Copyright 2000 eMediaMillWorks, Inc.
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Document Clearing House, Inc.)
Federal Document Clearing House
Congressional Testimony
September 19, 2000, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2707 words
COMMITTEE:
SENATE GOVERNMENTAL AFFAIRS
HEADLINE:
TESTIMONY POSTAL RATE COMMISSION NOMINATION
TESTIMONY-BY: GEORGE A. OMAS , COMMISSIONER
AFFILIATION: U.S. SENATE
BODY:
September 25, 1 999 Remarks of Commissioner George A. Omas Before The
National Association of Presort Mailers THANK YOU VERY MUCH. I WANT TO THANK YOU
FOR ALLOWING ME TO PRACTICE MY PUBLIC SPEAKING SKILLS ON YOU TODAY. THIS IS MY
MAIDEN VOYAGE INTO PUBLIC SPEAKING. AS A FORMER CONGRESSIONAL STAFFER, YOU WRITE
SPEECHES, YOU ATTEND SPEECHES, BUT YOU DON'T GIVE SPEECHES. SO IF I APPEAR A
LITTLE NERVOUS IT IS ONLY BECAUSE I AM. YOU HEARD THAT MY INTRODUCTION TO POSTAL
AFFAIRS CAME IN 1977 WHEN I JOINED THE POST OFFICE AND CIVIL SERVICE COMMITTEE.
INTERESTINGLY, ONE OF MY FIRST LEGISLATIVE ACTIVITIES WAS WORKING ON A LARGE
POSTAL REFORM BILL, HR 7700, WHICH ULTIMATELY FAILED. I FIND IT
AMAZING THAT 22 YEARS LATER CONGRESS IS STILL TRYING TO PASS LEGISLATION THAT
WOULD REFORM THE POSTAL SERVICE. THE TRUTH IS
THE POSTAL SERVICE, WITH THE HELP OF THE COMMISSION AND ITS
CUSTOMERS, HAS FUNCTIONED VERY WELL AND, IT COULD BE ARGUED, HAS REFORMED ITSELF
NUMEROUS TIMES WITH INITIATIVES, SUCH AS WORKSHARING, AUTOMATION AND RECENTLY,
ITS FORAY INTO ELECTRONIC COMMUNICATIONS. THE DEBATE ABOUT POSTAL
REFORM, I BELIEVE, CAN BE SUMMED UP IN EVERYONE'S DESIRE FOR A
LOW-COST, EFFICIENT MEANS OF COMMUNICATING. THE ARGUMENTS YOU HAVE HEARD ABOUT
REFORM ARE DISAGREEMENTSABOUTHOWTOREACHTHATGOAL. THEYAREBASICTO THE LEGISLATIVE
PROCESS. A CONGRESSMAN I USED TO WORK FOR OFTEN SAID: "EVERYONE WANTS TO GO TO
HEAVEN, BUT, NO ONE WANTS TO DIE TO GET THERE." THESE DISAGREEMENTS ARE
HEALTHYIN THAT THEY PROTECT US FROM WHAT MIGHT BECOME BAD LAW. IT'S BETTER TO
HAVE LEGISLATION WELL ARGUED SO EVERYONE UNDERSTANDS WHAT IS TAKING PLACE. AS
YOU MAY KNOW, I'M RELATIVELY NEW TO THE COMMISSION, I CAME IN 1997. BUT, WHAT A
TIME TO COME. I CAME IN AUGUST AFTER THE POSTAL SERVICE FILED ITS OMNIBUS
REQUEST IN JULY AND THEREFORE, HAD THE "OPPORTUNITY"IF YOU WILL OF LEARNING ON
THE JOB. AND IT WAS AN OPPORTUNITY. BEING A NEW COMMISSIONER FACING A RATE CASE
GIVES YOU JUST THE RIGHT PUSH TO DIG IN AND LEARN. YOU HAVE NO CHOICE. YOU
EITHER HIT THE GROUND RUNNING OR YOU GET LEFT BEHIND. I QUICKLY LEARNED WHAT THE
JOB INVOLVED, WHAT THE CASE INVOLVED AND JUST WHAT WAS AT STAKE FOR EVERYONE. IT
WAS A GREAT OPPORTUNITY ALTHOUGH A LITTLE OVERWHELMING AT THE TIME. DURING THAT
PROCESS I HAD AN OPPORTUNITY TO SPEND A GOOD DEAL OF TIME WITH THE PROFESSIONAL
