Mr. HANDELMAN. It would have been another billion dollars. Instead of looking forward to a $2 billion deficit, we would only be looking forward to $1 billion deficit. A lot of that has to do with volume decreasing, and maybe that also has to

Mrs. MORELLA. Deals with the competitive nature of the Postal Service now.

Mr. HANDELMAN. The only thing is, in the last couple of years that volume has decreased, regardless of increases in the mail. And whether this is going to remain this way or not is another subject, I think, that should be of great concern to everyone in the Postal Service.

Mrs. MORELLA. Do you view the problem also with the need for the unanimous vote for the rate increase of the Postal Rate Commission or do you not get involved with any of that?

Mr. HANDELMAN. If I had to be truthful, which I am going to be truthful

Mrs. MORELLA. Of course.

Mr. HANDELMAN [continuing]. I really think there are some people on the Postal Rate Commission that would like to see the Postal Service privatized. I could mention a couple of names, which I won't, but there were former Postal Rate Commissioners who would get up in places where postal people would be, and they would advocate privatization of the Postal Service.

And I have had meetings with some of them, one-on-one, and I said, I don't think you should do that, I don't think you have the right to do that, and, of course, they go to personal opinion; that they have opinions, just like myself. And I said, yes, but your job entails being a Postal Rate Commissioner. If you want to get on a soap box, quit the job, get out there, and I will get you the soap box. But as long as you are a Postal Rate Commissioner, I don't think you have the right to expound in the fashion that you are. Mrs. MORELLA. Finally, if you would indulge me, Mr. Chairman, always we look at the legacy that you leave behind. When we write about you, what do you want to most be remembered for?

Mr. HANDELMAN. I would just say I was a good postal employee. Mrs. MORELLA. Good postal employee, and a good civil servant. Mr. HANDELMAN. Thank you.

Mrs. MORELLA. Thank you very much, Mr. Chairman.

Mr. HAYES. Mr. Handelman, my subcommittee has received calls from supervisors that want to know what kind of protection they have against layoffs. Could you explain the process; their rights?

Mr. HANDELMAN. Well, from what I learned just recently, in the last couple of days, is there cannot be a layoff without a RIF for EAS people. In order to have a layoff, you have to also have a RIF. In my opinion, I don't think supervisors will be RIF'd or laid off. I don't think. This is just personal opinion. It could happen, and that has to do with how our volume throughout the country goes. I do know that in my own region, where I am assigned, the Northeast region, there are bigger problems there because they have more employees and their volume has fell off tremendously, more so than the other four regions. But I guess that would have to remain to be seen.

I personally think they can get rid of, if they had to, get rid of people. I think they have, and I don't know what the figure would

be, but I understand that some in the Postal Service, including the chairman of the Board of Governors, has stated that, and Mr. Coughlin has stated we can't get rid of enough through attrition. I think the figure was 39,000 the last 3 years, and that isn't much, but I think we have enough part-time people, casuals, that we can get rid of that would amount to many, many more thousands of people.

If they talk about an incentive like they had in 1971, where they did give an incentive to those that were eligible to retire and I understand you don't have to go through OPM if the Postal Service wanted to give that incentive-it is true it would be an outlay of a lot of moneys the first 6 months, or an outlay of 5 months' salaries, but you have 40,000 craft people eligible to retire.

I think you have close to that 10,000 mark with the EAS people that are eligible to retire. And I think if an incentive was given, the way things are happening in the Postal Service, with the implementation of automation, I think a large percentage of those eligibles will end up retiring. But that is an opinion and a guess on my part.

Mr. HAYES. When you testified last year you said that the morale was low and that Management By Participation was not accepted by many postmasters. Has that situation improved?

Mr. HANDELMAN. Not at all. I think the morale is still low. I think everyone, from the craft to the supervisors to upper echelon managers are working with fear in their hearts.

I guess when you hear of a new Postmaster General coming in, and you hear of deficit budget and the way it is, and you take a look at the history of what is going to happen with the new Postmaster General-and I have met him, and I think he made a good impression on me, and I think he is going to be honest. He is going to try and do whatever he has to do. And maybe in certain places he will do proper, but I think everybody is afraid only because of not having the knowledge of what is going to happen to them personally, and nobody could give us that information.

