operates at the center of an industry that employs some 7 million people and generates more than $1 trillion and sales and revenue each year. >> wheat can't afford to put jobs and that kind of productivity into jeopardy. the postal service has done its share to slow the decline in demand and better align its costs with revenues. total costs have been reduced by $12 billion in recent years. and more than 200 and thousand over the last decade. it represents over 25%. the new contract with the

american postal workers union and significant workforce flexibility. the have introduced in promoted a number of new products. one of those is the flat rate priority mail box. we are rapidly reaching the point at which the postal service no longer does what it needs to do to survive and prosper. it is why i am introducing the legislation that aims to clean up finances and implement the organization plan announced last spring. the main provision in the bill, the postal operations sustainability aims to permanently address the various pension and related issues that

have plagued the postal service for years to come. the postal service's inspector general, he regulatory commission had independent actuaries have come to the conclusion that the postal service has funded its obligation and $75 billion. in addition, numerous observers and the office of management have pointed out that the postal service has paid $7 billion more than those in the federal employee retirement system. it will give access to the funds it has overpaid. it will be able to use them to make the payments, making upwards of $5 billion of its books for the next several years. once those payments are satisfied, the funds that this bill will free up could be used to pay workers' compensation

obligations and retire debt owed to the treasury. these changes or something very similar to them will need to be a vital part of any effort to improve the financial condition in both the short and the long- term. staffing with these and avoiding potentially more difficult changes will simply not be enough. the postal service is projecting losses of $230 billion between now and 20-20. -- 2020. others that have been introduced, including the bill introduced by senator collins and bills introduced in the house will only address about 1/3 of these losses. the postal service's latest financial data shows that even the health refunding payment is not made, they face the risk of insolvency and a shutdown in

2012. and even if the 2012 health payment is not made, the postal service would enter 2013 with no cash and no borrowing room at all. more will clearly need to be done. that is why my bill takes important steps for truly giving the postal service had flexibility that those of us in congress say we want to give them to adapt to new realities and operate more like a business. no business facing these kinds of difficulties and challenges would survive for very long if it were told how many retail outlets they should have and where they should be located. or if it were prevented from making operational changes are taking full advantage of the resources and expertise that it has at its disposal. that is what congress does of the postal service. my bill aims to address these

problems and take on risk out of the day-to-day management of the postal service. i commend them and the labor unions that represent most of the workers. even if the postal service can continue to build on the recent cost-cutting efforts, these changes could help said the postal service on more solid footing in the years to come. the report that they were releasing today on the state of the postal service's vehicle fleet was a valuable case study. the report clearly details the negative impact of financial uncertainty and while at is sometimes harmful, it dictates postal operations. for example, at least in part of the dire financial situation, the management currently has a plan in place to deplete its very large delivery vehicles.

the cost of operating and maintaining these vehicles are increasing. the postal service has no plans to date to begin placing its aging fleet. in part, it is due to the action of congress. i look forward to hearing from our witnesses today about these and other pressing issues. i know that senator collins with whom i've worked a lot of issues on in the past has introduced her own bill and there is a fair amount of overlap between what she has proposed and what you'll find in the legislation.

i hope that senator collins and i can work on these issues and others in the past to find common ground. we can find a bipartisan approach to address these challenges. my hope is that many members of the subcommittee in this committee will be part of that solution. i will recognize senator brown for any comments that he would like to make. >> think you, mr. chairman. i will not repeat a lot of what you said, but i wanted to point out that i agree with you that we need to allow the postal service to have the tools and resources the need to move forward. we need to remove some of the road blocks providing that they can provide universal service so that the community is not adversely affected. you already addressed the pension-fund overpayment.

i think it is just a question of giving them the flexibility to work in a responsible manner to solve their own problems. the path that they are going down is not sustainable. i look forward to working with you and senator collins, working on these very real issues. i appreciate the opportunity and i look forward to the testimony. >> your statement will be made part of the record. >> thank you very much, chairman. i want to thank you for holding this important hearing about the future of the united states postal service. i also want to welcome the postmaster general and ceo of the u.s. postal service and also here [unintelligible]

as we have heard time and again, over the last three years, the postal service faces a devastating financial crisis. by the end of this fiscal year, the postal service may not be able to fully pay the $5 billion retiree health benefits. the accountability office reports released last year examined several options to help the postal service. i want to commend the senator and senator collins who have both introduced legislation that aims to help the postal service meet its obligations by addressing over payment to the retirement funds.

additionally, the act offers several provisions that will allow the postal service to renovate and expand its business. with both of these bills that still contain a provision in traduced in the last congress. which would buy collective bargaining process. to favor the postal service during arbitration. the fact that the postal service ratified a new contract who just last week, it demonstrates that the postal service and employees can work together. to reach an agreement that meets every one's needs. congress does not need to inject itself in the collective bargaining process.

i also want to mention the issue of the five-day delivery. as i expected, the estimated savings for cutting a day of service is more than the postal service's. they also point out that the postal service had not examined thoroughly the impact on rural areas. i am concerned about the impact of cutting service which already has slowed and mail delivery because of its location and the challenges. ultimately, i don't believe this change will help the postal service attract new business or revenue. instead, it could harm those

that rely on the postal service. again, i want to thank my colleagues for their hard work on these issues and thank all of our witnesses for their contributions to the entire process. these hearings will help us move forward with legislation to finally ensure a long-term fix for the postal service. >> it is great to have you back again. the first witness is the postmaster general. >> senator, used with the enemy. good to see you again. we spend most of our day together. the first witness today is the postmaster general. this is his first time testifying before the

subcommittee, is that true? they serve as the postmaster general and chief operating officer at the postal service. he spent his entire career at the postal service beginning as a clerk in his hometown of pittsburgh. next, we have the director for fiscal infrastructure issues and the government accountability office. brighter -- broad range of issues there. both of the stevens will be admitted in their entirety for the record. you may summarize as you see fit. if you exceed five minutes, i won't say much. if you exceed seven or eight minutes, i will say something. >> i will not exceed five

minutes. i appreciate the opportunity to testify today on behalf of the u.s. postal service. thank you for the invitation and thank you for calling this hearing. the postal service plays a vital role in american society and the american economy. they will deliver more than 165 billion pieces of mail and ship more than 2 billion packages. we are the backbone of a trillion dollar mailing industry. we innovate and compete for customers. we provide reliable, secure and affordable delivery platforms. it is a national interest to keep the postal service financially strong. like any business, it is subject to marketplace trends and we have seen a significant long- term decline in the most profitable product category which provides for approximately 50% of revenue.

people and businesses receive statements and pay bills electronically. we have aggressively cut costs for customer trends and we have reduced the size of the work force by 113,000 employees over the last four years and we are consolidating mail processing and retail facilities. the total cost production is an excess of $12 billion. whoever is on the declines by working with corporate partners and improving our customer experience in creating products that spurred demand. it is a port to recognize that our employees have done an outstanding job during turbulent times in the marketplace. absently prepayment mandates, the postal service would have reported a cumulative profit. despite our significant role in the american economy and our

aggressive cost-cutting and revenue generating efforts, we are in a serious financial predicament today. as things stand, we don't have the cash to make the prepayment for future health benefits to #30. and we may be forced to default on other payments. this could extend to operational expenses. because of disruptions cannot be overestimated. even the threat of such destruction will have significant impact on america's business and irreparable harm home to america's faith in the mail. we need legislation this fiscal year. i am grateful that you have deduced bills that introduced -- address the most serious restraints. we eliminate the prepayments by reallocating the civil service retirement overpayments. the federal employee retirement

system will provide the postal service with flexibility to determine its own delivery schedule. i also urged the subcommittee to start this process with a long- term approach to the business model. we have sustained financial losses over the years and have created a negative perception and to some extent have had a negative impact on our business. the fact is, with the right legislation, the postal service can return to profitability. we can continue to serve the american public very effectively and continues to sustain and propel american commerce. members of the subcommittee, i look forward to working with you and support of these goals, and thank you for a leadership on these important issues. this concludes my remarks. >> you are shorter than jack parker. helen to make sure that we did

that. chairman, ranking member brown and the members of the subcommittee. i am pleased to discuss the work on the postal service. i will briefly discuss the financial condition, a key issues, and the postal delivery fleet. addressing the broader challenges. the postal service is on the risk of the agencies because it needs to realign the business model. total volume decrease 3% in the second quarter of this fiscal year. that is compared with the same time last year. the postal service is reporting a loss of $2.6 billion. the project they will reach the debt limit this year had defaulted on a $5.5 billion payment for health benefits. the postal service needs to modernize its operations and

prepare to upgrade delivery fleet. the delivery fleet has 192,000 vehicles, most of which are custom built in the 16-23 years old that are approaching the end of the operational lives. the commercially available minivans with respect to the operational life of 10 years. maintaining the delivery fleet costs about a billion dollars or $18 a day for a vehicle. the analysis of the data found that direct maintenance costs was a bit understated because the contractor costs were not included. about 5300 vehicles required more than 7000 indirect costs. and there is about 7500 in direct costs. and 31% of delivery costs were for unscheduled maintenance over

the postal service's goal. while the employees we interviewed believe that they would continue to operate without interruptions for several more years, we identified a maintenance problems. agency requirements or replacing frames and it was not being followed in the facility we visited. it was only replaced with a perforated the metal. also found frames with severe problems in new york state. replacing frames is a key indication that it will replace, not repair vehicles. upgrading will be costly. it is estimated to cost about $5.8 billion, about 31,000 for vehicles with gasoline engines. totally refurbishing the fleet will cost less. the cost of replacing frames and

transmissions is effectively a refurbishment had a slower pace. mainly 75% will be capable. another complicating factor will be the higher acquisition cost that may not be recouped over the operating lives given the vehicles that currently travel about 17 miles a day in use about 2 gallons of gasoline. the time will soon come when the cost will not allow for the delays. we recommend the postal service develop a strategy and timeline. more broadly, agreement is needed to align its cost with revenues and to generate sufficient funding for capital investments. congress should consider modifying the requirements in a fiscally responsible manner to provide short-term relief.

and addressing constraints and legal restrictions, the action can be taken to control costs. the legislation discussed today will be a starting point for action. this concludes my prepared statement and i am prepared answer any questions. >> thanks to both of you for that testimony. i want to just go down on the report released today. as i understand it, there is close to 200,000? the average about 17 miles. the cost of fuel, just go back and clarify for me, what do we talk about the cost of fuel?

