-- to the last part of my question. is there a time where there is an investment that could be recaptured and make the service more useful without some other connecting mechanism like a bus mechanism like a bus service index >> the question is useful. not to be argumentative. but i think it is useful now. if the real question is, will you be able to make money, i will say no. most of the long-distance trains, the best one we have -- whether you are in a bus system today, unless there is some subsidy, it does not to be cash, because that with air

traffic control, it is debatable if the tsa checkers, that is all paid for by the government. there are all levels of subsidies across the country that we provided as a policy question. i do not see it as being able to operate profitably. >> but the record reflect heat said i 49 before i did. [laughter] i yield back. >> aggressive very much. good to see you. i do not want to misquote you but you talk about how amtrak was very efficient. is that what she said? >> cost-efficient. >> talk to me about fleet terrell. -- fleet rail,

. how about freight rail? they pay for the infrastructure. they pay for their lives. it is my understanding, do we subsidize them as well? >> we do, but not very much. let me explain what that means. when we do a highway job it is easy paid for by the highway side of the house. and not by the railroad. there have been several times when investments have been made that have helped to the freight railroad. >> we also regulate them and cause additional costs as well. >> i had to live by those regulations. >> it also affects you. my question is, and i know is comparing, not even apples and oranges, but if they're not

heavily subsidized and yet they can provide a profit, the question that needs to be asked is, you are subsidized. yet you do not provide a profit. why the difference? it seems the private sector makes a profit. they compete and invest more than you do through subsidies. why is that amtrak cannot do that? i understand it is passenger and not afraid. -- freight. >> it is a good question. i think the railroads have not always been comfortable. the act made them become profitable when they could spin off the profitable routes.

it helped them in 1971 when they turned over their passenger services to amtrak. they have gotten rid of those things that to be subsidized by somebody. in the past, they were subsidized by other revenue. freight railroads are key providers of the movement of our economy. 40% of the freight they carry is cold. -- coal. it is responsible for most of the energy in the country. that is a key element of what the freight railroads provide as a base level of service. >> the solvent marked they have.

-- market they have. there must be other parts that lose money. >> in terms of passengers? >> de you look at, and i think i know the answer, do you look at closing those that do not make a profit? if so, why don't you get rid of those and make a profit? >> i think there was a large part of time spent in the late , maybe 2005, and trying to make that change. trying to figure out how many long-distance trains we could cut and save money. we looked, because we know our country is in trouble, we said, if we're going to reduce service, where would we do that? we could save money by going to three days a week. we have to of our trains on

three days a week. they're the worst performers. there and the bottom of the run. we thought we would lose more money if we did that. people could not depend on that. it was not every day. >> but if you close them down. >> be next year's cost would be $1.1 billion. that is because of the requirements that we had a right from the beginning of this railroad to pay labor pay and also we would have to spread other costs as part of the shutdown. it would be over a billion dollars next year. that would play out over a five- year period. we would have $5 billion to shut them down. you would no longer have any service for the rural states of

united states. >> so why understand you have a national shutdown costs. even chile you would -- eventually would not have to subsidize. you would start saving money. would it not be a substantial amount? by imposing this is a question. in the private sector when something is losing money, you shut those down and you focus on what makes you money. i am not sure if we are looking at that. if that is possible. if not, i would like to know why not. we will continue the conversation. >> thank you, mr. chairman. i appreciate this opportunity. the couple of things about high- speed rail. i keep hearing that amtrak wants

to have some of that florida money and use it for the northeast corridor to expand high-speed rail between philadelphia and new york. you're talking about for under $50 million -- $450 million dollars. >> i have the application with me. for the project we were looking for $188, $570, well over a billion dollars. >> i heard four hundred $50 million. -- $450 million dollars. >> it is $449.9.

>> pretty accurate than. i ride amtrak. the maximum speed, is that when 35 -- 135? if you were to go to high-speed rail, how fast could you get the rail? >> the project that is being talked about is improvements that are required to get as above the 135. one of our most serious problems is the power available to run them. it has to be improved to get to 160. it is capable of 150. >> it rarely goes on that speed. >> just on the north and for 20 or 30 miles. that is all that is available for the track. we can operate a higher speed

train but we would have to make infrastructure improvements. >> what would be the maximum speed deep you could get a train to run? >> 220 m.p.h. >> a question about rail service in the northeast. we have done studies about expanding rail service between new york city and new jersey transit. we have done studies and found if we were to extend the line, we would recover 22 cents of the dollar. i understand many of these systems have operated at deficits. as a rule of thumb, would you expect the cost recovery from writers to be -- riders to be?

a if you're talking about commuter service, i think they are covering, metro-north is probably the most efficient. they are indeed 50%-60%. you had a real culture built into this. so much of rail and bus transit is dependent upon external circumstances. when you are seeing for dollar gasoline, you will have a higher number of people writing transit. it yet candela gasoline, you will do a lot better than that. that is part of the difficulty of making that happen. >> how would you wrist -- react to 22 cents on the dollar? >> for how long? >> i will get back you on that. i could not say the time period. i have no further questions.

