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that 8 percent of our first class that is purchased by individual citizens for private business? Or do they spend some time on these economically weak classes of mail and considering them as consumers as well?
Ms. STEIGER. Let me address one issue first, and then I will go to the OCA.
The nonprofit third-class rates for 90 percent of the mail at step 14, are exactly the rates recommended by the Postal Service. The higher increase you are talking about, I think, comes at phase 15 and 16. But at current step 14, this is roughly a 12-percent increase and equal to that recommended by the Postal Service.
There have been some benefits also. We made about a 37-percent increase in the discount to carrier routes, for this class of mail-22 percent increase in 5 digit. I do realize that the bulk of this mail goes five digit or all other, but the deepened discounts may draw some of these folks to commingle wherever possible and offer some additional savings to them.
The OCA, in our view, best represents the public interest by scanning the entire record presented by the Postal Service and by other parties, sweeping the corners. They are the only party that has no vested interest one way or the other in anything. Their overriding interest is in the lowest possible rates for the general public, but also in the most complete record. In this case, they spent a fair amount of expert time on volumes and on cost models. The testimony they elicited formed a base for our being able to recompute Tolley's volumes according to his methodology and were substantially responsible for relatively lower rates than those we would have been ever able to recommend without it. As to that kind of technical expertise, independent of us, independent of the Postal Service, they do perform that function of completing the record. That in itself is generally in the public interest.
They fought against the Service proposal for third-class rates, but also one of the intervenor's proposals, either one of which might have worked some detriment in third class to some of the people you were expressing concern about.
As per cost attributions in this case, unlike the last case where we assigned and attributed some 75 percent of cost, our attributions are very close to those found by the Postal Service-roughly 64 percent, and the Postal Service found about 60. So I don't really think attribution is the issue here that it was when service-related cost existed since we no longer accepted that theory in this case. Nonetheless, as I have said before, for the preferred classes of mail, our hands are tied when the attributions are found, and the statute says we must set a rate that will recover attributable costs. In other words, the preferred classes of mail did not receive lower rates. The people who did were those who had mitigation of their burden of institutional costs. As the nonprofits are well aware, since they don't pay that, that advantage did not flow through to them in the same way they did to what we call Aunt Minnie who uses the 22-cent stamp.
Mr. FORD. Thank you very much.
We have people constantly running-now all of my clerks, in the name of democracy and open elections, want us to swallow the cost of mailing absentee ballots. And it is very, very difficult as the
chairman of this committee to tell them we just can't afford it, because they then accuse me of being against the old and the lame having an opportunity to participate in the process. It is not a good thing for a politician to do at any level.
Newspapers had a sort of inchoate idea. They came to you and weren't able to make their case any better with the Rate Commission than they did with us. But the attempts over the years since the Rate Commission has been created have, I think, have succussfully avoided us from interfering at the legislative level with the ratemaking process.
We used to sit in this committee years ago and finally had to link rate increases with pay increases together, because you could get one-half of the room to vote for the pay increases and one-half to vote for the rate increases, but nobody would vote for both. The only way you could hang it up was to trade one for the other. So we made political decisions on rates and political decisions on compensation, and it never made much sense. That is one of the reasons the corporation was created and the Rate Commission was set out to decide.
Certainly you must be getting some feedback from people who complain about the complexitity of the process, people who think that it is another one of these things in Government that get so big and so complex that they don't count. We don't want to saddle you with some kind of new statutory watchdog or anything of the kind. That doesn't work very well anyhow. But there are people expressing constant concern to me out there on the floor about these little specifics that are only a very small part of the big job that you have to do, and we have to be able to tell them where this is going. As you described, all this technological advance with computers and the fact that even some of the big boys in the game don't have the capacity to digest what your computer is spitting out, that tells me that a country lawyer like me would have no chance at all.
Ms. STEIGER. Mr. Chairman, that is where I have to respectfully disagree. The problem was with a Postal Service computer model. We have computerized the roll-forward model that we use at the Postal Rate Commission. It will be available to the parties, complete with a walk-through-it tells you how to use it-and we intend to do the same thing with any computerized program that we use. I think the language is basic. I doubt that it will be above and beyond most of those people who have access to any computer advice. At least that is our goal.
I would like in the time before the next rate case to computerize everything that moves. I would like to try to get a rate structure that could be run on a computer. It would save parties not only time, but with the appropriate text to go with it, I think it would save them financial resources as well.
I would add only one thing about, in a sense, the complexity of our proceedings. There is no question that getting through a case of this magnitude which divides up $30 billion in required revenue and doing it in 10 months does put burdens on people. I am not suggesting any extension of the 10-month deadline, but I think it inevitably causes overtime, it causes late-night sessions, and these things may not be economically the fairest way to operate. But no matter what we do, no matter how efficiently we proceed, 10
months cause crunches of time that are expensive to the people who argue. I don't have any answer for that other than to keep simplifying as far as I can the procedures we use, and replicating what we do so that parties can see it, can use it, and can know what we are doing just as quickly as possible. That is our goal in the next couple of years. I presume we have a few years before our next rate increase.