>> the billion dollars was for maintenance and fuel. it was about 250. it would have increased this year easily. >> one of the things that i encourage the previous postmaster general, the labor unions, we want to be as creative and think outside the box. and you have even suggested that if you haven't already, the job is to think outside the box had come up with clever ways to have revenues and clever ways to reduce costs. think about energy cost and talk with us about what you're doing already to bring down energy

costs within buildings. and whether or not there is any potential for a similar approach with reducing the energy costs for maintenance costs. >> the first of all, let me thank you for your positive comments about the energy program herein we embarked on an energy program about for five years ago out to look at anything and everything we do, mainly focused on buildings. a lot of the emphasis was all electrical costs. when you look at electricity, it comes down basically to how much it costs to keep the lights on in the facility. there has been investment in special systems to manage that and we of the and allot of simple things like replacing light bulbs for a more cost- efficient a bold.

and very simple things like keeping the lights off. and her live-in able to cut electric usage and that is something that we are very proud of. we're looking at innovative upgrades. they can help us not only sustain buildings for a long time, but it helps with energy conservation standpoint. from a vehicle standpoint, we are looking at all of the options right now. live in experiencing with hydrogen vehicles. electric, a hybrid, we want to make sure that we look at everything out there. the daily cost is to operate the vehicle, and the long-term costs, that is why we have to maintain the idea of the of replace the battery. that could be considered as part of the long-term investment.

we are out of place where we'll have to buy vehicles in the next few years. we have got to get finances in order. i appreciate your bill because it will help us get the short term finance. >> we ask a few votes in the industry about the idea of the energy sharing contracts. one of the points was because the vehicles travel a relatively short route and use not much fuel, have they worked very well with buildings, but it may be a tougher things -- a tougher thing to use in terms of vehicles. you have folks that will actually do work to reduce energy consumption, and it will flow from the energy savings that is created. it doesn't work for vehicles. >> it would be a new idea.

given the configuration of the fleet, they're hoping to do a by for another 25-year vehicle. there is a long-term commitment for the industry. >> one thing to keep in mind, as we know, there is a huge reliance on oil in this country. it is for places that are undemocratic, frankly unreliable. we need to reduce that. among the issues that we are pursuing, we hope within a couple years, about 12 miles fuelyou'll be able to homes per day. we know the wind doesn't always blow and the sun doesn't always shine. one of the things i like this

for us to keep in mind. as we look at trying to reduce the building costs for energy, we will see if there is another way to use this opportunity to make money or save money. we are moving toward hybrid vehicles. next year, they were going to originally billed 50,000 and we are now building 200,000. the oil the at the end of next year, 80 miles a gallon. they have to be fuelled some place. and to the extent that the postal service has in the business of using electricity to power vehicles, and there might be the opportunity to also sell electricity with customers. we're looking at a price of natural gas and fueling stations there.

we're really looking at vigo to place. if you have of fleet hall of fans, it will have a hard time doing the unpredictable sources of electricity. but if we had somehow a fleet of vehicles, they could almost be a reservoir of a electricity. so when the sun is shining, the wind is blowing. and sell it back to the grid. that might be the opportunity to make money for the postal service. i don't know if any of those ideas will actually work out. we have to be more entrepreneurial than we have in the past. the others might be working with the folks in the auto industry. let me stop there. i have another round of questions and will come back.

>> what do you need congress to do so you can get your fiscal and financial house in order? >> what you want to give us so you can solve the problems? >> we appreciate hearing, it is a great opportunity. we want to hear specifically what you want from us. >> we need the bill passed this year. >> what bill the recommend we pass? >> be built recommended the answers the needs for the postal service of in the short-term and long-term. they're good portions of the bill that have been introduced by senator collins. what posts bill does for us, it provides immediate resolution on

the retiree health benefits. that is the number one thing. that has to be addressed. that is the reason i say the entire bill. that only gets us to break even now. it does not help us in the future in terms of paying off debt. and when you get two or three years down the line, we'll be back in the same business. >> it will give you about a year window. that is why it is critical. >> we have to resolve and return the payment of the federal employment retirement system. we overpaid into that system. using the provisions of the bill to use that to pay against the retirement health benefits would be great. hand-painted that going forward. >> it is worth, we thank $7.9

billion. that would pay half of the debt off. >> issues we are faced with going forward is the problem of declining first-class revenue. it is half of our revenue and 2/3 of our contribution in terms of paying for the overhead. we're fully staffed on a daily basis. 35,000 post offices, that is all paid. >> if the price keeps going up, you will bang it out. why would i spend whatever the number ultimately is going to be. what if the volume goes down? dodge that is what we are facing. >> first-class mail has dropped

25%. it puts unreasonable pressure on the organization so we are proposing flexibility. >> elimination of potential services, getting great at it? >> there are two things. we have worked very well when the unions. we have taken a 15,000 routes in the last four years which is well over $1 billion. what we need is the flexibility to eliminate saturday's delivery as required by congress. >> saturday everywhere or somewhere? >> keep the post offices open, allowing customers to receive mail through post office boxes on saturday, but we would eliminate regular delivery on saturday. we would deliver express mail on saturday. there was still be service, but we would take $3 billion of

costs out of the network. after that, it has continued to be very flexible with product offerings and additional revenues generated in the organization. we're very pleased with a lot of innovation we have taken on listening to our customers. if it fits, it ships. this is great because customers can use this in many different sizes, different prices. but what you want and, you can ship it from your home. we have a simple box coming out. we think there's a lot of growth there. this something that is really in the string. this ties in to some of the latest technology. here is how it works. you would send this to

somebody's house and they would take this out of their mailbox. for more information, scam esparto. it took you up to a website where you can not only find out more about the products, you can buy products online. >> you will get piece of that? >> we would get the postage and we have talked to people about collect charges. the freedom to do those things with the regulatory commission, we think there's a lot of caution in that, too. >> talk about the fleet vehicles, obviously, they travel such a short amount of time and there is a conversion bill that will allow a pretty simple process. say 25% of fuel consumed. i am interested in dissecting the report a little bit and understanding.

if there is a mandate to do a certain amount, does it come into play that may not be cost- effective to do that? >> if there is a price differential, over a fleet of that size, it would raise challenges. have also been improvements in technology. there are gas engines. >> it is certified by the low emission. there have been things involving. watching how the industry changes will be important to see what makes the most sense. >> as part of a caucus here, how many are there? >> we are glad the he is here

today. >> if i can do a quick follow up on the vehicle issue, i agree on the short term for a short distance. there is home economics of fuel efficiency. are you looking on those? hugh have large semi truck movements. that is where the real money is in energy savings of vehicles. until they get into mass production, trucks in the sense of long haul, are you looking at that equation? >> we do two things with what we call the heavy fleet. there is 2 tons of oil up to tractor-trailers'. we are working within the industry to have the latest as far as technology. we operate 30 electrocute-ton

vehicles right now. we have been very successful with the technology. the majority of the long haul heavy fleet, we work with our contractors. we make the vehicles more energy-efficient. as you see, what they have been putting on the trailers, the contractors are moving in that direction. there is a simple fuel economy. >> have you thought on the vehicle and of its, he said 185,000 vehicles? just going out to the market and saying, here is what we need. we need to replace this vehicle fleet and we're open to lease, purchase. when we got heavy into updating the computer systems, for example, the department said it

bought all this stuff. the change that occurs and we figured we could get a better deal with the companies because they would use us to both of their production and cut the costs and to other product sales. have you looked at saying the private sector, rather than you all, i sometimes worry about the government plan analyzing the best result and saying, okay, this is what we have. we have a hundred and 85 vehicles that we need to purchase. give us your best deal. even though the hesitation, you don't know what they can offer. they are hungry out there, so have you approached it? >> here is what we have been doing. we have been working to the

technology just to get an idea of how it works in the organization. with the original intent, it was to try to keep them for 25 years. when we bought them, we tested them in arizona. is probably not a good place to test vehicles. i am from pittsburgh. we are not as nearly as alaska, but we have obstacles going up and down hills. we are looking to figure out what the best technology is. we're working with private industry. we had general motors work with us on the hydrogen fuel. we had a number of different companies on electric. we are trying to figure out the best thing. the key thing for us right now, we have got to get a good idea going forward about what the technology will look like five,

six, 10 years down the road. we have done work in the past. from a financial standpoint, i can't write any of it off. we are looking ahead and we have been talking with private industry. it will probably be two or three years down the line. i've got to get the short-term finances. >> let me ask you, i think when you came to my office a couple of months ago, think you for recognizing alaska is unique. we had a conversation about universal service for all areas. and we have written a letter regarding service. we recognize flexibility. how do you deal with areas very remote that may have flights coming in or certain kind of supplies.

we will ask that maybe saturday is the day. can you give us your thoughts on universal service? and bypass the combination of the two? how you will address rules? and first and universal and by passing? >> we are fully in support of the mission to provide service to the american public. any changes that we would make, it still comes first and foremost. from a standpoint of how that ties to the bypass, we understand how important it is for the rest of the u.s., but people have the ability to get food and medicine. we take that very seriously. we make sure that that goes through every day.

