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Mr. McCLOSKEY. Thank you, Ms. Emigh.
Mr. Silbergeld, it is always good to see you.
Mr. SILBERGELD. Thank you, Mr. Chairman.

I heard with dismay your description of the situation at the Bloomington post office and can only project myself back some 30 years and imagine sitting around my IU dorm for an extra 6 days after the check from dad arrives at the Bloomington post office while it migrates its way from the Bloomington post office to the IU dormitory system. I hope that gets cleared up quickly.

Mr. McCLOSKEY. We have consistency, is what this proves.

Mr. SILBERGELD. Mr. Chairman, allow me to begin by thanking you and the committee and all of our colleagues in the postal community for the outpouring of support and condolences in the loss of our late executive director, Dan Doherty, who, in fact, was involved in trying to work out the compromise that Carolyn Emigh just mentioned at the time of his death 2 weeks ago. We all miss his dry wit, his reasonable approach to problem solving, and especially now with this question of the revenue forgone appropriation pending and unsolved.

The subject before the committee today is the Joint Task Force report on postal ratemaking. We appreciate it that you have solicited our opinions. If the question is whether the recommendations of the task force are acceptable as a beginning for meaningful reform of the ratemaking process, then the answer from our particular constituency is a clear affirmative.

As you know, all mailers, including nonprofit mailers, were overwhelmed with postage rate increases of over 35 percent as a result of the last rate case. We are convinced that something is broke, and we must fix that in the ratemaking process. We commend the Joint Task Force for their conscientious and dedicated efforts as well as the thoughtful and carefully considered recommendations.

Implementation of the proposed 4-year rate cycle will make the timing of rate increases more predictable and help nonprofit organizations budget postal expenses better. It is also our expectation that the 4-year cycle will spread the astronomical costs of participating in rate cases over a longer period and help reduce our annual costs of that effort.

The task force's recommendations should provide the ratemaking process with considerably more flexibility than currently exists. We hope that such flexibility will reduce significantly the high-level contentiousness that has characterized the ratemaking process in prior years. The Joint Task Force report proposes to reduce the size of individual rate increases by shortening the interval between rate increases, taking into account the 2-year adjustment.

Insofar as it goes, the Alliance of Nonprofit Mailers finds no fault with this proposal, but, as previous witnesses have, we caution that reform of the ratemaking process cannot and will not increase productivity or reduce costs or improve the long-run competitiveness of the Postal Service; that is beyond the scope of ratemaking.

The Postal Service must begin immediately to realize significant cost savings from the billions of dollars that it has invested in automated equipment. Since issues as these are beyond the scope of this report, they were not addressed by the task force.

The Alliance of Nonprofit Mailers considers it essential that this oversight committee continue to focus attention on the management and governance of the Postal Service. They must be held accountable for achieving increased productivity and cost savings. It is our sincere hope that the new Postmaster General will be able to turn the ship around and hold the line on postal rate increases.

While I have your ear, however, Mr. Chairman, I do want to express our gratitude to you and to your staff and the staff of the minority for the months of hard work dedicated to rescuing charities, churches, universities, arts and research organizations, and other worthy nonprofit mailers from the effects of catastrophic shortfalls in the revenue forgone appropriation.

I know that I speak for the entire nonprofit community in expressing our shock and our disappointment over the deliberate sabotage of those efforts by the Deputy Postmaster General and some shortsighted factions in the commercial mailing community. The 11th-hour strategy to break this carefully crafted compromise was clearly designed to create tremendous turmoil between the authorizing and appropriations committees. You and we have been placed in untenable positions.

We stand hopeful that the members of this committee will deny the Postal Service this bloody victory and shield the nonprofit community from the 40 percent postal rate increase that will become effective October 1, 1992, unless something is done about the revenue forgone appropriation.

Your staff is now studying legislative language to create a reduced markup approach to continuing the long-standing public policy of providing for preferred postal rates. This proposal would address many of the concerns of the Postal Service as well as rescue nonprofits. We hope that it is not too late. On that score, let me make one additional comment.

We find it offensive that the Deputy Postmaster General has played fast and loose with his verbiage before the chairman of the committee. In Mr. Coughlin's June 4 letter to the Chair, he stated that the separate subclass option that was at that time under consideration-and I quote- set a dangerous precedent and breaks a cardinal rule that each class of mail should bear its own costs.”

Mr. Chairman, nonprofit mailers pay all of their attributable costs. They pay all of the attributable costs that are assigned to their mail in the ratemaking process. The proposals crafted by your staff and by our late executive director, Dan Doherty, and the proposal that has recently been transmitted to your staff, none of them would change that policy, and for the chief executive officer of the U.S. Postal Service to insinuate anything else can only mislead the committee.

