consulting firm for a -- consulting group for a major law firm. i'm on the boards of three major neutral funds. i'm on the board of clean energy fuels, the largest provider of natural gas for vehicles in america. i am in the audit -- chairman of the audit committee and

designated financial expert for those firms. i am as you mentioned, here with hush blackwell and also chairman of the executive committee of the u.s. tax and investment center. today i ask you to confirm me for this port of post. my wife of more than 50 years, demarus miller, asked me, why are you doing this? you've been there done that. the answer is it's unfinished business. when i was at the board of governors, i worked very hard trying to obtain the kinds of reform that you have outlined that are needed. but without success. and i would like to go back and working with you working with other members of congress working with management working with the stakeholders of this great institution, make those kinds of changes happen and restore the financial integrity and the viability of this important organization.

thank you, mr. chairman. >> dr. miller mr. miller, i sat here listening to you talk about your -- what you've been involved in in your life. what a life. what a life. and still going strong. >> thank you, sir. >> thanks for your willingness to take this on and hups fix this problem. steven crawford mr. crawford, you were in the army, right? >> i was. >> go ahead and turn on your mike if you will. >> and tell us about your service, just very briefly, please. >> i served for 3 and a quarter years, the last of which i served in vietnam as an infantry officer. as an adviser to an arvin infantry battalion in the delta. lost a good friend in the tet offensive. so i think we all have mixed feelings about difficult years there. but certainly a learning experience. >> i have been back a number of times since then. led a congressional delegation back there in '91 to find out

what happened to a lot of our men. mostly men. some women. senator mccain, senator kerry were involved in that effort in the senate. and i feel very good about that. and have been back a couple everof times since. every time i talk to those who served, i ask them if they've been back. most haven't. >> i applaud that. my wife and i adopted a child from vietnam who is now 14. and she's off at summer camp or she would be here today cheering for uand i could introduce her to you. but, yes, we went back to get her and then we went back to visit with her family when she was about 9. >> that's great. >> it's been a good experience. >> thank you for that service. and if there's anyone in the audience you'd like to introduce, feel free and then proceed. thanks so much. >> so good afternoon, chairman carper and thank you for the opportunity to testify today. and to second what jim, a hard act to follow, but what jim --

>> i wouldn't want to have to follow that statement. i would say skip over me. >> yeah, right. thank you for your leadership on postal reform legislation. it's been a long, hard struggle, but we are -- i am excited about as 1486 and commend the committee for advancing it this far. i'm truly honored to be nominated by president obama to serve on the board of governors of the united states postal service. and i am pleased to share with the committee how, if confirmed, i would approach the responsibilities involved. as you know the postal service faces enormous challenges. it is in these dire straits i believe for three main reasons. one, the growth of electronic communications and the resulting diversion of first-class mail. two, the recent recession and lingering impact. and three, and perhaps most importantly, the unique

regulatory environment in which it operates. while there seems to be broad agreement anesthes causes of the postal service's problems and deficits there is considerably disagreement about how to fix them. some emphasize cutting costs by consolidating facilities, reducing delivery frequency and changing service standards. some emphasize increasing revenues by adding new products and services. some call for adjusting the price cap and many call for changing the current requirements for prefunding the health benefits of future retirees. i believe that the challenges are so severe that the postal service should explore all the above and i applaud the committee for crafting and passing a bill that does so. i believe that my prior experience has prepared me to serve well on the board and to make a distinctive and

significant contributions. to be sure, i have never managed an organization of more than 50,000 employees. however, i have advised and worked closely with the top leaders of such organizations, especially state governors, but also corporate ceos and university presidents. i have also served on various boards and commissions and at present, i am a member of the board of directors of the american national standards institute. whose nearly 1,000 members include trade associations professional societies unions consumer organizations, universities government agencies and such companies as apple, ibm caterpillar exxonmobil, netflix verizon, et cetera. firms and organizations that represent more than 3.5 million professionals. finally, as a member of the obama/biden transition team and later as a consultant to the postal service i had

exceptional opportunities to get acquainted with the problems and potential solutions facing the postal service. the mailing industry and such related agencies as the prc and the inspector general's office. in closing, i would like to thank the committee for its efforts to -- over many years to provide the policy framework needed to enable the postal service to accomplish its vital mission. it is clearly a difficult task in today's rapidly and changing environment. but i am optimistic that good solutions are within reach. i look forward if confirmed, to working with you and all the postal services' stakeholders on crafting and implementing such solutions. i appreciate the opportunity to testify today and welcome your questions. >> thank you, very, very much. that's a very strong resume as well. and different from that of dr.

miller, but you all have different backgrounds. i think all of you do. bringing different strengths to the board. thank you for all of that. david, is it michael? >> david michael bennett. and mr. bennett -- great to see you. >> we have a guy named michael bennett here. serves in the u.s. senate from colorado. i don't think he spells it with two ts. his family could only afford one. but -- >> well i brought the t in my e-mail address. >> it's good to know. >> nice to see you. nice for your willingness to serve. thank you. >> i think my son michael bennett is here. where? >> he's back there. >> he looks like he might be pretty tall. is he? >> he's pretty fast. he's a track guy. >> really? what are his events? >> he's a 400 hurdler.

tough race. >> what level. is he college? >> he's out of college. he's a personal trainer now. and coaching track. just got back from his certification of coaching. and my mom jonny evans is here. >> where? >> right here. >> hi. how are you? nice to see you, ma'am. >> my pleasure. >> and my partner pam jackson is here. >> is it pam? >> yes. >> hi pam. >> which one is your mom? >> good joke today. >> i'll hear about that when i get home. >> you are both -- thank you for coming in. thank you for being here to have your dad's back. it's great. >> well, i will say good afternoon, chairman carper and also one of your staff said the other day at the end their session with me said, well, we have four very different nominees. and that's true.

and all four of us have had a chance to get to know one another. i am the corporate guy. i'm the guy who spent 95% of his career in corporate america, even in the years i was practicing law, i was inside of a corporation. but let me say good afternoon to you chairman carper and a good afternoon also to dr. coburn when he arrives. so i have a prepared statement i'd like to go through if i may. >> each of your entire statement will be made part of the record. feel free to summarize as you wish. >> it is my pleasure to be here before you this afternoon. i want to thank president obama for his decision to nominate me to become a member of the united states postal service board of governors. i believe that the board of governors is a critical role in our postal service and ultimately to the american people. so with integrity pride and diligence, will i serve on the board. i'm committed to exercising every aspect of my legal, business and technology experience to help the united states postal service continue

to evolve with america. a long time resident of our nation's capital and native north carolinian, proud -- >> native north carolinian? >> yes. >> where? >> charlotte. >> ever hear of boone? >> yes. >> my wife is from there. >> okay. so i'm a north carolinian, prior graduate of duke university and the george washington university law school, which my colleague is a professor. and most importantly, i'm someone who uses mail services an a very regular basis. i still pay all my bills by mail n send cards out and letters. i believe in the mission of the post service. my previous experience of 100,000 multinational company of course specifically gives me the skills necessary to drive change in our ever-changing world. i'm honored to have an opportunity to serve my fellow citizens through one of the most

important institutions in america. some of the changes in our culture have caused many to question the intrinsic value of the postal service. i believe that our postal service is an essential part of the fabric of our nation. a vital part of our economy and material force in our personal lives. it is sometimes a sole option for businesses in remote areas to receive products that are essential to maintain manufacturing machinery or state a product for resale. postal services have personal impact for many who are unable to travel to a pharmacy for instance. for various reasons. and essential medications are delivered to their doorsteps by united states postal service carrier. it is the only institution in this country that can touch every single american every day. that's an incredible national asset. and that turns me on for some reason. i find that incredible that you have an institution that can touch 300 million people every single day. there is probably no other country on the planet that has

an institution with the capabilities of our united states postal service. unfortunately some take this 200-plus-year-old national treasure for granted. i recognize this treasure and want to be a part of creating even more value in it for the american people. i'm honored yes, but i'm also excited about what is possible for the postal service. i am eager to explore all of the various ways this institution can serve the american people through a vast network of facilities, distribution networks and most importantly the employees. i think about how many companies have transformed themselves over the past decade to drive eofficialeffic efficiency in and solve challenging business problems, i get excited thinking about the possibleities for transformination the united states postal service. transformation is driven by innovation. i look forward to working with the board -- with other board members and challenging

management on various innovative ideas to drive value throughout the enterprise. throughout my career i have led transformational business programs which have led to cost savings, streamlined business processes and ultmaltly greater value to customers employees and shareholders alike. i look forward to sharing my experience as a result of leading large technology centered innovation initiatives to create greater value for america. and finally we should continue to look for ways to leverage the knowledge and skills of our incredible workforce. our people are our largest and most valuable asset. when i was growing up my stepfather was a postal service mail carrier in charlotte north carolina. there wasn't anything he didn't know about locations and getting around charlotte. we can leverage these human cape ibls to continue transforming the post office to be the business current and future america needs and wants. i want to get started. thank you for this opportunity. i look forward to your questions. >> i like that. i want to get started.

that's good. we have a fellow who is a u.s. secretary of department of transportation who is a former mayor of charlotte. anthony gay fox. fox with two xs. >> i do. in fact he used to go to the doctor that my mother was the receptionist for when he was a little kid. >> no kidding. >> so he knows my mother well. >> so your mom was a director of first impressions at that office? >> absolutely. >> that's great. so thanks for your testimony. ms. kennedy great to see you. thank you for your willingness to serve and please proceed. your entire statement will be made part of the record. >> i'm pleased to join james mill esteven crawford and michael bennet to appear before you this afternoon as president obama's nominees to the board of governors of the united states postal service. and i am honored and humbled by the confidence and trust that president obama has placed in me. i look forward to answering your questions and hearing firsthand your thoughts and concerns about the postal service.