>> i think the gentleman. -- thank the gentleman. a couple of things caught my attention. you said it would cost $5 billion or $6 billion. did i hear you right? >> yes. >> even though employees are not working. >> yes. that was created as part of the original effort. there was an expectation that amtrak might not continue. in order to get qualified employees, the congress at the time passed a law which was a result of a dock worker decision in new york city that paid employees depending on how long they served.

it was up to five years of their wages. congress told that clause out in 1997 when they made some changes. the required amtrak to negotiate. it changed a little bit but not a lot in terms of what employees would be paid. >> looking through your budget, i was pleased to see that your estimate of $192 million increase for fiscal year 2010. you testified about having 17 straight months of ridership growth. it is surprising that you are estimating a larger loss. if you have increased revenues and riders, shouldn't it

increase profits? it is unusual business. >> that is a great question. what we really are applying for is the maximum authorized level. that is what we are asking for. what have we done with the money, that is evidenced in the finances itself. for example, we have reduced the debt from four billion dollars to $2 billion. we are not using that money frivolously. last year we were in the neighborhood of $34 million dollars to operate these long- distance trains. those dollars were used to reduce our cost for the future. that is part of what we are doing. we are making sure we make investments to reduce the cost. what we are asking for is the

maximum authorized level to make improvements for amtrak. that is where the 1600 $60 million comes from. -- $616 million dollars. >> your budget says you has -- have end of larger -- a larger operating loss. >> we have the maximum amount of money. our loss is the operating part of the budget. that does not wind up as our operating loss. it is whatever we have actually lost on those long-distance trains. then you have those dollars we used to make sure we do continue to reduce those costs. >> you have another request for your capital account. >> that is correct. >> it was interesting. i noted there was discussion

about the bus. it is burning fuel into the trust fund. you have an operating loss caused by the longer routes but those do not go toward infrastructure accounts. >> they do. with our purchase of the 70 electric locomotives we are using revenues as the base for our debt structure. we are using the surplus we have available. >> but when you talk about new bridges or overpasses, that type of, tunnels, maintenance, you are not talking about using operating funds. >> those are all capital.

>> i think it is clear, or should be. people should be aware there is a capital account. it is justifying a lot of other routes that are not as profitable. >> if i can respond, we are operating on a continuing resolution at the fy 10 levels. >> i am keenly aware of that. >> we did not stop using the dollars we expected because we thought that was irresponsible. we have been maintaining a spend a level that would keep us within the fy 2010 level. >> i think the gentleman. -- thank the gentleman. >> the more i hear the questions

and answers, the less i think i know about how amtrak runs or should run or whatever. the last thing leads me to what we were talking about, a shutdown. what happens in your case in a shutdown procedure? can you give us a sense of what your plan is? you must have a plan. does that go -- is that like a light switch being turned off? or is that several days? or is most of the 2011 money provided for in the previous cr's? so you have money that would keep you going? explain to me what happens. >> we do not keep a zero

balance. you have potential problems you are dealing with. we always provide what our financial condition is. we are keeping a close eye and what is happening with the potential shutdown. we see ourselves being able to operate for an additional month prior to s -- >> and that is because reserves have been held from other years? >> it is not reserves. we have not spent all of the money in the accounts we have available. that is where we are. >> dui -- >> we receive revenue every day. as i said earlier, we get 85% of our operating money from the operations itself. 75 percent of it out of leases

like penn station. >> that money, does that mean you could sit at a computer and decide which trains to cut out and keep going for two months? >> it is not quite that simple. there would be a lot of major changes if that happened. >> i would not be the one using the computer. so you think you could keep running for a month and maybe somewhat longer on the basis of revenue coming in. >> when i asked my finance guy the same question, his answer is always, a month. he is definite. >> at which point does it come to a stop? does the northeast corridor go?

>> i do not have a month a two plan yet. >> if you shut down, we will start planning. >> i do not know how long this hearing is in the golan. we have been told there is going to be some votes. >> i would be happy to end at any time, sir. [laughter] >> i wanted to learn about the fleet plan. this is a variety of equipment from 20 years to 60 years. the kind of equipment you uses different. it is from a single car, electric locomotives, diesel locomotives, everything else.

what portion, where are we on that plan? are you on a plan where you have achieved the first two years? how much of this is done? how much of it is maintenance of equipment? how much has to be in new equipment? how do you keep track of that? >> one of the things i said recently is that it did -- isn't it great, because there was some criticism, it isn't it great we have a fleet plan to criticize? are we moving it forward? we just updated it. we are moving it. >> never offer anything when it is clearly going to be criticized? >> i think you have to offer and to criticize. you have to get the job done.

we are doing that. we have a fleet plan. we have offered up a lot of plans. we are willing to talk about those plans. we are moving forward on the replacement on the 70 electric locomotives and the 130 single cars. they are the oldest. the conventional electrics are old. >> how long? >> some of them back from the 1980's. it was more for those -- for the mileage. we ran into problems with technology for the future. >> there will come a point where rehabilitating and maintaining, you must be putting a lot of maintenance money every year. >> to under $50 million every

year. that is what it costs. that is to keep us going. >> is there a manufacturing base in this country for the replacements? which is the piece that is most likely to be replaced as opposed to made duke? >> the electric locomotives have to be replaced. the decision was that our 60 year-old baggage cars and diners needed to be replaced. we have, and are still debating, some of our superliners. >> do we have the manufacturing base to deal with that? if we are trying to produce -- >> cab usa has been awarded the

contract. >> the times started late. >> as you know, i was the chairman of the subcommittee. just indulge me for a couple of minutes just to dispel some of the observations that were made. the notion that the freight railroad, i love them, the notion that there was not subsidies is not true. if you look at the ones in my part of the country, both of them received grants in the area of hundreds of millions of dollars. there are a lot of tunnels that

were built back in the 1920's and 1930's that do not have the capacity to take a double stack containers. that means they're not a fact -- as effective as they could be. hundreds of million dollars in the last year. you point out section 130, the highway bill, that has done with crossings of the motoring public. it was something that could never get through to you, rift program. it was for the railroad system in this country. chicago has a couple of billion son -- billions of dollars moving freight. i go back to the fact that whether you like it or not, amtrak has been on the receiving end of $36 billion since 1971.

i would say that pales in comparison to all of the freight systems. just to take care of asia and europe, i have had the chance to ride every train that moves fast in the world. because of my previous posting. i always asked transportation officials, it does this thing pay for itself? no. in france, if the ticket is $100, how much is my trip? 30%. the french government subsidizes because they have made a choice that for trips of 400 miles or less, that is what -- how they have their people move. that is the choice the country has made.

