1) Implementing Postal Reform The Postal Service has been in a financially tenuous position for nearly a decade now.

Today, it stands on the brink of failure. The Postal Service likely ended FY2011 with a record $10 billion deficit, nearly $2 billion more than Postmaster General Patrick Donahoe projected in May when he last testified before my subcommittee. Due to this rapidly deteriorating situation and the continuing migration away from First-Class mail, the Postal Service nearly defaulted on the $5.6 billion retiree health pre-funding payment it owed the Treasury on September 30th before Congress pushed the due date back in the recently-enacted continuing resolution. As FY2012 begins, the Postal Service is left with just enough cash to fund its daily operations. Under even the rosiest projections, it will have difficulty making payroll in October and may even be hardpressed to make good on the $1.2 billion it owes the Department of Labor this fall for compensation for postal employees. If nothing is done, the Postal Service will have exhausted all of its cash and borrowing authority by August of next year, if not sooner, forcing it to shut its doors. If the Postal Service were to fail, the impact on our economy would be dramatic. As Postmaster General Pat Donahoe and others have pointed out time and again, the Postal Service operates at the center of an industry that employs some 7 million people. These men and women dont just work at the Postal Service. They work at businesses large and small in every state in the country and generate more than $1 trillion in sales and revenue each year. At such a difficult time for our country, we cannot afford to put those jobs and that kind of productivity in jeopardy. The serious nature of these developments calls for immediate and dramatic action. While the situation is dire, it is not hopeless. Like the troubled American automobile manufacturers did while facing a crisis that threatened their survival just a few years ago, the Postal Service needs to right size its enterprise to reflect the changing demand for the products and services it offers. Like the auto industry did, the Postal Service has more employees than it needs given the demand for the products and services it offers. And, just as the auto industry until recently had more auto plants than it needed here, the Postal Service has more mail processing facilities and post offices than it needs today. It likely needs to reduce its network of mail processing facilities by a third or more. Similarly, the Postal Service needs to close, consolidate, or re-locate a number of the 33,000 post offices it operates. It may even need the authority to adjust delivery frequency. Maintaining the status quo, as I am certain you are aware, is not an option. As you develop the Joint Committees proposal, I would urge you to consider a number of ideas discussed below that have been proposed in recent months, including in S. 1010, the Postal Operations Sustainment and Transformation (POST) Act, the comprehensive Postal Service financial restructuring legislation I introduced this past spring. 1. Pension Overpayments The Postal Services Office of Inspector General, the Postal Regulatory Commission, and two nationally-recognized independent actuarial firms the Hay Group and Segal Company have all found that the Postal Service has paid more than it owes into the Civil Service Retirement System (CSRS). Estimates on the overpayment range from $50 billion to as much as $75 billion. In addition, both the Postal Service and the Office of Personnel Management agree that the Postal Service has also overfunded its Federal Employees Retirement System (FERS) obligations by nearly

$7 billion. Ive joined a bipartisan group of eight members of the Senate and the House in asking GAO to act as an arbiter and advise us as to whether the total overpayment is $7 billion, $82 billion or something in between. GAOs official response is expected later this week. My bill as currently drafted assumes that the total overpayment is as much as $62 billion between $50 billion and $55 billion from CSRS and about $7 billion from FERS. It would give the Postal Service access to these funds over time in order to make the prepayments for retiree healthcare it is scheduled to make through FY2016. Beginning in FY2017, any overpayments not used for this purpose could be used to pre-fund the Postal Services workers compensation obligations or to pay down its debt to the Treasury. Since my bill was introduced, it has also been suggested that at least a portion of the Postal Services pension overpayments be made available to fund an effort to incentivize as many as 100,000 or more postal employees at or near retirement age to retire. Such an effort, if successful, could save the Postal Service as much as $8 billion annually. 2. Retiree Health Payments As I discussed above, the Postal Service must make a payment each September 30th to pre-fund its future retiree health obligations. These payments, set into statute in 2006 through the enactment of the Postal Accountability and Enhancement Act (P.L. 109-435), range from $5.5 billion to $5.8 billion. Unfortunately, the size of the payments is not related to what the Postal Service actually owes its retirees. Nor is it based on an analysis of how much it would be reasonable or necessary for the Postal Service to pay in advance. Rather, the payments were set for each year at the amount necessary for the Postal Service to pay to cover the annual projected score of the 2006 Act. In 2006, the Postal Service was operating at peak mail volume and could afford to make these aggressive pre-funding payments. Today, this obligation is bankrupting them. Mr. Donahoe testified last month that, over the past four years, the Postal Services annual losses have totaled about $20 billion while its retiree healthcare pre-funding payments have totaled about $21 billion. It would be of significant help to the Postal Service, then, if the current payment schedule could be restructured in a way that better reflects the Postal Services future retiree healthcare obligations. President Obamas submission to the Joint Committee includes a proposal to restructure the payments. 3. Delivery Frequency Recognizing that First Class mail volume continues to decline and is not likely to return to its pre-recession peak, the Postal Service has proposed eliminating Saturday delivery. While the estimated savings associated with taking this step vary, Mr. Donahoe contends that it will save the Postal Service upwards of $3 billion per year. My bill would remove language from current law that prevents the Postal Service from responding to its dire financial situation by taking the difficult but probably necessary step to move to a five-day delivery schedule. The enactment of a provision like this would be especially necessary if the Postal Service is unsuccessful in working with its two letter carrier unions during the collective bargaining process in the coming months in making Saturday delivery more cost-effective.