and if confirmed, i look forward to working with the committee and with other members of congress to strengthen the postal service in a long-term and comprehensive way. i would also like to thank my family for their support. and some of them are here today. my mother doris reggie, my son -- >> your mom is here? >> my mom is here. doris reggie. my son kern rackland. my son patrick kennedy and his wife amy and their two little ones were also here but they've stepped out for a few minutes. they are very tiny. >> do they realize they are missing your testimony? >> yes, i think that food has won out. and my daughter caroline rackland is working in the philippines and ted kennedy jr. has a campaign in connecticut but they are here in spirit. >> i call those excused absences. >> i want to thank in a very personal way, my senator ed markey for such a gracious and warm introduction and my friend senator chris dodd for being here. it really means the world to me

that they are here. and i have other dear friends in the audience. >> let the record show i can barely see chris dodd's lips moving when senator markey was speaking. >> so the postal service is a vital public asset. as my friend michael bennett said it has near daily contact with every american household and business. there are more than 31,000 post offices, stations and branches across this country, many of which serve as a focal point of local identity. and a center of community interaction. with 500,000 hard-working and dedicated employees earning a solid middle class income the postal service is an essential part of the fabric of american life. because of the governing principle of universal severance, no matter where you live in the united states you are entitled to the same postal service as every other american. and without a doubt, as our founding fathers understood when they included the postal clause in article 1 of the

constitution, universal service unifies us as a nation. as we meet today, however and as we've been discussing the postal service is facing a serious financial crisis. if confirmed i would work with my fellow board members to look at comprehensive ways to address this crisis. i would likewise work with them to listen to the concerns and ideas of key constituency groups to craft long-term solutions to long-term problems. to position the postal service to be nimble and ready to take advantage of opportunities for growth in its core business, letter and package delivery, and not to undermine its essential strengths. i think it also important to look at the possibility of expanding and into related business lines while always maintaining timely, universal service and protecting and nurturing the core business of the postal service. the mailing industry in this country generates $800 billion

in economic activity and the postal service is a key part of the distribution network for that activity. its comtet pors even rely on its exceptional distribution infrastructure for the key last mile delivery to connect the smallest towns and rural areas to e-commerce. a recent inspector general report has concluded that preserving that infrastructure could allow the postal service to reap as much as $500 million of additional revenue in the near future because of private sector manufacturing innovations such as 3d printing that will need the sophisticated full-service delivery infrastructure that the postal service has in place. i believe that the postal service can and should be at the leading edge of innovation and envisioning the new ways that americans communicate with each other and with the rest of the world. i also believe it should have the regulatory flexibility to take advantage of opportunity and innovation when it is in the public interest.

if confirmed, i believe that my skills and experience can make a positive contribution. i would keep always paramount if confirmed a focus on the public interest, the board of governors should set policy to ensure the long-term financial well-being of the postal service and it should assure that senior management follows and executes that policy. i believe in a full airing of the issues and a robust dialogue with all interested parties. as we seek in the public interest the best way to return the postal service to a safe and secure financial footing. i look ford discussing these and other issues with this committee today and, if confirmed, with the committee and congress in the future. in closing i again want to thank you for considering my nomination, and i look forward to answering your questions. thank you. >> you know, you used exactly five minutes. that doesn't happen every day. >> thank you. >> it was good. >> thank you. thank you all. now i am supposed to start, i usually forget this, but i'm

supposed to start my questioning with three standard questions that we ask of all nominees. and i am going to ask if you would just please answer after each question. is there anything that you are aware of in your background that might present a conflict of interest with the duties of the office to which you've been nominated. dr. miller? >> nothing other than what i indicated in response to the questions to this committee. >> thank you, mr. crawford. >> nothing. >> mr. bennett? >> no, mr. chairman. >> mr. kennedy? >> no mr. chairman i'm not aware of anything. >> number two, do you know of anything personal or otherwise that would prevent you from fully and honorably discharging your responsibilities of the office to which you've been nominated? dr. miller? >> no, sir. >> no, sir, mr. chairman. >> no, mr. chairman. >> ms. kennedy? >> no mr. chairman. >> and do you agree with our reservation to respond to any reasonable summons to appear and testify before any duly constituted committee if you are

confirmed? dr. miller? >> absolutely. >> i do. >> yes, i will. >> yes i will. >> great. thank you. thanks for your testimony. interesting testimony. very well prepared. well presented. i just want to start off by saying, mr. bennett said about he still sends, pays his bills by mail. he still sends out cards and letters. so do i. and you are probably better at technology than i am. but i'm not bad and i have two sons, 24 and 25 who coach me so i can get even better over time. but i was reminded of the service, the u.s. postal service on saturday. i was home for a bit. and the post -- the letter carrier delivers our mail. delivered our mail just a little before 5:00 p.m. sometimes it's later if he has a whole lot to deliver and

sometimes not quite that late. but it's 95 degrees outside and he was delivering mail, cheerful, going about his work. and he's there when it's 95 degrees. he's there when it's 5 degrees. he's there when the sun is shining as it was on saturday and he's there when it's raining, sleeting, snowing and we're grateful for his service and those of hundreds of thousands of postal employees across the country who have served us for years served us today and will serve us for a whole lot longer time to come. we had sitting right here, i think, ms. kennedy, where you were sitting, a couple years ooh was a fellow from -- was it wisconsin, john? a very successful business person from wisconsin. he runs a company called quad graphics. and he sat before us that day and he talked about his business which was -- is it a paper

business? or printing business? paper and printing business, if you will. and he talked about how they out in a day and age when a lot of businesses in that industry had closed, had fallen and eventually been ended and how he talked about his business sort of just the opposite and instead of failing faltering, going out of business, they've gotten stronger over time. and what has happened is they've taken a legacy business, paper, printing business and figured out how to be successful in the digital age. that's what they've done. and what i've been hoping for with respect to the postal service is the ability to do something like that. find that intersect between maybe one of the longest lived organizations, living organizations in our country, that's our postal service and how to make an operation like

that not just relevant in the digital age but significant. it's not that we'll make them successful but we'll enable them to be successful. i think we can do that. we've had testimony here before when folks have come in from different stakeholders people like you and they said to us in terms of the things we need to do, one of the things we need to do is to focus on the main thing. an old methodist minister in a town called seaford passed away a couple of years ago. when i was governor, before that congressman, now later in the senate he's always given me great advice when i was down in sussex county. let me be a lay speaker in his church. it was a special treat. he used to say this. he used to say the main thing is to keep the main thing the main

thing. that's what he would say. the main thing is to keep the main thing the main thing. for some of the folks that have testified before us, they've said in terms of -- i don't know if it's a main thing but a big thing for us to consider is health care costs of retirees. when we worked on legislation in 2006-2007 senator collins and i and others one of the requirements, if you will, from the administration president george w. bush was to not only recognize there's a large liability that's owed by the postal service and the liability is for retired health care costs. some people think that's not liability, something we don't need to be mindful of. when i was elected state treasurer at the age of 29, just a pup the state of delaware had the worst credit rating in the

country. we were the best at over estimating revenues and underestimating spending. think about that. we were the best in the country in overestimating revenues and underestimating spending. we had no cash management system. we had no pension fund. and we had a lot of state banks about to go under. we were the lowest startup of new businesses of any state in the country. and in fact we used to sell revenue anticipation notes. revenue anticipation notes in order to meet payroll and pay pension checks. we were not a model of financial respectability. and nobody else wanted to run for straight treasurer. we won. pete dupont was elected governor. he did a great job. mike cassill after him and i succeeded mike cassill. we started off with the worst credit rating in the country in 1977 and we ended up in my second term as governor with

aaas across the board, aaas. i'll never forget that. the rating agencies told us what they had done and why. they said, you've got a big liability out there that you've not recognized you've not addressed at all. we said, what is that? they said you have a lot of pensioners. i said, well, we have a strong pension fund. it's admired for how fully invested it is. they said, no, no, that's not it. they said, your problem is all the pension ners out there, they have enormous health care costs attached to it each of them and you've not recognized that and you've not set money aside for that. they still gave us an aaa rating. we addressed that. we acknowledged it as a liability and we started to address that. the problem from our 2006-2007 legislation is we agreed with george w. bush in order to get the president to sign the bill

we had to agree to i think a very aggressive schedule to pay down debt liability for retired health care costs. what we found out in the years since then is that the postal service pays more into medicare than any employer in the country. nobody else. my wife retired from dupont. hard to believe to look at it. she just turned 65 and when she turned 65 the dupont company said to her, martha, we love you but for now on you have to sign up for medicare, part a, part b, maybe part d and we'll provide wrap-around coverage for you. they expected that for all employees -- retirees, rather. there are thousands of companies in this country who say that's what we expect. they'll do the wrap-around but they expect retirees to sign up for a, b, maybe part d. medicare postal service competes with fedex, ups.

postal service pays more money to medicare than anybody else. they don't get equal value and it's not fair. it's not fair. and as one of the chief provisions in our bill is we call it medicare integration. medicare integration. it's -- it enables the postal service to pay down this obligation in a more timely way. let me just ask, we'll start off with dr. miller. this probably sounds familiar to you. may or may not sound familiar to our other nominees. in terms of the main thing if we don't do this, if we somehow don't do this i think we're going to be very disappointed in our inability to get anything done. dr. miller. >> mr. chairman i -- actually i thought maybe mr. marky might say a few words on my behalf. i need that kind of help. mr. chairman, i am not surprised at your insightful analysis because i know you have a degree in economics from the ohio

state -- >> i tell people i studied economics at ohio state. my professors would say not nearly enough. >> you're spot on in my judgment. >> thank you. mr. cart wright. >> yes i wholeheartedly endorse the plan in s 1486 to have -- require postal retirees once they reach 65 and are eligible for medicare to make medicare their primary coverage. as you say, it's almost universal in the corporate world and my understanding is that 10% of postal retirees who are eligible don't take part a and 24% don't take part b and i haven't done the numbers to figure out sort of what the cost implications are but those are especially that second number, that's huge. >> all right. thank you. mr. bennett? >> senator i agree. i think, one, you're right. the main thing needs to stay the main thing.

in my company and in the previous company i was with norfolk grummond that's the route we've done. there's no way you can continue on this path. the postal service can't continue on this path. large companies have decided to do that a long time ago. i would agree completely. >> miss kennedy, please, will you react to this? >> yes certainly. obviously the issue of health care and health care costs is something that's a great concern. it's my understanding that there's widespread support, both with the collective bargaining units and with management at the postal service, for the plan that you describe and it's something that i look forward to learning a lot more about. it seems to make a lot of sense but i'd like to understand it in more depth as we go forward. >> fair enough. let's talk a little bit about this intersection between the, if you will analog -- i'll use

analog as an example of what we do at the postal service today we deliver packages, parcels pieces of mail. we do it door to door, five to six days a week do it all over the country. use vehicles to do it. meanwhile, you have a lot of folks that are ordering stuff today as we speak that they want to have delivered tomorrow. they'll look for somebody to deliver it, there are some good business opportunities there including on sundays. and the postal service is starting to take advantage of this. i don't know if it's miss kennedy, somebody mentioned innovation in our legislation. ironically one of the provisions in the legislation that we have is it was legislation lifted from senator bernie sanders and most people wouldn't think of bernie as the chief innovation officer or the guy to be the most entrepreneurial guy in the senate. marky, you're smiling. he's right on -- spot on when it comes to the postal service. how do you figure out, how do we

help enable the postal service to use this legacy organization to find new ways to generate revenues and provide a service that's needed without stepping on the toes in an inappropriate way in the private sector? there's a call in our legislation the creation of what i'll call a chief innovation officer. we call for a summit with all kinds of people, including people from the digital world to come in and say to the postal service, have you ever thought of doing this or that or the other? we're going to do a similar kind of approach with the census. the next time we do the census we won't be doing it with a pen and paper, smarter, less expensively and hopefully more effectively. talk to us about innovation and things that you'd like to see the post office or you think might be good ways for them to provide a service and make some money while they're doing it. again, i'll ask dr. miller if you would just lead off with this please. >> mr. chairman the movement to the digital -- the digital revolution has cost the postal service inasmuch as first class

mail has diminished. on the other hand it's created opportunities as well. that's the major reason you see the growth in the packaging. people ordering through ebay and other ways that has generated a great deal of increase in mail volume. i think that mr. bennett's becoming a member of the board would be a very positive thing to stimulate a lot of thinking at the postal service because he has the kinds of -- those kinds of responsibilities at bae. and there are other opportunities, i think steve has talked about it and vicky have talked about it as well. i think there are many opportunities there that need to be explored -- that are being explored, frankly at the postal service but i think there are many opportunities as you have identified. >> thank you. mr. crawford? >> mr. chairman i'm -- i enjoy reading the white papers at that

the inspector general's office produces. some of them are simply stimulating. i'm not sure that they're politically or otherwise always going to survive and be implemented, but i would like to see the postal service have the flexibility to run pilots and experiments and tryout. let's take non-bank financial services. we see a lot of foreign postal services make some money on that. whether it makes sense for the u.s. postal service to get into that is a huge question. the issue though it seems to me is to have the opportunity to experiment, whether it's that, whether it's the implications for 3-d printing. there is just so much in the world of technology that's unfolding now.