We hope that this issue will be dealt with before this year's appropriations process has run its course so that we do not face the drastic additional increases less than 2 years after the last set of enormous increases. It will break the back of some nonprofits and seriously injure the ability of others to deliver their services to the public.

Thank you, Mr. Chairman. Thank you, members of the committee.

[The prepared statement of Mark Silbergeld follows:

ess.

PREPARED STATEMENT OF MARK SILBERGELD, PRESIDENT, ALLIANCE OF NONPROFIT

MAILERS Mr. Chairman, allow me to begin by thanking you and all of our colleagues in the postal community for

the outpouring of support and condolences in the loss of our friend, Dan Doherty. We have all come to miss his dry wit and reasonable approach to problem-solving, especially now.

The subject before the Committee today is the Joint Task Force Report on Postal Ratemaking. If the question asked is whether the recommendations of the task force are acceptable as a beginning for meaningful reform of the ratemaking process, the answer from our particular constituency is a clear affirmative.

As you well know, all mailers—including nonprofit mailers—were overwhelmed with postage rate increases of over 35 percent as a result of the last rate case. We are convinced that "something is broke" and must be fixed in the ratemaking proc

We commend the Joint Task Force for their conscientious and dedicated efforts, as well as the thoughtful and carefully considered recommendations. Implementation of the proposed 4-year rate cycle will make the timing of rate increases more predictable, and help nonprofit organizations budget postal expenses better. It is also our expectation that the 4-year cycle will spread the astronomical costs of participating in rate cases over a longer period, and help reduce our annual costs for that effort.

The task force's recommendations should provide the ratemaking process with considerably more flexibility than currently exists. We hope that such flexibility will reduce significantly the high-level contentiousness that has characterized the ratemaking process in prior years.

The Joint Task Force Report proposes to reduce the size of individual rate increases by shortening the interval between rate increases. Insofar as it goes, the Alliance of Nonprofit Mailer finds no fault with this proposal. We must caution, however, that reform of the ratemaking process cannot and will not increase productivity, reduce costs, or improve the long-run competitiveness of the Postal Service. The Postal Service must begin immediately to realize significant cost savings from the billions of dollars that it has invested in automated equipment. Since issues such as these are beyond the scope of the Report, they were not addressed by the task force.

The Alliance of Nonprofit Mailers considers it essential that this oversight committee continue to focus attention on the management and governance of the Postal Service. They must both be held accountable for achieving increased productivity and cost savings. It is our sincere hope that the new Postmaster General will be able to turn the ship around and hold the line on postal rate increases.

And, while I have your ear Mr. Chairman, I want to express our gratitude to you and to your staff and the staff of the minority for the months of hard work dedicated to rescuing charities, churches, universities, arts and research organizations and other worthy nonprofit mailers from the effects of catastrophic shortfalls in the revenue forgone appropriation. I know that I speak for the entire nonprofit community in expressing our shock and our disappointment over the deliberate sabotage of those efforts by the Deputy Postmaster General and short-sighted factions in the commercial mailing community. The 11th-hour strategy to break this carefully crafted compromise was clearly designed to create tremendous turmoil between the authorizing committee and appropriations committees. You—and we have been placed in untenable positions. We stand hopeful that the members of this committee will deny the Postal Service this bloody victory and shield the nonprofit community from 50 percent postal rate increases effective October 1, 1992.

Your staff is now studying legislative language to create a "reduced markup" approach to continuing the long-standing public policy of providing for preferred postal rates. This proposal would address many concerns of the Postal Service and rescue nonprofits. We hope that it is not too late.

And, on that score, allow me make one additional comment. We find it very offensive that the Deputy Postmaster General of the United States of America plays very fast and very loose with his verbiage before the chairman of the Post Office and Civil Service Committee of the House of Representatives. In Mr. Coughlin's June 4 letter to the Chair he stated that the separate subclass option that was, at that time, under consideration, "set a dangerous precedent and breaks a cardinal rule that each class of mail should bear its own costs."

Mr. Chairman, nonprofit mailers pay all of their attributable costs assigned to our mail. The proposals crafted by your staff and by the late Dan Doherty and the pro posal that has been recently transmitted to your staff would not change that policy.

For the Chief Executive Officer of the U.S. Postal Service to insinuate anything else is grossly misleading to this committee. Thank you for your attention.

Mr. McCLOSKEY. So I guess we can mark you down as not feeling abundant with the warm fuzzies toward Mr. Coughlin.

Mr. SILBERGELD. I think I have delivered my message accurately.
Mr. McCLOSKEY. Definitely opposed on that issue, right?
Thank you, Mr. Silbergeld. You said it well.
Mr. Hayes.
Mr. HAYES. Thank you, Mr. Chairman.