for your long-distance routes that lose money, the choice is pretty stark. you point out you lose $5 billion over the first five years because of the structure of the agreements. once you get past that, and you could save money and all of those routes if they ceased to exist. but you would not have anybody writing on a train. that is -- if that is where the country wants to go, ok, then people with the most votes is should be able to impose that. that will never get my support. passenger rail needs to exist. it is never going to pay for itself. that is a fiction. it does not pay for itself any place in the world. we waste a lot more money than a billion dollars a year on a lot of stuff around here.

there is my soapbox. we had a conversation hr 1. i know you know you're not getting $2.2 billion out of this congress this year or next year. the questions are two. there is the decision on the northeast corridor, the gateway , if you are able to access those for capital improvements, and if this congress were to give you flexibility, whatever the number is. but you have the flexibility to move between capital and operating, what do you think? >> it is an important question.

i appreciate it. i appreciate where you're coming from. we asked for the $50 million for the gateway project in the budget and in the application. one of the things i asked us to start looking at, i understand where our country is. we looked at, what could we do from the capital standpoint. what do we really need? we need three entered $50 million for safety of the northeast corridor. we need to under $50 million -- $250 million dollars for overhauls. if we're going to make a continued commitment.

we need $63 million to continue the 130 cars for the acquisition. we think we need to continue our reservation system at $17 million. we have a labour management system we are putting together to get better data. we need about $12 million for that. this is of capital. our garage has to get fixed. we have cement falling off of that. we need $70 million to make that happen. we need $12 million for chicago and union station. can i finish the list? that puts us at $900 million. on the operating side, where we really need to be is $544

million. if that is what happens, we will not be able to progress a lot of the other improvements that have been detailed in the budget to make future improvements. >> i thank the chair. >> thank you, mr. chairman. i apologize for not being year earlier for your testimony. i come from a part of america that loves railroad. we want to invite you to our trained day in toledo. we look toward new york city and washington. we look west to chicago. we looked up to ontario. my questions will relate to our abilities to modernize our

passenger as well as our freight rail system. and the ability to offer good passenger service is constricted by the confluence of the freight and passenger on the same system. one of my questions has to do what -- and the sandusky, to leave the corridor, do you talked to the freight lines? is there a way of separating those as we move toward more modern transportation? my focus is on the midwest. you mentioned n.y. in california, but our part of the country is not specifically mentioned. i have to be a bit of an advocate. as much as we support you for the country and the necessity for having modern transportation, this issue of being efficient in passenger is

constricted by what is happening with the freight using the lights at the same time. it makes for bad hours. you have to catch the amtrak train at 3:30 a.m. it is not much fun. it is not very user friendly. that this question one, dealing with midwestern plants headed to chicago, eased out of that ohio corridor. what can we conceive of that was separate those plans? what are your thoughts toward canada? from that.hat far we look at the world differently than if you look in new york city or san francisco. ontario is our friend. and the were withvi via great lakes corridor? what about the improvements you

had to make the cars and so forth? what percentage is done in america versus being imported? as we look toward a modern rail system, how capable are weak? -- are we? >> i have never considered steve we do not the east, claim him. >> it depends on where you live. we are in the dust country. that is where we got our name. we view them as the east. [laughter] >> we have been doing different studies. one of them has not included toledo. when you look at where to lead a

iece, thosee ohio peace were state initiatives. that is what we look for. state initiatives to make those things happen. there is a connection to toledo of to the michigan service that operates to detroit. some of those kinds of things, we have had some discussions. nothing has moved forward about how that might happen. at least in a serious way, what the cost would be, those kinds of questions, in a special way, what does it take to get changes in the kinds of structure we are looking for along the hull -- the lower great lakes area. >> as a city planner, i am interested in the corridor, the connectivity. you are saying it is on hold. >> better than that, we will give you a written response.

there may be something our planners are doing. we will look at that. >> have them include the canadian question as well. we have canadian northern in our area. we have to think about that. i'm curious on the passenger side of that connects. >> i will respond. >> the doesn't contend on your end of the state? >> they own a rail facility. hopefully we will develop that. hasn't happened yet. >> et to be careful. you might find there is a train that goes from detroit to london and buffalo and completely bypasses the whole south side of lake erie. >> thanks for that help.

[laughter] >> we seem to have gone from ducks to canada. not sure where i lost control. [laughter] it had been mentioned earlier compliance. ada you listed your needs for those projects. do you of the stations? >> in most cases we do not. it is a complex ownership structure. we have to meet the requirements. >> why do you have to pay for it? >> i will get a legal answer for you that our office will put up.

we will required -- were required to make sure stations were compliant. >> they also have to comply with 88. >> they do. to some extent they do. i will give you an answer. >> to you know what it would cost to bring the stations that you alone into compliance -- own into compliance? >> do we know that? let me get back to you. >> use --you said $50 million for development of high-speed rail. i have a couple questions about that. is and the estimate for --

isn't the estimate about $116 billion? >> this is the gateway project. >> city was $50 million to start $117 billion project? >> no. what we are running out of this capacity. there is insufficient capacity to increase the demand that is occurring on the corridor. we will be locked up and unable to move trains through penn station. the northeast corridor of gateway project is about the portal bridge, the tunnels, and the capacity in penn station. >> how much is that? >> we do not know of the total number. we would have to get the financial, that as part of the $50 million. there have been some estimates

used from some of the projects. i do not have it in my head. >> what is the $50 million for it? >> moving forward on our re- engineering and environmental requirements. >> wheat get into a lot of different projects around here. are we getting ahead of ourselves? if we do not know what the cost is going to be? >> you never know until you get up to a point. we have the overall large estimates but we do not have -- >> what are they? >> i do not remember. if i have it on here, i would pull it out. >> if somebody has to responsible for taxpayers, to have $50 million for an open- ended, we do not know what is going to cost, as first payment on this project, --

