Ask the Scholar

{
    "localId": "4520765",
    "label": "Postal Service",
    "core": "doc",
    "dtoType": "document",
    "citationUrl": "https://catalog.archives.gov/id/4520765"
}

{
    "id": "4520765",
    "sourceUrl": "https://catalog.archives.gov/id/4520765",
    "contentType": "document",
    "title": "Postal Service",
    "citationUrl": "https://catalog.archives.gov/id/4520765",
    "collections": [
        "Philip W. Buchen Files",
        "Philip Buchen's General Subject Files"
    ],
    "subjects": [
        "Conflict of interests",
        "Postal matters"
    ],
    "iiifBase": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0019/574067/Batch0002/38-0019-f-4520765.pdf",
    "thumbnailUrl": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0019/574067/Batch0002/38-0019-f-4520765.pdf",
    "largeImageUrl": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0019/574067/Batch0002/38-0019-f-4520765.pdf",
    "imageCount": 1,
    "hasImages": true,
    "source": "import",
    "hasTranscription": false
}

{
    "url": "https://catalog.archives.gov/id/4520765",
    "naId": 4520765,
    "coverageEndDate": {
        "logicalDate": "1976-04-01",
        "month": 4,
        "year": 1976
    },
    "coverageStartDate": {
        "logicalDate": "1974-09-01",
        "month": 9,
        "year": 1974
    },
    "levelOfDescription": "fileUnit",
    "recordType": "description",
    "ocrSource": "nara-archive"
}

{
    "seq": 1,
    "pageIndex": 0,
    "type": "document",
    "url": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0019/574067/Batch0002/38-0019-f-4520765.pdf",
    "mediaId": "bd0c167f14c4f0da",
    "ocrText": "The original documents are located in Box 43, folder \"Postal Service\" of the Philip Buchen\nFiles at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nSome items in this folder were not digitized because it contains copyrighted\nmaterials. Please contact the Gerald R. Ford Presidential Library for access to\nthese materials.\nMr. Buchen: Let's this. have something done about\nH.W.-Attorney.\n-\nnothi\nJack Anderson\nsonal\nHEW\nalso\nMilc\nHF\nFIRST CLASS MALE\n]\nCali\nWASHINGTON.\nService continues to decline. Unless\non\nPostmaster General Ted Klassen has\nCongress bails him out, the free-wheel-\nbuilt himself the most luxurious office\nIng postmaster will ask for another\nP\n$\nin Washington with taxpayer funds,\nrate hike soon. It may cost 13 cents to\nbut regularly leaves it for personal\nmail a letter and help underwrite Ted\njunkets, also courtesy of Uncle Sam.\nKlassen's royal way of life.\nThe impulsive Klassen, who has just\nwarned that the price of a stamp is\nHealth, Education and Welfare Secre-.\ngoing up again, spent $12,870 on 32\ntary Caspar Weinberger permitted the\nCh\ntrips to 18-cities in 1973, a travel record\nIniversity of California to keep $50\nby a\nthat almost puts him in a class with\nmillion in federal contracts despite ad-\npaigr\nSecretary of State Kissinger.\nvice\nDigitized from Box 43 of the Philip Buchen Files\nat the Gerald R. Ford Presidential Library\nTHE WHITE HOUSE\nWASHINGTON\nSecGroff\nabout these\nA\nGistin file SERVICE\" RALO FORD LIBRARY\nre \"Postal\nTHE WHITE HOUSE\nWASHINGTON\nSeptember 5, 1974\nMEMORANDUM FOR:\nPHILLIP BUCHEN\nSUBJECT:\nProposed Presidential Meeting with\nthe Postmaster General\nThe Postmaster General, E. T. Klassen, and the Chairman of the Board of\nthe Postal Service, Frederick R. Kappel, have requested a meeting with\nthe President. The purpose of the meeting is to discuss inflationary prob-\nlems confronting the Postal Service that have created a deficit and a need\nfor a rate increase to meet costs. This issue is important and it would be\ndesirable for the President to discuss it and other postal matters with them.\nRecent allegations by Jack Anderson in the \"Washington Post\" about the\nmisconduct of Mr. Klassen make it desirable to obtain your opinion on the\nadvisability of such a meeting. Briefly, Anderson makes the following claims:\n(1) Klassen was involved in a conflict of interest and a violation of the law\nwhen he accepted approximately $20, 000 in fees from a client whom he\naided while a member of the Postal Board of Governors. (2) Under Klassen,\nthe Postal Service filled many jobs as political favors. (3) Klassen misused\nfunds by lavishly furnishing his office and by taking trips on Postal Service\nfunds to visit his properties. (4) The Postal Service slowed service in 1972\nto aid the Nixon Campaign. (5) Klassen is under investigation by the FBI\nfor these activities.\nI have attached copies of the most recent articles to give you a flavor of\ntheir content. OMB has commented regarding the $302, 200 for furnishing\nthe Executive Office suites, and the $528, 360 to outfit the Board of Directors\noffices and conference rooms and the $12, 870 in Klassen's traveling expenses\nin 1973, that there appears to be no illegal activity involved, although one\ncould conclude that these activities might be done less expensively. A GAO\nreport to Congressman H. R. Gross, on this matter, dated December 16, 1973,\nreported that the office procurements and the travel expenses appeared valid,\nbut implied in the case of the furnishings that more competitive bid purchases\nmight have been used.\nFORD\nLIBRARY\n-2-\nI would appreciate your feelings on this matter as soon as possible. It is\nimportant that the President become aware of the problems besetting the\nPostal Service and unless there are reasons to the contrary, Klassen and\nKappel should be the individuals to brief the President. The Postmaster\nGeneral is not a Presidential appointee; he is appointed by the Board of\nGovernors of the Postal Service, who are appointed for nine year terms\nby the President with Senate confirmation.\nis Ly {\nF. Lynn May\nAttachments:\n1.\nSchedule Proposal re: above\n2.\nSix Jack Anderson's articles from the \"Washington Post\"\nLIBRARY GERALD R. FORD\nSCHEDULE PROPOSAL\nDATE:\nSeptember 3, 1974\nFROM:\nGeoff Shepard\nVIA:\nWarren Rustand\nMEETING:\nWith E.T. Klassen, Postmaster General of the\nUnited States and Frederick R. Kappel, Chairman of\nthe Board of Governors of the U.S. Postal Service\nDATE:\nOpen (Mr. Kappel will be in D. C. on September 10\non Postal Service business)\nPURPOSE:\nTo discuss problems of the U.S. Postal Service in-\ncluding current performance, economic factors, labor\ncontracts and future appointment to the Board of\nGovernors\nFORMAT:\n-Oval Office\n-Participants: E.T. Klassen, Frederick R. Kappel and\nBenjamin F. Bailar, Senior Assistant Postmaster\nGeneral\nSPEECH\nBackground material and talking points regarding the\nMATERIAL:\nPostal Service will be supplied by the Domestic Council\nStaff\nSTAFF:\nF. Lynn May\nRECOMMEND:\nKen Cole\nBACKGROUND:\nSince the post office reorganization in 1971, it has been\nstrongly criticized as unresponsive to Congress and the\nneeds of the American people. The Service was intended\nas a semi-independent corporation to place the post office\non a paying rather than a deficit basis. Inflated fuel and\nlabor costs plus customer resistance to mechanization\nand re-routing have hurt the attempts to balance the books.