your point about the delivery and the discussion on saturday is what we have been looking at. there were comments from a number of people about what do you do going forward? our proposals are delivery, flexibility, and just that. we thought we would make the changes and saturday would be the day. there are sometimes over the year that we don't deliver mail on monday. we're thinking of maybe delivering on monday and some of these cases. in the case of alaska or hawaii, there could be the case of some provisions. we have to be flexible with that, too. that is why we have used the term delivery flexibility. we recognize it is a responsibility to provide that service. >> how will you be engaging stakeholders? like in the case of alaska or

fairbanks. how will you engage them on this schedule of flexibility? >> last year, we spent time and we can do that again as we move towards changes that we would be getting out of the passage of the post back, we would engage customers the same way we do by changing post office access points. we're going through a process right now. we are fighting people to talk to us. we listen to customers and receive the mail and the customers that receive the mail. >> i think it is a critical issue and i am very supportive as we have had this conversation. >> thank you, mr. chairman. let me start with you, if i may. the post regulatory commission made some recommendations, i

believe it was last year about things that you should do has your closing post offices. one of the recommendations is that people in the area should receive actual notice which i assume will be a post card type notice. apparently your current practices is to notify your customers and delivery customers about the affected facilities. the second recommendation would be that the postal service would expand the methods available for providing an receiving customer input. and the third recommendation they made is that they would expand the contents of the public notice to include better information about alternatives for customers. my understanding is that you did not implement those recommendations? we're having post office is closed in our state and the

people in our state feel like they are not notified of this adequately. they don't have opportunities for input. when there are opportunities, it seems like the decision has been made. maybe you are not really taking input. >> we don't go through the motions, ok? we agree with all the recommendations. it has just closed the comment. how to employment of those changes. to employment which, like to call the access change. we will provide better access to the american public. we're going through a process that has been in place for 30 years where we examine small offices and we agree that it could be much more customer friendly. having community meetings and

providing them with their recommendations and providing what they are asking for. 35% of all postal services and products are bought outside of the post office. you can buy stamps packages, and that will continue to evolve in that direction. we want to be where the american public needs us to be. that is a case of large, downtown offices. " we want to do is take a good look at how provide that access and the best way financially as well as -- i will give you an example of some of the things we are looking at. we're finding that many of these offices don't even have an hour's worth of work. if that is closer, a mile or so,

we can consolidate. many towns have a gas station, a general store, and a post office. we are looking at talking to the general store or the gas station to provide service. that allows people to have access to those businesses and get the postal services through that way. we are wanting to hear from people. >> you say you are listening and you want to hear from people. you went through the public comment processed and decided not to close it? >> i have to get back to you about that. it is already suspended, so they were already closed. we clean the paperwork up and finished them off.

there are about a thousand, [unintelligible] >> of like to ask about the bill. it sounds like you have already said you support the financial parts of his legislation. you think it is very important for the financial viability of the postal service. how much will that save the postal service? >> it will save about $3.1 billion a year. and on the criteria, this is another part of the chairman's bill. in closing the post offices and facilities, he mentioned today small facilities or maybe low- volume facilities. what is your criteria there?

>> what we're looking at right now, the places that were less than an hour of business in a day. that is generally tenor less transactions. >> he means the post office will close their? >> in means we are looking at it to either consolidating its or potentially contract the work out or leave it alone. we're trying to keep it as much of an open mind about these things. but we have to put everything on the table as well as taking cost of organizations. >> i can think of some areas were naturally it will be low volume because of the sparse population. >> the comments were to balance the requirement for universal services. if you have a small office that

does not generate much revenue, then it is certainly a potential for better access within half a mile or a mile. one of the provisions talks about the shipping of alcoholic beverages. dion how much revenue would generate if you are allowed to ship a alcoholic beverages? >> we think it is an excellent idea. what the postal service brings is convenience. that is one of their biggest growth products. we have the network to provide that service along with the ability for pickup. adults will have to come than and pick the alcoholic beverage up. we think it is a very interesting proposal.

>> there is a provision in their about when you are in arbitration with your employees, that the arbitrator could consider the financial condition of the postal service. or would that be a change? >> we think it is important to any time you go to arbitration, especially in today's world. if you look at the future of the postal service, they should consider that recently conducted negotiation with the american postal worker's union. it is irresponsible contract by both sides. bills of think it is responsible for the industry that the protection is in their incase the union decided to go to arbitration. >> and those are great questions.

>> there is more time if you want to ask more questions. >> i just want to follow up on the issue of wine and spirits. that is thinking outside the box. , aa deal out of mother's day green card. it was a partnership to take pictures. it was a beautiful mother's day card. it was delivered by the postal service. our next-door neighbors are getting that flex. it is a good piece of business. i'm not sure how long the business will be. it is the kind of thing that we just want you to do more and more of.

a lot to ask a question about how important is it that the financial relief bill we consider go beyond pension and retiree health issues? >> it is critical. as i mentioned who senator brown, what happens is if we just address the health benefits, it gets us through this year from a cash standpoint and an income standpoint. we lost $8.5 billion. we are predicting losses of around $8 billion. even with the release of $5.6 billion going forward, it will not be enough. it is critical that we address the overpayment. we will not spend that anywhere else. the delivery flexibility, going

forward on product the way of talked-about, you have got to get the whole thing done and through an industry standpoint, who have to make sure that all of those things happen. >> this seems to me that there is a fair amount of agreement. we have the overpayments into the federal employee retirement system. to use those to pay down the obligation, also furred that, as i understand, that is only 1/3 of the problem. the flow of money from the retirement system, stopping the overpayment is only about 1/3 of the problem. >> we have an outstanding responsibility of $91 billion. we pay through the need.

with about 47% of the way paid. if we were able to access the funds, that would clear that side of the ledger. the volume we are experiencing keeps the pressure on our organization and the industry as a whole to continue to reduce costs and how to use the mail and more creative ways. with packages and even trying to slow down the drop-off in first class, one thing that our customer told us, from a bill standpoint, we will try to work with our companies to stay in the mail. to charge the same postage for 1.2 ounces as we do

for 1 ounce. customer says -- customers said it was too complicated. the customer can use a better paper, they can put messages in there. in many cases, that is the only way that a bill sender gets priority in customers' eyes. we want to keep our foot on the gas pedal like we have been talking about. the topline is just as important. >> the question i asked in this exchange is how important the financial relief bill is in congress to go past the retirement health issues. >> the overcapacity in the processing, [unintelligible]

there is a similar set of challenges. with the needs for the mail coming in, [unintelligible] >> you have concluded a round of negotiations and most people say is a fair contract. give us the status on negotiations please. >> we are still in negotiations with the characters. it is a very responsible contract, not just for the postal service employees, but for the industry.

we like to conclude the same way. we began discussions in august because the contract ends in november. we expect to see this type of framework and contracts. >> this will be the last question i asked. >> the other question i want to ask, i want to talk about business opportunities. people ask how i feel about six- day delivery. and we can save substantial amounts of money. i think we ought to consider that. find a substantial savings, we can't consider that as much. the opportunity cost of six day

delivery, we talked about this before. someday, somebody will look back at the postal service. we went to every door, six days a week. why didn't we think of x, y, or z? cockatoo was briefly about the opportunity cost of a eliminating saturday mail delivery? the work of fedex and ups. >> you know that we would rather not eliminate saturday delivery. the critical issue is the continued pressure we have on first-class mail and the fact that the contributions as that drop continues to put financial pressure on the organization. we think it is important to provide that service, even at

five days a week we will still have the greatest network reach of every one because we will continue to good every home and business five days a week. we also think it is important to continue to work with customers to sustain first-class service as well as we can, as well as at new opportunities for a revenue standpoint. i do not know of any one specific cost area that we could achieve that would be able to offset the benefits of the reduction of that day delivery. our goal was to get the organization down to $60 billion as soon as possible, and that is a combination of reducing and eliminating the retiree health benefits, delivery flexibility, and between administrative cuts, work are cut, successful union negotiations, i would like to get us that the 60 billion. that gives us about a $5 billion cushion from the revenues right

now that gives us the ability to pay down debt, that keeps us strong in the future, and addresses capital issues we've been talking about today. >> thanks so much. senator mike castle, welcome. >> i would like to follow up on the german cost question. we have a difference between two agencies that say the five day delivery -- you all say that it is going to save $3 billion, and the regulatory commission said it would generate one with $7 billion. i do not know how much that is at a suitable to a loss of business, that is inevitably want to occur when you cannot do a six-day delivery. you have an advantage right now with six-day delivery. if you are looking at this with a cold lands of it your business

model, you are getting away the major -- you are giving away the major advantage you have when you give away that sixth day, and you speak to why there is a white disparity between saving these two agencies came up with, and what keeps us from going forward? if we're not careful, if we go to 5, are we not really talking about the beginning of a death spiral here? >> bethany address and number of your questions, senator mccaskill. we did not want to go to the six -- the six to five. it is an option: ford and is tied directly to the loss of that contribution of first-class mail. if i had an answer to stop that, we would get that in place now, that america is changing, bills are being paid online.

that is 18 cents that comes out of our coffers. the difference between our estimates and what the prc estimate is two things -- their estimate of revenue loss, $600 billion, hours, $200 billion. there are a lot of opinion polls, many customers in the past used to make sure they deliver -- that we deliver mail on saturday. they have moved away from saturday. it is by far the loudest thing of volume. many businesses are closed saturday, and what we have been told his people did not look at their mail on saturday as much as they do the rest of the week because they are busy with other things. the $200 billion vs $600 billion, as part of the difference. the other part of the difference is an estimate as being able to say, to capture the cost. we think we can capture a substantial portion of the cost of saturday delivery by

absorbing it into monday. the reason we say that is 95% of the letter mail we deliver today is sorted by automated machines and are processing facilities. that terrible cost that a carrier with experience years ago, they do not experience the day. we also know that once you're out on a route be delivered to a number of houses, our coverage factors are 90% today. the letter carrier observers of lot of that time in their daily work. saturday business today costs us $3.8 billion. we think we could save $3.1 billion. we know we will have to add some costs that we cannot observe, but based on our history of taking costs out of this organization, we think we will be able to do that. i have committed a to do it. it is going to get done. >> i was disappointed when i

realized the postal service survey that you did in this regard, we are -- were not in rural communities. one was in suburban atlanta, and the other was suburban seattle. would it be possible to take a look at a rural community, not one that is within commuting distance of a major city who it is those folks that, in terms of getting their medicine, which we all know that saturday delivery is very important for, and in terms of their ability to receive mail on saturdays -- is there a reason why what i would call a true role committee was not included in the survey? >> we can look at that. there have been a number of surveys done across the country by rasmussen and the gallup poll that have looked at many different communities across the country, and consistently what comes back is this --

when asked the question, if you made a choice between the delivery saturday, closing post offices, or substantial increases in postage rates, 70% came back and said eliminate saturday delivery. our proposal is to eliminate delivery, but to keep post offices open. from a rural-back of, people still have access to post offices. >> their role post of as closing -- by a little -- the rural post office closing -- there may be a situation where you call something other than a post office so you can get around the requirement in terms of notice to the committee. could you eliminate that situation for me changing the name of a post office to a substation or to some other name and then not having to go to the community and get the kind of input that is needed -- i get it

that we have a huge problem here. i get that the money coming in does not match the money going out. i am not trying to throw tax and from the moscow, but i think it is important that these rural communities feel like they have an opportunity to weigh in. i want to make sure there is not some ability that you may have to get around the regulation for notice and public hearing by just renaming it something different. >> we agree. we have a process in place right now. we finished up a register notice where we will provide public input, notice on any changes to access that we make out there. we know postal service, especially in rural areas, is very important, and your point, we got to balance the cost of benefits. we will not do anything to hoodwink the american public that way.