STAFF OF THE COMMISSION AND MY FELLOW COMMISSIONERS. I WANT YOU TO KNOW THAT I
CAME OUT OF R97-1 TREMENDOUSLY IMPRESSED WITH THE QUALITY AND DEDICATION OF THE
PROFESSIONAL STAFF AND THAT OF MY FELLOW COMMISSIONERS. WHILE PARTIES MAY NOT
ALWAYS GET THE SPECIFIC OUTCOME THAT THEY MAY HAVE WANTED, I CAN ASSURE YOU THAT
THE RESULTS ARE THOROUGHLY REVIEWED, FAIRLY CONSIDERED AND ARE ARRIVED AT ON AS
ACCURATE A BASIS AS HUMANLY POSSIBLE. WHILE NOT PERFECT, I BELIEVE, THE POSTAL
SERVICE AND THE COMMISSION HAVE FUNCTIONED REASONABLY WELL FOR ALMOST 30 YEARS
ALBEIT AT TIMES IT MAY HAVE LOOKED A LITTLE "TOUCH N GO." SO FAR THIS YEAR ALONE
THE COMMISSION HAS, AT THE DIRECTION OF THE U.S. CONGRESS, COMPLETED THE FIRST
EXTERNAL, IN-DEPTH, STUDY OF INTERNATIONAL MAIL RATES IN THE HISTORY OF THE
POSTAL SERVICE. THAT REPORT WAS PROVIDED TO THE SPEAKER OF THE HOUSE AND THE
PRESIDENT OF THE SENATE. THE COMMISSION HAS COMPLETED OR SHORTLY WILL COMPLETE
FOUR MAIL CLASSIFICATION CASES, FOUR REGULATORY RULEMAKING CASES AND FOUR
COMPLAINT CASES. ALL OF WHICH CAME ON THE HEELS OF R97-1, WHICH WAS COMPLETED
ON. SCHEDULE IN MAY OF 1998. AND, LIKE YOU I'M SURE, WE ARE WATCHING THE SMOKE
SIGNALS COMING FROM L'ENFANT PLAZA AND PREPARING FOR ANOTHER OMNIBUS RATE CASE,
WHICH WILL PROBABLY BE FILED LATE THIS YEAR OR EARLY NEXT. AS YOU KNOW THE
METHOD BY WHICH THE COMMISSION SETS POSTAL RATES AND FEES IS DICTATED BY THE
POSTAL REORGANIZATION ACT. THE LAW SAYS, BASICALLY, THAT WE MUST SET RATES THAT
WI LL PRODUCE ENOUGH REVENUE TO COVER THE COSTS OF OPERATING THE POSTAL SERVICE;
WE MUST RECOVER FROM EACH CLASS AND SUBCLASS OF MAIL AT LEAST THE AMOUNT OF
COSTS THAT CAN BE ATTRIBUTED TO THEM, AND IT MUST BE APPORTIONED EQUITABLY AND
CONSISTENTLY. AS A COMMISSION, WE DEVELOP RATES CONSISTENT WITH PUBLIC POLICIES
AND A SET OF LEGAL REQUIREMENTS. THESE INCLUDE: GIVING RECOGNITION TO THE VALUE
OF SERVICE BOTH TO THE SENDER AND RECEIVER; THE EDUCATIONAL AND CULTURAL VALUE
OF THE MAIL MATTER, AND, PERHAPS MOST IMPORTANTLY, OUR DECISION. SHOULD NOT
CAUSE UNDUE HARM TO EITHER USERS OR COMPETITORS. WE MAKE OUR DECISIONS BASED ON
TESTIMONY AND EVIDENCE PRESENTED BY WITNESSES DURING RATE PROCEEDINGS. AS
BUSINESS PEOPLE, YOU MAKE DECISIONS EVERYDAY THAT TAKE INTO CONSIDERATION
VARIOUS FACTORS, SUCH AS HOW MANY EMPLOYEES YOU NEED, HOW MUCH YOU CAN PAY, HOW
MANY CAN BE AWAY ON VACATION AT A CERTAIN TIME, WHAT YOU ARE GOING TO CHARGE
YOUR CUSTOMERS TO ACHIEVE THE REVENUE YOU WILL NEED TO COVER YOUR EXPENSES. WHAT
WE DO IN APPLYING THESE LEGAL REQUIREMENTS IS VERY SIMILAR. WE HAVE TO LOOK AT
ALL THE EVIDENCE: ORAL AND WRITTEN TESTIMONY, THE SUBMITTED FINANCIAL DATA, OUR
PREVIOUS CONSIDERATIONS AND, FINALLY, OUR OWN JUDGEMENT TO MAKE THESE DECISIONS.