\nKlassen has also figured in allegations in Jack Anderson's\ncolumns.\nThe Postmaster General is not a Presidential appointee;\nhe is appointed by the Board of Governors of the Postal\nService, who are appointed for nine year terms by the\nPresident with Senate confirmation.\nAPPROVE\nDISAPPROVE\nulz\nThe Washington Merry-Go-Round\nTHE WASHINGTON POST\nSaturday, June 8, 1974\nE59\nPostmaster Manages to Balk Critics\nBy Jack Anderson\nOne House committee mem-\nmeaningless letter warning\nPercy charged, often \"are nei\nSCHULZ\nber, Rep. Charles Wilson (D-\nKlassen that his patience \"has\nther professionally qualifiet\nIn a series of columns, we\nCalif.), wanted help in his pri-\nworn thin.\" That was six months\nnor adequately equipped to di\nhave carefully documented how\nmary election campaign. Sud-\nago; yet Dulski's patience still\nagnose and treat acute ear dis\nPostmaster General Ted Klas-\ndenly, the Postmaster General\nhasn't been exacerbated.\norders.\"\nsen has lavished himself with\nturned up in the unlikely town\nrs\nElsewhere, officials of the\nthe appurtenances of power,\nof Lynwood, Calif., which had\nWashington whirl-The pres\nAmerican Postal Workers Un-\ndoled out jobs and contracts to\njust been added to Wilson's con-\ntigious, nonprofit Population\nion, citing our columns, have\nhis cronies and put politics\ngressional district.\nReference Bureau, which co-\ncalled for Klassen's removal.\nahead of delivering the mail.\nAlthough Klassen is a Repub-\nined the term \"population ex\nFootnote: Congressman Wil-\nHe has managed to get away\nlican and Wilson a Democrat,\nplosion,\" is short $85,000. The\nson denied that Klassen to\n3\nwith these abuses by intensely\nlz\nThe Washington Merry-Go-Round\nTHE WASHINGTON POST\nThursday, June 20, 1974\nF7\nKlassen Paid by Firm He Aided\nBy Jack Anderson\nInstead, we have exposed a\nstructed personal aides to make\nrecord of misspending and mis-\nHouse hatchetman Charles Col-\nout the paperwork that would\nmanagement. Klassen cut back\nson, acknowledging they would\nPostmaster General Ted Klas-\njustify the deal. Then he tried to\npostal workers and slowed\nhave had difficulty convicting\nsen has collected several thou-\nhide the transaction by entrust-\nsand dollars in secret fees from\ndown the mails during the 1972\ning the Segal file to a loyal aide\nhim. The likelihood, therefore,\nelection campaign, we reported,\nis that he will get a light sen-\na firm doing business with the\nwho kept it under lock and key.\ntence\nin order to avoid raising postal\nWashington skeptics\nPostal Service.\n(We got hold of the\nlz\nThe Washington Merry-Go-Round\nTHE WASHINGTON POST\nFriday, July 5, 1974\nF15\nPostmaster's High Life Not Denied\nBy Jack Anderson\na no-parking zone, the car's en-\nmoney but denies only that it\ntheir sails, however, when we\ndiscovered that Klassen's per-\nIn response to our investiga-\ngine idling to power the air con-\nwas secret\nditioner. When the Klassens\nNo one on the board of gover-\nsonal friends had also received\ntive series on postal abuses, the\nemerged triumphantly with the\nnors knew Klassen had taken a\nstamp albums.\npostal authorities have been\nfee from a postal contractor. We\nThe postal poobahs labeled\nfencing with the facts. They\ncurtain rods, the chauffeur pop-\ninterviewed people at the high-\nfalse our charge that the mails\nhave put on a dazzling display of\nped out, deposited the curtain\ndrove\noff\nest levels of the Postal Service;\nare moving slower now than\nThey\nThe Washington Merry-Go-Round\nTHE WASHINGTON POST Thursday, July 25, 1974\nF 19\nAllegations Against Klassen Probed\nJustice Department to deter-\nleft leg had resolved itself and\nment to protect personnel\nBy Jack Anderson\nmine whether these activities\nthat the President was \"fine.\"\nagainstfirearms.\nThe FBI is now investigating\nThis was contradicted later by\nOur report was echoed a\nwere illegal or merely im-\nour allegations against Post- proper.\nboth the President's physician,\nmonth later by Sen. Henry\nmaster General Ted Klassen.\nDr. Walter Tkach, and staff\nJackson (D-Wash.). Ziegler im-\nZiegler's Lies-Despite all the\nWe have reported that Klas-\nWatergate lies that have back-\nchief, Gen. Alexander M. Haig,\nmediately denied it. He had\nacknowledged\nthat\nthe\nspent an entire morning, he\nThe Washington Merry-Go-Round\nTHE WASHINGTON POST Tuesday, August 13, 1974 B13\nComplaints on Klassen's Style Rise\nBy Jack Anderson\nPlaza, however, he is continuing\n$5,748, a $1,141 conference table\nmillion to bring the new postal\nThe clamor last week for\nunabashedly to live in the high\nand a $194.50 telephone table.\nheadquarters up to Klassen's\nRichard Nixon to evacuate the\nstyle we have described in pre-\nHis carpet cost the taxpayers\nstandards.\nWhite House was accompanied\nvious columns.\n$11,666 and the draperies came\nBecause the building was pur-\nby a more modest demand that\nHis latest extravagance is a\nto $5,999. Not far away is a pan-\nchased \"as is,\" all repairs must\nTed Klassen leave the Postal\ncarpeted and paneled stairwell\ntry, which cost the taxpayers an-\nbe paid by the Postal Service.\nService.\nfor his rare walks between the\nother $5,280.\nAlready, $357,500 has been laid\nout for additional architectural\nthe food from the\nwork\nNow\na\nThe Washington Merry-Go-Round\nTHE WASHINGTON POST Friday, August 30,1974 D19\nKlassen Is Well- Traveled Postmaster\nBy Jack Anderson\nonly one other local postal offi-\nnot be cancelled as is pre-\ncial, while be journeyed eight\nSociety campaign. What is sur\nPostmaster General Ted Klas-\nscribed by law for those who\ntimes to or near his far flung\ndiscriminate.\nprising is that Church's Repub-\nsen has built himself the most\nproperties.\nlican opponent Bob Smith has\ninxurious office in Washington\nBut Weinberger's general\nEven Klassen's wife gets in on\ncounsel, John Rhinelander\nnot condemned the Birchers'\nwith taxpayer funds, but regu-\nthe act. The Postal Service\nsmear.\nlarly leaves it for personal jun-\nbucked the memo back to Miles,\npicked up a $340 tab when she\nAs many as 100,000 reprints of\nkets, also courtesy of Uncle\nscrawling on it, \"Either hold or\nwas the guest of honor at the Na-\ndestroy.\" Instead, it was slipped\na Birch Society article are being\nSam.