We know it is coming, but up until the time that you find out just exactly what is happening and where it is going to happen, I guess you work with fear and the morale is low.

Mr. HAYES. Does the budget situation have some impact on that? Mr. HANDELMAN. The budget enters into the picture a lot. I have mentioned on many occasions that our supervisors look to save nickels and dimes and the higher echelon looks to spend thousands. But that could only be an opinion of mine. But I think the budget is the biggest part of that that enters into the picture.

Mr. HAYES. You mentioned that the 73 divisions are independent. Why do we need the regional headquarters?

Mr. HANDELMAN. Well, the regions are supposed to be over divisions. There are some regions that could have 13 divisions under them, and there are some regions that have 11 divisions and all. I guess they are that next area of importance over that, and just like headquarters, is supposed to be over the regions.

But I think between your regions and headquarters, they have given those 73 division managers just about their right to do anything they want. And I think what we are working with presently is 73, if you want to call them headquarter offices, you want to call

them 73 divisions or not, because when they do something wrong or it is against the policy as stated in various employee labor relation manuals, various manuals, and you go to the upper echelon and say, look, they are doing something improper, it is against the regulation as written or against the policy, nobody looks to correct them.

They want to give them the leeway to do whatever they have to do to do the job. Sometimes it is working and sometimes it is not. Mr. HAYES. I just hope it isn't a patronage situation that I am familiar with in the political arena.

Mr. HANDELMAN. I hope so.

Mr. HAYES. In your nearly 50 years, and this is my final question, you have seen a lot of changes, I know.

Mr. HANDELMAN. I think I have.

Mr. HAYES. Would you speculate on what changes need to remain to keep the Postal Service healthy just over the next 10 years?

Mr. HANDELMAN. Well, I will be—here again, I really think, and I have mentioned this to Mr. Runyon, I listened to his press conference, and he was nice enough then to come and meet with the people that were at this meeting on violence, and he had most of the union presidents and management presidents there, and I think competition is a big thing. The only thing is how could you compete when you are competing unfairly? Meaning, Postal Rate Commission makes the rates.

If we were private industry or if we were able to compete fairly, I think we could win hands down against any opposition. I told this to Mr. Runyon. The only thing is, we have certain laws that we have to abide by, and I guess in private industry they don't. A lot of our business is phasing away to all the delivery carriers and various other, let's say companies, that are coming into our business, and there is nothing we can do about it.

Private industry, if you want to retain business, you can lower your rates and retain the business until you get the business, then you may come up with a little on your rates, but we can't do that.

If you go back years and you take UPS, UPS went into a place where they were delivering in Alaska and they found they were losing money and they left. I guess your alternate delivery companies will do the same thing. If they saturate a place where they have newspapers and all and they start delivering them, if they are making money, they will stay; if they are not making money, they will leave.

Mrs. MORELLA. Will the gentleman yield?

Mr. HANDELMAN. I will yield also.

Mrs. MORELLA. Thank you.

That joint task force report, it does give some latitude for the bulk mail to have some flexibility in terms of the pricing in order to meet competition, doesn't it?

Mr. HANDELMAN. Mrs. Morella, the new report the committee came out with does. I am mentioning previous to that.

Mrs. MORELLA. So you would approve of that facet?

Mr. HANDELMAN. Yes. That new report does something to assist in that area. That new committee that sat down, which had a couple of the former Board of Governors and a couple of former

Rate Commissioners, and I did read that report, and it does give them more leeway than we have ever had before. But previous to that, when you competed, we competed at a big fault. In other words, we really could not compete.

Mrs. MORELLA. Thank you.

Mr. HAYES. Automation is moving, as you just mentioned, toward privatization. It has played havoc and is still playing havoc with the employment of people in the Service.

Now, what you have just said would indicate you have a feeling that if we move in the right direction, we might be able to change this move toward privatization; am I right?

Mr. HANDELMAN. I feel automation is going to work. The only thing is, when you start implementing-I remember when we had the letter sorting machines and we first implemented, there were a lot of kinks in the system. The same with automation.