and this can't be all or nothing. we're now going to implement this. now the postal service to be fair, already does do some studies and trials. i just -- i -- if i were on the board, that's an area that i would give special attention to. >> what about the -- well let me let you finish and i'll throw out a couple of ideas and let you react to them. thank you. mr. bennett? >> this is really, mr. chairman, my sweet spot. i have led a number of innovation initiatives in my company, particularly from a technology perspective, but i really get excited thinking about the different things that you can do with this incredible infrastructure that we have, with all these people with all this logistics that we deal with as a postal service every single day that nobody else knows how to do. imagine if you start partnering with a company like sysco and take the kinds of things that they do from a networking perspective and connect those to

our postal infrastructure. we've talked about 3-d printing. imagine being able to have the companies who produce these 3-d printers at no cost to the postal service put those printers in various locations in the postal service and have opportunities where they're able to fax if you will the model of a shoe and they want that to get to a particular customer in an hour. the postal service says, great, we'll get that there within an hour. there are so many different things and opportunities. the moment i was nominated i had the coo of sysco, senior executive at microsoft, various people from different technology companies talk to me about things they would like to consider and to talk to the u.s. postal service about but haven't had an opportunity to get in. this is -- i mean this is just right in the area that i would love to have an opportunity to help the postal service evolve

and do a number of different innovative things over the course of the next decade. >> did you say fax someone a pair of shoes? >> yeah. absolutely. absolutely. the technology exists. it's there. >> i -- let me just say before you speak, vicky. i don't know if they have like the boy has a committee or subcommittee on innovation but if you get confirmed, mr. bennett, i sure hope they put you on that committee. that would be good. thanks. miss kennedy. >> i understand there are athletic shoe manufacturers that are going to be taking orders for athletic shoes with your specifications and doing 3-d printing of your shoes in your exact size and with your specs and they're going to want to distribute them. the distribution network that exists right now for the united states postal service is an incredible asset. that's something that i believe we have to maintain to be able

to take advantage of that kind of innovation, to be able to reach people. when you talk about doing what we do that's what the postal service does. it knows how to deliver. it has an infrastructure and that's why one of the wonderful things in the last few months of waiting for this hearing is that we've all gotten to know each other, all of the nominees here. >> how did you -- if you don't mind, how have you all gotten to know each other? >> we've had lunch. it's a great thing. talking. regular lunch talking e-mailing. so we've gotten to know each other. >> facebook? >> no. no, not facebook, but it's been a very good thing. you know, collegiality and sharing ideas. it's been a very positive thing. so if we're confirmed, i think we'll hit the ground running. and, you know talking about, you know, what's out there in the future, being able to take advantage of that kind of innovation. one of the things that steve crawford just said in his

opening statement though is will the regulatory structure restrict your being able to take advantage of innovation in other ways? there might be some 18-year-old in a garage right now who's coming up with some great new innovation. will the postal service be able to take advantage of that or will it not? i believe we need to be nimble and able to take advantage of innovations that we don't know about as we're sitting at this table right now and be reg gu la tore rally nimble while building on the strength. >> that's very encouraging testimony. i want to turn, if i cohere for a little bit, to the pricing for postage. as you know, the postal service current inflation base postal rate structure was set in place seven years ago. and before the beginning of the

drastic drop in mail volume that continues today. you saw that dr. miller firsthand. late last year the postal regulatory commission allowed the postal service to temporarily increase its pricing for postage above that normally allowed to make up for the losses in mail volume attributable to the great recession. an increase is a 4%. we call it an exigent rate increase. the prc said let's put that in place interim, a period of time. dr. coburn and i in our proposal to the committee said let's make that the new base and then we'll worry about other increases as we go or not increases to go as we go forward. in light of the postal services current financial difficulties let me just ask, again i don't want to pick on you, dr. miller, but let me just start with you. your thoughts on the postal rate structure as we have it currently and how it would be

under our bill. >> as i said in my response to question from the committee i think that the inflation adjusted cap needs to be liberalized a great deal, if not eliminated entirely because it just means that the postal service will start searching for ways to change, alter the rate structure to try to raise additional revenue and that further perverts the structure prices. there's an analogy with how the railroads performed under the interstate commerce act and squeezing revenue here and there. give the postal service the discretion to make rate changes. there is a natural limit to how much a postal service would want to increase certain rates because of the falloff in volume so it's not as though it's going to change the stamp price from

49 cents or 55 cents to $1.80 or something like that. it really is an impediment. there are other ways in which the postal rate commission, despite having some very good people who work there who are, you know just as publicly spirited as we are where it inevitably slows down the process of introducing innovations and changes and experiments of the sort that steve was talking about. so we need to have that kind of freedom to have the postal regulatory system intervene when they see a real danger of the postal service violating the law or about to violate the law. that and you've addressed that in s 1486 and i hope that provision prevails in any conference bill. >> thank you, sir. mr. cartwright?

>> thank you, mr. chairman. i agree with dr. miller's analysis. i think the mail volume, especially for the standard mail, is so sensitive to prices that the postal service is not about to try to jack up that price. you know the notion of a monopoly position is -- it's not as much, it's not as hard a monopoly as some monopolies are. i applaud s 1486 for the reforms in the price cap. i'm on record in previous writings for lifting the price cap and making adjustments. i think the postal service needs that flexibility. i think the postal regulatory commission has a role to play in reviewing the reasonableness of those, but to do it ahead of time is just as vicky kennedy was saying, we need to be nimble enough, the postal service does, to make the adjustments. fuel costs can go up. we saw surcharges put on fed ex

and ups when there was a spike in gasoline prices. the postal service doesn't have that flexibility. i think they need it. i think it's fine to review it after the fact and i think the new legislation has that exactly right. >> thank you, sir. mr. brennan? >> i won't repeat what my colleagues have said, but i do agree with the provision in s 1486 relative to rates. one of the things that came up in the session with your staff last thursday was there was a comment in the private sector that you can -- you know you don't have any caps on pricing. well, that's really not true, i mean, because if you price yourself out of the market and you don't sell anything, then you're out of business. i think the postal service needs the same level of flexibility that you have in the private sector. the kind of flexibility that will allow us to be market driven. in fact, when that happens i think oftentimes prices ind up going down because you're not driving volume up and you end up

driving prices down and you increase value in that institution and increasing value for the american public. i agree with that particular section. i agree with my colleagues. they have more flex bimt. >> >> -- flexibility. >> at the urging of mr. coburn dr. coburn has had an incredible career. he was a very successful business person. did he that for a number of years. he decided i'd like to be a doctor. he became an ob-gyn. very successful there. given birth to -- delivered thousands of ban babies. not given birth to them. he said, i think i'd like to be a congressman. he became a congressman from oklahoma. did that for a while. he said no maybe i'd like to be a senator. he's done that now for ten years. he has a signal he will step down two years early before the end of his term this year. god only knows what he is he'll do next.

maybe he's going to land the plane. he should be here before too much longer. miss kennedy same line of thought we have. let me just say before you -- one of the things that dr. coburn really insisted on, pushed for when we introduced our initial bill a year ago this past august, he basically said the postal service is not foolish, not stupid they're not deaf to the marketplace. let's get the flexibility to set rates. if they charge too much, customers will stop using them. and if they eventually find a sweet spot. in the end we didn't do that. there was huge push back for the original proposal as you can imagine from the mailing industry, printers and so forth. we thought we had found a pretty good medium here with the exigent rate increase becoming the baseline and having the cpi cap going forward. then in 2017 the opportunity to

revisit this. if you're on the board of governors you'll have an opportunity to participate in that. miss kennedy? >> thank you. as a general rule, i believe in flexibility and being able to be nimble. on the specific issue of rates i also believe in being cautious and not answering something that i am not as deeply familiar with as my colleagues here. it's something i would like to understand in a deeper and fuller way. it sounds great. i think what they've said makes a lot of sense to me but i'd like to understand it more. i understand. just a little bit of background. what we've done with the exigent rate case folks that are nonprofit, i think under -- before the exigent rate case the cost of mailing an envelope is about 10 cents and with the exigent rate case it goes up i think a penny to 11 cents. for folks that are mailing magazines i think the price is

about 27 cents and with the exigent rate case becoming the baseline it comes up to 28 cents. i think i might be wrong, but -- correct me if i'm wrong, john but for catalogs the price is 45, 46 cents and it would go by 2 cents. it's not -- there is not an outrageous increase. it strengthens the economy. >> i'm familiar with what the provisions are. that's not -- that was not the issue. it's just the whole underlying philosophy and theory behind them being set that i wanted to be -- >> okay. good enough. dr. miller, did you want to say something else? no? all right. i think i mentioned in my opening statement today the board of governors, postmaster general announced a week or so ago that if we don't do something, if we don't do our job here in the senate and the house to pass hopefully thoughtful effective postal

reform legislation this year, put it in place signed by the president, then they will feel compelled to go ahead and take a next step in closing mail processing plants. it wasn't that long ago we had 600, few more than 600. we're down today gosh, six or seven years ago i recall we're down today to about 325. the postal service is saying unless we do our job that they may be compelled with no help from congress and the president to close another 80 or so starting at the beginning of next calendar year. from our point of view, in our legislation we have a stipulation that says two years after the inactment the postal service may move forward to reduce the number of mail processing centers. we had a similar provision from two years ago, 62 senators, mostly democrats voted for some