\ntional Association of Postmas-\ncirculated in an effort to dis-\nThe impulsive Klassen, who\nout of the files and into our\nters convention in Salt Lake\nhands.\ncredit Church on Vietnam. The\nhas just warned that the price of\nCity.\nright-wing circular quotes\nWhen we reached Rhinelan-\na stamp is going up again, spenti\nMeanwhile. the postal service\nChurch as saying that America's\nder, he insisted that\n$12,370 on 32 trips to 18 cities in\nis\ngood\nhyplemating.\nCAO has looks 145\nto\nhas\n11141\nwould\nconluct\nthis have been done\nleo eyp easined\n>.\nof\nel\nof\nHECHINGEB\nv6b 10ds.]\nгэзітą gnivs2-y9nom Is smgti qu-ns9lo gnivs2-10dsJ\nS:HEP:EW:jp\n23-66\nT. 8/19/74\n8/28/74\nHonorable Donald C. Alexander\nCommissioner\nInternal Revenue Service\nWashington, D. C. 20530\nDear Mr. Alexander:\nAs you know the Department recently conducted an internal\nstudy of the effectiveness of the Federal Organized Crime Strike\nFoces and the questions of whether or not they should be retained in\ntheir present form. That study was completed recently with a recomenda-\ntion that Strike Force activity be retained in its present: form.\nI have reviewed this report and have adopted its findings and\nconclusions as by am. I advise you of this first of all so that you may\nprovide for support of the Strike Forces for the foresecable future in\nyour internal planning.\nOne of the recomendations of the reviewing cosmittee was that\neven greater agency participation be encouraged. In this connection I\nhave been informed that you have taken certain actions which have had the\neffect of decreasing the participation of the Internal Revenue Service in\nthe organized crime drive.\nThe steps I refer to are:\n1. The resoval of audit representatives from all the\nstrike forces. As you know these agents with\nexpertise in accounting have served as liaison between\nthe strike force and the accountants in the audit\ndivision of the District. This lisison has been\ninvaluable in the past in translating the accountants\nart to the attorneya on the strike force and in keeping\nthe Audit Division informed of Strike force intelligence\nwhich he considers to be of importance to the accountants\nRECORDS\nin the District.\nWNCH\nNERSEN\nThis loss of easy communication between accountant and\nTYCE\nlawyer is no longer available and must be conducted by\nTL\na special agent who may have no accounting background.\nTRICE CHRON\nFORD\nSIMON\nBERALD\nLIBRARY\n-2-\n2. The placing of a ceiling on the man hours applied to\nall special enforcement programs including the strike\nforce program to not more than that applied to the\nprogram during fiscal year 1973. As you know the\npercentage of direct investigative time for the Intelligence\nDivision, devoted to strike force work has diminished from\n22.2% in fiscal 1972 to 15.7% in fiscal 1974. This decrease\nin the amount of direct investigative time has been continued\nby the Service program letter of July 15, 1974. This letter,\nsetting out the manpower Limitations for fiscal year 1975\nlimits the man years in the strike force program to the\nlevel of fiscal year 1974. This curtailment of the investi-\ngative time is a very apparent withdrawal of manpower from\nthe strike force program. The morale of the agents in the\nstrike force program and their enthusiasm for the program\nis severely lowered by the diminution of effort on the part\nof the Service. This loss of enthusiasm is a severe blow to\nthe entire strike force effort.\nI am informed that these actions on your part, (taken without\nconsultation with those vested by Executive Order with responsibility for\nthe coordination of the efforts of the executive branch in the fight\nagainst organized crime) has caused severe morale problems, not only in\nthe Internal Revenue Service but in the entire strike force effort.\nI find the results of your action to be very distressing and\nhereby request that you reverse the actions you have taken and in\naddition that you give consideration to what further actions can be taken\nby you to increase the impact of the Service in the fight against organized\ncrime.\nI have this day written to the Secretary of the Treasury\nenclosing a copy of this äetter to you.\nSincerely,\nWILLIAM B. SAXBE\nThe Attorney General\nenclosure\n4\nFORD\nGERALD\nLIBRARY\n8/28/74\nHonorable William E. Simon\nSecretary of the Treasury\nUnited States Treasury\nWashington, D. C.\nDear Mr. Simon:\nAs you know the Department recently conducted\nan internal study of the effectiveness of the Federal\nOrganized Crime Strike Forces and the questions of whether\nor not they should be retained in their present form. That\nstudy was completed recently with a recommendation that\nStrike Force activity be retained in its present form.\nI have reviewed this report and have adopted its\nfindings and conclusions as my own. I advise you of this\nfirst of all so that you may provide for support of the\nStrike Forces for the foreseeable future in your internal\nplanning.\nOne of the recommendations of the reviewing\ncommittee was that even greater agency participation be\nencouraged. In this connection I feel compelled to call\nto your attention a situation which I consider to be very\ndisturbing. This is the apparent lessening of the commitment\nof the Internal Revenue Service to the effort against\norganized crime. I am enclosing a copy of my letter to\nCommissioner Alexander where I request that he halt and\nreverse this lessening of the commitment of the Service.\nI consider this situation to be particularly\ndisheartening in view of the impressive contributions\nmade by the other Treasury agencies to the strike force\neffort and the very impressive contributions made by the\nService in the past.\nLIBRARY GERALD R. FORD\n-2-\nI respectfully request that you take such\nactions as are necessary to increase the effectiveness of\nthe contributions of the Service in the Organized Crime Drive,\neffort. thereby carrying out the Administrations commitment to the\nSincerely,\nWILLIAM B. SAXBE\nThe Attorney General\nenclosure\nBERAHD & FORD 1441\nTHE WHITE HOUSE\nfile\nWASHINGTON\nDate 9/27/74\nTO: Ja,French\nFROM: DUDLEY CHAPMAN\nI told LynnMay That\nphil covidn't focus on\nThis that my proforrace #3 FORD\nis to recemmed\nGERAL\nLIBRARY\nI should this to Ken Lazarrs\nt he agrees. of you do to you\nmilet call Lynn may as 8 told\nhim I cauld In phil.\nTHE WHITE HOUSE\nWASHINGTON\n09/27/74\nTO:\nPHIL BUCHEN\nFROM: LYNN MAY 11th\nFYI\nCOMMENT Please\nlet me know your recommendations\nby tomorrow if possible. My\nphone # is 6437. Thank you.