i think one of the big problems with the new regulatory regime is congress has limited them to external inflation as the limit on how much you can raise total revenue. at the same time it has mandated above inflation costs to the system. until you fix that, there's absolutely no way you can get 50 new banks or products, you're still not going to be allowed to raise the revenue and the system is going to fail. can you comment on that? >> you hit on a key point, referencing a system that by law mandates that it's market dominant products, which is where you have the captive customers needs to be regulated under a cpi system. the law did say after ten years the commission needs to look at

the full ten years of experience and assess improvements, changes, how that might operate. the idea was on the competitive side, the competitive marketplace would be that limit. if you go back to 2006 when this law was being finalized after 12 years of effort and a lot of if was focused on the prices shs the products, the flexibility for the postal service, there was an issue that got bubbled up toward the back end, which was this idea of prefunding future health benefits. a huge liability. at the time the decision was made, look this makes sense for the postal service to start prefunding that. what came out of the legislation and that was signed into law actually locked into place for ten years specified payments of upwards of $5 billion or more per year for ten years. after the ten years, it was reamortized. back in 2006 if we all go back

to then and certainly from the postal service perspective, they were at their peaks of revenue volume and the postal service at that time, their general focus was, look, this is going to be tough for ten years, but we can make the payments. none of us would have predicted that the next year our nation went into a great recession that rivalled the depths of the great depression and mail volume and revenue, and i think you hit upon the key point, while good intention because it was locked into statute to undo it create score scoring issues and it became a recipe for insolvency. >> and there's equally significant issues in revenues not just in the inflation cap but from the deeply discounted rates that nonletter mail

receives. that periodicals, it's mainly advertising. it's all the mailers you get. and that is an increasing share of the volume. and the congress has mandated deeply discounted rates and they have done this in a way the congress operates. but if you need it, we have one of america's scientists here to explain it. and that's not a subsidy that's a cost. and it's under universal service obligation. if we are going to have a hybrid form of a system which is that provides delivery that competes with private companies, then we also have to introduce more competition into the other side

of the market. and the first way to do that is to get rid of those two things. get rid of all of them and let other people -- let other companies compete for that business at a market rate. >> i think gene may want to say something about this. >> let's talk about the limit that you pose. the limit you posed was how do you make things work when you limit your income it can make on the basis of an external factor versus what congress does in order to tell it what it has to do. you've got at play here, you'll never be able to satisfy successfully resolve the postal service dilemma you have to play here a different ideological perspective. if you were to ask rand paul what he would expect the postal service to like and contrast with what bernie sanders would

say, it would be like night and day. the thing is the congress has never said if this is what we want to have, there needs to be a way by which it gets funded. now we can all talk about raising everybody's rates, but here's the important thing to keep in mind. you may compel people, but today with electronic communication you don't have to mail. so if you end up doing things that makes it apparent to a business that the prices you're charging no longer facilitate the ability to use, they will take their business elsewhere. but you still have to mandate. how do you fund the mandate in the absence of sufficient revenue if the revenue has an opportunity. >> i guess what i would like to point out is that what robert

said is very important. the moment of passage is important to remember. e enormous, robust expanding business that was approaching a cliff where i think legislators felt that mail was expanding but there would be a time in which it would totally evaporate. there would be no postal service in the future. all of which turned out to be quite wrong. but the cpi cap was intended as a surrogate for market forces because absent those federal bureaucracies, any bureaucracy, absent market forces, so it was hoped that if there was enough pressure applied that that would be policed and take care of itself. and it was an expanding market. cpi caps anywhere tend to work in an expanding market. they don't work well where the market is stable and they are a disaster where the market is declining, which is exactly what

occurred. the other great pressure was prefunding. pay $5.5 billion a year. the postal service in its history u had never made $5 billion. we make or lose $1 billion. e we never made a single payment. we borrowed to make every single payment. we borrowed against a bill that we didn't have that would some day arrive. that was an odd one. it was in the hands of opm. opm had a couple things going on there. one, they were desperate for money to manage what had been a fairly poorly managed pension fund for all of the government. second, there were competence problems. they had just tried to collect our pension amount. they missed a $171 billion debt by $71 billion.