I WOULD LIKE TO SPEND JUST A MOMENT OR TWO NOW AND TALK ABOUT WORKSHARING. I
MUST SAY THAT SPEAKING TO THIS GROUP ABOUT THE VIRTUES OF WORKSHARING IS LIKE
SPI@AKING TO RESTAURANT OWNERS ABOUT THE VIRTUES OF EATING. NEVERTHELESS, I
WOULD LIKE TO TELL YOU HOW WE SEE WORKSHARING AT THE RATE COMMISSION. IN
REVIEWING THE ISSUE OF WORKSHARING, OUR MAJOR CONCERN IS NOT ONLY THE IMMEDIATE
WELFARE OF THE POSTAL SERVICE; WE ARE PRIMARILY CONCERNED ABOUT THE WELFARE OF
THE NATION AS A WHOLE. WE SEE WORKSHARING AS GOOD'FOR AMERICA BECAUSE IT REDUCES
THE TOTAL COST OF MAILING. WORKSHARING TENDS TO ENCOURAGE THE LOWEST COST
PRODUCER TO DO THE WORK AND THIS LEADS TO WHAT ECONOMISTS CALL PRODUCTIVE
EFFICIENCY. ANYTIME WE GET MORE PRODUCTIVE, THE NATION'S STANDARD OF LIVING
IMPROVES AND WE ARE BETTER OFF. THE POST SERVICE AND THE RATE COMMISSION
ENCOURAGE WORKSHARING BY GIVING DISCOUNTS OFF A BASIC RATE. THESE DISCOUNTS
REFLECT THE COST SAVINGS TO THE POSTAL SERVICE. THIS APPROACH TO WORKSHARING
RESULTS IN RATE DECREASES FOR THOSE WHO TAKE ADVANTAGE OF THE DISCOUNTS. EQUALLY
IMPORTANT, IF MAILERS CANNOT OR DO NOT CHOOSE TO PARTICIPATE IN WORKSHARING,
THEIR RATES DO NOT INCREASE. THIS IS WHAT ECONOMISTS CALL A PARETO OPTIMUM
CHANGE OR A CHANGE WHERE SOME PEOPLE ARE MADE BETTER OFF BUT NO ONE IS MADE
WORSE OFF. THIS IS A SIMPLE NOTION BUT IT HAS BEEN IMPORTANT TO THE SUCCESS OF
WORKSHARING. OVER THE TWENTY- FIVE YEARS THAT THE COMMISSION HAS BEEN INVOLVED N
WORKSHARING DISCOUNTS, THERE HAS BEEN VIRTUALLY NO OPPOSITION TO THEM. THIS IS
BECAUSE NO ONE HAS BEEN MADE WORSE OFF. IN FACT BECAUSE THE DISCOUNTS PROMOTE
VOLUME GROWTH, IT WOULD BE CORRECT TO SAY THAT EVERY MAILER IS-MADE BETTER OFF.
THE MORE PIECES OF MAIL, THE LOWER THE BURDEN OF FIXED COSTS ON EACH PIECE. THE
LACK OF OPPOSITION TO WORKSHARING DISCOUNTS IN RATE COMMISSION PROCEEDINGS IS
IMPORTANT BECAUSE IT HAS ALLOWED MAILERS AND THE POSTAL SERVICE TO DEVELOP
WORKSHARING TO VIRTUALLY ITS FULLEST POTENTIAL. OF COURSE, WHILE IT MAY APPEAR
THAT WE HAVE ACCOUNTED FOR THE MAJORITY OF WORKSHARING OPPORTUNITIES, IT IS UP
TO YOU IN THE INDUSTRY TO CONTINUE TO BE AWARE OF FUTURE OPPORTUNITIES. WHEN
THESE OPPORTUNITIES DO PRESENT THEMSELVES I INVITE YOU TO BRING THEM TO OUR
ATTENTION. TOGETHER, BETWEEN YOUR INDUSTRY, THE POSTAL SERVICE AND THE
COMMISSION WE CAN CONTINUE TO ADDRESS WAYS TO GET COSTS, AND THEREFORE, RATES
DOWN. I MENTIONED THE FACT THAT WORKSHARING DISCOUNTS PROMOTE VOLUME GROWTH.