\nFORD LIBRARY 07V839\nDRAFT\nTHE WHITE HOUSE\nWASHINGTON\nSeptember 24, 1974\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nKEN COLE\nSUBJECT:\nPostal Subsidies\nBACKGROUND\nOn June 30, 1974, President Nixon signed into law S. 411, which extends\nFederal subsidies for several classes of mail, including second class\nmail which encompasses magazine and newspapers. The bill requires\nthe President to include in his budget, without revision, the full subsidy\nauthorized by law. The bill, strongly pushed by the magazine lobby,\nreceived bi-partisan support from the Congress, including Senators\nKennedy and McGee. The vote was 277 - 129 in the House and 71 - 11 in\nthe Senate.\nOMB has not requested a $44 million supplemental from Congress, which\nwould be necessary to fund the subsidies, because OMB feels it would\nnot meet the urgency criteria for supplementals established between Roy\nAsh and yourself in August. OMB concludes that while the legislation\nrequires the inclusion of the subsidy in the FY 76 budget (approximately\n$94 million), it does not mandate payment of a subsidy this year. The\nquestion of a supplemental was not dealt with in the Enrolled Bill Memo\non S. 411 or in the opinion papers submitted by the agencies.\nThe Postal Service recently submitted a request to OMB for a $44 million\nsupplemental to cover FY 75. It claims that it will have to increase its\npostage rates in November to match the resulting loss of funds if the\nsupplemental is not forthcoming. Members of the Administration and\nCongress have begun to receive phone calls from Mel Laird, John Byrnes\nand others representing the magazine industry pressing for a supplemental\nrequest.\nThe Postal Service has indicated that it will recommend a major rate\nincrease next year to meet the anticipated $500 million deficit incurred\nthis year. This will likely include the raising of a first class stamp\n:\nFOND\nGERALD\nLIBRARY\n-2-\nfrom 10¢ to 12¢ or 13¢ and will likely swell the steady criticism of the\nPostal Service, increasing the pressure on Congress to vote additional\nsubsidies or perhaps curtail the independent status of the Postal\nService.\nThe Senate Appropriations Committee has agreed to hold open the\nomnibus supplemental legislation until October 2 to allow the Admin-\nistration to determine whether or not it wants to request a supple-\nmental.\nOPTIONS\n1.\nForward a supplemental request to Congress\n2. Do not ask for a supplemental, but let Congress deter-\nmine on its own whether or not to appropriate the $44\nmillion.\n3. Do not ask for a supplemental and indicate that any\nsuch supplemental will be actively opposed because\nof its budgetary impact.\nRECOMMENDATIONS\nTHE WHITE HOUSE\nWASHINGTON\nBiue Nichalson\nRustand's ofc\nCalled 1230\n11/7\nLISRATE GERALD ? FORD\nTHE WHITE HOUSE\nWASHINGTON\nPhil A:\nWould appreciate\nyour comments\nP.\nOK to ]\njust\nkidsion. urist\nJBovin\nScatt Ant NUSAPY p6 backgood , poper fre.\nScott will. paper\nQERALO FORD FIBRARA\nTHE WHITE HOUSE\nWASHINGTON\nOctober 31, 1974\nMEMORANDUM FOR PHIL BUCHEN\nSUBJECT:\nProposed Presidential Meeting with the\nPostmaster General\nAttached are copies of two memorandums which give the background\nof the proposed meeting. When I first approached you on this matter\nin early September, you felt it would not be best for the President to\nmeet with Postmaster General Klassen at that time and suggested\nthat he meet with Dean Burch instead. This meeting took place but\ndid not satisfy Klassen's desire to brief the President.\nSince that time, I have met with Wally Scott and representatives of\nthe White House Personnel Office who are responsible for appointments\nto the Postal Board of Governors and the Postal Rate Commission.\nThe meeting established a mutual agreement to exchange information\nof the Postal Service and to consult with one another on any problems\narising with the Postal Service.\nBoth OMB and the White House Personnel Office felt there were advan-\ntages to be gained as a quid pro quo in setting up a meeting between\nKlassen and the President in the area of tightening up Postal Service\nmanagement procedures and appointment procedures. They also ex-\npressed the fear that when a major rate increase goes into effect next\nyear or if a postal strike takes place, the Postmaster General can\ndeflect criticism by claiming that he tried to inform the President of\nthe Postal Service's difficulties but was denied an interview.\nGranted that Jack Anderson has continued to sporadically attack Klassen,\nFORD LIBRARY\nthere seems to be positive reasons for a meeting between the President\nand Klassen. Do you still feel that the meeting should be postponed?\nD Lynn my\nF. Lynn May\nAttachment\nSeptember 12, 1974\nMEMORANDUM FOR:\nDEAN BURCH\nSUBJECT:\nProposed Presidential Meeting with\nthe Postmaster General\nPURPOSE\nThe Postmaster General, E.T. Klassen and Frederick R. Kappel, Chair-\nman of the Board of the U.S. Postal Service have requested a meeting\nwith the President to discuss the current deficit in the Postal Service,\napproximating $500 million this year. Mr. Klassen claims that the short-\nfall is a result of unexpected inflationary factors like increased fuel costs,\nmaterial shortages and cost-of-living salary increases. He believes that\nit will be necessary to request the Postal Rate Commission for a raise in\npostal rates to pay for these deficits, asking for a 2$ or 3¢ increase in the\nprice of a first class stamp. The alternative to this would be increased\ngovernment subsidies which would further hamper efforts by the Postal\nService to become self sufficient but would be a course favored by magazine\npublishers and similar businesses.\nKlassen and Kappel also wish to discuss appointments to the Board of\nGovernors, who are nominated by the President and confirmed by the FORD\nSenate. Klassen stated that Congressional criticism of a do-nothing Board\nchosen on the basis of political cronyism is justified in some instannes. at\nLIBRARY\nBACKGROUND\nThe Postal Service has suffered severe setbacks in its drive to become a\npaying operation due to inflation. Personnel costs which make up 85% of\nthe Service's budget have jumped because of automatic cost-of-living con-\ntract clauses. The Service is also facing major contract negotiations\nwithin a year that will add greatly to these costs. A rate increase appears\nto be a better choice in returning the Postal Service to a balanced budget\nthan a subsidy. The rate increase will come about without Executive\nBranch action when the Postal Rate Commission recommends changes to\n-C-\nthe Board of Governors. This action may spark Congress to vote aditional\nsubsidies to the Postal Service in lieu of the rate increase. This would\nviolate the principle of the Postal Reorganization Act to make the Postal\nService a paying operation and would place an additional burden on the\ngovernment budget.