we are proposing in the federal register a top-down approach that ensures fairness. we did not have one state that is going gung-ho and another that does not look at it. it-shores would make the right decisions. we were talking earlier about the importance of what we do in alaska, and i appreciate in missouri and arkansas, a lot of rural areas. you have my assurances that we will make it a very fair process. people have plenty of input. we will make the right decisions and make sure we reached out. we will send anybody affected will post cards. we will take their input. >> mr. chairman, i want to compliment you on so many parts of your legislation, and i know how hard you have worked on it. i want to compliment mr. donahoe. i think you are trying very hard to try to put this puzzle together. i feel strongly if we can save

six days it is a very important to the integrity of the product we have, which is the united states a full-service. it is going to happen, and i worried we are going to diminish the ability of that business model to survive if we start cannibalizing it by falling to five days. if there's any way i can work with you to save the six day deliveries, i would like to do that. >> part of it is going back to negotiations, that will take place between the unions going forward. and our ability to help them another way stricken -- in other ways. that is real money. i want to come back. closing questions. in your view of what would still be provided in a post a world

where there is no saturday delivery? would it include people would have a box? >> syre, >> what he say about express mail? >> post office accessibility. mel coming to the network, -- mail coming to the network, monday that would be delivered, or in some cases the people have what is called caller service, they would have 24/7 access for that mail. >> i caught what he said to the senator regarding 30 miles or within. in alaska, 80% of our area is non road access, so i assume that as part of the equation. when we did the central air service, there was debate that we would cut it off because he

could get waukesha -- so you could get to a hub. >> absolutely. alaska presents the situation with the universal service, similar to hawaii. those are the two states that we have to dig ever look as we work through that. >> as you send out notification, i know everyone gets mail, the material in the mail. they do not pay attention to it until something bad happens, and then they say i did not realize that was happening. i would send out your postcard and it would say, closing a post office. i guarantee you you will get 100% engagement, and otherwise if it is a regular we are notifying you of the post office situation and change an operation, here is what is happening, they will look at it,

said the side, and read the catalog for the day. >> maybe we will use the qr code, click here to find out. >> one example. i was invited to a meeting, and there was a land use issue. no one was going to come out because it was so many months away. the flier sent out of the neighborhood was, come learn about how your taxes are going up, and the room at full capacity, and it to local city council members said your up- front, we are not. then we talked about land issues and people were confused, but they got fully engaged. >> thank you for using the mail. >> and they handled it. thank you. >> thank you for being here and being an active part is based. i think that is going to do it for our first panel. i want to thank you for joining

us and thank you for your testimony. >> thank you. >> as the panel comes up, do we have a vote at noon? >> it has been moved to talk 17. we have the opportunity to hear our panel and have to break off at 12:30. >> ok, thank you. [captions copyright national cable satellite corp. 2011]

[captioning performed by national captioning institute] >> we will go ahead and find your seats, please, and i will ask those who are planning to leave to go ahead and make your way to the door. i am going to introduce the witnesses for the second panel. if he did not catch it, the vote has been moved from noon until 12:15, and i want to complete the testimony for this panel

before we break. we have a vote followed by a respective caucus meeting. i want to finish this panel and have a chance as the couple questions and then we will move on. the furnace -- the first witness is margaret pinch hitting for rube. she has worked as a specialist on rates and classification of the commission and served as the lead pose the auditor gao. next, david williams. the postal service inspector, the second independent the inspector general at the poster service in the history, is that correct? he worked as a devotee, assistant administrator for the aviation operator at the reservation security administration and service at

five other agencies. next discusses the president of the american postal workers union. how long have you been in office now? [inaudible] does it seem longer? congratulations. before becoming president, mr. duffie served as the exec and a vice president and served in top leadership positions in the union since 1986 and started his career with the postal service in 1971. next is mark strong, where he has held leadership positions since 2006. mr. strong is postmaster in sun city, arizona. we could use some sound around the state, maybe a couple they'd. finally, we have jerry cerasale.

he has a long history working on postal issues. great to see you. thanks for coming today. your full testimony will become a part of the record. >> good morning, chairman carper. i thank you for the opportunity to present to you the commission in addressing the financial crisis. the chairman regrets been unable to testify today. she has prepared written comments. i ask that these comments be made part of the official hearing record. >> without objection. >> in four months the usps will conclude its fiscal year and will not have sufficient borrowing authority to pay its bills.

analysis for rate increase is related to a requirement to fund its health benefit premium. the postal service has paid $21.9 billion to fund these benefits through it all other things equal, without the requirement, the postal service would have achieved a net, the -- a net profit of that type instead it has accumulated losses exceeding $20 billion. this year it will exhaust its borrowing authority. you have proposed legislation to address this crisis and to build on a model of the puzzle accountability enhancement act. the commission supports the approach of your bill and in addressing the crisis as well as longstanding issues related to funding of its employee

pensions and future retiree health benefits. the strategy is grounded on objective analysis that incorporates the best practices of business and government has identified a commission in previous studies. the commission appreciate your bill provides a regulatory oversight for non postal products and services that may be proposed to be provided to the postal service. this will promote growth and innovation while protecting the public interest. the commission supports modernization of the process to make it quicker and more robust. the requirements of the service to respond to the issues of recommendations in the opinion is an important improvement which may be strengthened by requiring its response card implementation of the change is. the bill would alter the advisory opinion process to produce decisions within 90 days from the date of the request of the commission. under current law the commission

by its national service changes in formal hearings on the record that are subject to the procedure act protections. this type of person can be time- consuming. the proposed legislation would opportunity to contain information from the postal service. as a result the commission would be able to reduce its opinions more promptly. the detailed analysis and a sense of outrage of the commission house recent opinion on five day delivery would not be possible in a 90-day case. the commission has not yet concluded it supports the 90-day maminute. the commission understands the need to adjust the retail network to reflect customer demand. it requires the effective so

customers be involved. the postal service has proposed revisions to its rules for consolidating retail facilities. the commission has provided comments to the post service, including recommendations to ensure the ability to offer and put, and coronate discontinuations of services. in closing i would like to reiterate the commission support for addressing the postal service crisis as outlined in your bill. timely action to address the benefit issue remains a key element of any reform the affected oversight is vital when the system is under such grace system defect of oversight is vital when the system is under such great stress. that concludes my oral statement. i will be happy to answer any questions. >> since the german could not be

here, thank you very much for your participation. give her our best. mr. williams, please proceed. >> i appreciate the opportunity to discuss the serious financial condition of the postal service, whose leadership anticipate being able to meet its obligations in the fall. the postal accountability and enhancement act was crafted to incentivize service to adopt a volume driven in fisher john. it required pre funding of benefit plans, but the framers were -- subject overcharges. resulting payments created the 20 billion loss. this has caused inflated and researcher cost. in the near term cost containment and infrastructure optimization are under way. it will take time unless numerous actions are undertaken simultaneously which could outstrip the ability to control

optimization and to avoid unintended consequences. what is needed? in addition to benefit reform, postal service optimization of plants, post offices, and infrastructure, my office has recommended conversion to give by way of letter carrier routes for effective management, flexible work rules, a comprehensive delivery point strategy, maximizing curbside delivery and cluster box delivery, evaluating the number of offices, simplification of pricing, curling -- growing value of man. the digital age is continuing to disrupt industries. the cost instant communications, search engines, suppress -- americans need stronger

infrastructure to deal with collateral issues. citizens would benefit that the postal service would support security, the pending bid -- dependability, and other issues. local agencies provide egovernment services. provide a safety net for those being left behind by the detroit revolution. the bill provides not total services utilizing digital infrastructure in a manner consistent with the public interest. it would give the opportunity to find its role in the digital age. the postal service has set aside more than $300 billion in cash to meet its obligations. additional contributions of 55 ban dollars will result in a 100% pre funding level. the $300 billion does not include the over charges of $82

billion a document by my office. if those are returned, the level or exceed 100%. congress and the postal service could explore an option of clarifying requirements to be inclusive of postal service assets. the purchase price up a full- service real estate is $27 billion, with a fill market value been greater. the realistic and premium locations -- the nearby national postal museum has a purchase price of $47 million for it if this is an example of the fair market the news, taxpayers are well protected. a surplus of access would be likely be given over to the treasury. if the service were suddenly shut down, alternatively, there are provisions that may allow the postal service to work with

opm to fashion an arrangement to recognize the assets and meet the obligation. against this backdrop the postal service continues to be built a $11 billion a year for retiree obligations. as i have testified, i agree with senator collins' call for opm to change its calculation of the pension fund payments. failing action, senator carper's bill to require the opium recalculation to correct the mistakes and balance the accounts is needed to stop the crippling pain and spirit there is a need for review of the benefit plans and payments. this will allow construction of a clear and accurate financial map for the postal service's future course. otherwise the service will be build into insolvency. thank you, sir. >> thanks for the work that you

do. mr. guffey, please proceed. >> i am president of the american postal workers union. i am pleased to participate in this hearing today a representative and the inspector general who have done much to help preserve and protect united states postal service. this is a that relief is necessary to restore the financial stability of the postal service. the apw appreciate the leadership and proposing legislation that will be the need for immediate financial relief. we support the proposals to permit the service to use more than $5 billion each year from its overpayments in the civil service account to meet its obligations to pre fund

benefits and pay workers complain -- worker's compensation's obligations. this is not a request for a subsidy or a bailout. the postal service has been dealing effectively with the challenges it is facing because of declining mail volumes. we are confident that under the leadership of the postmaster it will continue to do so. exhibit a to this testimony is a chart that shows that the postal service net income for 2007 through 2010 -- during this period, that included the most severe recession since the great depression, the postal service had a net income of more than $600 million. only in a government agency could refer that to little amount of profit. that is profit. this was achieved by the postal service and cost-cutting measures. the postal service has reduced work hours by 245 million

hours, and it costs by $12 billion. it will cut another 40 million working hours this year. the agreement concluded will save the postal service billions of dollars and will provide necessary work force and work force flexibility. the postal service has shown the capacity ciskei's -- to sustain itself. what it cannot sustain is the burden of the unique and a reasonable requirement that to refund its benefits over a 10- year. without access to the billions of dollars by which it already has a overfunded csrs. from 2007 until 2010, when the postal service would have had a financial surplus, the statutory o fundrecord payments throug payments was $21 billion. the additional payment of $2.2

billion the fund retiree health benefits which meant the postal service was required to pay 11.5% of its revenue for benefits. these payment deprive the service for capital to maintain its to distribution networks. i want to emphasize we appreciate the lead ship of the chairman in addressing the issues of csrs and retiree benefits. we appreciate the fact that senator collins has introduced legislation that would introduce the issues and provide relief from retiree health benefits funding requirements. we are encouraged by the fact that members of the house have introduced bills that would deal with these problems. there is a broad consensus in the committee to support these measures. there's also a broad consensus to support proposals to revise the provision on offering non

postal products, to permit to offer additional services and postal facilities, and except beer and wine for shipment. we support efforts to help the service at that to changes in communications. these measures will help bolster revenues and help maintain a network that can deliver services that regard the country. everyone to remember that was the service that those offices are where the american flag flies in every community in this country. and did take them down should be the last alternative and we should be putting government services, or services, into this was the facilities. we will help in any way we can to support legislation that does not seek to address problems at the expense of postal employees. i will be happy to answer any questions the committee might have.