republicans. i would like each of you to give your thoughts to closing plants. what we tried to do is lay the groundwork so that the postal service can pay off the obligations, recognize the liabilities and pay them down. have money for capital investment, have money for pay races, have money for pay raises. have money in the bank when all is said and done ten years from now. but i'm not interested in seeing a lot of additional plants close or any additional plants close, i just want to make sure that the postal service is profitable and viable. dr. miller, if you could just lead us off on this, i'd appreciate it please. >> mr. chairman, first let me say that i have not done an analysis of these 82 and the specifics. some may apply to the points i'm making and some not. my impression based on my work on the board of governors ending two years ago or three years ago is that a number of mail processing facilities are there

and have not -- that under ordinary market circumstances would have been relocated would have been changed but for the fact that there would be the impediments from congress displeasure from members of congress restraints put in appropriations bills nimby provisions have not been changed. that leads interestingly to a perverted outcome because when you think there's going to be a change you want to make as many changes as you can on all -- in one fell swoop. so it is just an inefficient system unless you give the postal service some freedom to streamline and rationalize its logistical network, you're going to get these back and forth and i think inefficient decision making about these various installations. >> okay. thank you. mr. coffman. >> mr. chairman i largely agree

with jim's points. i think that the devil's in the details here. it's not for the board to dig into them. it's for the board to set criteria and policy. but i think you know in general the postal service has been right. it needed to consolidate some of its facilities. it's already done a great deal. whether it needs to do more or not i'm not capable of sitting here and saying yes or no but -- and each time they do that's painful for somebody somewhere, but as jim says, you just are pushing these problems to the future. automation has made it easier to do a lot of this high volume mail processing so on balance without trying to avoid commitment i would just say this -- it would be premature for me given my level of understanding of the issue to say anything about the next round of closings and consolidations of processing

centers or plants but i do think that it was appropriate to make some moves along those directions over the last few years. >> all right. thank you. mr. bennett please? >> sure. chairman, i am very familiar with the issue. i'm not familiar with the details as to whether or not these specific plants should or should not be closed, however, what i would say though is that i think in this environment where we do have this incredible infrastructure that is in place, whether or not that facility is operationally efficient or not the rest of the facilities that you're talking about, i think you have to be very careful when you start taking away some of your assets to make sure that those assets couldn't drive future revenue. one of the things that i think that a lot of major corporations make a big mistake particularly the very large ones is when you start trying to cut costs.

because you're so big you start looking at your costs in silos and you don't think about how those costs impact revenue someplace else. and so you really have to be careful to make sure that you consider the whole prior to doing these individual silo cuts. so i don't have an answer to your questions other than if i were looking at this more carefully, that's what i would do. i would consider how does it impact the whole enterprise versus just the silos that we often look at in budget cuts. >> thank you. miss kennedy? >> i echo the concerns michael bennett just set forth. i worry that i don't think you can cut your way to prosperity. i think you have to look at what the long-term implications are of closing these facilities. i don't know what those particular facilities are. i also worry about the impact on the universal service obligation. i don't know what it means for rural communities. i don't know -- i believe that

universal service doesn't mean universal service some day, it means timely universal service. so what delays will happen by that many consolidations and closings? i think that matters because the postal service is a life line for so many communities, and i think that's something that needs to be looked at. and i think you also have to be poised to take advantage with this terrific infrastructure that's in existence for innovation poised to take advantage of the next great opportunity. i think all of those issues need to be considered. >> i'll probably ask you to answer this next question for the record but i may ask you to comment very, very briefly. it relates to the potential closure of additional mail processing centers. the question i have think about it outloud for a minute each maybe, is the service delivery standards. as some of you will recall, it wasn't that long ago that the postal service had delivery standards and delivered the mail and one day, sort of like the

same metropolitan region, geographic region one day outside if you couldn't do that, the postal service was expected to deliver within two days. the mailer and the mailee are in the same 48 contiguous states it was one two, three. at our encouragement the postal service have changed the standard of -- if you will the standard of delivery. it's gone from one, two three day to a modified one. if you're in the same metropolitan area, if you live in one side of washington d.c. i don't i live in delaware. i mail it to you today, you should get it tomorrow. that's modified one. if we're outside the metropolitan area, you might get it, you may not. modified one two, three. and i like -- i think the postal service would like to go to two three. two day even in the same

metropolitan area could be in one but two would be the expectation and then three. in terms of what's appropriate for us, i'm not comfortable with the postal service saying this is how many mail processing centers we should have. maybe with the involvement of the postal regulatory commission and the board of governors and the postal service is to consider whether modified one, two, three days of service is appropriate, one, two three is better or two, three is just fine. i welcome any comments you have in this regard. miss kennedy, i picked on dr. miller all afternoon. >> my first thought of that is if we have declining first class mail volume to have more delayed first class mail delivery doesn't make sense. i mean, if possible, i personally would like to see us have the fast er faster standard of

delivery. that concerns me. you would have fewer people mailing letters. >> just off the cuff i think the faster form of delivery would be better. it is the postal service. this is a service organization. every company that's focused on service is focused on how to provide a better service to the customer than somebody else and having deliveries two, three days after you've put it in the post is probably not a good way to make sure your customers are happy. if you have customers happy on one end, then they're going to want to use you for something else. so i would focus on how do i make my customers most happy and i would think that would be more of a faster service to help my business. >> okay. thanks. mr. crawford? >> what strikes me when i think about this question mr. chairman, is my daughter who's 14 lives on her iphone when she's not at camp, and she finds e-mail to be slow and

cumbersome. instant messaging is so much quicker, she tells me. to me, e-mail's just so rapid it's incredible. but the new generation is accustomed and expects what they want to arrive on the door, you know, within minutes and instant sort of gratification. we worry about that in some respects but in other respects it's a tribute to the new communications and transportation capabilities that we've developed. and given that shifting culture those expectations for speed and on time delivery i'm reluctant. you know, you have to look at the economics of all of this and the tradeoffs and costs, but i hate to see the postal service give up one, two, three. >> all right. thank you. dr. miller? >> mr. chairman two things. one, as i recollect the rationale for this change in

service standards was developed after i left. i don't know the details of it and i hesitate to answer without having time to analyze the data. second, there is a tradeoff obviously. you can't do all things for all people and you have to make some choices here. service standards should be an input into the question of plant and logistical rationalization seems to me. i just don't have -- i don't have my hands on the information necessary. >> i understand. >> everything else equal, there's something nice about having a -- as you characterize one, two three kind of standard and you would deviate that only for good reason, but i don't -- whether there's a good reason there or not, i just simply cannot say at this time. >> all right. thank you. i think i mentioned earlier on saturday i was home for a little

bit and about 5:00 in the afternoon our letter carrier came and delivered our mail on saturday. and it turned out there were some things in the mail that we actually very much wanted to receive. it's not always the case but it certainly was on that saturday. part of the debate that surrounds postal reform these days is should we continue to have 6-day a week service except when we have a holiday that mixes in like july 4th it was on a friday maybe. or should we allow postal service at some point in time to go from six to five-day a week service. when we passed our legislation two years ago 62 senators voted for it, but the -- in that bill you may recall there was a provision that said the postal service could eventually go from six to five day service if they chose to, but you have to wait for at least two -- they have to wait for two years after enactment of our -- of that legislation. well, that legislation if it had been enacted that means the

postal service would have been free this year to go from six to five-day a week service in 2014 and to do the same thing in terms of closing additional mail processing centers. in this year, 2014. the bill didn't get enacted. now we're grappling with the same issues. standards delivery and six or five-day a week service. we've taken a different approach as you may know this year in respect to our legislation from six to five. for years i have sat here with our labor friends from the postal union especially to the letter carriers and urged them to work with the postal service to find a way to continue to deliver mail on saturday and with a wage againbenefit structure that makes them as competitive that doesn't lose as much money. we were told going from six to five day a week service would save $5 billion a year and we're told now that that -- because of

the changes in the wage benefit structure that have been negotiated between the postal service and the letter carriers that that's no longer $3 billion savings. it's 1.5 to $2 billion a year which makes the postal service -- they lose money but there's a tradeoff between service delivery and labor costs. our legislation, we took a different approach, dr. coburn and i have brought to the committee and the committee has reported out. our legislation says we're not going to say to the postal service for two years you're forbidden to go to five day a week service. what we say is let's look at a volume trigger and postal service last year i think delivered about 150 -- 158 billion pieces of mail give or take. what we've put in is a volume trigger that says if that number drops below 140 billion pieces

of mail then the postal service would be free to go from six to five day a week delivery. didn't have to. they're losing money. they're making money hand over fist, maybe they wouldn't want to. maybe they're continuing to find ways to make that internet digital connection, to make money. the reason why we decided to take this approach to use a volume trigger instead of somebody going to five-day a week service in two years is because we want to realign the incentives. we want to incentive advise postal employees to work harder, sell products. if you happen to be on a rural route or happen to be in a post office or a town or city or community, but we want them to be incentivized to sell harder and sell more. we want to incentive advise the mailers, whatever they happen to be mailing, whether it's catalog folks, magazines, we want to incentive advise them to mail more in order to keep the six

day a week delivery if that's what you want. what we put in our bill two years ago we said you can't do that as opposed to some volume trigger today. what do you like about it or not. please, dr. miller. >> mr. chairman, as i said in my response to questions from the committee, i think the postal service made a mistake in trying to obtain permission or first stated it would accomplish this without congressional acquiescence but then tried to obtain permission to go from six day to five-day delivery. i think they should have asked for delivery flexibility. there are a lot of places where six daze day delivery makes eminently good sense. some places seven day delivery makes good sense. other places five day delivery, other places still two or three day delivery per week.