>> we know what pieces of the. the portal bridge is about a billion dollars. you'll probably have the total cost of the $12 billion in the end. it is a billion dollars to $10 billion. i can get to the, chairman, we have those numbers. it is my failure in memory. i do not have a staff guy they can hand me that. i need to get that. >> in your budget, you are saying the project will cost $13.5 billion through 2018 with $50 million of that for

engineering work. you just said -- >> i said $12 billion. talking real money here. >> i would have to look at the list. we're not trying to hide anything. >> my time has expired. >> thank you, mr. chairman. this is going to be a round of quickies. if i can articulate the questions. when you get back to these labor issues you were talking about, this is six your problem that occurred in the legislation in 1971. all of the employees who worked there at that time certainly have been retired. long since retired. this -- this was not a grandfather in kind of a thing?

that is remarkable. maybe it is a remarkable. the way these agreements get made, i should never be surprised. >> the same thing exists for bus systems. they call the1 day3c. -- callit it a 13c. it depends on how long they have served for their salaries. >> do you owned the stations on the track where you on the tracks? yes. >> that would mean you do own from new haven to springfield. >> some of them are owned by the

transit system. >> that operate out of the same place. do you manage, or run those trains? or is there another operator? >> we dispatch. everything on the corridor. >> are you providing the whole service for their commuter rail? >> they run the trains themselves. >> you do the dispatching. i was always curious of having been dispatching 10 different from the ones operating the tracks. we have every imaginable situation. >> we operate the tracks and dispatch them. it is not their train or employee.

>> you then run the program to harrisburg. >> that is an amtrak employee. >> does their commuter rail system go to places like westchester or lancaster? >> i do not know the limits but the use part of our track. >> but they are the operators. >> we are the operating, the maintainers, the owner. >> in detroit, which is another conundrum, you own a mess of track in michigan. disconnected from your own track in michigan. how're you proceeding? what progress is being made? grant.en't --have a

>> it is michigan that has the grant themselves. >> it is for work on your own trackage. >> it is the part that they on. our ownrackage, we are improving train control and improving the speed of those trains. >> that is the route to lake erie. >> it could connect to toledo if you come down. >> the goes into detroit. the route from new york to chicago, it doesn't go through detroit. does that pastor toledo? >> yes. that one goes from toledo and

other places. >> we also -- we have to have all of these duck projects. >> we have salamander crossing under the highways and the railroad tracks. >> thank you for sharing that. [laughter] >> i do not have further questions. i want to make a comment. i am a freshman. i recognize that. i am new to this business. i think it is a shame that when economic conditions and circumstances might dictate business this is an be made regarding an enterprise like this, and that we have in place agreements that guarantee certain benefits are paid for a series of years, and on a day like today, when we are debating

shutting down our government, that no such agreement exists to pay the people who are defending the freedoms that we enjoy. i find that incredible. i will yield back my time. >> i thank the gentleman. we will try to conclude this hearing before those votes are over. >> i will be brief. the want to hear more about what he wants to say about toledo. just two things as i continue my advertisements for amtrak. if you go to the transportation energy data book, and tracked moves its passengers with 20% less energy than airlines and

30% less than cars. green people need to perk up. this is a good use of a billion dollars a year. we had a secretary lahood in front of us. the problem with high-speed arrangements with the states is that you do not own a lot of track in the places you want to own and expand. it was brought to my attention in north carolina, i guess you had some discussion down there, basically, the observation was that, nor folk has a tiger greta and some other grants -- tiger grant and some other grants to get into the sea. there is money floating around to do this service.

i think the freight railroads have a legitimate concern when it comes to signing some of these agreements. those that required the use of their track. it is their track. they are being strong armed into saying amtrak has on-time performance. i note you are more than sensitive to that. the secretary said that would never happen on his watch. the difference between europe and the united states is there -- passenger goes wherever it pleases whenever it pleases. if you're asking to have beenmou and agreement to use other tracks, they still have their job to do. i would hope he would not be

complicit to the headlong rush to make high-speed rail their signature transportation issue in a way that damages the growth and viability of freight rail. i want -- work together rather than. >> understood. we are doing that. they are hard bargainers. they keep their word. >> they do. >> i wanted to continue on my same line of questioning and place on the record a represent the fifth largest rail center in the country. we are within 75% of the nation's population. the role of rail and moving cargo -- in moving cargo and other items, it is a vital part of our economy. all of our freight rail his hiring --is hiring.

we have massive investment in relic. we look different than some of the other members of the committee. i would reiterate my interest in meeting with your land and service planner in looking forward to take a look at our part of the country and the real impediment because of the conflict of freight. what we do with those easements. we have to think forward. if you could include in that, how you look at the canadian passenger freight confluence with us at the border. that would be grateful. so we can take a look at passenger and freight and what is going on. what do you well, what do you not done. if we want to get passengers from point a going north to

detroit or ontario, how those systems interconnect. my other question relates to making the locomotive, the car is, we hear a lot about foreign companies being the places that are making the passenger car. i am interested in what is made in america in the area of rail. are we dependent on imports to satisfy that demand? i would let you answer that. a 36% increase in riders ship is impressive. that means your people are working hard. the th want toank everybody that works for amtrak. on the question of making it in america, how american are we in terms of the repairs or making,

the items you procured? >> we will always be depended on cars from foreign suppliers for some things because of the way the economy works today. callous saki -- kawasaki is the transit industry cars they build. they are building them. others are built in canada. we have the u.s. manufacturer in new york by the name of you s.a.calf wh -- usa calf. the logistics' of the rail industry is difficult for passengers because of the low level of passengers we have. there are other industry. there is a real manufacturer in

california and harrisburg. there are several freight car manufacturers. there is a locomotive plant in erie, pa., not too far from you. and illinois that as part of caterpillar. we have electrical locomotives being built on the west coast. >> thank you very much. are there american provisions that apply to you? >> we have different provisions. but we still look at trying to follow what the policy is of congress and the president. >> thank you very much. closehink we're going to the hearing. we have just a few minutes left to make our votes on the floor. i want to thank you for your testimony today. we have a lot of challenges

before us to get the current situation. the long term will be very challenging. amtrak will always have a warm spot in my heart. when i was dating my of why she lived in colorado. i used to get on amtrak on friday night and ride and get off in fort morgan about 7:00 a.m. to visit my wife, a girlfriend at the time. fortunately my wife today. there will be always be a warm spot there. i appreciate your testimony there.