>> mr. strong, you are recognized. >> thank you for inviting us to testify today. it is a pleasure to be here and i commend you for holding the hearing. my name is mark strong and i am the postmaster of sun city, there is another. founded in the 19th century, it is a trade position better represents postmaster's for it in examining how to address the crisis, it is critical to understand what it was a service by itself and the position it does today. it is not because the electronic version of mail. it has slowly pulled some mail out of system. that has been with us for decades. electronic was a factor 30 years ago, during the recession, and will be a factor for years to come here and electronic diversion was a fundamental

factor in coastal life and has not changed in recent years. two largest factors for the recession and the fact that the service has to make payments to prefund its health benefits. today the service is running a deficit because of the retiree health benefits payments that we are making. we would not be running a tavis that if we were not paying over $5 billion into the fund despite the fact that there is up to $70 billion surplus sitting in our pension fund. bill andtor's carper senator collins' bill supports the efforts. without relief in this area, the service cannot continue as a viable entity for long term. no business of any type in any

part of the country could afford to pay $5 billion supplemental annual income tax that its competitors do not pay and remain viable picket one thing this service should not do is close small post offices across as the senator will tell anyone, rural post offices are the keystones of every committee. according to data, the total net cost of the 10,000 small post offices, more than 1/3 of all post offices in united states, is less than seven tenths percent cost of all post offices. it does not say anything that amount of money to close rural post office, but is one of those measures that are popular with officials because they can look good and give the impression that they are driving large cost

of the system. closing post offices is not popular with the american public. according to the 2010 l poll, 86% of americans opposed closing post offices. this is overwhelming nationwide. this is consistent with a 2009 gallup poll. as shown in my testimony, few other services rank this fight in importance in the public's mind. the reason for this is that as detailed in my testimony, post offices and postmasters to more than substance and deliver mail. they perform all sorts of other committee functions and are the glue that binds rural america together. although it is difficult to urbanites -- for urbanites to understand this, it is not a gross exaggeration.

if you allow the service the close, substantial numbers, you will seriously hurt america, -- one way is to maintain them to allow them to sell other supplies. this poses a minimal problem of competition with the private sector since there would be no local competitors in most rural areas. thank you for considering our views, and i will take your questions trad. >> thank you. >> our vote has just started. so we have 15 minutes trekkie. >> i am chariness cerasale -- i am jerry cerasale.

our members represent 85% of postal service revenues. the postal service is an important occasion channel for our members and those of magazine publishers. it is in financial crisis. we agree with what you have done on pensions. the pension obligations for every hour worked in the postal service has been fully funded by postage we have paid. we have paid between 50 bay dollars and $75 billion in obligations for hours worked before the postal service was ever created ticket that is they tax. we have also overpaid in furs payments. we ask that these overpayments be used to offset the retiree health payments that are currently harming the cash flow position of the postal service. we think legislation to require

the governor's the use any pension overpayment refund for retiree health benefits until those legacy costs' are completely funded. concerning facilities, we agree to give the postal service more flexibility and support the use of kiosks to give retail services to the american public, and we support the location of postal facilities in other retail outlets, and vice versa. we think the service should look hard at co-locating with local governments for it we support the provisions on new products in the post act. we think the postal service should work with and partner with the private sector, with their expertise on this context, rather than starting out from scratch, we want to commend fully the postal service trying to merge and leverage

mobil and print communications with their summer sale with the qr cards. keep it up. bring some more. we support the provisions in s353 requiring a cost-benefit analysis for any new mail preparation requirement. and if that analysis shows that there is a shift of cost to the mailer, we think that should be considered as a rate increase under the cap, as well. dma has specifically to concerns with the post at. we thinks that powers given specifically to the governor's should not be delegated. there's a reason that presidents appoint governors, and we think specific powers of the governor should not be delegated. the 45-8 decision requirement on the " regulatory commission for transfer of products from the

market, competitive, is too short. transferred between those provisions can have serious consequences for dma members, and we believe extending the period would not harm that was the service because that product is still being offered, even though it is looking at a transfer. was this service has to right size to deliver 150 billion pieces of mail rather than 250 ban, and we cannot afford that excess capacity, and it has to be done today and not tomorrow. thank you very much. >> thank you for your testimony. thanks olney. i wanted to share with you on the subject of whether or not the world has changed, i was back over in afghanistan and

pakistan, and scott brown and i have bent over there a year or so ago. i think about what the world was like when i was a naval flight officer. how important to us in our squadron the mail was us. just to hear from our friends and families back home, to get letters, cards ha. i was stationed in california, and to be able to receive the sunday "sentences the chronicle -- "san francisco chronicle" five days late. when i was in afghanistan, i saw people skyping, and they can pass any paper they want to to the internet or newsweek.

they can pay their bills electronically tr. we've got to have opposed a service. we've got to have one that does not continue that at our budget deficit. the idea whether or not it is 86% sign of the people have opposed to closing post offices, at least that many people also oppose running huge budget deficits. what we have to do is come up with a way to have a strong service, but not add to our budget deficit of the next 10 years. i think we can do that, and the challenge is to figure out how to do that. >> i will make general comments, and because men of both i want to thank all of you, and there is a recognition to in the last panel and this panel, and i will ords -- to right-si

ze the post office. mr. strong, i was in alaska meeting with as messieurs, annika they had no conference -- meeting with his master's, and we had a great discussion with issues over lunch time. what was good was they talked about us with the importance of the disaster and how that as a critical piece of the puzzle. i want to say t you that you will find me a partner in trying to solve this problem. on the pension issue i have dealt with this when i was the yor. we've restructured it and as a result the city no longer have to pay because we restructure

debt. the employees became more satisfied. they were highly unionized police and fire force, but we figured it out. it was painful getting there, but at the end of we figured it d a cash flow or better. the approach that you are taking, mr. chairman, is the right approach. there is thought to be some work to do, and that is what this hearing was good to hear from you because of the issues you have on your table. thank you for what your doing. i will end with a comet -- my son alive -- i like having him collect stance because their history behind each staff come in last thursday we went to the ost of as website, order somed some first day at vision stems, and they came on monday. when you think about that, that shows the efficiency that you had to organize it, package it, put it in, deliver it, and we

got it. that is an amazing thing, a stamped envelope i could mail here and get out in the village in western alaska is amazing. i credit the post office for the great art. thank you for allowing me to say a few words. >> i look forward to review with you. one question, and this will be for mr. guffey or mr strong. what do you think it was a service needs to do to reach out to customers, individual customers small businesses, to attract new business? what do we need to do to attract new business? >> one of the problems is our rules down in a lot of way. we prevent this does is from stay open past 5:00. they closed at 5:00 and the

people who bring down the male, packages, just missed out. he got one of our competitors. we changed our rules to allow post offices to stay open longer. we have lowered costs of new employees and long-term benefits so the postal service can open and can lower costs to keep post offices open longer in the general committee, rather than shutting them down. we must -- we have lowered the cost of processing inside plants. we have tried that some of the bay mailers keep their this counts -- discounts. the men and women of the unit are concerned about as office and want to help but be a viable

institution, and they overwhelmingly voted to do those things. >> mr. strong? >> i had a privilege of being on a panel of a couple of weeks ago, i talk about the complexity of the back end of the post office, the baltic area, and is a complex operation. we have to reduce the complexity and make it easier for occasional users to get mail into the system. one of the things that was brought was the fact we also have to look retail services. sometimes it can be a struggle, not only for the customer to understand, but for the retell associates. we have to reduce the complexity of the retail operation. we have an outreach program where we have carriers involved, the postmaster involved, and it is a business connect, customer connect, and rural outreach.

because investors are great salesman. we need to get them into the field and sell the products we have. we need to get of the time behind the desk to get that done. i think we have the people and product lines to do that and to be a vital part of america. we need to continue to work on that. >> we have five minutes. they do not hold the votes for me. when i can be the leader i can be -- that is a much for joining us today, and thank you for your preparation hard work cricket -- hard work you do every day to help us have a strong post of service metrics in adversity allies of opportunity. there's plenty adversity here, but also plenty of opportunity

and it is incumbent on us to find that have worked together decree husks in a creative way to come up with opportunities we have never thought before. i see the neighbors that the netflix in the mail, my wife being delighted to receive a mother's day card from the other side of the war, flat rate boxes -- i talk to folks that are getting medicines delivered six days a week, to their mailboxes, there is a lot of good ideas out there. a lot of them have not even formed in our minds at. we need to divert on that, and maybe it can be with respect to the cost-effective -- with respect to the energy costs. in terms of driving deficits,

the cost of health care. it works almost everything else. one of the drivers and business the day is the cost of health care. we spend 18% of our gdp on those costs. they cannot be that smart and we be that dumb. the challenge is to get better health care results for less money, and that is an issue for another day, but an important issue that we deal with. i look forward to working with colleagues here today. those that were not, i look forward with working with senator collins. it is not going to be easy, but we will figured this out this year. that having been set, this hearing is adjourned. thank you all.

>> senator john kerry return this morning from overseas trip where he met with pakistan and afghan officials. chairing a hearing this morning, he said pakistan is interested in working with the u.s. to combat terrorism. general james jones was the only witness.