4. New Revenue Opportunities Under current law, the Postal Service is generally prohibited from offering non-postal products or services, despite the fact that a number of foreign posts earn a significant amount of revenue from these kinds of endeavors. My bill would authorize the Postal Service to offer any product or service that meets a public need and that leverages the Postal Services existing processing, logistics, and delivery network. It also seeks to give the Postal Service more flexibility to work with existing customers to keep mail in the system and to coordinate with state and local government on potential new uses of postal retail outlets. While its unclear how much revenue these provisions would raise, they would give postal management new tools they can use to slow the erosion of mail volume and continue to keep the Postal Service relevant as Americans communication needs and habits change. If you have any questions about these proposals, feel free to reach out to me or have your staff contact John Kilvington at (202) 224-7061. Attachments: Legislative Text and Section-By-Section Analysis of S. 1010

2) Closing the Tax Gap The tax gap is the difference, in each year, between the amount of taxes owed by taxpayers and the amount that is paid voluntarily and on time. The estimated gross tax gap in 2001 was $345 billion, slightly more than16 percent of tax liability. Roughly $55 billion was eventually recovered through late payments and enforcement activities leaving a net tax gap of about $290 billion in 2001. Most analysts agree that the tax gap has grown larger since that time. The most significant source of the tax gap is underreporting by taxpayers who file a timely return but misreport the amount of tax they owe. Much of this misreporting can be ascribed to situations in which income or expenses are subject to little or no reporting. To address these concerns, I introduced S. 1289, the Taxpayer Advocacy and Government Accountability Promotion (TAX GAP) Act of 2011, which would reduce the tax gap by improving current information reporting requirements, expanding and improving levies on government contractors and vendors, enacting new levies on certain Medicaid and Medicare providers and suppliers, and increasing certain penalties. Among other critical measures, this legislation incorporates a range of bipartisan proposals made by the current and previous presidential administrations. In addition, the bill requires the completion of several studies and reports designed to improve our understanding of the tax gap and to mitigate the effect of reporting requirements on taxpayers who comply with the law. Provisions in the bill will also allow the Internal Revenue Service to improve its data matching and auditing systems to identify noncompliant taxpayers, resulting in fewer taxpayers being subjected to unnecessary audits. Simply put, this measure provides a common-sense and fair approach to combating our nations mushrooming deficit, an approach that enhances revenue, not by raising taxes, but by better ensuring that all of us are paying the taxes that we truly owe. The overwhelming majority of Americans pay their taxes properly and on time. However, those individuals and businesses who fail to pay what they legally owe contribute to a rising debt burden that our economy simply cannot sustain. They also force their fellow Americans who play by the rules to pay more in taxes to make up the difference. This bill takes the necessary steps to crack down on lawbreakers, which will lower costs for law-abiding Americans and, ultimately, help reduce our deficit. If you have any questions about these proposals, feel free to reach out to me or have your staff contact Chris Prendergast at (202) 224-3161. Attachments: Legislative Text and Section-By-Section Analysis of S. 1289

3) Strengthening Medicare and Medicaid Program Integrity Each year, Medicare and Medicaid lose tens of billions of dollars to waste, fraud and abuse. According to estimates prepared by the Department of Health and Human Services (HHS), the two programs together made an estimated $70 billion dollars in improper payments in fiscal year 2010. In addition, experts believe that these two vital programs will likely lose tens of billions of dollars in fraud each year. Without a doubt, waste and fraud from Medicare and Medicaid are a major drain on the federal budget. However, there are clear steps Congress can take to greatly reduce the amount of money lost each year to waste and fraud in Medicare and Medicaid. A number of those steps are included in bipartisan legislation I introduced with Sen. Coburn and others earlier this summer, The Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayers Dollars Act (S. 1251) or the FAST Act. Each of the FAST Act provisions aims to greatly enhance program integrity efforts underway at Medicare and Medicaid to prevent waste and fraud. Among its provisions, the legislation would: enact stronger penalties for Medicare and Medicaid fraud; establish stronger prevention strategies to help phase out the practice of pay and chase; curb the theft of physician and beneficiary identities; improve the sharing of fraud data across agencies; and deploy cutting-edge technology to better identify and prevent fraud.