that's pretty bad. they missed the math problem by more than a third. we have now put aside money the most attractive takeover target in the corporate world today. but we have paid dearly for that. >> i think there's a question back there sir. >> yes good morning thanks for the panel. my jam is john bird for fair competition. and we're very interested in knowing what kind of remedies would be offered to take a look at the e evolving market conditions, the current financial challenges and then the second part to the question

would be this management that's ongoing, where is that mispronounced to the extent that you can kind of weave each of the panelists' remarks about that, i would appreciate it. >> anybody want to pick this up? >> in terms of mismanagement, i'll leave that to somebody else. but to your earlier point rob may have put his finger on it. the time of having a hybrid system, one that is supposed to act like a business and one that is not supposed to act like a business may be well past us. if there are certain core service which we know the nation. needs and we want to restrict who can provide them, they ought to be organized separately and distinctly from those services that we would like this other element of the business enterprise to undertake to be able to operate competitively within the marketplace. that would mean you'd have to restructure competitive services under a corporate structure that

would require it to have the same sorts of sets of books and con strangts that would apply to anybody in the private sector was the whole issue is immediately ruled out. >> anybody else have a comment? >> i want to say in the defense of the postal service here that i don't think it's really an issue of mismanagement. it's an issue of responding. that the problem with any anybody -- and this applies to market dominant private company companies as well as this unusual hybrid is that the need to figure out how to be more efficient and in particular how to innovate what kind of

investments should you be making and what kind of investment should you be pulling back on. those incentives are absent. and consequently, they become less efficient less innovative and their cost relative to the product decline and we see the bls has quantified that. that's what productivity captures. and that's not because they have bad managers. i don't think they have any quality of the managers there is any worse than the average for the private sector. i think that the way they are forced to operate is different. and it has predictable economic consequences. >> i think if you think about

what the postal infrastructure is about it's instructive to your question. they provide universal service to all of america even places that are not profitable. they do so at the lowest possible costs so that we energize commerce, we don't destroy commerce. we are conflict free with regard to picking winners and losers. now hold that thought. in europe they attempted all this. there were no serious takers. they said would anybody else like to do these three things. no serious takers. so is there some value in having someone just focused on energizing commerce with no conflict of interest and who is charging as little as they possibly can to survive?

i think so. i think that's the very definition of a national infrastructure. >> it did work in sweden. sweden is has the most competitive open system and it's worked quite well in sweden, but. i would not claim that sweden that the problems facing a small homogeneous society and one facing ours are the same. it would be different and more complicated, but they went to full privatization. >> the last question to the lady up here. >> i'm an attorney. i got involved in postal issues when the post office by my house was closed, even though it was very profitable.

so i'm in favor of post offices. so i appreciate your point of view. i don't understand because it's like you want to start from scratch and pretend none of this exists, which maybe in the perfect world would be great but that's not where we're at. one thing that troubled me in this e prefunding, the postal service is bleeding billions of dollars. they don't understand the concept of operating revenue, operating income. this $5 billion requirement makes it look like that it's a dysfunctional business when in fact as you pointed out, the last mile delivery is vital to the economy. many people rely on the post office. i look at everybody and they are standing there. they have a reason to be there. they have a paper someone wants to help. it's an important part of our infrastructure. >> robert, do you want to take that? >> i think a key point what

everyone thinks of the prefunding requirement we have to deal with the fact that it's the law of the land. and hence because of that, they are not meeting certain obligations that are required by law to meet and more importantly has real world application. i went through and saw the good news, the operating income isn't good news but the reality is with those requirements and the law as it is, the liquidity is just not available there. then you get into scoring issues. so that's a challenge for congress to sort through. at the end of the day, it's like everything, it's going to need 218 votes in the house and a presidential signature. but until any of that happens it is what it is. it has the effect of the postal

service where they are at and as a result of a variety of these factors, we know they have cut $16 billion in costs since the law took effect. >> i think we're going to have to close this now because we've come to the end of our time. thank you very much for. opening up this issue to us and we hope that congress is listening. [ applause ] a reminder that you can watch this event any time in our video library.