>> afghanistan, i visited a post which is on the border of pakistan, and a hot spot in terms cut of network activities coming out of the sanctuaries. and i spoke with our intelligence committee personnel and others there about the impact of those sanctuaries and their analysis of the war. i then flew north to a place where the unfortunate incident of the blue mosque took place not so low that. in order to understand how the groups there in the north, where there are uzbeks, to see how they he prospects of reconciliation. and in kabul, in addition to

meetings, i met with the afghan cabinet ministers, provincial governors, civil society leaders, and with president karzai and discuss the upcoming transition and the steps we all need to take to ensure its success. finally, i had the distinct pleasure and honor of meeting with our men and women in uniform, including 500 national guard troops from massachusetts who are serving at can phoenix just on the outskirts of kabul. i know all of us feel us every time we go there, you cannot help but be impressed by the quality of the special young men and women who are serving in the armed forces of the united states. they are smart, discipline, remarkably committed, they know

their jobs, they are away from their families, and during hardships, they live take life and that risks high daily basis, and for that, none of us can really say thank you enough. my discussions with them helped drive home a critical point. whether somebody wore a star on their uniform or a chevron on their sleeve or whether it was general petraeus or the young woman that i had a great pleasure of promoting to staff sergeant -- every person i spoke with across afghanistan understood that there is no purely military solution. they all get it. this is an important moment, and i believe that a osama bin death has opened up an opportunity. i learned in afghanistan that

our afghans, ho accomplishments in achieving that ray has given them the sense, a renewed sense of political and of opportunity and of confidence about the american commitment. afghans do not want the taliban to return, overwhelmingly, but many have concerns about what reconciliation means in terms of their interests. above all, they do not want their struggles and sacrifices over the last 10 years to be in vain. there are many courageous afghans, and i had the privilege of meeting some, like a governor, who are daily struggling to bring about better future for the country for a peaceful means. -- through peaceful means, and we need to empower this was so

they can leave their country in the right direction. i do have reasons for optimisms after discussions with president karzai and general petraeus that we can find a way forward that significantly changes the american footprint and secure our interests. on saturday night i sat with president karzai and listened to him to talk about the necessity of bringing all of the parties to the negotiating table. he understands that time that american patience are running out, but is confident there is a way for that meet everybody's needs. he also realizes that afghanistan is going to a suffered an enormous economic shock when international forces leave, and that we have to work on a plant that is financially and militarily sustainable for

afghans and americans alike. finally, let me say that as much that opened the door in afghanistan, it has complicated our relationship across the border in pakistan. while the pakistan leadership people initially reacted by raising our actions, subsequent discourse in pakistan unfortunately became quite critical because of the issue of sovereignty and the questions surrounding the rate itself. relations between us quickly took a dive, jeopardize it by nationaltries' interest could i arrived here sunday night, began the process to see if we could find a way to rebuild the relationship, and during my trip to a islamabad, i met with president zadari,

generals, members of the cabinet, and i emphasize in clear terms the than the serious question that members of congress and the american people are asking with respect to pakistan and its role in fighting violent extremism. i underscored the importance of seizing this moment to firmly produced -- reject an anti- american narrative that exploits our differences instead of finding common ground can and advancing mutual goals. i also listened carefully to the frustration that many in pakistan are feeling about how we have been doing business together, about how the raid was conducted, and perceived in terms of their politics and their ability to manage in pakistan. after many hours of talks, we

agreed that it was imperative to move forward jointly and to take specific steps to strengthen the relationship. i also emphasized at every step of the way this relationship will not be measured by words or by communique's after the meetings like the one i engaged in. it will only be measured by actions. and that should begin the day with a return of our helicopter tail to american forces, and in the days ahead with very clear defined measures of cooperation, which will be further defined by high-level meetings by administration officials commencing tomorrow or the next day, and depending on the

outcome of those discussions, hopefully, a subsequent visit by secretary clinton. i also want to point out, and i'm not at liberty to go into all the details of some of the things that we will do in specific terms, but i'm encouraged by them. i think there is great ability to actually shift the dynamics of the entire relationship between afghanistan and pakistan and pakistan and the u.s. and all three and india and ultimately change the long-term strategic interests of the region. but that will require diplomacy over the next course of the next few weeks. the final data want to say is that we do have to remember in this country that pakistan has

suffered enormously in the fighting of the violent extremism. over 35,000 of its citizens have died as a result of the acts and theylent spark are suffering in their country. 5000 of their soldiers have died in efforts to go into the west and take on the insurgents. they do not have a lot of money. in fact, you could call them broker. difficult times economically. and they rely on assistance in order to be able to wage this fight with us against extremism. their leaders, understand that this moment in this relationship between us is an important one where they need to take decisive action as part of a regional solution in order to promote peace in both afghanistan and pakistan. i am hopeful that the joint statement that we reached

yesterday, which addressed counter-terrorism operations and pursues a political stunt -- a political solution in afghanistan will help be a road map to get us there. >> watch this hearing and entirely tonight at 8:00 p.m. eastern on c-span. for much of the day today the senate has been debating it democratic bill to help repeal tax breaks, $21 milli in tax breaks for the largest oil companies. the procedural vote in our ago and the bill fails to move forward. there will have a similar vote on wednesday at 2:30 p.m. eastern on the republican-backed energy bill which would expand oil production domestically. also 3 drogin bills. you can follow the senate on c- span2. earlier today approved a

judicial nomination of susan carney by a vote of 71-28. >> this began on american history tv on c-span3 from lectures in history, cleveland state's prof. regina williams on the music of duke ellington -- duke ellington and the effort to preserve the jefferson bylaw. and live from jackson, mississippi, a celebration of 13 men and women, black and white on a bus bound from new orleans, their goal to integrate bus stops. press the c-span alert button to get our alert e-mails directly to you. >> history, as you know, is much more than just politics and soldiers. and social issues. it is also medicine and science and art and music and theater and poetry and ideas.

and we shall not lump things in two categories. >> the samuel morse, james valdemoro cooper, harriet beecher stowe, thomas edison on sunday q&a, one of two parts with david mccullough, americans who made the greater journey to 19th century paris. >> earlier today at the white house, president obama and king of dela of jordan met with reporters following -- king of dela of jordan met with .eporters sa the president will release a statement thursday at the u.s. state department. >> it is a great pleasure to welcome once again my good friend king abdallah.

the united states and jordan have had a longstanding friendship, an extraordinary relationship with cooperation on a wide range of fronts i have valued his majesty's advice on numerous occasions, and obviously, this meeting was an opportunity for us to share our views on the extraordinary changes that are taking place throughout the middle east, throughout the region. we discussed the situation in libya and are grateful for the support of a wide range of arab countries in our efforts to make sure that humanitarian assistance and humanitarian protection occurs inside of libya. we discussed the rapid transformation that is taking place in places like egypt and tunisia and we both agreed that

it is critical that not only does political performer -- political reform proceed, but economic reform companies those changes their because so much of what is taking place has to do with the aspirations of young people throughout their world for their ability to determine their own faith, to get an education, get a job, support a family, and that means some of the structures up were prohibiting their ability to progress have to be reworked. his majesty discuss the reform efforts taking place inside jordan as well, and we welcome the initiatives that his majesty has already embarked on and feel confident that to the extent he is able to move these reforms forward, this will be good for the stability and security of jordan, but also will be good for the economic prosperity of

the people of jordan. we're very pleased to support on that front. along those lines, one of the things we discussed was how the u.s. will continue to be supportive of these economic efforts that his majesty has embarked on. i am pleased to announce that we have mobilized several hundreds of millions of dollars to opec. that will leverage, ultimately, about $1 billion for economic development inside of jordan. in addition, because of the spike in commodity prices dropped the world we will be providing 30 metric tons of wheat to jordan. all of this will help to stabilize the cost of living and day-to-day situation of jordanians and will provide a foundation set up these economic reforms can move forward and

take place. we're very happy to be partnering with his majesty on that issue. we also discussed the relationship with israel and because of the changes taking place in the region it is more vital than ever that both israelis and palestinians finally get back to the table and begin negotiating a process whereby they can create two states that are living side- by-side in peace and security. obviously, jordan with its peace with israel has its own stake in this. we will try to encourage and equitable and just solution to a

problem that has been nagging the region for many, many years. finally, i want to say that we continue to appreciate all of the security and counterterrorism cooperation that we receive from the jordanians. it is very important in terms of our own security and that partnership we expect to continue. your majesty, you are always welcome here. the american people feel a great affection for the jordanian people. and we trust that during this remarkable time of transition in the region that jordan will be at the forefront in being able to move the process forward the creates greater opportunity and insurers and that jordan is a model of a prosperous, modern, and successful arab state under your leadership. thank you. >> mr. president, i'm delighted

to be back here and again to take this opportunity to thank you and your government for the tremendous support that you are showing jordan economically, and the support of the united states on relieving able to push reform in an aggressive manner in our country. and again, your continued interest and support on the core issue of the relationship of the israeli-palestinian peace. we're grateful for the president's role in all of these issues. i am delighted to be back here and die before to being part of which got all the challenges that we face -- and i look forward to being partnered with you with all the challenges that we face. >> we will hear more as press secretary j. carney asked these questions from reporters at today's -- answers questions

from reporters at today's white house briefing. >> good afternoon, ladies and gentlemen. as i do not have any announcements, so we will go straight to questions. >> as the president prepares for this speech in the middle east, the region is in upheaval and bin laden is dead. how does the president into those things together and what does he intend to accomplish with this speech and with all the activity that is taking place this week? >> you make a great point that we have seen a remarkable amount of activity of change in these five months. more in five months than we have seen in 50 years in many ways in the region in the middle east and north africa. the president looks forward to giving this speech and sees it as an opportunity to step back and assess what we have all

witnessed, the historic change we have seen and to talk about how he views it. it is a moment of opportunity. it is an opportunity for us to explain to the world what our values are and the values and principles that we bring to the region as we decide what policy of this administration and this country should pursue to support that change, to support the democratic aspirations of the people in the region. he will talk specifically about ways that we can best support the positive change. and while focusing on are: -- our core principles, non- violence, support for human rights and support for economic reform. >> the president was quoted that injusticey'

and stalemate in the process as to the potential violence, in particular with the peace talks. >> the president will certainly discuss the middle east peace process in a speech. it is an element, obviously, the speech as well as the discussions about what is happening in the region. i think the fact that there needs to be progress in those peace talks is something the president very much agrees with. i think, as we said most recently -- i said yesterday in responding to a question about activities by the steering -- syrian government, that conflict is often used by other governments in the region to distract from the problems in their own countries. i think there is a history of that. at what we have been seeing in many cases in these past five months, demonstrations by people of these countries, protest

against their government's and demand for greater individual freedoms, greater economic prosperity that is really the source of future instability in the region. while we obviously believe there needs to be progress in the middle east peace process, there are many other important problems to address in the region, for the government to answer legitimate grievances of the people they represent. >> the president once again today did not take questions from the white house press corps when he met with king abdallah. but we have not had a press conference in some time. i was wondering why that is. sure you will have opportunities.

for those of you are traveling, he will be taking questions on our upcoming foreign trip. and he has given some interviews to journalists in that time who had asked about the pressing issues of the day. and he will continue to do that. i think his track record of taking questions and giving interviews have been very strong and will continue to be strong going forward. >> is the administration concerned about the future of the imf? no, we -- >> no, we have full confidence in the imf and its for filling its role in the economies of the world in this difficult time. that remains our position today. >> at some point, the managing director of the imf, the

position will be open in the future. with the president supports the longstanding tradition of the imf managing position to be held by a european changing and next term been for someone from an emerging part of the world? >> i will not talk about selecting a future head of the imf from here. i do not have any comment on it, really. the important thing is that we believe the imf can and will continue to function and to fill its role in the global economy. >> changing track to the debt discussion, new gingrich over -- newt gingrich over the weekend economicul ryan's plan extreme.