[captions copyright national cable satellite corp. 2011] >> next, the proposed 2012 budget for the postal service. after that, q&a with cnbc anchor melissa lee. your calls and comments on "washington journal." a daylong discussion on the state of race in america. juan williams, al sharpton, some -- film director spike lee. monday and 9:00 a.m. eastern on c-span3.

on april 12, 1961, -- 1861, the civil war was ignited. the nation commemorates the 150th anniversary of the bombardment. american history tv on a 3 c- span brings you the sights and sounds from fort sumter with a special look at wartime life as well as interviews with civil war scholars and reactors from the north and south. to get the complete schedule, and go to cspan.org. >> top postal officials said the post office will default this september if congress does not pass new legislation changing the rules that govern the agency. the house oversight committee examines the tentative labor agreement between the postal service and the workers union. officials say the agreement would save $3.8 billion over

four years. this is two hours and 15 minutes.

>> we have been focused on

simplicity and making sure we can grow the business consumer channel, especially for small businesses. we have something new called every door direct. you can reach everybody their lives within a couple of the codes. we have been teaching people how to use ebay, amazon, to grow other small business. one product we are working on is the opportunity to show you what is coming in your mailbox. we can do things for small business and for those that would like some digital in their products as well. >> thanks.

>> i have to take great exception with your comment. do you know what the financial difference is between the state can the federal government is the ninth -- the government? >> the taxpayers pay for both. >> that is true. we spent the last several years paying people not to work, rewarding failure and penalizing success.

the big differences the federal government, we just keep printing the money. if you go out the door and down independence, you can hear those presses day and night printing money. we are in debt $5.30 trillion. the big difference is the state has to have a balanced budget. we print the money. the states are making the tough decision dealing with their biggest cost factor, which is employee base. it is not pleasant for anybody.

this is not a hearing intended to do an assault. indianola much we are borrowing? 42 or 43 cents per dollar that we borrow. this is not an assault on labor. i've been in the transportation area. we kept firemen on training, even though we did not use nikole for anything for fire for many years. we adopt electronic means of -- it was not an assault on labour when we had to eliminate some of the positions. would you say that was an assault on labour? >> i cannot relate to a 78 year

old example. >> they say they can run the post office with 400,000 people. i have more than that. i have to make you choose. the >> you can order your medicines over that, but you cannot get them delivered to your home. the type of mail is going to change. >> that is why i usually use fedex or ups. i love the postal people.

i cannot think of people i like better than some of the postal workers are no. this is not an assault on them but a change in the dynamics of communications in our society. we cannot feed the dinosaurs. we cannot afford to do that. ben franklin was a postmaster in 1775. they've arranged to have mail delivered from philadelphia to new york, the same day service. >> yes. he did it representing the king. >> yes, but he still did it. what you have to do is adapt.

the post office is becoming a dinosaur and will soon be extinct if it does not adapt. we have to find a better way to deal with -- the $15 billion credit limit is about to run out. no more coming from here. >> the time is out. next. >> thanks for your testimony. i have a special interest in this hearing. i represent the global hub of ups. it is our largest single employer. i am an honorary member of the letter carriers union. i am proud about.

the least you can spend anything with ups is $5.17. the lowest price fedex will deliver anything is $7.22. what do you think would be the impact on american business, charities, local governments if for every piece of mail they had to send out, it would cost $5.17 ? bac >> we are happy that we have been able to hold our service down to 44 cents. >> one person talked about the 4

billion plus subsidy goes to users of the postal service. how would you break down users of the postal service funds which percentage would be private individuals, personal correspondence? >> 95% of the male is by commercial entities. the mail that goes between residents is a lot smaller today. probably 90%, let me take that back. some still use the postal service to pay their bills. me sending you a card represents about 10% of the volume.

>> we are talking about an enormous subsidy for american business. >> i would not say in those terms. american customers enjoy but is getting in their mailbox. it is a great time -- a great way for people to advertise. we feel it is very important for the american economy. it is an excellent platform for all users. >> i do not disagree at all about those statements. the fact remains is we spend that in advertising. we to a good vantage of what was given to publications. and they are sending those

advertisements and billing mailings as well at a rate that is far lower than they could get anywhere in the private sector or a free market situation. >> yes. again, we have been asking for the mandates the congress has on the retired health benefits. we think there is a resolution without having an effect. >> you can continue to offer that low rate. when we talk about this, the legitimate role of government is to to for people what they cannot do for themselves. the private sector cannot deliver a piece of mail for 44 cents a across the country or around the club -- blow. e. glob

there is a notion that there are overly generous benefits when we hire police officers, firefighters, mail carriers to embark upon a career that requires physical exertion and have a shortened career as opposed to them day made do. part of the trade-off is to guarantee that there is a healthy retirement for them. otherwise, you have police officers at 75 years old chasing criminals. that is part of the consideration to get people to do some of these public service jobs.