the postal service needs to have that kind of flexibility. i think the postal service can provide what any reasonable person would say is universal service to some places in america at two days or three days where the costs are just extraordinary of doing six days a week. the postal service did couple its proposal with provision that the post office would remain open on saturdays as some were expecting a bill or payment or box of medicine or something like that, they could come to the post office and get it. i live on a lane. i have to go 1/3 or half a mile every day to pick up my mail at my mailbox. a lot of people go pick up their mail at the postal -- post office. so you know -- and i know a will the of people are very remote locations et cetera, et cetera, especially rural communities, more rural than

mine, but i think with some flexibility the postal service could inconvenience a few people somewhat but save a lot of money, money that is being provided by other postal ratepayers. for the most part what we're talking about in terms of the postal service's revenue base is not money from the taxpayer, it's money from other postal patrons. they are paying for the losses that are ascribed to service that is just economically prohibited. >> all right. thank you very much for that insight. mr. crawford please? >> just to add to those very thoughtful comments jim, that i see it as a last resort. when i was on the transition team the volume was 200 billion pieces. 158 billion this year from

second quarter results. it will be 151 million -- billion pieces or so in 2014. that 240 -- we're approaching some of the thresholds that are in the bill. but what has struck me since i was here two years ago, and i learned this from the reform legislation that you and dr. coburn have introduced is the potential savings in retirement and health care expenses which exceed even what i imagined when i had done earlier examinations. and i think in light of the really large possibilities there, that it may not be necessary to go to five-day delivery. i think jim makes a good point about it depends on where you are and what makes sense. i do believe the postal service should have the flexibility. it would be better if it weren't

just legislated. they had that capability, but at the same time as a governor i view any reduction in service, it's a little like one two three. and service standards highly regrettable and should only be taken as a last resort if we can show, and i think the numbers show that there would be some savings, as you say, 2 or 3 billion a year. that's not chicken feed but next to what we're talking about in the health care and retirement expenses it may not be necessary. and for a lot of people who deliver catalogs i get my "economist" most weeks on a saturday. that would be a loss to have to wait for monday or tuesday on a holiday week. i would like to see us keep six-day delivery but to have the flexibility to reduce if we need

to. >> all right. thank you very much. mr. bennett please. >> i think six-day delivery is something that is a foundation at the post office and that people expect that. i think that customer service would probably almost demand it in most cases however that said, i think that this is -- i think we have to be careful to try and have a one size fits all fix for all the various problems. as jim pointed out, that sometimes there may be some areas where five-day delivery is just fine and some area where seven-day delivery is most important, but at the end of the day i think we've got to be very, very careful not to try to fix the -- i have a one size fits all kind of solution to the various challenges. this is just about the financial issues. i think as stephen crawford said, there are other ways that you've included in the bill to

address the major financial issues. so just to make that change for the purpose of financials, as big of a savings as it would have, i'm not sure that that's the right thing. and, again, if you go back and think about the model i talked about earlier where you've got these various silos of costs you start driving costs down in one area, you may end up driving costs up in some other areas. ending saturday delivery while we have this trigger of 140 billion pieces of mail before you can drop saturday delivery, if you drop it and all of a sudden your pieces of mail starts to fall further. so the savings impact could end up causing revenue losses in other areas that we haven't thought about. so i think that there needs to be careful analysis in that area to look at what the impact is across the enterprise. >> thank you. miss kennedy? >> i really support what my

colleagues said. i really don't need to repeat it, only to say that i think we need to project a postal service that's working and that is available for people to want to use and any time, and i really reiterate strongly what steve crawford said, any time you have a cutback in service in any way, whether it's delivery standards, whether it's daily delivery, six days a week, i think it's a black eye. i think it hurts us. and we want people to feel that the postal service is excellent in every way, that the mail when they drop that letter in the mailbox when it's picked up by their postal carrier, that it's going to get where they want it to go, that it's going to get there in a timely fashion, that they can rely on the united states postal service. that's the inmage we want to project. that's what we want to see happen. i would love for us to find other ways to keep our finances

robust and to maintain the postal service. >> thank you. i just want to reflect on this for a moment. the legislation that was reported out of this committee a couple of months ago allows the postal service to consider whether or not to reducer advice from six to five with a number of caveats including post office has to be open on the weekends. people have to have access to their mailboxes and that kind of thing. certain kinds of items still had to be delivered including pharmaceuticals, medication, that type of thing. but we at the encouragement of senator levin we didn't use a straight trigger $148 billion trigger to say when the mail volume drops below 140 billion, even if that's next year you can go to five-day delivery.

we said you can't do it before 2007. effectively the postal board of governors, if you see it plummet plummet, i don't think you will with the economy coming back. but the effect of what we've put in our legislation at the earliest, we could go from six to five in 2000 i think 18. we'll see how it works out. the challenge for us, the postal service and the employees is to figure out how to get more people to use the service. how do we make saturday delivery? maybe not something that loses $1.8 billion a year, actually make it profitable? that's the key. how do we do that? as we figure out with the digital intersection figured out, mr. bennett if you get on

the committee and the board of governors, i know you're going to help us do that. i think that's a challenge for us. how do we do this take this legacy organization and make money with it and do so without encroaching inappropriate ways on the private sector. we're still hoping dr. coburn's going to join us. he's flying in from tulsa. you know the old song, jean pit pitney song, only 24 hours from tulsa. doesn't take quite that long to get here from tulsa. his flight has been delayed somewhat. fritz, do you have any updates for us? all right.

>> i have some bad news for you. that's dr. coburn's flight has been delayed further and he's not going to be able to be here until 8:00 so we'll have dinner and you guys can get to know each other even better. no, i think we're going to wrap it up and knowing dr. coburn he'll have plenty of questions for the record. if he hasn't had a chance to meet with you, my guess is he would want to do so. try to make time to do that. he's very thoughtful, creative person. he's saddled with not very good staff -- no he's blessed with good staff, so am i, they keep us out of trouble most of the time. i -- well a lot of times what i'll do with a hearing if we have an opportunity we're invited to make an opening statement and i thought you had very good ones and sometimes

when we have time i like to give our witnesses a chance to give a closing statement. not five minutes. just sort of reflect on what you've heard, what you've said and what others have said. some questions that were asked. but if you would just take a moment, think about it. a closing statement, take a minute or so to do that. i'll make a couple of comments and then we'll call it a day. miss kennedy would you like to lead off? >> sure. thank you so much, mr. chairman. thank you for giving us the opportunity to be here today, and thank you for your very thoughtful questions. i think the challenges are there, but i think they're great opportunities. the united states postal service is a tremendously vital asset for this nation, and i look forward to having the opportunity to serve and if confirmed i look forward to getting my -- serving with these

magnificent gentlemen here to my right and having a great continuing conversation with you and with dr. coburn and the rest of the members of the committee. thank you very much. >> thank you, ma'am. david michael bennett. >> all right. >> from charlotte, north carolina. >> absolutely. this is a really neat process. thank you so much for the opportunity to be here. >> confirmation hearings aren't normally this much fun. >> i've had a good time. >> sometimes they can be downright -- as dr. miller knows, very awful. >> i've had a great time. >> it's been a good one. >> more of a comment on my personality than anything else. this is a real opportunity i look forward to having a chance to tackle. the problems that the postal service has and that we talked about at our lunches are really challenging, but they're the same kinds of problems that other businesses have faced for the -- for the last decade. ibm transformed themselves. sysco's having to transform themselves now. company after -- at&t.

company after company, they've had to transform themselves. they've come out on the other side better than they were before. i think we have an opportunity to take this 200 plus-year-old organization and make it better than it was before. do some things that are different. i mean, maybe in a year we're not even talking about the number of pieces of mail that we've delivered. maybe we're talking about the number of shoes or the number of other items that have been faxed that we've had a chance to deliver. i mean, so they're -- the world is changing and we have an opportunity, i think, now at this critical juncture, we have an opportunity to take the most unique organization in the world in terms of logistics and moving things around and make it something really special for the american people. i look forward to the opportunity and i hope i get the opportunity to serve on the board of governors and help make that happen. >> thank you. i hope you will, too.

thank you. dr. crawford not mr. crawford, the closing statement i want to recognize dr. crawford. >> thank you. >> i kept asking my staff, is he mr. or a dr. they told me you were dr. all those times i called you mr., i apologize. dr. crawford. >> i'll take this opportunity to say, you know, i was here two years ago almost to the day for my hearing the first time around and 1789 -- s 1789 had actually passed in the senate. since then my wife has said to me this classic question that we've all been asked why do you want to do this? the board can't fix what's wrong with the postal service, congress seems to be reluctant to act, and to be perfectly frank, i had -- i had to ask

myself, does this make good sense? and it has been so gratifying to come back this time because s 1486 has been reported out of the committee and i have -- i am just so impressed by the changes that it -- that it holds forth and am hopeful enough that those will -- something like those will be enacted that i find myself almost sharing michael david bennett's enthusiasm. and the fact that there are four of us together here now with such an interesting background i have to confess that i, too, and it's not like a cynical old professor and army officer but i, too, am enormously

enthusiastic about this opportunity because of the legislation that's underway and because of the team that's here together. so thank you >> you're welcome. dr. crawford thank you for your willingness to take this on yet again. we'll try to get it done this time. okay. thank you. dr. miller, please. >> thank you, mr. chairman. i appreciate the opportunity of being here today and i appreciate also the opportunity of a prospect of serving with these three individuals whom as i say, i've gotten to know and respect. i think great things could come from the postal services being led by them, as well as the current governors. i concur with what dr. crawford has just said about the two legislative vehicles. i think the current one is much improved over the former one. a matter which i gave rise, i think, to some lack of cohesion

last two years ago. i think mr. bennett michael summarized things well, and made the case for something i have been saying, and all along and that is i think the postal service really needs the freedom, the flexibility, to operate like a business. those businesses that have remade themselves have been able to do that because they had the freedom to experiment and to do things of a sort that steven mentioned earlier. all along we have to be cog nizant of the public service mandate the postal service has. as articulated by mrs. kennedy. i think we can do that. i think working with congress both houses, as you know the

other body has not come with a proposal that is quite similar to the one that you have, there's more work to be done. i think, though that the prospects are reasonably good. because the situation for the postal service is so dire. and i congratulate you on the progress that this committee has made, and i urge your prompt attention to the nominations and to the prospect of a full board operating in high gear. thank you, mr. chair. >> thank you all. it was a wonderful, wonderful closing statements. let me add a couple things. one humorous. one more serious. not long ago my wife and i were driving by a cemetery. she's always after me to wrup date our wills.

and i have no intention of dying any time soon, but she said oh, we need to update our wills. and one day she said to me driving by a cemetery she said you ever think about what you'd like to have like on your tombstone? what would you like to have on your tombstone? and i thought about it for a moment. i said, you know i have. and i think i would like to have these words. return to sender. return to sender. and it's not just a great song. but a pretty good -- pretty good something to put on a tombstone. fits nicely, too, i think. the leaders are many things. you've always been leaders throughout your lives. leaders, i think to think of leaders are humble not haughty. we lead by examples.

not do as i say, but do as i do. i like to think as leaders as those who have the courage to keep out of step when everyone else is marching to the wrong tune. leaders are also purveyors of hope. leaders are purveyors of hope. this is not a hopeless situation. this is actually quite a hopeful situation. i've been up here drinking water, sometimes have to be careful not to drink too much. but this is a glass half full situation. this is definitely a glass half full situation. and if we can get our act together, we're in this body, on capitol hill working with the president, all the key stake holders, you know this can -- this can turn out a whole lot better than some are willing to believe just a few years ago. and part of the key to this is having folks on the board of governors. when people say to me what's your all-time favorite job, i

tell them, my best job i ever had was at ohio state university, where i was the pots and pans man. at the delta gamma sorority house. that was a great job. close second would be governor of delaware. i loved being governor. but which to serve -- i love being governor. i tell people i'm a recovering governor when they ask what i do. people who don't know me i say i'm a recovering governor. some day i hope i have a chance to say you're recovering governors, too. you've been age to say this for awhile but i think you'll be a great addition to the board of governors. and we're going to try, dr. coburn, have a chance to talk tomorrow, and talk about how -- how he'd like to move forward and how we'd like to move forward and do it in a timely, timely way. with that say we're deeply grateful to each of you for your

time and preparation today, for meeting with our half, for all the responses to their respective bigraph can and financial questionnaires, answering freely the hearing questions submitted by our committee. you've had your financial statements reviewed by the office of government ethics without objection this information will be made part of the hearing record, with the exception of the financial data which are on file and available for public inspection in the committee offices. without objection the record will be kept open until 5:00 p.m. tomorrow for the submission of any written questions or statements for the records and i'm sure dr. coburn will have some additional questions and my guess is some of our colleagues will, too. and with that, it's a wrap. and we'll adjourn this hearing today. thank you again so much. >> thank you, mr. chairman. [inaudible conversations]