>> but as a complicated -- that involves a lot of moving pieces. without waiting into a dispute between republicans, i would note that the former speaker of the house once said that he hoped to see medicare with your on the vine, and now his position is seen as too far to the left by some in his party. what we believe and as the president has stated clearly is that medicare needs to be there for seniors. the commitment it provides need to be retained. our approach is to find the savings that we can within the program, as we have demonstrated in the past, and going forward as we deal with long term? and-long-term debt and deficit reduction. we obviously disagree with the approach that some house republicans have taken in their

proposal, which would essentially eliminate medicare enter it into a privatized ventures system, which we do not support. -- and would turn it into a privatized voucher system, which we do not support. >> given the reconciliation between fatah and hamas and its charter calling for the destruction of israel, what would we suggest out of king abdallah on friday? >> we are watching developments in the palestinian territories and we are watching them closely. we made it clear that hamas must stop its outrageous use of terrorism and recognize israel's right to exist. that is our position and it has not changed. obviously, any palestinian government would require that it abides by those standards, in our view.

that is why we are continuing to monitor developments and reports about reconciliation and where it is headed. >> is there anything possible? the president has said that it is more vital now than ever for the parties to return to the table. is it possible given the position of hamas? >> we are looking into the future in terms of what the palestinian government might like in terms of reconciliation. we have made it clear that hamas must stop its use of terrorism and recognize israel's right to exist. those are the core principles that we stand by. >> switching to the white house and the department and health -- department of health and human they have signed waivers for the health care law.

can you explain why so many neighbors have been granted? >> first, it is not that many of you consider the number of businesses we are talking about. the waiver is not a waiver of the law. it is a provision of the law. it is specifically designed to ensure that those individuals in those places of employment and who have many medical plans, these -- who have mini medical plans, these very limited coverage plans retain their coverage while these laws are put in place. by 2014 when all of these things are banned, these waivers will blogger it is. it is basically a bridge to -- will no longer a this. it is basically a bridge to the point. there were 1372 waivers granted

and fewer than 100 tonight. >> or were they tonight? >> you have to ask -- why were they denied? >> you would have to ask dhhs. >> [unintelligible] >> i believe you probably heard the secretary of state mention that we are looking at additional measures that we might take and that is obviously the case. i do not have the timing for you, but we are continuing -- i do not want to get ahead of myself, but we are looking for ways to continue to put pressure on the syrian government, the syrian regime, to pressure it to so that it ceases the violence against its own people and in gauges its people in peaceful dialogue and begins to respond to the legitimate grievances that the syrian people have. we will be taking additional measures to do that.

>> you said that the president sees this as a moment of opportunity. how big is this window of opportunity, and in light of what we have seen spread across the region, is this now or never? >> it depends on what you are referring to. my answer is, no, this is not now or never, but we are into a historic moment with what has been referred to as the air of spring. i do not think anybody -- arab spring. i do not think anybody in this room has seen anything like it in their lifetime. it presents unique opportunities for the u.s. and our allies to embrace and support the kind of change that will improve the lives of the people of that region and will improve the security of the united states of america. that is an opportunity not to be

missed, in the president's view. and while change can be unsettling, it can even be scary because we do not always know where it is headed, but it is something in this case to be embraced. the opportunity is there to help shape a better future for the region and for the world. >> in terms of the opportunity to jump-start the peace that is stalled, how big is that window? >> if you are asking specifically about the peace process, i think our will let the president addressed that in his speech in terms of specifics and how he wants to discuss that. i think the president has been very clear, as has the secretary of state and others that we need to move forward with the process. the circumstances are difficult and they're not likely to magically dissolve themselves.

the parties need to sit down and negotiate and move forward on a two-state solution that we obviously support strongly. >> in a speech on thursday, will the president be essentially setting forth a new policy on the middle east peace process? >> again, i think there is a focus on the middle east peace process here that i want to clarify, which is that the speech is not about the middle east peace process. it will include a discussion of the conflict between israelis and palestinians and the peace , but it has a much broader scope concerning the events of the last five months since the street vendor intermedia to the dramatic action that he took. -- in tunisia took the dramatic action that he took. again, he wants to talk about

the approach that he has taken and applying the core principles that he holds to the whole region and to the unrest that we have seen in the region, but obviously, looking at u.s. policy and apply those principles on a country by country basis because as we said, obviously, each country is different. >> will there be of -- an element of a new policy? >> with regard to the peace process, again, i do not want to get into specifics. the president will be -- will have some specific ideas about how the u.s. can support the positive change in the middle east and the north african broader region of. on the specific israeli- palestinian conflict, i do not want to raise the curtain on specific elements of the speech. >> there was been talk of sanctions and things of that

nature -- nature. will the president make news? >> [laughter] the president will make news. in a language that we understand, yes, he will have some specifics new ideas about u.s. policy toward the region. >> in a fundraiser speech he said we are just a quarter of the way through. and hillary clinton today is quoted as discussing a discussion that fritchey had with the president recently and she said -- and she quoted the president as saying, i'm going to get reelected and that is it. it sounds like he is taking it for granted. >> i can assure you that he is not. he is focused on the job that he has to do as president and the enormous array of challenges .hat this country faces an hou

it occupies almost all of his time. when it comes to the elections, he takes nothing for granted. he understands very well with and competitive political environment, which is why he will when the time comes make a case for reelection. >> you have spoken out several times about syria. we have the secretary of state speak out about syria this morning. should we expect a message from the president directly to asada ordaz syria? >> i do not want to get too specific about the elements of the speech. i want to make sure that you tune in and cover it. i will leave that alone, except to say that -- to echo what the secretary of state said, which we are taking additional -- we are looking at taking additional measures to try to put pressure on the syrian government to

stop violence against its own people. >> there was an opinion piece in the "wall street journal" talking about the jobs market and its said the reason why it feels so good right now is because we are not necessarily adding more jobs. we are just not having as many layoffs. do you agree with that assessment? >> i will say two things. when we came into power, we had already lost 4 million jobs. and within a number of months after that, another 4 million were lost in the recession. that is quite a big hole to dig the country out of. we measure the jobs situation based on the way that everyone sees and receives, which has shown us that we have had no 14 months of net job creation, the private sector job creation. and three months of rather strong private-sector job

creation three-quarters of a million in three months. i think that is pretty solid news. would we argue that there is not more to be done? absolutely not. that is why the president wake up every morning thinking of what we can do to further economic growth, to continue the job creation that we have been experiencing, especially the strong job creation lately. but we still have a ways to go, and a question. there are people -- no question. there are people who wake up every morning worried about whether they're going to be able to find a job. that is in all of the president's economic policies. >> back to israel, you said that the president would focus on core values when looking at the situation. on the issue of nonviolence, how does the president viewed the

nonviolent protest the palestinians staged over the weekend? i know you mentioned the situation in syria, where there was clearly some incitement by the syrian government to do this. but there is no talk about non- the non-protests -- but ther violent protests to put pressure on his release, what is the president's view about that? >> obviously, israel has the right to protect its own borders. that is an important point. the other important point is that we would urge restraint on all sides. we want progress in peaceful negotiations. that is obviously the goal that we seek. but i think it is important that israel, like all countries, has the right to protect its

borders. not figuring how the president now plans to move things forward in a way that is different than things have been in the past. given that the new reality -- or what seems to be a new reality of the government of the palestinians have formed. what do you do? how do you start demanding that hamas [unintelligible] can you deal with any aspect of that government? >> we obviously deal with the existing government, the prime minister and president, and we encourage both sides to move forward in the peace process. as we make clear our position on the things hamas needs to do in our view. the broader stepping back, this

is a moment of opportunity, and not just for other countries in the region. but for israel and the palestinians as well. there is historic change taking place in the region. and proof that there are of universal aspirations, a desire for greater freedom, greater political freedom and economic prosperity that crosses borders, crosses ethnicities, crosses nationalities. it is incumbent upon the a lo political leaders in the whole region to try to take steps that encourage a positive change. that is really the future for their country and for their people. and as we said about other countries, the efforts to use --

to resist the positive change will not lead to greater stability. we think is very important that everyone in the region will get at this moment as an opportunity to look forward -- to move forward, on behalf of the people of the region and on behalf of the world. reports in pakistan, there was a an arrest of the >> in pakistan, there was the arrest of an al qaeda operative that was described as a major figure. the u.s. is not describing him in that way. to what is your sense of how ?ignificant this is how should we see this? >> i confess, i do not have anything for you on that, except to say as we have been saying

for the last couple of weeks that the relationship that the u.s. has with pakistan is very important, complex, and sometimes complicated. but it is vital to our national security interests and maintain that cooperative relationship is a high priority, precisely because it is in the interest of the u.s. and the american people that we maintain that relationship. it has led to some very important achievements in the war against al qaeda and terrorism in general. we look forward to that cooperation with the people of pakistan and the pakistani government. >> we are hearing now reports of mass graves in the town of dara and other places. the death toll is approaching 1000. as the president looks at the situation compared to libya and other situations, how much