Mr. FORD. Mr. Chairman, I would like to make one brief comment, and I don't want any time of my own.
I would like say for the two subcommittee chairmen who are here that I have known the Chairman sitting before us for a good many years. Her husband was on the committee with me and, while he was from the opposite party, he was a really great ally in many interesting battles. I have known her-we have traveled together, and I shudder a little when she says she would have everything computerized. She is the kind of a lady who, if she sticks around, by God, will.
But I wanted to say for the record, Janet, that in my 4 years as chairman of this committee, I have never once had my staff complain that they can't get cooperation from your people, that you haven't been forthcoming over there. We don't always understand it, but at least we get what we ask for. You are, frankly, a little easier to deal with than most agencies in Washington, and I think that is largely a reflection of your personality and commitment to public service.
I don't know why you would want to do it-but I hope that you stick around for a while because we could use some more people like you in this Government, whatever your political party.
MS. STEIGER. Thank you, Mr. Chairman. The next time you don't understand anything, let me know because, if I don't, there is going to be real trouble.
Mr. GARCIA. My colleague from Texas.
Mr. LELAND. Thank you, Mr. Chairman.
Madam Chairperson, I understand that the Postal Service's rate case filing before the Postal Rate Commission was based on a pay increase for postal employees; is that correct and, if so, how much of a pay increase was anticipated?
MS. STEIGER. Mr. Chairman, I believe our estimate of the predicted contract settlement is 5.5 percent. This, of course, is split between a variety of things, such as bonuses, fringe benefits, straight salary, and so forth. But that is the number.
Mr. LELAND. Are your recommendations based on a pay increase and, if so, how much?
Ms. STEIGER. The Commission, while expressing serious concern about the grave difficulty, Mr. Chairman, of attempting to set a rate where a great amount of the revenue requirement was an unknown, nonetheless, did not disturb the Postal Service's filing, and that amount is accounted for in the revenue requirement.
Mr. LELAND. We have some other questions. I know that you have been very patient all day and have been waiting. I am going to ask the chairman, if he will, I will submit the questions in writing so that you can be dismissed and go home earlier, if you will. Mr. Chairman, I would like to submit some further questions of the chairperson and have them included in the record.
Mr. GARCIA. I just have one final question. I am also going to ask the same of you and counsel. We have a series of questions that we would like to submit. But it really is late and this hearing has gone far beyond what we anticipated it would. I want to finish by 5 o'clock and that is 5 minutes from now.
Ms. STEIGER. We would be delighted to respond to any written questions.
Mr. GARCIA. The last question I would like to ask is does the Postal Rate Commission intend to adopt procedures which would allow for resolving recurring cost issues before rate cases are reviewed?
Ms. STEIGER. It is my sincere hope that we can devise a rulemaking that will not become so giant that it will overshadow us, and yet will allow us, with the assistance of the parties and public participation, to focus on some of these questions. As I have said before, I think settling these in a nonadversarial atmosphere of a rulemaking outside of a rate case would be of benefit, not only economically to the parties, but certainly to the smooth conduct of the next rate case whenever it should come along. So the answer is a resounding yes, Mr. Chairman, and I hope you wish us luck on it. Mr. GARCIA. I do.
Just let me join in what my chairman said, Mr. Ford of Michigan. I obviously don't know you as well as the chairman, but in the few opportunities that we have had, I must say that you are a remarkable person. This Government and the Postal Service and all those connected with it are fortunate to have a person like you in the sensitive position in which you are. So I would like to just add my 2 cents before we close this committee hearing.
Mr. LELAND. Mr. Chairman.
Mr. GARCIA. Yes.
Mr. LELAND. Madam Chairperson, I have heard all these accolades about you. Would you consider joining the Democratic Party as opposed to being a Republican? [Laughter.]
Ms. STEIGER. Well, I am with Mr. McKean, I voted for you, Mr. Chairman. [Laughter.]
If that makes me half of a ragtag band, I guess I will have to put up with it. Your kind remarks are appreciated. It is an honor to serve in this position, as you know, and I am grateful for the opportunity.
Mr. GARCIA. With that, we will close the hearing.
[Whereupon, at 4:55 p.m., the subcommittee was adjourned.]
[The following letters were received in response to written questions subsequent to the hearing:]
Janet D. Steiger
POSTAL RATE COMMISSION
Washington, D.C. 20268
October 22, 1984
The Honorable Mickey Leland, Chairman
Committee on Post Office and Civil Service
U. S. House of Representatives
608 House Office Building Annex 1
Washington, D. C. 20515
Dear Chairman Leland:
Enclosed are responses to your follow-up questions
of the hearing of September 27, 1984. If you have any further questions, please do not hesitate to contact me.
Janet D. Steiger