\nThe Board of Governors, who serve nine year terms, is comprised of\nnine members nominated by the Senate plus a Postmaster General and his\nDeputy, who are appointed by the Board. The current Board is comprised\nof nominally qualified men but whose average age is quite high. Some\ncritics have speculated that the age of the Board and the distance some\nhave to travel have encouraged absenteeism and made it possible for the\nPostmaster General to dominate the Board. One vacancy now exists due\nto a recent resignation and Kappels' term ends in December. The White\nHouse personnel staff is currently opposed to Kappels' reappointment\nbecause of his age (72) and questionable merit.\nRecently Klassen has been the subject of allegations by Jack Anderson,\nsummaraized as follows:\n(1)\nKlassen was involved in a conflict of interest and a violation of\nthe law when he accepted approximately $20,000 in fees from\na client whom he aided while a member of the Postal Board of\nGovernors.\n(2)\nUnder Klassen, the Postal Service filled many jobs as political\nfavors.\n(3)\nKlassen misused funds by lavishly furnishing his office and by\ntaking trips on Postal Service funds to visit his properties.\n(4)\nThe Postal Service slowed service in 1972 to aid the Nixon\ncampaign.\n(5)\nKlassen is under investigation by the FBI for these activities.\nGERAL\nLIBRARY\nSo far GAO has suggested no illegality in the matter.\nPhil Buchen has requested that you meet with Klassen and Kappel, or\nKlassen alone, to further determine their motives in meeting the President.\nKlassen is the logical choice to brief the President on the rate question,\nwhich might have a heavy political impact. It would not be in the Presidents'\ninterest, however, to appear to reinforce Klassen's position in the light\nof allegations against him or to assent to any spot agreement on appoint-\nments to the Board of Governors.\nIf you need any additional information please let me know.\nF. Lynn May\nFORD : 034870 LIBRARY\nTHE WHITE HOUSE\nWASHINGTON\nSeptember 5, 1974\nMEMORANDUM FOR:\nPHILLIP BUCHEN\nSUBJECT:\nProposed Presidential Meeting with\nthe Postmaster General\nThe Postmaster General, E. T. Klassen, and the Chairman of the Board of\nthe Postal Service, Frederick R. Kappel, have requested a meeting with\nthe President. The purpose of the meeting is to discuss inflationary prob-\nlems confronting the Postal Service that have created a deficit and a need\nfor a rate increase to meet costs. This issue is important and it would be\ndesirable for the President to discuss it and other postal matters with them.\nRecent allegations by Jack Anderson in the \"Washington Post\" about the\nmisconduct of Mr. Klassen make it desirable to obtain your opinion on the\nadvisability of such a meeting. Briefly, Anderson makes the following claims:\n(1) Klassen was involved in a conflict of interest and a violation of the law\nwhen he accepted approximately $20, 000 in fees from a client whom he\naided while a member of the Postal Board of Governors. (2) Under Klassen,\nthe Postal Service filled many jobs as political favors. (3) Klassen misused\nfunds by lavishly furnishing his office and by taking trips on Postal Service\nfunds to visit his properties. (4) The Postal Service slowed service in 1972\nto aid the Nixon Campaign. (5) Klassen is under investigation by the FBI\nfor these activities.\nI have attached copies of the most recent articles to give you a flavor of\ntheir content. OMB has commented regarding the $302, 200 for furnishing\nthe Executive Office suites, and the $528, 360 to outfit the Board of Directors\noffices and conference rooms and the $12, 870 in Klassen's traveling expenses\nin 1973, that there appears to be no illegal activity involved, although one\ncould conclude that these activities might be done less expensively.\nA\nCAO\nreport to Congressman H. R. Gross, on this matter, dated December16, 1973,\nreported that the office procurements and the travel expenses appeared valid\nbut implied in the case of the furnishings that more competitive bid purchases\nmight have been used.\n-2-\nI would appreciate your feelings on this matter as soon as possible. It is\nimportant that the President become aware of the problems besetting the\nPostal Service and unless there are reasons to the contrary, Klassen and\nKappel should be the individuals to brief the President. The Postmaster\nGeneral is not a Presidential appointee; he is appointed by the Board of\nGovernors of the Postal Service, who are appointed for nine year terms\nby the President with Senate confirmation.\nF. Lynn May\nAttachments:\n1.\nSchedule Proposal re: above\n2.\nSix Jack Anderson's articles from the \"Washington Post\"\nas\nFORD\nGERALD\nTHE WHITE HOUSE\nWASHINGTON\nOctober 31, 1974\nMEMORANDUM FOR PHIL BUCHEN\nSUBJECT:\nProposed Presidential Meeting with the\nPostmaster General\nAttached are copies of two memorandums which give the background\nof the proposed meeting. When I first approached you on this matter\nin early September, you felt it would not be best for the President to\nmeet with Postmaster General Klassen at that time and suggested\nthat he meet with Dean Burch instead. This meeting took place but\ndid not satisfy Klassen's desire to brief the President.\nSince that time, I have met with Wally Scott and representatives of\nthe White House Personnel Office who are responsible for appointments\nto the Postal Board of Governors and the Postal Rate Commission.\nThe meeting established a mutual agreement to exchange information\nof the Postal Service and to consult with one another on any problems\narising with the Postal Service.\nBoth OMB and the White House Personnel Office felt there were advan-\ntages to be gained as a quid pro quo in setting up a meeting between\nKlassen and the President in the area of tightening up Postal Service\nmanagement procedures and appointment procedures. They also ex-\npressed the fear that when a major rate increase goes into effect next\nyear or if a postal strike takes place, the Postmaster General can\ndeflect criticism by claiming that he tried to inform the President of\nthe Postal Service's difficulties but was denied an interview.\nGranted that Jack Anderson has continued to sporadically attack Klassen, B.\nFORD\nthere seems to be positive reasons for a meeting between the President\nand Klassen. Do you still feel that the meeting should be postponed?