longer can this go in that direction before there is a need for some more aggressive response, not necessarily militarily, but some kind of response? how you see the developments fdot are going in the wrong direction -- developments that are going in the wrong direction? >> we have made it clear that we condemn them. we believe that syria cannot go back to the status quo. syria's future will only be secured by government that respects the popular will of its people. the window is narrowing for the syrian government to shift focus away from repressing its people and meeting the legitimate aspirations of its people. as i said, we are looking at

additional measures that we can take, and we continue to enforce the measures already taken, the longstanding tensions against syria and the specific targeted sanctions that we announced recently. we remain very concerned baqouba and we could not -- concerned about that and we could not be more clear that our -- in our insistence that the syrian government stop the violence against his people. the window is nearing for them to embrace the demands of its people and work with the syrian people in peaceful dialogue to respond to their aspirations >> two questions. a first, you spoke a moment ago about the changes taking across the region affected the world. does that apply to the

palestinian conflict? do they also have a moment of opportunity? >> broadly speaking the changes in the region present an opportunity for positive progress and i will leave the specifics about that conflict to the president's speech, except to say that, yes, broadly speaking -- well, i do not want to drive into firmly. just as each country in the region is unique, this conflict is distinct. but there is an opportunity. you are talking about development in a region that are unprecedented in a half century. that has repercussions, and hopefully positive repercussions drop the region. >> european leaders, arafat --

are calling on strauss-kahn to resign from the imf. does the u.s. feel the same way? >> i have no position on the imf. >> do you feel he should keep his position? >> this is involving a legal issue taking place in the united states. beyond that, i have no comment. >> i am not asking if you think he should be forced to resign, but whether you think it is wise. >> i have no comment. >> today, ireland made a public gesture putting old grievances behind between the republic of ireland and great britain. does the queen's visit give much hope that those resolutions may exist in those regions?

and will the president asking her majesty for some advice? >> it is entirely possible. i have not discussed with the president about what conversations he may anticipate having with the queen. he is very much again for to the visit. he is very excited about visiting ireland, in addition to the united kingdom. and the progress made in that an importantimportan precedent for reaching a peaceful reconciliation. in that sense, i think the answer is yes. >> on the middle east, is a september deadline still possible? is it a realistic deadline now? >> i do not want to get into any more specifics because the president is going to give a big speech about the middle east region. i will leave it to him. >> what would be needed for the

talks to be revived? >> there are obviously a number of people involved directly in the negotiations who could answer the question more concretely, but obviously, a certain amount of will and desire to sit down and move forward with the peace process. that is the basic requirement. >> on the budget talks, when is the vice president -- do you have a day? >> we do not have a day. >> what kind of talks are going on now? who is the vice president talking to? >> conversations are continuing on a regular basis. we remain optimistic about the progress that those talks have made so far and we look forward to greater progress being made when they resume. staff level conversations are taking place this week while the house is in recess.

i know the president is deeply engaged in this process. i just have not checked in with him or his office to see if he has had any conversations in the last 48 hours, but it is entirely possible. it is a matter of finding the venue and date and the pri moment -- are appropriate moment to do it and we settled on thursday. >> [unintelligible] >> i think it has been reported

for quite a long time discussions about having the president give a speech like this well predating the death of bin laden. the decision that we would do it in washington, and i think the state department is an excellent venue because it speaks to where our efforts in the region will emanate principally, which is that they will be diplomatic efforts. even as we maintain our fierce fight against al qaeda and terrorism in general, and even as we continue to work in afghanistan to make progress there and break the momentum of the taliban and make the kind of progress that will allow us to achieve the transition to an lead, and those are

principally military efforts, blogger we are in the middle east it will have a diplomatic proponent to -- the longer we are in the middle east it will have a diplomatic proponent to it. these are the goals of the president will talk about on thursday. >> when secretary clinton laid out the way the u.s. was going to move forward in the middle east in the wake of the direct negotiations between abbas falling through, she said there would revert to approximately talks. and yet, there did not seem to be any high-level u.s. engagement trying to make that happen. senator mitchell made no trips at all during the intervening time. why was there not any one,

senator mitchell and others, on the board trying to make these talks begin to unfold. was the judgment made because there was so much going on elsewhere in the region that it did not make sense, or is there another way to explain it? >> the specifics i will be for others to discuss, and perhaps in reference to the state department's prominent role in these kinds of things you might want to get more information from the state department. i would say that whatever means by which you pursue this effort, the pursuit has been consistent and intense, and it is very much the priority of the president to continue to push for progress in the middle east peace process. i think you will hear again from him on thursday. >> can you speak to this report that the president has a draft of the speech floating around

[unintelligible] >> the report is completely false. we have not shared a draft of the speech with anyone outside of the administration. >> will he talk about, for example, the 1967 borders? >> i do not want to get into the specifics of his discussion at all, but i can tell you that no one outside of this administration has been shown the draft. >> the report is inaccurate? >> a report that has this about a speech based on a draft that does not exist, i do not have any comment on a draft that does not exist. because no draft has been shared with anyone outside the administration. >> you are still working on it? >> fine-tuning it. [laughter] >> in the meantime, there are

draft, correct? >> and yes, there is a process by which the speech is written. the president reviews it, make edits, the speech is written, adjusted according to what he wants and that process is being followed. but this is in a relatively small circle. >> has he made any commitments to visit israel? >> i do not want to, again, get into any specifics about the president's speech beyond what i said. has a comment about any of the leaders ahead of the speech? >> he has had consultations with the number of leaders in the region in general over these past five months because of remarkable events there, and it recently in anticipation of giving a speech but also because of the successful mission

against osama bin laden. those conversations have contained discussions about his views of the historic change in the region and his vision for how the u.s. can best support positive change in the region. both with leaders from the region and leaders from elsewhere other nations of the world. >> is the president going to announce anything new when it comes to bin laden? >> i do not anticipate that. i think the speech is much more forward-looking about the change in the region and how to take actions that support positive change in the region. >> [unintelligible] >> you treat me. >> i did not tricky.

you just chose to answer in the way you did. [laughter] but going back to bin laden, since the raid and the death of bin laden and the way that information was obtained, and thousands of officials are going through there, what news can you give us on an update on that information? also, after 9/11 and his health issues, what do you know? we were told he had kidney dialysis. other people were saying they did not find those kinds of machines or anything of that nature in the raid. can you talk about that? >> i do not have any more detailed information for you on that. our personnel obviously were reviewing the considerable amount of information that was gathered initially for any

evidence of imminent threats. which is why in the immediate aftermath of the raid there was the alert about the consideration that had taken place, is going after an american railway system. it was an old consideration and they felt that important to get that out. and there was a variety of information that will help an hour -- in our fight against al qaeda and other terror networks. >> [unintelligible] any reaction to trump yesterday, he is not running? [laughter]

>> is surprisingly subdued reaction, i would say. no, he did not have a particularly notable reaction. >> [unintelligible] >> i'm not even going to go there. [laughter] the event -- don't the events so far of the arab spring, does that suggest that the peace talks will be even more difficult with the palestinians being concerned about their border security -- the israelis been concerned about their border security and less inclined to negotiate? >> these are elements of what the president will cover in his speech on thursday. this has obviously been a difficult issue of ways.

-- always. we continue to pursue it aggressively. the fact that we have seen a change in the region has created some unpredictability. that is without question. it has been said by students in the region that one of the prices for this search for stability has been their repression that we have seen, and obviously, the unrest we have seen in the region has created a certain amount of to most -- tumult. altman lake, the president believes rakes -- ultimately, the president leaves this is

progress -- believes this is progress. and again, remind you of the corporate post at the old 20 looks at developments in the region, he thinks -- at the developments when he looks at the region he feels that the government are representatives of the people who answer legitimate questions. that opportunity is real and the potential for positive change is great, not just for the people in the region, but for the u.s. and its allies. >> that being said, it is also important that the united states not be seen as an actor in these uprisings. >> the president has been clear and myself and others have been clear that we cannot dictate outcomes. nor should we. if we could, nor should we. for example, if you look at the

egypt, it is in each very important to deprive those who would repress their populations of the strong man accusation, a legitimate expression of a desire for change by people in these regions is somehow being forced upon or inspired by the u.s. because these are legitimate demonstrations of popular will. it is important that is made clear. >> i do not know if you have seen [unintelligible] explaining why the palestinians have to go to the u.n. to get resignation. [unintelligible] >> we believe very strongly that progress toward a to-date solution house -- a two-state

solution has to come to reverting process and we encourage them to move forward with the negotiations. -- through a bargaining process and we encourage them to move forward with these negotiations. >> [unintelligible] >> i do not think so. [laughter] i think this administration has been assiduous in his pursuit of peace in the region and trying to help move the peace process forward, and continues to do that. in terms of the border region, again, -- broader region, again, to suggest that we have not taken actions that have not been helpful toward the process of positive change in the region i think would be a mistake. >> how did this speech compare

to the cairo speech and what did the president learn? >> that is a big exception that you have carved out. in looking back on the cairo speech, not that anyone could have predicted the timing of this about a month, but it recognized the importance -- the president understood the importance of the changes that were beginning to show themselves in the region. and when you have such a young population, and a population that is frustrated by a lack of opportunity, frustrated by a lack of ability to participate politically, there was a coming movement for change. and that had fed -- had to be

recognized and engaged by governments in the region, or else. in the sense that if you are looking to the future stability of your country, you need to engage your people, harness that change and do it in a peaceful manner and afford in a positive direction. as i was just saying about -- and move forward in a positive direction. as i was just sang about syria, there is no going back. you cannot put the genie back in the bottle. there were echoes of that in his speech in cairo and there will be echoes of it on thursday. >> [unintelligible] people would call them trade- offs between security and reform. >> the principles that he has stated apply in the way that we

look at every country in the way that we have called on and complemented those leaders who have engaged in political dialogue, whoever moved towards political reform -- who have moved towards political reform, because we think that is the way to go for these specific countries and in the region. one more. >> everybody is focusing on what the u.s. can do. will the president also talk about the limitations as long as the leaders of these countries are not willing to move in their position? what i do not know if he will speak to that specifically, but it is a truth that in all conflicts like this it is incumbent upon the leaders of the conflicting parties, the leaders of the nation's desire progress and desire peace.

-- to desire progress and desire peace. what the u.s. can do is help facilitate that, as it has tried to do in its middle east peace process and through administrations. and also, make decisions as it has in some of the cases with unrest in the region to leader quietly advise and assist, or make clear that we are not inserting ourselves into a process because it is a process that is unfolding organically on the street, if you will. there are other things that we can do actively that can help encourage the process forward. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]