[inaudible conversations] >> a. >> the chair of the federal reserve, janet yellen, will be on capitol hill to testify about u.s. monetary policy and the health of the economy. should put to to get questions about possible interest rate increases from central bank and u.s. government bonds. watch live starting at 10

eastern on c-span3. later in the they also and c-span3, a senate subcommittee on crime and terrorism holds a hearing on cybercrime. officials from microsoft internet security companies and the justice department will testify. live coverage at 2:30 p.m. eastern. >> we are at the henry wallace countrywide's center, which is 50 miles south and west of des moines. this is the birthplace home of henry a. wallace. the wallace up i will consist of three generations of wallace's. the patriarch was known fondly as uncle henry, and he was the founder of wallace farmer magazine. his son henry, was u.s. secretary of agriculture under woodrow wilson. henry's son was born on this

farm in 1888. he went on to become editor of wallace farmer magazine. he was been asked by franklin roosevelt to serve as u.s. secretary of agriculture, which he did for eight years from 1933-1941. in 1941-1945 he was roosevelt vice president. as u.s. secretary of agriculture, he is known for the agricultural adjustment act which was the first time that farmers were asked not to produce. at first people couldn't believe that things that he was proposing regarding that, but then as prices went up they started to listen to him. people still refer to him today as the genius secretary of agriculture. >> explore the history and literary life of des moines iowa, saturday at noon eastern on c-span2's booktv and sunday afternoon at two on american history tv on c-span3.

>> up next ellicott secured on u.s.-mexico border and the recent rise in the number of apprehensions involving an accompanied miners and families trying to enter the u.s. the customs and border protection commission testified at this two hour 45 minute hearing. >> let me begin today by calling us to border, and thanking our witnesses for joining us to witnses discuss the current humanitarian challenge that is playing out on our southern border with mexico, with an company chose as young as four years old arriving in record numbers almost everyday. 4 ye before we discuss theumbers administration's robust response to the current situation i

think it's important to try to put things into context. over the past decade, we havet's imrtan made significant progress in to securing our borders. things since 2003, for example, we have ma spent $223 billion dollars to enforce our immigration laws since more than doubling the size of the border patrol along the way. our we have also built 670 miles of fencing and have deployed force the multipliers such as high-techborder patroong cameras, radars, and drones up 've al and sodown the border. multip in to thus and six just eight years ago the border patrolllion pe apprehended more than annoying people at theop border. 420,000. some got through most did not. while the most recent recession played a role in that drop i think it's clear the investments we've made in recent years have paid off. although overall, migration is still at historic lows, we're now facing a large surge, as we

know, in undocumented immigration from the central american countries including unprecedented numbers of unaccompanied children and families showing up at our borders. some are saying that the current situation shows that our borders are not secure. i don't believe this is true. let me be clear. these children and their families are not slipping past our borders undetected. they are being apprehended in large numbers by the border patrol, almost as soon as they touch the u.s. often turning themselves in voluntarily. people from central america unlike mexico must be flown back to their countries. this is a costly process that can take months and sometimes even years. this process is even more complicated for unaccompanied children and families, because our laws, appropriately, require different treatment for these groups. children must be handed over to the department of health and human services and families must be detained in special facilities that include educational opportunity for children. our border security system has

been overwhelmed by the sheer number of these children and families. the administration and secretary johnson have responded to the situation with what i describe as an all hands on deck approach. the federal emergency management administration is coordinating with the department of homeland security wide response to the problem. the department of defense has provided space in some of its military installations to house unaccompanied minors until health and human services can find a placement for them. and we surged immigration judges and other personnel to the border to help process these individuals. finally, just yesterday the administration proposed some $3.7 billion in emergency funding to deal with this situation. and while we're still trying to drill down on it and understand fully what it calls for, we do know that the department of homeland security will receive $1.5 billion to detain and deport more families build some temporary additional detention facilities for the border

patrol, and enhance investigations into human smuggling networks. these resources are urgently needed. i'm concerned however that while we continue to focus a great deal of attention on the symptoms of the problems along the border we also continue to focus too little attention in addressing the underlying causes. as i mentioned earlier we spent nearly a quarter of a trillion dollars securing our borders since 2003. at the same time, only a small fraction of this amount has been invested in addressing the root causes in central america that are encouraging young people and their families to risk life and limb and make the long and dangerous trek to south texas. seeking a better life in the united states is nothing new. most of us here today are here because someone in our family a generation or more ago decided to come here to take advantage of what america has to offer. but for some of those central americans, especially, the children and parents, who often send them on their journeys, the decision can be a desperate one.

life in parts of guatemala el salvador, and honduras is more than difficult today. it can be deadly. i've seen it firsthand, even this year. violence has been steadily increasing in the region, with homicide rates in all three countries among the highest in the entire world. kidnapping and extortion are endemic. meanwhile, these countries have stagnant economies to create too few jobs and opportunities for their citizens. faced with this violence and lack of hope at home, people from the region are voting with their feet and risking their lives and a nearly 1,500 mile journey to the united states. i believe that the u.s. along with mexico, along with colombia and along with many others, need to do a better job of helping central american countries help themselves. how? in a large part, by helping them create a more nurtureing environment for job creation. restore the rule of law. lower energy costs. improve workforce skills and access to capital.

and improve the prospects for the young people so that more of them are willing, even eager, to stay home and help build their country up. i'm dismayed to hear some of our colleagues suggest that the answer is to cut off funding for these countries. and while i'm a strong advocate of tough love i believe in tough love it strikes me as an extremely shortsighted step to take and one that will likely do more harm than good in the long run. colombia would be a failed nation today instead of one with a vibrant economy that's become a strong ally of hours. do our neighbors and their leaders in central america need to do more to provide a broader future for their own citizens? you bet they do. but this is not the time to abandon them. do we really think that making things worse in this country is going to somehow improve the situation on our borders? i don't think so. i'm encouraged that the administration has included $300 million in its emergency

supplemental request for the state department, some of which will be used to deal with the root causes of south american migration. but these funds should be seen as a down payment. this cannot be one and done. if we're serious about improving conditions in this region we need to do more, and frankly, so will others. and i would emphasize this. this is a shared responsibility. this shouldn't be all on america's shoulders. this is a shared responsibility and it includes the mexicans and colombians and other countries in latin america. it includes development banks and so far. but keep in mind plan colombia took more than a decade to bear fruit. i think we face a similar commitment here today. hopefully not that long, but a similar commitment. and in making that commitment will not only prove ourselves good neighbors, but ensure that we won't continue to face an expensive humanitarian crisis at our borders a decade from now. addressing the factors that are pushing people out of central america is important but we also need to address the factors that are pulling them here in the first place. some are saying that the current surge in migration from central america is somehow tied to the

actions that president obama has taken, to help undocumented immigrants, who are brought here as children, years ago, come out of the shadows and live without fear. many of those making this argument are the same people who oppose immigration reform and have rejected our bipartisan senate efforts to update the outdated immigration laws that often drive people to try and enter our country illegally. from what i have seen and heard, the biggest factor that pulls people to come here is the desire to have a better life. a job in the united states. but a broken immigration systems don't do enough to provide legal avenues for workers we want and need, nor does it provide the most effective tools to ensure the providers don't exploit undocumented workers. the senate passed a comprehensive immigration reform bill more than a year ago. i would be the first to say, it is not perfect. other parts would i like to change? you bet i would. and i'm sure others feel the same way. it would tackle some of the root causes that are pulling these

migrants to come here and live and work by providing them legal avenues to do so and return to their own countries. it also further increases the security of our borders and enforce our immigration and workforce laws in the interior of the country. lastly congressional budget office concluded that the immigration reform bill passed by the senate would increase our country's gdp increase our country's gdp, but i think, anywhere from 3 to 5%. and increase our budget deficit by almost $1 trillion. $1 trillion over the next 20 years. and yet just last week, we learned that our friends in the house of representatives the not to debate immigration reform this year. i believe this is a mistake. i truly hope they'll reconsider this decision. with that having been said, let me turn to my friend dr. coburn, and then we'll hear from our witnesses. >> i would ask unanimous consent that my remarks be -- >> without objection. >> submitted. i would welcome each of you here. i'll make some observations, as i've studied this. number one is that we've known about this problem escalating

since january and yet there was no mention of it or any request for it in the president's budget. number two is the best way to stop the flow is to send them back. i understand our 2008 law, in terms of the trafficking law, prohibits us to do that at this time in a timely manner but in fact, if we want to stop this flow. number three the root cause of this can be mediated somewhat by our ally the mexican government. and whether or not we've done everything we can do in that regard to utilize their help in this problem remains to be seen. i want to welcome each and every one of you being here. and i submitted your questions ahead of time so we can get complete answers for the record. >> thank you dr. coburn. i want to provide brief introductions for our witnesses and listen to you and we'll have

a good conversation. our first witness is no stranger here, craig fugate. william craig fugate. and mr. few grait is the administrator of the federal emergency management industry. mr. fugate has helped coordinate emergency management efforts between all levels of government. external partners in the private and community sectors prior to joining fema, mr. fugate served as the director of florida division of emergency management. craig, nice to see you. thanks for joining us and for your service. second witness today is gale kerlikowske. in this position, he oversees this nation's dual mission of protecting national and security objectives while promoting economic security. as commissioner, he runs the largest federal law enforcement agency and the second largest revenue collecting source in the federal government. prior to joining cbp, mr. kerlikowske was the director of white house office of national

drug control policy and as i recall, he's been the police chief in a place or two, maybe in buffalo and seattle, if i'm not mistaken. our next witness is thomas minh minkowski. the through the criminal and civil enforcement of approximately 400 federal laws governing border control, customs, trade and immigration. and mr.ost recently he served as the acting commissioner prior to the appointment of mr. kerlikowske. next we have mark greenberg. mark is an acting assistant secretary for the administration for children and families at the department of health and human services. prior to this, he directed the georgetown university center of public policy. during his career, he's frequently provided technical assistance to state and local

government regarding poverty reduction strategyings. mr. greenberg also serves as both the principle deputy assistant secretary, and the acting commissioner for the administration of children, youth, and families. and our next witness is francisco palmiery, the deputy assistant secretary for the caribbean and for the department of state. mr. palmieri has served and has led the latin america and caribbean program officers where he sponsored over $800 million in programs including the caribbean and mexican operations in 19 narcotics affairs offices throughout the western hemisphere. he serves as deputy executive secretary in the department of state's executive secretary.