I would like to join with you and my other colleagues in expressing my sympathies to the family of Dan Doherty. Both his knowledge and his sense of humor will sorely be missed. Dan helped preserve the revenue forgone appropriation in face of a hostile administration. I am concerned about the differences which have developed between your organization and the Postal Service on the future of revenue forgone. Do you think there is a common ground on which to save revenue forgone, Mr. Silbergeld?

Mr. SILBERGELD. Mr. Hayes, I think the effort is to greatly reduce the need for the revenue forgone while leaving some revenue forgone appropriation necessary, and we have language, which the committee staff is now looking at, which we think will solve the problem to everybody's benefit.

The Congress will have to appropriate far less revenue forgone starting this year, the Postal Service will have its principles intact, and nonprofits will avoid the huge rate increases that will result if we keep the system as it is and suffer the shortfall of revenue forgone that is virtually predictable if something like this language is not adopted forthwith, and we commend that recommendation to you. We would be glad to sit down with you and go over the language in detail and to do so just as soon as you would like to do that.

Mr. HAYES. So you think it is possible to save the program?
Mr. SILBERGELD. Yes.
Mr. HAYES. All right.
Thank you, Mr. Chairman. That is the only question I had.
Mr. McCLOSKEY. Thank you for an excellent statement, Mr.
Hayes.

Ms. Norton.
Ms. NORTON. No questions, Mr. Chairman.
Mr. MCCLOSKEY. Thank you very much for excellent work today.

Maybe just one parting question or observation. I guess one aspect of all this and I believe we talked about it informally in my office is the question of the nonprofit roles. The votes to some degree maybe possibly be 10 or 15 percent over-inflated with enterprises that are more directly in the commercial area and should really not have nonprofit tax or revenue forgone status.

A, could you comment on that? B, I think in the dynamics of possibly culling those lists, which I think probably needs to be done, is there any cause or justification, if you will, for St. Olaf's Group Interpersonal Dynamics Center being given treatment, with the revenues from that going to help the Good Jesuit Fathers of the Upper Plains, or whatever? Olaf's Group Interpersonal Dynamics

Center makes no bones about being in these seminars and promotions for the money.

I think we have some very difficult questions. You know, the Good Fathers and others are going to be coming in from all over the Nation.

Mr. SILBERGELD. Mr. Chairman, there is indeed both justification and a great deal of controversy about the justification that is offered for that. As we all know, that is a highly controversial point.

The draft that was scuttled by the last minute objections of the Postal Service and a few major commercial mailers had some language that would have addressed that in part. That agreement is apparently no longer afloat, unless we hear differently. The proposal dealing specifically with that question of eligibility, it seems to me, might require additional hearings, and our concern now is, further time having been passed to deal with the larger question of the way revenue

forgone will be calculated before this coming October 1, and I'm not sure, and, of course, it is up to the committee as to whether that is possible. But there is no doubt that that is as controversial as any issue that was addressed in that draft language that we thought, apparently quite wrongly, we had an agreement to.

Mr. MCCLOSKEY. I don't know if this helps at all, but I think one of the more tragic things here, and I'm not speaking politically, but this is supposed to be a kinder and gentler administration than the last, and the terrible economic and social ravages we are going through-that somehow the alleged concerns of the deficit and Mr. Darman seem to be ringing our bells rather than even on the legislative side here some common sense compassion that this is not the time to be cutting back on revenue forgone.

So I guess in some ways I'm apologizing for the Congress. I'm just in bitter turmoil myself that we are in this problem right now and I guess I'm truly amazed that our hearts are this hard, if I might say that.

Mr. SILBERGELD. Mr. Chairman, we all understand that the ever reduced appropriation and the ever increasing shortfall is a result of what ought to be revised and restated by the Office of Management and Budget and by the White House as a 400 points of light policy if they want to have some truth in politics.

Mr. McCLOSKEY. Ms. Emigh.

Ms. EMIGH. Mr. Chairman, in addition to the problems that we face because of this mushrooming deficit, I remember Mr. Carter lost the election-one of the reasons he lost was, he was sitting on a $90 billion deficit. Now we are up to $350 billion and there is no end.

But in addition to the budget problem, the question of how overhead costs should be distributed among third-class mailers, Congress should address that anyway, regardless of the budget, because the rate should be fair. Congress should not be paying overhead costs that really get charged to, that are really consumed by, another subclass.

So even beyond the need to deal with the budget is this other question of fair ratemaking and fair postal costing, and to say that nonprofits consume postal overhead at an equal rate as commercial mailers is simply not true, and that ought to be reformed, and I

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