\nof Lynn mg\nF. Lynn May\nAttachment\nSeptember 12, 1974\nMEMORANDUM FOR:\nDEAN BURCH\nSUBJECT:\nProposed Presidential Meeting with\nthe Postmaster General\nPURPOSE\nThe Postmaster General, E.T. Klassen and Frederick R. Kappel, Chair-\nman of the Board of the U.S. Postal Service have requested a meeting\nwith the President to discuss the current deficit in the Postal Service,\napproximating $500 million this year. Mr. Klassen claims that the short-\nfall is a result of unexpected inflationary factors like increased fuel costs,\nmaterial shortages and cost-of-living salary increases. He believes that\nit will be necessary to request the Postal Rate Commission for a raise in\npostal rates to pay for these deficits, asking for a 2$ or 3¢ increase in the\nprice of a first class stamp. The ålternative to this would be increased\ngovernment subsidies which would further hamper efforts by the Postal\npublishers and similar businesses.\nService to become self sufficient but would be a course favored by magazine\nKlassen and Kappel also wish to discuss appointments to the Board of\nGovernors, who are nominated by the President and confirmed by the\nSenate. Klassen stated that Congressional criticism of a do-nothing board\nchosen on the basis of political cronyism is justified in some instances.\nBACKGROUND\npaying operation due to inflation. Personnel costs which make up 85% of a\nThe Postal Service has suffered severe setbacks in its drive to become FORD\nthe Service's budget have jumped because of automatic cost-of-living con-\ntract clauses. The Service is also facing major contract negotiation.\nLIBRARY\nwithin a year that will add greatly to these costs. A rate increase appears\nto be a better choice in returning the Postal Service to a balanced budget\nthan a subsidy. The rate increase will come about without Executive\nBranch action when the Postal Rate Commission recommends changes to\nthe Board of Governors. This action may spark Congress to vote aditional\nsubsidies to the Postal Service in lieu of the reae increase. This would\nviolate the principle of the Postal Reorganization Act to make the Postal\nService a paying operation and would place an additional burden on the\ngovernment budget.\nThe Board of Governors, who serve nine year terms, is comprised of\nnine members nominated by the Senate plus a Postmaster General and his\nDeputy, who are appointed by the Board. The current Board is comprised\nof nominally qualified men but whose average age is quite high. Some\ncritics have speculated that the age of the Board and the distance some\nhave to travel have encouraged absenteeism and made it possible for the\nPostmaster General to dominate the Board. One vacancy now exists due\nto a recent resignation and Kappels' term ends in December. The White\nHouse personnel staff is currently opposed to Kappels' reappointment\nbecause of his age (72) and questionable merit.\nRecently Klassen has been the subject of allegations by Jack Anderson,\nsummaraized as follows:\n(1)\nKlassen was involved in a conflict of interest and a violation of\nthe law when he accepted approximately $20, 000 in fees from\na client whom he aided while a member of the Postal Board of\nGovernors.\n(2)\nUnder Klassen, the Postal Service filled many jobs as political\nfavors.\n(3)\nKlassen misused funds by lavishly furnishing his office and by\ntaking trips on Postal Service funds to visit his properties.\n(4)\nThe Postal Service slowed service in 1972 to aid the Nixon\ncampaign.\n(5)\nKlassen is under investigation by the FBI for these activities,\nSo far GAO has suggested no illegality in the matter.\nPhil Buchen has requested that you meet with Klassen and Kappel, or\nKlassen alone, to further determine their motives in meeting the President.\nKlassen is the logical choice to brief the President on the rate question,\nLIBRARY\nwhich might have a heavy political impact. It would not be in the Presidents'\ninterest, however, to appear to reinforce Klassen's position in the light\nof allegations against him or to assent to any spot agreement on appoint-\nments to the Board of Governors.\nIf you need any additional information please let me know.\nF. Lynn May\nLIBRARY GERALD 2007\nTHE WHITE HOUSE\nWASHINGTON\nSeptember 5, 1974\nMEMORANDUM FOR:\nPHILLIP BUCHEN\nSUBJECT:\nProposed Presidential Meeting with\nthe Postmaster General\nThe Postmaster General, E. T. Klassen, and the Chairman of the Board of\nthe Postal Service, Frederick R. Kappel, have requested a meeting with\nthe President. The purpose of the meeting is to discuss inflationary prob-\nlems confronting the Postal Service that have created a deficit and a need\nfor a rate increase to meet costs. This issue is important and it would be\ndesirable for the President to discuss it and other postal matters with them.\nRecent allegations by Jack Anderson in the \"Washington Post\" about the\nmisconduct of Mr. Klassen make it desirable to obtain your opinion on the\nadvisability of such a meeting. Briefly, Anderson makes the following claims:\n(1) Klassen was involved in a conflict of interest and a violation of the law\nwhen he accepted approximately $20, 000 in fees from a client whom he\naided while a member of the Postal Board of Governors. (2) Under Klassen,\nthe Postal Service filled many jobs as political favors. (3) Klassen misused\nfunds by lavishly furnishing his office and by taking trips on Postal Service\nfunds to visit his properties. (4) The Postal Service slowed service in 1972\nto aid the Nixon Campaign. (5) Klassen is under investigation by the FBI\nfor these activities.\nI have attached copies of the most recent articles to give you a flavor of\ntheir content. OMB has commented regarding the $302, 200 for furnishing\nthe Executive Office suites, and the $528, 360 to outfit the Board of Directors\noffices and conference rooms and the $12, 870 in Klassen's traveling expenses\nin 1973, that there appears to be no illegal activity involved, although one\ncould conclude that these activities might be done less expensively. A GAO\nreport to Congressman H. R. Gross, on this matter, dated December 16, 1973,\nreported that the office procurements and the travel expenses appeared valid,\nbut implied in the case of the furnishings that more competitive bid purchases\nmight have been used.\n=\nFORD\nGERALD\nLIBRAR\n-2-\nI would appreciate your feelings on this matter as soon as possible. It is\nimportant that the President become aware of the problems besetting the\nPostal Service and unless there are reasons to the contrary, Klassen and\nKappel should be the individuals to brief the President. The Postmaster\nGeneral is not a Presidential appointee; he is appointed by the Board of\nGovernors of the Postal Service, who are appointed for nine year terms\nby the President with Senate confirmation.\nF. Lynn May\nAttachments:\n1.\nSchedule Proposal re: above\n2.\nSix Jack Anderson's articles from the \"Washington Post\"\nGERALD ? GROA\nPostal\nThursday 11/14/74\n9:20 Lynn May's office called re the proposed meeting with\n6437\nthe Postmaster General.\n(Marilyn)\nIndicated Mr. Lynn May had sent a memo on October 31st.