>> that is a great consideration. there is also a prior knowledge of serving america. i went to vietnam. i tried to serve the country in a postal service. my retirement, $1,600 a month. i pay my health insurance. it is not a huge retirement, but it is a satisfactory life serving your country and your fellow man. >> thanks. i thank the gentleman. we recognize the number of two identical twins present here today. i tell you a part mostly by your

tie, which is stunning. your father one. -- won. craigslist me applaud you for the comprehensive testimony you submitted -- >> let me applaud you for the comprehensive testimony you submitted. you address the challenges that the postal service currently faces. i stand firmly in support or in with our families in the postal unions. i am committed to supporting the postal service's real organization to meet the challenges of today and tomorrow. i am very concerned with some of

the elements of the hearing. to take politics out of the postal service. and the workers' collective bargaining rights. i am afraid that some are seeking to return politics back to the postal service and perhaps strip those rights. this committee has a welcome response ability to perform oversight duty for the postal service. i do not think anyone would question that. many want to see the postal service succeed. the service provided personifies the best of america.

what is disturbing is that someone to use this hearing to attack something else that personifies them america, workers' rights, and the freedom that comes with a collective bargaining. i hope i am wrong and that we are here today to help the postal service and its workers find the right path to sustainability and success. i do not think it involves getting in the middle of a collective bargaining process. i do not see how that helps. your testimony demonstrates quite clearly that to the postal service labour force has made some remarkable gains in productivity in the last few years. the work force has been reduced by close to 120,000 employees

in 2008 to 525,000. this is a 27% reduction since 2000. total costs have been reduced by 11 billion. you also mentioned in your witness statement that the post office has achieved record service and productivity levels in recent years. is that right? >> yes. >> but on the waste side, you testified there has only been there modest increase in straight time wages in real terms. the u.s. agreed that is correct? >> yes.

our employees have done a great job. >> would you say the postal service has gotten a pretty good deal from their employees of the years? >> i think it has been a deal. they have done a great job in terms of productivity in services. >> i thank you both for your responses. >> you have to keep pace on the side. you have a history with president truman. that alone is critical. >> we do have something in common. >> i thank you. we recognize the general and

from a vermont. >> i think the witnesses for their excellent testimony. this is a practical problem to be solved. i do not think we should be coming at this trying to take away wages and benefits. i do not see that it should be attacked by trying to take away delivery services that they have come to rely on. i am from a role state in vermont. we had a lot of snow this year. 10 feet of snow. somehow, they managed to deliver the mail. i do not know who is responsible for it. [unintelligible] [laughter] those people in post offices

faction and vermont. it is quite astonishing. the mail is getting delivered. 44 cents for a first-class piece of mail is a pretty good deal. we do not get as many personal letters, but we love to receive them. the other thing that is amazing is the things that the commercial deliverers do not want to provide for delivered. a lot of times, it is frustrating when we go to our mailbox. i think it has to be acknowledged when we tried to wrestle this problem. we had about a 30% headcount.

that is an amazing thing. it is true that we have to change. that is hard. these are livelihood's that people have built their lives around a system that we put in place. not just individual employees, but businesses, homeowners. i think it is a significant accomplishment that demonstrates good faith. what are your views on that? >> i agree with you. it is a remarkable achievement. something that has been done in a passionate way. some have been reassigned. it is a remarkable achievement.

the important thing is the volume of mail has contracted faster when you consider the productivity increases that we have been able to keep up with. >> that is the world that we live in. would you agree that we are trying to make these changes by easing off of the gas pedal? >> i would. one person has done a great job being in charge of this. >> one of the issues is do we go to a five day delivery to save money. what would be the impact of losing market share to your competitors if we went to a five day week? >> thanks in the ups do not to deliver on saturday.

they will not be much of a change. customers have the opportunity to have a post office box to get their mail in. we would up -- offer express mail service. saturday is the lightest day of the week for advertisers to hit a mailbox. they usually look at their mail monday through friday and do their shopping on the weekend.

>> they have these opportunities .o provide the services > >> what is the case? >> there is a pattern behind this. it is not new. in 2003, it was determined that it was overfunded by $50 billion. >> what is the problem with

changing that? >> we are told by the treasury that it would be the changing law. >> we can help save the problem. thanks. >> i thank the gentleman. i trust in the president's budget we would consider that. now the gentle lady from new york for five minutes. >> things. -- the things.

>> the starting pay for a ups a driver and fedex carrier is roughly $16.14 dollars respectively. to do a six day a week drive up and concentrate -- compensation costs can possibly put them at a disadvantage. but you are very competitive. can you give your comments. >> we have a competitive rate of pay. there is financial benefit from the contract as well as

increased flexibility for the work force structure going forward. labor costs and to drive costs, because we are such a labor- intensive organization. we work well with the labor to come up with solutions to reduce costs and keep the postal service viable for the american public. as they have pointed out repeatedly, 80% of the postal service cost is for compensation. just so that we are clear, i am informed that a less than two- thirds is for compensation of the postal services in union workforce. is that correct? >> yes. >> said it accounts for 50% of the operating costs, not 80% as some would imply. >> there are wages and benefits

that make up about 70% of our cost. 10% is for retirement benefits. others are for fuel, just like any other company. >> it is important that we are clear about the actual labor costs represented. you have helped us do that. i would like the other members of the panel to comment on this issue. >> about 29% of the cost. >> any others? >> we think the percentage of cost is not the issue. it is how the total cost relates to our financial position. we think that today's tentative

agreement makes good steps to reducing the labor costs in a fair way while maintaining flexibility in the force. >> we have to look at every opportunity for the postal service to reduce costs, given our dire financial straits. i would think that it would be irresponsible for us not to look at the costs at every opportunity for a contract negotiation. >> my time has expired. thanks very much. >> we will now go into a second round. and double check to make sure no one else came in.

i want to tidy up a few things. one person's book about unionized workforce. it does not matter if your labors unionized or not. if it is 80%, it is 80%. >> the other 10% is in the retiree benefits health costs. >> you have plenty of nonunion workers in management, represented by association. i think there was a lot of dialogue back and forth. i want one thing clear. it is not about the hard-working men and women of the post office. the hearing is not about the union negotiations per se. our committee's primary jurisdiction and area of concern is is the post office of the right size for the future.

one of my concerns goes to this. maybe you can help me with this. in the union negotiation, they negotiated no layoff. if we go to six days -- if he cannot lay off workers going from six days to five days, how do you save costs? you cannot score a savings if you cannot get rid of the people, especially when you already have when hundred thousand to many today. we are looking at a lot of areas that we may legislates which would include legislation. what we probably need to do is bite the bullet one time and figure out how we are going to retire people over 55 and have

over 20 years of service to help get your number down. voluntary departures are not working. you have some people that are 98 years old on the payroll. your people do not retire. >> yes, they do. we have reduced the head count in this organization. >> today you are carrying almost 200,000 people then what you need. if he started the organization to do the job you currently need to do, build the facilities in need, you would need 200,000 less people. built from the ground up, you would need a lot less people.