more live coverage today here on c-span 3. at 1:00 p.m. eastern we take you to capitol hill for a hearing with fbi director. he will discuss his agency's 2016 budget before the house appropriations subcommittee on justice. that's live at 1:00 p.m. elsewhere in the capital today shs the hill reports that house republicans are increase ingingly confident they will approve a budget blueprint wednesday with more robust spending on defense after several days of working to bridge the gap between fiscal and security hawks. to get their budget across the finish line, republicans will had vote on two separate versions of the fiscal plan crafted by tom price. that's an unusual maneuver to allow the rank and file to take a more hands-on approach to legislating. gop leaders believe the house will back the amended version of the price budget which would increase the pentagon war fund to $96 billion and require no offsets. the debate takes place on the

house floor later today and you can watch live coverage on our companion network c-span. here's a bit more on what to expect on today's debate. >> what is happening in the house? what's the republican leadership strategy on the budget blueprint? explain these two votes. >> thanks for having me. there are two amendment votes in the house that would obviously impact the budget. the first is an amendment that would essentially just vote for the budget blueprint. the second is a second amendment for the defense funding. a lot of republicans feel in order to get the whole party behind the budget plan they are going to have to increase defense spending. this has become a sticking point among the different factions among the republican party. i anticipate both amendments will pass today barring any last-minute political theater. but it will be a very busy day in the house today as two key

amendment votes are set. >> what happens next with the house republican budget and how they reconcile that with the republican budget on the senate side? >> well that's the $6 trillion question. i think what comes next again s a larger argument about defense funding as well as more debates that we have already seen. debates like the affordable care act, obamacare debates about sequestration as well. all of the typical that we have seen republicans will be on display during that reconciliation period and then not to mention once they do reconcile a bill finally, it going to president obama's desk where there will be even more partisan politics and bickering regarding the budget. >> what's the democrat strategy here in the house and the senate? >> well, democrats have

maintained for months they are going to touch anything on obamacare. they have also been insistent in some of them in refuting the budget increases for defense spend ing spending. it's the typical partisan lines. for republicans, this is really an opportunity for them having control of congress to really be able to pass the budget, which is something that we heard them say for awhile that they would be able to do. it's a huge first step for them to see if they are able to do that. i think politically speaking, the republican party would probably agree they want to pass a budget to show to the american people that they can govern. >> there's a rare moment of bipartisanship on capitol hill and that is the speaker of the house and nancy pelosi have come together on a so-called doc fix. when would that get a vote? >> doc fix is a wonky issue, but

i would expect a vote some time this week. this is a huge bipartisan moment for pelosi and boehner. this is something by the way, that we have been -- this has been going. on for awhile, but to seep it come to fruition was something interesting. but you're right a rare moment of bipartisanship. i think something of perhaps if you read in between the lines, a signal from leader pelosi that she is willing, to some extent to work with republicans being in in. the minority. so a really interesting political display of political action this week from democrats in the house. >> kevin, finance reporter with the hill, appreciate it. >> thanks for having me have a great day. here are some of our featured programs for this weekend on the c-span networks.

on c-span 2's book tv saturday at 10:00 p.m. eastern on afterwards peter wallison says government housing policies cause the the 2008 financial crises. and sunday, the director of the earth institute jeffrey sacks on a development plan to counter global issues like poverty, political corruption and environmental decay. and saturday morning at 10:0030 eastern on "american history tv" on c-span 3, a discussion on the last major speeches of abraham lincoln and martin luther king jr. and sunday afternoon at 4:00 on reel america, the 1965 "meet the press" interview with martin luther king jr. find the schedule at c-span right lane andc-span.org and let us know what you think about the schedule. join the c-span conversation

"like" us on facebook, follow us on twitter. supreme court justices anthony kennedy and steven brier testified on the court's 2016 budget request. the court is requesting $78.27 million, an increase of just over 1% from last year's request. kennedy announced the court

does the legislative branch and the judicial branch get to talk to each other. so we look forward to that. i think all of us know that a fair and impartial judiciary is very much a cornerstone to our democratic system of government. the fact that you're here today i think is important. i think the work that you do is obviously very, very important. and not only you resolve disputes between individuals, but also between executive branch, federal government, and legislative branch. and to do that, you need the respect of the citizens and i think you have that. i think you also give respect to the citizens with regard to what is right and what is fair. today is important because we have a chance to talk to each other about issues that are important. one of the things that i want to