final witness is juan osuna. mr. osuna serves has director of the executive office for immigration review at the department of justice, leading up to his appointment as direct, mr. osuna served as a deputy attorney general working as indian country matters and pardons and commutations. prior to this year we saw sifl immigration related litigation in the federal courts as deputy assistant attorney general in the civil division office of immigration and litigation. hes also teaches immigration policy at george mason university of law in arlington, virginia. we're delighted that you're here. thank you all for your presence for your preparation, for your testimony, and craig why don't you lead us off? >> thank you mr. chairman senator coburn and other senators the timeline fema is involved actually started about

mid-may. we were as part of the department in meetings where the secretary had -- >> craig, could you bring the mic a little closer? >> yes. >> about mid-may the secretary had elevated the response based upon the number of children that were being held. at that time, fema offered what assistance we could. we weren't sure if this was commodities or technical assistance. the initial assistance we provided was mainly advisory and technical assistance in helping identify some resources within the faith-based community for some immediate needs. towards the end of may, about may 30th there was a deputies meeting at the white house with the national security council on this issue that we participated in, as fema. we were asked what else we could do. based upon authorities that fema had received in the post-katrina emergency management format as the principal adviser to the administration on emergency

management issues, we felt that there would be some additional resources or assistance we could provide. based upon that, we were asked by the president, through the secretary, to coordinate and again, i want to be very clear about this, a very narrow focus on supporting two lead agencies custom and border protection, and the agency for children and families, officer refugee resettlement focused on the humanitarian issues surrounding the children that were being held in detention because there was not enough capacity to place them in beds. so our focus has been using the framework through interagency agreements to formulate across the federal agencies existing authorities and existing funding to meet the needs of the humanitarian aspect of these children that were for being days held in detention cells working across the interagency with everybody from gsa, department of defense within our own department of homeland security, coast guard, and others for transportation

resources. and again the focus of our assignment has been on what we could do to either bring additional services in the field at the level that cbp had, or assisting children and families to getting more capacity to house children and process children. so through the interagency and the national response framework, that's been our role. we have not used our authorities under the stafford act, nor have we used any disaster funds in that matter. we've used existing funding that we've had. most of the additional assistance that fema's provided has been done through interagency agreements. that's built in when we respond to disasters that's not stafford act. similar to what we did in haiti, when under direction from usid, fema provided additional assistance in haiti. we did that through interagency agreements, where the fund transfers were done so that we were performing work under

existing funding to agencies that we were authorized to do. since thimime, we've added about 3,000 additional beds for children and families. numbers have come down, but we still face the problem of too many children that were in detention for more than 24 hours. too many children that are still in the custody of cdp for more than 72 hours before they're placed. and although we've made progress, that progress is disrupted when we see sudden influxes of children coming in faster than we can discharge them and we back up. the last week, we've seen our numbers drop, but we have not been, what i would say, successful yet in ensuring that no child is in a detention facility for more than 24 hours and no child is in cdp custody for more than 2 hours. we work diligent lyly to make sure

we're placing all of the youngest children. there was a massive effort to make sure that children under 5 were placed, and then children under 12 to get those children to an appropriate level of care. but the children continue to come across the border. it's a very fluid situation. again, we will continue our role until such time as the system is stable and children are being placed in a timely manner and we will then, at that point, consider our part of this completed. mr. chairman? >> mr. chairman thanks mr. fugate. and gil, please proceed. gil kerlikowske. >> yes, sir. chairman carper, ranking chairman coburn, distinguished members of the committee thank you for the opportunity to appear before and discuss the role that the united states border and custom protection is doing to address this issue of influx of unaccompanied children. the rio grande valley of texas has experienced a significant increase in illegal entrance, including increased numbers of

unaccompanied children and family units. most of these are from el salvador guatemala and honduras. i was confirmed for the position on march 7th and less than two weeks later, i was in the rio grande valley in mckown, texas, to see this for myself and look at the challenge that men and women of customs and border protection were facing. i've since made two return visits and i'm completely focused on though make sure we do everything we can to address this increased flow of children acrossing the border. the recent dramatic increase is difficult and distressing on a lot of levels. and today at this fiscal year the number of unaccompanied children encountered by cdp is over 57000. it's more than doubled compared to the previous year, and as of july 1st there were just over 2,600 unaccompanied children in our custody. we're working closely with our counterparts to surge every available resource personnel, facilities, equipment supplies to quickly safely, and humanely

process these children in accordance with the 2008 trafficking victims protection reauthorization act, and to support the transfer of the custody to the department of health and human services. we're also surging resources to maintain border security operations. in addition, 115 border patrol agents were recently added to the south texas area and secretary johnson has also just added an additional 150 agents on top of that. unaccompanied children are an incredibly vulnerable population. and while they're in our custody, they're provided shelter and medical assistance and basic necessities. these may be adequate for a short-term stay, but cbp's facilities are clearly not designed, nor were services put in place to accommodate such large volumes for an extended period of time. we're working with i.c.e. and health and human services and fema and others and the federal

partner to ease these conditions through the utilization of alternate facilities the nogales placement center in arizona and a facility recently secured by the gsa for customs and border protection to use in mcalan to process and trailer hold children that are awaiting transfer to health and human services custody. the border patrol has established medical units at our busiest border stations. we're conducting public health screenings. we have the assistance of the united states coast guard corpsman and the public health services, so that all of these adult and child detainees can receive medical care. fema has provided hygiene items, shower services and many other things. services that have improved the care for these detainees in the past several months. assistance from nongovernmental and charity organizations have had a big impact on the government-wide effort to accommodate these children. i could not say enough about them. the additional support has

provided relief to these law enforcement agents and officers who have been taking care of these kids. you know, i've been down there and witnessed firsthand these employees going above and beyond their regular duties. they're absolutely committed to making sure these children are treated in the most respectful and humane wait and heartfelt way possible under really difficult circumstances. we're working around the clock to address this issue. i appreciate the opportunity to be here and i would certainly invite all of you to tour and to visit these facilities and to see some of this firsthand and i know that some of you already have. thank you. >> thank you, mr. kerlikowske. >> thank you for the opportunity to testify today about u.s. immigration and customs enforcement role in addressing the rise in apprehensions along the southwest border namely the

rio grande valley, and our response. mr. chairman, i would like to thank you for your support and for taking the time this spring to visit mexico, guatemala, and el salvador in order to better understand the underlying causes of this search. thank you very much. through the whole government, we are determined to address the situation in a matter that is comprehensive, coordinated and humane. on may 12th secretary johnson declared a level 4 condition of readiness, which was the first step to bring the full interagency resources to bear. on june 1st president obama, prudent to the homeland security act, directed secretary johnson to establish a unified coordination group. craig talked about that. this group includes dhs and all of its components, the department of health and human services, defense justice and state and the general services administration. when cbp encounters a child attempting to enter the united states, cbp begins the interview

process to determine the child's status, review available documentation, and determine if the child is accompanied by a parent or a legal garden. under the trafficking victims protection reauthorization act of 2008, or tbpra, an unaccompanied child who is a national of canada or mexico, may be permitted to withdraw his or her application for a mission and be repatrioted immediately. however, this is not true for the vast majority of children accounted in the rio grande valley, because almost all of them are marbles of honduras, guatemala, and el salvador and according to tvpra are required to be processed by receiving a notice to appear in order to see an immigration judge. upon determining that an unaccompanied child does not have the ourpgsd tvpra to withdraw his or her application for a mission, cvp notifies i.c.e. and the department of human services offices of

refugee resettlement. once hhs notifies i.c.e. a shelter bed is available pursuant to requirements of a law. it is i.c.e.'s responsibility to transport the child to an oor shelter facility. i.c.e. transports unaccompanied children villa ground commercial, air and i.c.e. charter flights. in order to speed up the safe transportation of unaccompanied minors to oor shelters, i.c.e. has leeds additional charter planes and is working closely with the houston airport authority to have i.c.e. escorting officers fly to houston, rather than making the trip to the rio grande valley where both inbound and outbound flights are limited. i.c.e. is also using reverse escorting for unaccompanied children, where i.c.e. enforcement removal officers from other parts of the country are assisting in transporting the transportation needs in the rio grande valley, thus allowing for more escorting capabilities. all 24 of i.c.e. ero field officers have primary and backup

juvenile coordinators each of who receive annual specialized training with respect to the unique vulnerabilities of children. in addition, i.c.e. has detailed around 200 officers to the rio grande valley to assist with the increased children and transportation needs. in addition, i.c.e. has surged investigative resources for the prosecution of those who smuggle the children. on may 2014, there were 163 arrests of smugglers along the southwest border. the secretary has directed a 90-day surge of i.c.e. homeland security investigation special agents, 06 personnel, to offices in san antonio and houston that will work with the department of justice to ramp up the prosecutions of smuggling organizations. i.c.e. is also building additional detention capability for adults who cross the border illegally in the rgb with their children. recently, we have established a temporary facility for adults with children in arch tina, new

mexico and you're welcome anytime to visit. the establishment of this temporary facility will help cvp process those encountered at the border and allow i.c.e. to increase its capacity to house and expedite the removal or deal with the chirp in a matter that complies with federal law. finally, we have worked with the government of honduras el salvador, and gout mallla to repatriate the adults quicker, which has resulted in a quick process of travel documents moving to three days. within the last several months, we have therefore reduced the expedited removal time of this population for those adults who fall outside the expedited removal process, the repatriation period has also dropped and we are sending them back much quicker than we ever have done before. so with that, mr. chairman, i conclude my opening statement and look forward to answering your questions. thank you. >> thank you sir, for your testimony. and mr. greenberg, you're recognized at this time. please proceed.