\nHe has been in contact with the Postmaster General and\nMr. Lynn would like to know your decision.\nThis is my file -- I do not find the October 31 memo;\nchecked both your action and hold file and do not find.\nMr. areedo\nsaid it was\nOK for the\nmeeting.\nLIBRARY GERALD R. FORD\nPersonal\nPostal\nThursday 12/12/74\n4:20 Robert Off called from the Personnel Office to\n6531\nask if Mr. Buchen has any recommendations for the\nRm. 143\nPostal Service Board of Governors -- the dealine\nfor recommendations was 12/9.\nThey will start reviewing candidates right away\nand would hope to hear from us.\n6:25 advised Mr. off\nthat neither mr. Bucher\nmor mr. areeda\nhad any suggestions.\nGERALD R FORD LIBRARY\nPostal\nPhil A:\nDo you have any\nsuggestions? ?\nP.\nFORD si LIBRARY\n168B\n12/5\nTHE WHITE HOUSE\nWASHINGTON\nDecember 4, 1974\nMEMORANDUM FOR:\nDONALD RUMSFELD\nL. WILLIAM SEIDMAN\nJOHN 0. MARSH\nROBERT HARTMANN\nPHILIP W. BUCHEN\nWILLIAM J. BAROODY\nFROM:\nWILLIAM N. WALKER Fall\nSUBJECT:\nPostal Service Board\nof Governors (WAE-PAS)\nMr. Frederick Kappel, Chairman of the subject Board, will\nbe leaving at the end of his term in December. Also, Dr.\nRobert Ing has submitted his resignation because of poor\nhealth. Both of these newly created vacancies will be for\nRepublicans. We would like to move quickly and assemble\nnames for the President to consider.\nThe Postmaster General's office strongly believes that one\nof these appointments should go to a black since blacks\ncomprise approximately 20% of the postal work force. A1-\nthough there are no formal requirements, the candidates\nshould be individuals with a good management background\nand solid credentials (Kappel is the retired Chairman of\nA.T. & T.). This Board has the final responsibility for\npolicy decisions that concern the total operations of the\nU.S. Postal Service. It also selects the Postmaster Gen-\neral and the Deputy who then become members of the Board.\nThe Board of Governors receive $10,000 per year in salary\nand $300 per meeting. They meet approximately once a month.\nPlease forward any recommendations by December 9, 1974.\nFORD is LIBRAD\nPostal\nThursday 12/12/74\n4:20 Robert Off called from the Personnel Office to\n6531\nask if Mr. Buchen has any recommendations for the\nRm. 143\nPostal Service Board of Governors -- the dealine\nfor recommendations was 12/9.\nThey will start reviewing candidates right away\nand would hope to hear from us.\nGERRLO\nFORD LIBRARY is 0778\nKen Lazarus recom- has\norg. for\nmendation FORD for me\nto transmet. GERAL\nEIBRUPY P. Buchen\nTHE WHITE HOUSE\nwashington\nMarch 14, 1975\nMEMORANDUM FOR PHIL BUCHEN\nJACK MARSH\nJIM LYNN\nSUBJECT:\nDecision Memorandum\nAttached is a draft decision memorandum for the President. I would appreciate\nyour recommendations by COB today. Thanks very much.\nof hy g\nF. Lynn May\nAttachment\n&\nGERALO\nFORD LIBRARA\nDRAFT\n3/14/75\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nJIM CANNON\nSUBJECT:\nChief Administration Liaison Contact with the Postmaster\nGeneral\nYou met with the Postmaster General on Thursday, March 13, 1975. He requested\nthat you designate a senior White House official to serve as a contact with the\nPostal Service. You indicated that you would do so within a few days.\nOPTIONS\nThe following individuals could serve in this function:\nJim Lynn\nPhil Buchen\nJim Cannon\nDISCUSSION\n1.\nJim Lynn\nPRO:\nOMB could provide management and budgetary assistance\nto the Postal Service and has a large staff to provide\nback-up.\nCON:\nMost of the dialogue between the White House and the\nPostal Service will be on matters of political and legislative\npolicy. OMB does not have budgetary review authority over\nthe Postal Service.\nFORD & LIBRARY 074870\n2.\nPhil Buchen\nPRO:\nThe Counsel's Office would assure \"correct\" dealings with\nthe Postal Service as it does with the regulatory agencies.\nCON:\nThe Counsel does not routinely deal in postal policy matters\nand has a limited staff.\n-2-\n3.\nJim Cannon\nPRO:\nCould effectively discuss political policy matters and\ncoordinate postal liaison with other domestic policy issues.\nCON:\nLimited Staff.\nRECOMMENDATIONS\nGERA LIBRARY FORD\nTHE WHITE HOUSE\nWASHINGTON\nMarch 18, 1975\nMEMO FOR: PHIL BUCHEN\nFROM:\nKEN LAZARUS to\nDue to the press of time, I communicated\nyour views to May by phone.\nThere is no particular sensitivity involved\nin this assignment. I suggested that May\ndelete the draft argument supporting your\ndesignation and insert instead (1) your senior\nstatus and (2) experience with political and\nlegislative issues.\nrhoted, with P. thanks.\nPost Office\nTHE WHITE HOUSE\nWASHINGTON\nMarch 14, 1975\nMEMORANDUM FOR, PHIL BUCHEN\nJACK MARSH\nJIM LYNN\nSUBJECT:\nDecision Memorandum\nAttached is a draft decision memorandum for the President. I would appreciate\nyour recommendations by COB today. Thanks very much.\nof has of\nF. Lynn May\nAttachment\nLIGRARY GERALD R. FORD\nDRAFT\n3/14/75\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nJIM CANNON\nSUBJECT:\nChief Administration Liaison Contact with the Postmaster\nGeneral\nYou met with the Postmaster General on Thursday, March 13, 1975. He requested\nthat you designate a senior White House official to serve as a contact with the\nPostal Service. You indicated that you would do so within a few days.\nOPTIONS\nThe following individuals could serve in this function:\nJim Lynn\nPhil Buchen\nFORD\nJim Cannon\nDERALO\nLIBRARY\nDISCUSSION\n1.\nJim Lynn\nPRO:\nOMB could provide management and budgetary assistance\nto the Postal Service and has a large staff to provide\nback-up.\nCON:\nMost of the dialogue between the White House and the\nPostal Service will be on matters of political and legislative\npolicy. OMB does not have budgetary review authority over\nthe Postal Service.\n2.\nPhil Buchen\nPRO:\nThe Counsel's Office would assure \"correct\" dealings with\nthe Postal Service as it does with the regulatory agencies.\nCON:\nThe Counsel does not routinely deal in postal policy matters\nand has a limited staff.\n-2-\n3.\nJim Cannon\nPRO:\nCould effectively discuss political policy matters and\ncoordinate postal liaison with other domestic policy issues.\nCON:\nLimited Staff.\nRECOMMENDATIONS\nFORD is LIBRARY\nTHE WHITE HOUSE\nPaster\nWASHINGTON\nJanuary 7, 1976\nMEMORANDUM FOR:\nJIM CONNOR\nFROM:\nPHIL BUCHEN T\nSUBJECT:\nProposed letter to Andrew Heiskell,\nChairman of the Board of Time\nIncorporated\nI believe that the proposed letter gets involved in\ntoo much detail and too much defense of the postal\nsystem management to be signed by the President.\nI would recommend sending two letters: A brief\nacknowledgement by the President, including a\nnotation that he has referred the letter to an\nappropriate member of his staff who participated\nin the White House meeting with magazine publishers;\nand a detailed response by such staff member on\nbehalf of the President.