This bipartisan bill does not make changes to coverage for beneficiaries or change medical service pricing. Because of its common-sense approach, the legislation has garnered support from 28 Senators from both parties as well as from a number of organizations including AARP, Citizens Against Government Waste, the National Taxpayers Union and Taxpayers for Common Sense. In fact, most of the provisions are based on findings and recommendations from the Government Accountability Office (GAO), the HHS Office of the Inspector General, and other trusted experts and stakeholders. Additionally, several of the provisions are Administration proposals that have not yet been enacted or implemented. I joined with Senator Coburn in sending an earlier letter to this Committee that provided additional details and background on the FAST Act. If you have any questions about these proposals, feel free to reach out to me or have your staff contact Peter Tyler at (202) 224-48707.

4) Eliminating and Recovering Improper Payments Although Congress and federal agencies have made some progress in curbing improper payments in recent years, we still need to take further action in improving transparency, efficiency and accountability. According to the most recent Office of Management and Budget (OMB) estimate, federal agencies made nearly $125 billion in improper payments in 2010. To address these improper payments, this summer I introduced bipartisan legislation, the Improper Payments Elimination and Recovery Improvement Act of 2011 (IPERA Improvement Act, Bill #), with Senator Collins and others to better prevent and recover improper payments. This legislation aims to build upon recent laws, including the improper payments law passed by Congress last year. The legislation expands requirements and strengthens estimates for agencies' improper payments, mandates the establishment of a government-wide "Do Not Pay List," and requires that Recovery Audit Contractor (RAC) pilot programs be implemented across federal agencies. Specifically, the legislation takes three major steps to prevent and recover improper payments:
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It would expand requirements for agencies, especially the Department of Defense (DOD), to strengthen the estimation of improper payments. The DOD inspector general noted that the Departments relatively low improper payments number - DOD reported around $1 billion in improper payments in 2010 - was likely due to very poor and superficial estimates. The legislation, for example, would prevent agencies from relying solely on voluntary disclosure of improper payments by contractors, while requiring agencies to produce documentation to prove a payment was correct. By contrast, the Medicare improper payments program already has adopted these standards and has achieved a much higher estimate of improper payments. It mandates the establishment of a government-wide "Do Not Pay List." Currently, OMB is moving forward with plans to establish a "Do Not Pay List" based on the White House executive memorandum, Memorandum on Enhancing Payment Accuracy Through a "Do Not Pay List." However, there is much ambiguity in the OMB plan, and there is no legislative mandate to proceed. The IPERA Improvement Act would change that. The legislation would also address some of the challenges of the "Do Not Pay List," such as the need for multilateral data sharing agreements, broader access to the New Hire Database, and development of a database of incarcerated persons. It requires Recovery Audit Contractor pilot programs at federal agencies. Despite the provisions of IPERA written to encourage RAC programs, there is little or no evidence that agencies outside of the Centers for Medicare and Medicaid Services have embraced this process to identify and recover improper payments. Legislation would require a number of pilot programs as a starting point for agencies to adopt RAC programs.

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5) Improving Federal Information Technology Management Federal agencies spend about $80 billion developing and maintaining information technology assets. Unfortunately, these assets are often so poorly managed that a significant portion of these expenditures are lost to waste and inefficiency. In fact, late last year, then-OMB Director Peter Orszag said that addressing the poor management of agencies information technology was the single-most important step we can take in creating a more efficient and productive government. Based on the information that OMB has released as a part of its reviews of federal information technology projects, I believe he may be correct. The documented failures of information technology management in the federal government have, in some cases, been spectacular. For example, GAO found in January of this year that the individuals running the National Archives Electronic Records Archive investment had not been able to identify potential cost and schedule problems early and, as a result, failed to take any actions to address them. GAO estimates that, because of these failures in just one troubled project, taxpayers will lose between $205 million and $405 million. As you develop the Joint Committees proposal, I would ask you to consider including the ideas laid out in S. 801, the Information Technology Investment Management Act, which I introduced this past spring with Senators Lieberman, Collins, and Scott Brown. S. 801 requires greater transparency with respect to the cost and performance of agencies information technology investments so that American taxpayers can see how their money is being spent. It also demands that agencies and OMB be held accountable for a projects failure and work either to fix them or end them. The legislation builds on many of the valuable management reforms instituted by former Federal Chief Information Officer Vivek Kundra. According to Mr. Kundra, because of reforms like those contained in S. 801, 12 over-budget and behind-schedule information technology projects were accelerated from two years to eight months, four projects were terminated, and 11 projects were reduced in their scope. This resulted in over $3 billion in savings for taxpayers. The enactment of S. 801, then, would be a positive step towards tackling the institutional failings that have plagued agencies information technology management for years now and has the potential to generate significant cost savings over time. If you have any questions about these proposals, feel free to reach out to me or have your staff contact John Collins at (202) 224-0512. Attachments: Legislative Text and Section-By-Section Analysis of S. 801