>> thank you. chairman carper, ranking member coburn, members of the committee, thank you for committing me to talk to you about hhs' responsibilities the in relation to unaccompanied children. today i want to talk about the steps to care for the chirp when they're referred to us. our responsibilities to identify appropriate sponsors, with which the children can live, while they're awaiting and enduring immigration proceed skpgs the challenges we're facing as a result of the increased numbers of unaccompanied children. under the law when an unaccompanied child is in cvp custody, they refer the child to us. we fund shelters through grants to nonprofit organizations, a number of which are faith-based service providers. when a child arrives at a shelter, the child is provided with a complete medical exam within 48 hours, conducted by a doctor or a nurse practitioner. all children receive vaccinations and screening nor tuberculosis. soon after the child comes to us, shelter staff conduct an initial interview with the

child. the interviews are used as a first round of screening to determine if the child may be a victim of abuse, the victim of a crime or a trafficking victim and to determine if the child has any immediate mental health needs. these screenings determine whether the child need specialized services a home study, prior to release to a sponsor, and whether the child is a potential victim of trafficking. children in our shelters receive medical, dental and mental health services education services opportunities for physical activities, a legal rights presentation, access to legal services, access to religious services, case management, and clinical counseling. while children are in our shelter, we then seek to place them with appropriate sponsors. under the law, we have a responsibility to place children in the least restrictive setting that's in the best interest of the child. today in fiscal 2014 about 95% of children who have left our shelters were released to a

parent or relative or a nonrelative sponsor. if there is no appropriate sponsor, the child stays in our shelters until they turn 18 at which point they're remanded to dhs custody, or in some cases, the child may be repatriated, or may qualify for immigration relief. before we release a child to a sponsor, we verify the sponsor's identity and relationship, if any, to the child. we -- the staff conduct an assessment of the child's past and present family relationships and the relationship to any nonrelative potential sponsor. there is a background check, including a public records check for a criminal history, interviews with the child to discover any criminal or domestic violence concerns, a written assessment of the child and the sponsor, that is completed by case managers and clinicians. a fingerprint check is required if any concerns are raised including if there are concerns about the child's safety or if the sponsor is not the parent or

legal guardian. as part of the process, hhs notifies potential sponsors that they have a responsibility to ensure that the child appears at all appointments and court proceedings relating to their immigration case. that the sponsor has a responsibility to cooperate if there's a removal order. hhs also informs sponsors of the responsibility to notify dhs and the department of justice of any change of address and hhs also notifies dhs of the name address, phone number, and relationship of the child to the sponsor, prior to the release of the sponsor and notified after the release is taken place. so for us in recent months the number of children arriving has increased markedly straining our ability to place children in shelters, in timely fashion. we're actively working with our colleagues at dhs department of justice, and other federal

agencies through the coordination efforts at joint base of san antonio lackland to ensure naval stationatoint ba in oklahoma. we are continuing our effort toft. si in identify both public and private facilities. it is a complex situation with the number of challenges. we welcome working with theh committee and congress inwe welcome efforts to address it. thank you and i'll be happy to answer questions. >> thank you mr. greenberg.reenbe

mr. palmieri. >> members of the committee, i'm pleased to be here to discuss the department of state's response in a sharp rise of to be unaccompanied children arriving at our border unaccompanied children arriving at our border with a direct link between this activity and dire economic and social conditions in the region. and what we're doing to further the national security interests of the united states. i appreciate your interests and look forward to working with you on this important issue. the administration is deeply concerned by the substantial increase in the number of children from central america, who are leaving their countries and attempting unauthorized immigration to the united states. the department of state is implementing a five-part strategy. we are working on a common approach to the problem, with the source countries of el

salvador guatemala, and honduras and with mexico in its role as a transit country. we are creating an updated public messaging campaign to discourage families from sending their sons and daughters on this dangerous journey. we are helping el salvador guatemala, and honduras expand their repatriation and resbre reintegration effort. we're working with them to interrupt the well-known smuggling routes used in southern mexico. and finally, we're leading a new effort tor address the underlying causes of this migration migration, especially the security concerns. we know that these children are primarily arriving from el salvador guatemala, and honduras. central america faces daunting economic governance and security challenges, which impact the citizens ss of the region and the choices they make. our vision for central america

is a secure, well-governed region that creates opportunities for its people within its woerd sborders. this is the only path to diminish the factors driving high immigration flows. the political economic and social conditions in el salvador guatemala, and honduras are challenging. with extreme violence endemic poverty, and weak public institutions. all combining to create an environment that many people want to abandon. aggressive smugglers seek to exploit the situation. my colleagues from the department of homeland security, justice, and health and human services are described the scope of the enormous challenges they have faced in processing unaccompanied children adults with children, and adults arriving at the border. they are working tirelessly to protect our borders enforce our laws, and meet the pressing humanitarian needs of migrants,

especially the children. this effort not only serves to enforce u.s. laws, but is also the right thing to do to help these vulnerable children. our diplomatic engagement in support of this effort has been sustained and intense. last month, vice president biden traveled to guatemala and met with the leaders to establish that we all must take steps to stem the flow of undocumented migrants. in panama, on july 1st secretary kerry obtained an agreement on greater collaboration from the three governments. and on july 3rd all three nations' foreign ministers traveled to washington to meet with nine different u.s. government entities at the department of state. at our request all three countries have increased consulate staffing levels at the u.s./mexico border to expedite processing of unaccompanied children. the president spoke to mexican president enrique penneto in june about mexicoan efforts to

improve the security at its southern border. we are working with mexico to accelerate its southern border strategy that will increase mexican inspection and intradiction capacities and reduce human smuggling across mexico's borders. as part of the broader interagency effort, we are also working to increase immediately the migrant repatriation capacity for el salvador, guatemala, and honduras so that these governments can accept more migrants from the united states each week. finally, the department continues to focus on a longer term approach to address the systemic issues central american countries face, and that are creating the push factors behind this phenomenon. we're applying a more balanced regional approach to integrate prosperity, security, and governance assistance in order to reduce the root causes that are driving migrants to the united states.

however, we must be realistic. in order to achieve the substantiative change in america, that truly will stem migration flows all the governments must demonstrate the political will and necessary commitment. as chairman carpenter noted, it must be a shared responsibility. we will continue to work closely with congress on a comprehensive, whole of government approach, that provides the necessary resources to meet this migration challenge. thank you and i look forward to answering your questions. >> mr. palmieri, thank you so much. and mr. osuna welcome and please proceed. >> good morning, mr. chairman, senator coburn and other committee members. thank you for the opportunity to speak with you today about the justice department's executive office for immigration review. our agency is responsible for conducting civil immigration removal proceedings throughout our immigration reports throughout the country and our appellate level, the board of immigration appeals. our case does follow immigration enforcement patterns along the border and in the interior of

the country. every individual that the department of homeland security formally charges with rebeing removable from the u.s. results in another case for our immigration courts. with nearly 375,000 matters pending at the end of the june we are facing the largest case load that the agency has ever seen. overall, we have 243 immigration judges and 59 immigration courts around the country. many of our courts are located at or near the southern border including in san diego el paso and texas. many of our courts are also located within i.c.e. detention centers, for efficiency reasons, including the border locations of la mesa, california, and port isabel, texas. the highest priority cases have been those involving detaineed aliens, and the agency is focused on the timely and efficient adjudication of such cases. the current situation along the

border is prompting us to reset our priorities across the entire immigration court system not just courts and near the border, but across the entire system, as along with our federal partners we respond to the president's request or directive to focus additional resources on the cases of recent border crossers. from now on the following four types of cases will be a priority for the entire immigration court system. unaccompanied children detained cases involving adults who arrive with children, adults who arrive with children who are not detained because of lack of detention space, and regular detained cases. this means that these cases will go to the front of the line for adjudication, and immigration judges will be assigned to make sure these cases are heard promptly and ahead of all others. while in most cases there are already sufficient number of immigration judges assigned to hear regular detain pded cases we

will be assigning a significant number of judges to bring to a priority the other cases i mentioned, unaccompanied children and adults who arrive with children in recent weeks. this change has consequences for the broader immigration court case load cases not considered a priority will take longer to adjudicate adjudicate. however, given the seriousness of the situation along the border, it is the appropriate response by our agency, a part of the all hands on deck response that you mentioned, mr. chairman. the utmost priority for every case, however, will remain that every fact is considered and every application of law is correct and that people appearing before our immigration judges receive due process of law. we will do these cases quickly but we will do them right. in order to continue to meet the timely adjudication of cases, with the judges and staff that we need to process cases effectively and efficiently. in 2010 the department and our agency placed a great deal of emphasis on the hiring of new

judges, and this was met be significant success, as we were able to ramp up pretty quickly. however, the effects of funding constraints over the last few years resulted in a hiring freeze in 2011 and that has had a worsening impact on eor's operations, increasing the number of cases pending and extending court dockets further into the future. earlier this year the fy '14 appropriations act, and we are in the process of hiring more than 30 new immigration judges that will be coming on board over the next few months and those judges also, if necessary will be assigned to prioritize the cases of recent border crossers. in march the president sent his fifth fy '15 request to coke, for additional funding and the president's request, once again, includes good funding for eor that will enable us to hire more than 30 additional judges if that is approved. and finally, i would like to highlight the president's request yesterday for supplemental funding that was

transit mitt transmitted that includes funding for additional judge teams and additional efficiencies that will make these cases move through the court system more efficiently. and i ask for your support for that request as well. mr. chairman, senator coburn, despite the large case load that we face, we continue to meet every challenge presented. and this situation at the border is no different. with your support we will contribute to the government in wide response that is called for. thank you for your interest and i look forward to answering any questions that you might have. >> thank you for your excellent testimony. thanks to all of you. i want to start off by going back in time a little bit but i want to talk about two guiding principles for me. all of us have our guiding principles that come from different experiences, different places, our parents, our faith. one of my guiding principles came from southeast asia. but i remember going into the makeshift office of my commanding officer in the navy,

my squadron. and he had a cartoon blown up and mounted on his wall behind his desk. and it was a cartoon of a one person, a guy looking pretty disheveled, and on a very small island with one tree, and being surrounded by alligators who were trying to get him. and the caption under the cartoon was, "it's hard to remember that your job was to drain the swamp when you're up to your eyeballs in alligators." he used a different word than "eyeballs," but one of my guiding principles is don't just address the symptoms of problems but let's go to the underlying causes. we need to address the symptoms and there's a lot more we need too and your partner i the other thing that's been helpful to me and my life is to try and figure how to do with the problem or crisis to ask the question what's working? someplace else. figure that out into more of that. find out what works and do more

of that. if you look at john mccain was good enough to bring me down to arizona more than a year ago to visit the border of mexico and his state. i've been from the pacific ocean all the way over to the gulf coast, and we've seen a dramatic change in one, the people are coming across. and we've seen dramatic change, west to the east and there was a time when most people, the folks who came were from mexico as you know. a lot of them. we still of mexicans try to get into our country illegally as you know but not nearly as many as before. in fact i'm told the net migration might be going the other way. and here's the first question i want to ask in terms of finding what works and do more of this. why this shift in mexican migration? almost may be an outmigration. why has this occurred and what can we learn from that?

>> we've seen those changes that have been very dramatic. by the way i think every ceo must of had that same cartoon. but we seem those changes and i think because of the work that it did for the president on the drug policy issues the safety and security that has increased within the government of mexico, the fact that economic opportunities are better now within mexico and we know that in the three central american countries that we've been talking about, neither of those economic opportunity or safety and security have been something to write home about. .. please? mr. kerlikowske? >> thank you for that question. i agree with what the commissioner has said and i think you just have a whole different dynamic when you l