This is something new to everybody that has to work on it. There are mechanics that have to fix it, but we will find kinks. I guess you have to gets the kinks out before it starts running smoothly.

I think automation is here to stay. I think it will work, and it will do whatever it is intended to do. But until it gets implemented throughout the country, and until it starts working where you get all the kinks out of the system-I think it will do well for the employees.

Mr. HAYES. In privatization we see some of the businesses being pinched off little by little, but do you see any way we can stop or halt that?

Mr. HANDELMAN. I don't know. When you come to privatization, you think of firms like Mailbox, et cetera, you think of the alternate delivery companies coming in, big companies like Time, Inc., and there is very little investment that these people that are coming in on alternate delivery.

Meaning, if I was going into alternate delivery, you have many people that deliver newspapers or newspaper routes at around 3 or 4 o'clock in the morning and they have a route. If I was a company that wanted them to deliver my magazine or catalog, I would go to that particular gentleman and I would say, or to that lady or whoever has that route, and say, how would you like to make some extra moneys? During your route, where you are going, how would you like to deliver some of my catalogs or some of my magazines? I think that that person will say, great. So, actually, there is no investment to the company that is requesting that person to do that. If the person gets too overburdened, they will not do it. But if they want to make some extra moneys and they want to hire somebody, I guess they can do it very easily with very little expenditure to start.

Mr. HAYES. I thank you very much. We have certainly appreciated your testimony.

You don't have anything to add, do you, Mr. McLean?

Mr. McLEAN. No, thank you, Mr. Chairman.

Mr. HAYES. Our next and final witness, Mr. Ted Valliere, director of government relations, the National Association of Postmasters of the United States.

STATEMENT OF TED VALLIERE, DIRECTOR OF GOVERNMENT RELATIONS, NATIONAL ASSOCIATION OF POSTMASTERS OF THE UNITED STATES

Mr. VALLIERE. Thank you, Mr. Chairman. Mr. Chairman, I am Ted Valliere, I am director of the government relations, National Association of Postmasters of the United States.

On behalf of President Miller, who cannot be with us today, we want to thank you for giving us this opportunity to address the committee regarding our views on the Postal Service.

In the interest of time, and with the permission of the committee, Mr. Chairman, we have submitted written testimony for the record, and I would not summarize but would just like to talk about the Postal Service.

Mr. HAYES. Do as you see fit. It would save some time, though, if you didn't read the full statement, because all of it will be made a part of the record and you can deal with its highlights as you suggested. We would appreciate it.

Mr. VALLIERE. Thank you, Mr. Chairman. I would like to give a little background and to touch on some of the questions Congressman Clay asked Mr. Handelman earlier.

I have been retired from the U.S. Postal Service since 1986, after 37 years and 9 months of Postal Service. Twenty-eight years of that time was as a union activist. I was the national director of research and education for the American Postal Workers Union for 10 years. I also worked at the Management Academy as a management educational specialist.

Following my retirement, I worked as a marketing consultant for the postal employees newsletter and had the honor of working for President Handelman as editor and legislative council for a year. Following that, I went to work for NAPUS as the director of government relations.

I mention that because Bill Clay's question to Rubin with regard to a paramilitary style of management is very difficult for me to deal with. The 6 years that I was at the Management Academy I developed two programs in communication skills directed toward getting away from that style of management. And I can say, without qualification, that during that period at the Academy, the focus was on joint decisionmaking and getting away from an authoritarian style of management.

Why it has not happened, I don't know. The only thing I can attribute it to is that, while we have it at the lower levels, we don't have it at the executive levels. I think a lot of it is people protecting their turf.

Another reason I wanted to mention my background is I was here in 1970 during the discussions and enactment of Public Law 91-375, the Postal Reorganization Act. I recall that that bill was negotiated between the executive branch, legislative branch, and the unions. I even recall George Meany being involved, and I was involved to a lesser extent.

That law provided that the Government would take over the liabilities of the former Post Office Department, and yet, since 1980, we have seen the Postal Service being hit and hit and hit, time and time again, up to $9.1 billion. That was not the promise of the ne