THAT IS BECAVSE VOLUME RESPONDS TO PRICE REDUCTIONS. WE HAVE DONE ANALYSIS AT
THE RATE COMMISSION THAT INDICATES THAT VOLUME RESPONSE TO WORKSHARING DISCOUNTS
IS MUCH LARGER THAN WOULD BE EXPECTED FROM A SIMPLE LOWERING OF PRICES. WE THINK
THAT THIS IS IMPORTANT IN EXPLAINING POSTAL VOLUME GROWTH. TODAY OVER 60 PERCENT
OF TOTAL POSTAL VOLUME INVOLVES WORKSHARING. SINCE 1976 WHEN THE FIRST
WORKSHARING DISCOUNT WAS INTRODUCED, TOTAL VOLUME HAS GROWN FROM 90 TO 200
BILLION PIECES. ADVERTISING MAIL IN PARTICULAR HAS BENEFITED. IT HAS GROWN
NEARLY FOUR FOLD. WORKSHARING AND VOLUME GROWTH TOGETHER HAVE KEPT POSTAGE RATES
IN THE U.S. QUITE LOW IN SPITE OF RELATIVELY HIGH WAGES. WORKSHARING IS A GREAT
EXAMPLE OF ADAM SMITH'S "INVISIBLE HAND." EACH OF US WORKING AT WHAT WE DO BEST
IMPROVES THE WELFARE OF ALL OF US. I WOULD LIKE TO TOUCH ON ONE MORE THING
BEFORE I CLOSE. THE DATA COLLECTED BY THE POSTAL SERVICE. THE POSTAL SERVICE,
GAO AND THE RATE COMMISSION RECENTLY COLLABORATED IN MONITORING A STUDY BY A
PRIVATE CONTRACTOR ON POSTAL SERVICE DATA SYSTEMS. THE STUDY WAS REQUESTED BY
CONGRESSMAN JOHN MCHUGH, THE CHAIRMAN OF THE HOUSE POSTAL SERVICE SUBCOMMIT-TEE.
OVERALL THE STUDY FOUND THE STATISTICAL PROPERTIES OF THE DATA SYSTEMS TO BE
QUITE ACCEPTABLE. THE STUDY DID NOT, HOWEVER, EXAMINE WHAT STATISTICIANS CALL
NONSAMPLE ERROR. THESE ARE ERRORS WHICH INCLUDE INCORRECT RECORDING OF DATA, NOT
RECORDING DATA ON THE RIGHT THING, MISTAKES IN TABULATION, NOT- USING THE BEST
INFORMATION IN TABULATIONS, FAULTY DATA COLLECTION PLANS, ETC. CLEARLY THE
IDENTIFICATION AND FIXING OF NONSAMPLE ERRORS IS IMPORTANT, AND I HOPE A SECOND
STUDY WILL BE LAUNCHED TO EXAMINE NONSAMPLE ERRORS AND TO DETERMINE WAYS TO
MINIMIZE THEM IN THE FUTURE. I THINK SUCH A STUDY WOULD BE BENEFICIAL TO
EVERYONE IN THE POSTAL COMMUNITY. IN CLOSING I WANT TO THANK YOU AGAIN FOR THIS
OPPORTUNITY TO SPEND SOME TIME WITH YOU AND GRACIOUSLY ALLOWING ME TO VISIT YOUR
FACILITIES YESTERDAY. THESE TOURS ARE TREMENDOUSLY HELPFUL, PARTICULARLY TO A
NEW COMMISSIONER, IN BECOMING ACCLIMATED, IF YOU WILL, TO SOME OF THE UNIQUE AND
INTERESTING THINGS PEOPLE IN THE POSTAL COMMUNITY ARE DOING. I WILL TRY TO
ANSWER THOSE QUESTIONS FOR WHICH WE HAVE TIME AND FOR THOSE THAT I CAN'T ANSWER,
LIKE WE SAY ON THE HILL, I'LL BE GLAD TO GET BACK TO YOU IN WRITING. ALSO,
PLEASE FEEL FREE TO VISIT NTH MY SPECIAL ASSISTANT, STEVE WILLIAMS, OR MYSELF
AFTERWARDS. THANK YOU.
LOAD-DATE: September 21, 2000,
Thursday 