>> you're right. $3.8 billion estimate includes the problems of a diminishing the numbers. you do not realize the benefits right away. your point is correct when you think about it. you will be contracting very fast. how do you bring down the number of employees as rapidly as you need to. >> you have a $1,600 retirement. the issue of retirement from your military service? that is your postal service retirement? any other retirement coming now and the future? that is it?

i want to make sure we understand that. >> it is not military. that is all i have. >> we have been talking about a pre-funding and over-funding. the first part is higher. every year, you do not pre-fund. you have to add is back on later on in the year. one of the challenges i am looking at is that if we were to obeyed your pre funding from now until 2017, although you would drop down, in 2017, we would be looking for $10 billion and every year going up. one of the challenges is even if we were to smooth it out, you are lowering it now and raising

it again. does anyone disagree with that? >> yes. it includes a track that would result in substantial over- funding of the account. >> i want to ask one exit question. you talk in terms of private corporation and you have been good about this. are you willing to do what they did? if you want to be there, those private corporations, and i believe including united airlines -- and others, they limited their contribution and the retirees got less. if you do not pre-fund and the post office drops off where it

is not able to pay into the amounts, because it would be too big of a burden, wouldn't we end up with a federal responsibility? today we call it a full refund on our side of the aisle. if you do not pay in now, and we were to say, we will tie this to the default being a default that does not pay out, how would the letter carriers feel if because you do not want to pay it in, we will do that, but we will not stand behind it with the full faith of the american people. how would you feel? >> i know they would not like that. there is some confusion that i would like to clear up. you are regarding fully funded

pensions. >> we are talking health care. use of the analysis of the pensions early on in health care. >> close to 1992, it was a book hit. it was not a cash hit. they chose to determine what the liability levels were going to be for retiree health-care benefits, not pensions. for most public companies, they only require 8% funding, based upon the actual needs. >> that is where i came up with what happened in the case of united airlines and others. the fundamental question that we will leave and answered that anyone can respond for the record is, isn't it true that we do not fully fund, that we leave

the taxpayers of america off the hook should the post office not be able to pay in the future? >> >> it is fully funded for pensions and overfunded for retiree health-care benefits. we are more than willing to continue paying that in 2011. that is 5.5 + 2.5 some other billion dollars that we are paying to make sure we are fully funded -- fully funding retiree health-care benefits based on what they need. we are asking for fairness and a level playing field on the $5.5 billion that came across on an accelerated basis.

we want to stand behind these responsibilities. >> i appreciate that. i have exceeded my time. >> you are not asking to eliminate pre-funding. but to pay your retiree health benefits on a true cost basis and spread it over 30 or 40 years, is that accurate? >> we are looking to get a true account on what we sell. we do not want to shirk our responsibilities. it would include a postal service that delivers mail five days a week. we could recalculate everything going forward. that is what we need to do.

until we do that, we do not have a precise idea. >> i join my colleagues in employing -- of plotting new for hiring ron. he did an outstanding job for us. we are sorry to see him leave. he was absolutely magnificent. that means a lot to us to know that he is there. we really do appreciate it. >> we're very happy to have him. >> both sides of the aisle. they have said this is not an attack on postal employees. i do not want one postal employee -- i have some in my

family. i know how hard they work. i understand your emotion. you do not have to apologize for that. you are representing some people who have already given a lot. they have given a lot. anybody that looks at the fact that 100,000 people -- that is a lot of people are no longer working for the post office. 100,000 families. one thing i have noticed is that when the employee rate is 8.8, for the nation, it is 15 points

something for african-americans. the hispanic rate is close behind. when you tell me that we have 40% minorities, that is very significant. i want to see the unemployment rate come down also like all of us do. when i hear about women, many of them, i am sure single, head of household. struggling every day, trying to make it. many of them have lost their jobs. we talk about the loss of jobs, i do not want to speak in terms of collateral damage. and we talk about veterans.

i did not know the post office hired this many veterans. and took care of disabled veterans, giving them some dignity, instead of having them in the veterans said -- center, many times unable to find jobs. all of that is very important. i cannot walk out of this room without telling you that i am proud of the negotiations you have been involved in. i thank you for what you have said. i know you have differing opinions, but she said the -- several things. it is so significant. he said, i believe mr. donna who is doing a good job. that is what it is all about. one of the things i tried to do with my kids is i tried to be careful that i just do not say the-when they do something

wrong. i tried to make sure to compliment them when they do something right. sometimes a ticket -- to get a little bit upset because we do not do enough for the team that is doing it right. you said something the other day. if all unions work with you like his, we can solve all kinds of problems. the reason i am talking about this is because i know you have employees sitting there saying we are the coin to get 10% less. we are not going to get a raise for 10 years. many colleagues have gone. i want them to know that a grateful congress appreciate what they do every day. when i look at my mailman in the rain.

seeing dogs run after him. i do not know how many members of this congress would walk up and down in the hot sun delivering mail. in many instances going through difficult circumstances. i live in the inner city of baltimore. you may not find a mailbox to put the mail in. but some do it over and over again. they get up and they do it. i think we need to take a timeout and applauded them for what they do. i know public employees are catching hail from all levels. they are being told they do not do this or that. but they do a lot of great things. i want to thank you for calling this hearing. god bless you.