6) Improving Federal Agency Property Management and Disposal The federal government has many excess and underutilized properties that cost billions of dollars each year to maintain. In January 2003, GAO placed real property management on its list of high risk government activities. It remains on that list today. For nearly a decade, the federal government has taken steps to address some of these challenges and improve its management of federal real estate. In 2004, President Bush signed an executive order directing executive agencies to develop and use asset management plans to determine whether real property holdings were sufficient for, or in excess of, what is required to satisfactorily fulfill their operational missions. The executive order also established a Federal Real Property Council comprised of the OMB Controller and senior real property officers of all 24 landholding agencies. Through the Council, agencies have established asset management plans, standardized real property reporting, and adopted various performance measures to track progress. President Obama recently built on these efforts by issuing a June 2010 memorandum directing agencies to accelerate efforts to remove excess and surplus property and to achieve $3 billion in cost savings by the end of FY2012. These cost savings are to be derived from increased proceeds from the sale of assets and from reduced operating, maintenance, and energy expenses generated by property disposals or by other space consolidation efforts, including leases that are terminated. Unfortunately, despite these efforts, much work remains to be done. For example, in FY2009, 24 federal agencies reported that they possessed more than 14,000 excess and 45,000 underutilized buildings that cost more than $1.7 billion annually to operate. These assets have been acquired over a period of decades to help agencies fulfill their diverse missions. However, as agency programmatic needs have evolved over time, many of these assets are no longer needed. President Obamas FY2012 budget request included a proposal for the establishment of a civilian BRAC process to reduce the amount of unneeded property owned and leased by federal agencies. Similar to the DOD BRAC process, agencies would recommend properties for disposal or consolidation to an independent board, who would then submit a list of final recommendations to the OMB Director for review. These recommendations would ultimately be transmitted to Congress for an up or down vote. In addition to President Obamas proposal, I have developed what I believe is an effective legislative strategy that would address some of the problems with the current disposal process for federal property. My draft legislation includes six major provisions: 1. It would permanently establish a property management leadership structure within agencies and at OMB. This proposed structure is based on an executive order issued by President Bush in 2004. It involves the formal creation of a Federal Real Property Council to guide government-wide property management policies and the clarification of the roles OMB, the U.S. General Services Administration, and other agencies play in property management issues.

2. It would ensure that agencies senior real property officers have the knowledge, skills, and expertise needed to effectively perform their duties and be accountable for the reliability, usefulness, and timeliness of their real property data. 3. It would mandate that agencies take the steps necessary to effectively measure the performance of the property they possess and, where appropriate, dispose of property and make use of existing property before obtaining new property. 4. It would begin the process of evaluating and potentially ending costly leases by requiring agencies to provide annual data that on the amount of leased space in its inventory. In addition, agencies that have independent leasing authority would be required to submit leases and alterations to leased buildings for congressional approval when costs exceed a specific point. 5. It would require agencies to dispose of property determined to be surplus as of the date of enactment within five years. Properties could be sold, demolished, or disposed of in any other way as appropriate. Congress and the public would be kept up to date on disposal activity through a central web site. Agencies that do not comply with the five-year requirement for disposing of surplus property they possess would not be permitted to buy or lease new property unless they receive a waiver. 6. It would provide agencies with an incentive to sell property that can be sold by allowing them to maintain 25 percent of sale proceeds. Retained proceeds would be used for property management and disposal activities and must be used within a year. In fact, its my hope that these proceeds could be used to make these buildings more energy efficient and sustainable. Legislation I offered earlier this year, The Reducing Federal Energy Dollars Act (S. 963), gives agencies additional authorities and resources they need to do that. This would lower the buildings overall cost to taxpayers, creates good paying jobs here at home, and helps the environment. Remaining proceeds from sales and retained proceeds not used for property management and disposal activities within a year would go to the Treasury for deficit reduction. If you have any questions about these proposals, feel free to reach out to me or have your staff contact Velvet Johnson at (202) 224-6579. In sum, holding unneeded property carries a hidden opportunity cost due to both the lost revenues that would be gained from selling the property as well as the savings that could be incurred from no longer having to maintain the property. It is my belief that the proposals put forth are steps in the right direction for agencies to begin exploring opportunities to better utilize federal assets in a more efficient and cost-effective manner.

Attachments: Legislative Text and Section-By-Section Analysis of the draft bill and S. 963