>> i thank the ranking member. i think the witnesses for their testimony. i would like to add but the ranking member just said. hard-working men and women in the post office not just this particular union that we spoke about, but all of the workers on both sides of the aisle. we spoke in terms of how do we get to a fair patient for various future obligations of the post office and how we get to the right number of postal workers. we can be proud on both sides of the aisle. this is not about cheap shots of the postal office. the rating is not high. but it is about getting to the right number to meet a mandate the that this congress has

voted for in reiterated repeatedly when it came to the self-sufficiency of the post office. the ranking member and i take very seriously unique obligation to oversee the post office and bring such laws that may be necessary to incorporate that. we did speak about one part of legislation. i believe the republicans and democrats will have to work on a number of pieces of legislation to help the post office to enter markets appropriately and to get to the right number. we cannot tell you what the right number of pay in is. we cannot say about the -- what is appropriate and what is not. we will get to the experts to find the right numbers. if these numbers need to be

adjusted, you have my assurance that we will work for those right numbers, regardless of the technical hurdles, because we want the independence of the post office to be about you taking responsibility for your costs and thus staying out of your way. i thank you. you have many questions that were unanswered. this will be in the record. we stand adjourned. >> thanks. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] 1]

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>> next, q&a with melissa lee. live at 7:00 a.m., your calls and comments on washington journal. the commission on wartime contract gained looks at the rules that nonprofit

organizations are playing in afghanistan. this is live at 9:30 eastern on c-span2. and looking at the t mobil merger. >> what are the specific harm to consumers? the merger process should not be an excuse to implement rulemaking, issues that do not arise because of the merger. >> that is tonight on c- >> this week on "q&a," a look at financial reporting with melissa lee, anchor and reporter for cnbc.

>> melissa lee, why do you do what you do? >> i love what i do. i cannot think of anything better in the whole world to do. i think the reason behind financial news really is to help people enrich their lives. it is financially, but it enables them to pursue their dreams. my grandparents came from another country. they came here to the united states. they invested in businesses and eventually in the stock market, and they sent five children to college. this is how wealth is created in this country and how many generations are able to advance themselves. that is what america is all about. >> what year did your grandparents come in? >> they came in in 1903 from southern china. the came here and started a laundry in buffalo, new york. i cannot tell you how they chose buffalo, new york, of all places, but they were some of the few chinese people in that whole town.

that is what they did. they started that laundry. they had all of their kids work in that laundry. day in, day out, sometimes they slept above the laundry in the building. five kids in one bed, and they made it work. they believed in being here. they believe that by making the sacrifices, their children would have a better life. to think that just after that, one generation later, that i can be on tv talking about the u.s. stock market, talking about how you can trade stocks and invest, it is amazing to me. >> your parents grew up where? >> my father grew up in buffalo and my mother was born in southern china as well. she was the daughter of a wealthy landlord back then before the communists took over. as was the custom back then, he had three wives at one time.

that was the custom back then. my mom was the youngest child of the youngest wife. when the communists came, basically my grandfather said you can use my land, i am taking my family to hong kong. my mom grew up primarily in hong kong and came to the u.s. for college, where she studied fashion. >> did you know your grandparents? >> i knew my grandmother's on both sides. i knew briefly my mother's father. i was not lucky enough to have a grandfather taking me to the ice-cream truck, so to speak. >> you mentioned that your grandfather skids all went to college. where? >> my dad went to columbia university. a lot of my aunts and uncles went to university of buffalo, but my dad had the big dreams and the family.

he was able to study at columbia and live with his older sister who had settled down in queens. he would commute from astoria all the way up to columbia university every single day, and back. >> that is a long trip, for people that don't live here. >> that was an hour and 20 minutes one way. >> what did he study? >> he studied computer science. that was back in the day when you used a punch card to program mainframe computers. that was at the cusp of the computer age. he worked there for some time, but later in years he lost touch with the computer until fairly recently. he did not know how to operate a mouse. >> why recently? >> he just saw that everything was on the internet and he wanted to be able to find information. my dad was a very smart man. he loved to learn. he was constantly reading papers and stock newsletters.

he watched cnbc all day, not just for me but also for cramer and a lot of other shows. he had a thirst for knowledge. he always wanted to know where were the best places to go eat, where to travel. i got that from him, i think. >> what did your mom do? >> she was a fashion designer. she designed sportswear until i was born and then my parents started a business. they thought that working for themselves was going to be the best way to help their family along. they had a number of businesses. one was a drug store in queens. i remember growing up and -- the common theme was that no matter what business they had, me, my older sister and younger brother were all supposed to work on the weekends at whatever business it was. i was young when they had the drug store. i had an older sister at the time, but my dad would divide up the tasks to be age

appropriate. my sister would have to take off and white down all of the high shelves and i would be in charge of the lower shelves. that is the ethic that we had. later on they closed the drug store and started a furniture, custom upholstery and drapery business. we tapped into my mom's love for fashion and my dad, my dad had a desire to create a business that he thought was in need. we also worked on the weekends there. >> you ended up being a bachelor of arts in government at harvard. >> i thought i could save the world by being a lawyer for some time. >> that was your intent? >> i had abandoned several dreams along the way. i should not say abandoned, because i think the job i have is the dream job, i just did not know it at the time when i was 18 or 19 years old.

when i entered harvard, i thought i would be a doctor. i took all the premed courses in college and i worked at the crimson. i really loved that sort of environment, the pursuit of the story and breaking the story and the developments at the newspaper. the crimson is basically a self sustaining business. we do not depend on any funds from the university. we had our own printing presses. during the time i was there, we put the crimson on the internet. i loved that sense that the business is evolving and you could be part of it and that your stories would be posted immediately. it was very, very exciting. once i had a taste of that, i had to try it. i just had to pursue that a little bit more. little bit more.