\nLIBRARY BERNED FORM\nTHE. WHITE HOUSE\nCTION MEMORANDUM\nWASHINGTON\nLOG NO.:\nate:\nJanuary 6, 1976\nTime:\nFOR ACTION:\nCC (for information):\nPhil Buchen\nJack Marsh\nJim Cannon\nPaul Theis\nBob Hartmann\nBill Seidman\nFROM THE STAFF SECRETARY\nDUE: Date:\nTuesday, January 6\nTime:\ncob\nSUBJECT:\nProposed Letter to Andrew Heiskell,\nChairman of the Board of Time Incorporated\nACTION REQUESTED:\nX\nFor Necessary Action\nFor Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nX For Your Comments\nDraft Remarks\nREMARKS:\nWe apologize for the short time on this item but\nwe are receiving pressure to send an answer to\nMr. Heiskell.\nLIDRARY CERALD R. FORM\nPLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.\nIf you have any questions or if you anticipate a\ndelay in submitting the required material, please\nJim Connor\ntelephone the Staff Secretary immediately.\nFor the President\nDecember 31, 1975\nDear Mr. Heiskell:\nThank you for your letter of December 12, 1975.\nI appreciate your sharing your thoughts with me\nwith respect to the problems of the U.S. Postal\nService.\nAt the time of postal reform, our postal system\nwas in serious trouble. at was suffering under an\narchaic organizational structure, overlapping and\noften contradictory laws and regulations. It was\nalso hindered by an ancient physical plant, low\nemployee moral sad productivity, and political\npressures. These problems left a poor legacy\nand postal management has struggled to bring\nabout change. Improvements have been made and,\ndespite occasional complaints, the overall record\nof the Postal Service in terms of reliability and\nspeed of delivery is quite good, particularly when\ncompared with other countries.\nThis is not to say that postal management cannot\ndo more to reduce unnecessary costs. I know that\nPostmaster General Dailar is devoting his full en-\nergies to this goal. While recent rate increases\nhave been larger and more (requent than we would\nlike, these cannot be attributed solaly to the acts\nof the postal management. The Postal Service,\nlike all business type operations, has had to dont\nwith the strong inflationary pressures or the pact\nfew years.\nLIBRARY CERALD FORD\n. 2 -\nI still believe that the principles embodied la\npostal reform will provide as with at far more\nefficient postal system. Among those principles\nis one which calls for the appartioning of the costs\nof all postal operations to all USCTS of the mail on\na fair and equitable basis. I support that principle:\n1 believe it is cound and that it should be parsued to\nthe maximum extent possible.\nThe cost of postal operations must be met and should\nbe mot equitably. The alternative to users supporting\nthe postal system is to shift the burden to the general\ntaxpayer. Such an approach is not fair and -- by\nliself -- would do nothing to reduce postal costs.\nI would like to comment briefly ca some specific\npoints which you raised in your letter concerning\nExecutive Branch control over the Postal Service.\nUnder the Reorganization Act the operating budget\nof the Postal Service is the responsibility of the\nBoard of Covernors. Federal appropriations to the\nPostal Service Fund represent only a small portion\nof total postal revenues and are provided to cover\ncertain specific costs. Among other things, they\nprovide for public service assistance to the Postal\nService during the transition to a completely lade-\npendent status. I have continued to support the\nassual appropriation of those funds as set forth to\nthe Deorganization Act, out 1 have also opposed\nfurther taxpayer assistance for extended phasing.\nI do not have responsibility for making recommenda-\ntions os the remainder of the Postal Service's budget.\nla keeping with the Postal Service's new Independent\nstatus, the White House neither approved nor dis-\napproved the recent postal labor settlement.\nis\nGERALD\nFORD\nLIBRARA\nThere are no casy solutions to the problems and\ndeficits which face the Postal Service. Future\nrate increases will be necessary to cover costs,\nand I bolieve It is reasonable to expect such in-\ncreases as long as they follow other general price\nincreases in the economy. I remala unconvinced\nthat taxpsyers should be responsible to held down\nrates for users.\nAgain, thank you for writing and best wishes.\nSincerely,\nMr. Andrew Heiskell\nChairman of the Board\nTime, Incorporated\nTime and Life Building\nRockefeller Center\nNew York, New York 10020\nbee: Nessen/White/O'Nelll\nGRF:OMB:RN:EMO:RLE:sby\nis\nBERALD\nFORD\nLIBRARY\nTIME & LIFE BUILDING\nTIME\nROCKEFELLER CENTER\nNEW YORK 10020\nINCORPORATED\n(212) JU6-1212\nCHAIRMAN OF THE BOARD\nDecember 12, 1975\nDear Mr. President:\nRecently, you and members of your staff\nheld a meeting at the White House with magazine pub-\nlishers in which you indicated that you will continue\nto oppose both additional federal appropriations to\ndefray the increasing costs of public services pro-\nvided by the U.S. Postal Service and funds for phas-\ning increases in second class mail rates as author-\nized by Congress in P.L. 93-328.\nI want to thank you for your time and your\ncandor in stating your position. I would hope that\nyou will accept an equally frank response.\nAs you are aware, you and your associates\nhave repeatedly described appropriations for public\nservice by the Postal Service as \"subsidies\" to the\nvarious users whether such users happen to require\nthese services or not. You, yourself, have also com-\npared the deficit problems of the postal service to\nthe deficit problems of the City of New York. I\nquote from your statement:\n\"I just don't accept that they (the postal\nsystem) are doing as well as they should be doing.\nWe have to prod them, just like we are prodding New\nYork City, to improve their efficiency productiv-\nity\nif we don't keep the pressure on them. you\nknow how things operate in government that's one\nof the basic problems in New York City. No one\nreally put the screws on them until this year and\nnow they are faced with reality. I think the post\noffice department -- management and labor -- has to\nface up to that reality -- here as well as in New\n&\nYork.\"\nGROWN\nThe comparison of the problems of the postal\nservice and New York is yours. Let me demonstrate\nLISTARY\nhow apt the comparison is. We all can recognize that\na major element in the New York problem has been the\nunwillingness of political management -- in this case\nthe city officials -- to come to grips with escalating\ncosts, costs that flow largely from the escalating\ndemands of the municipal workers unions.\n-2-\nWhat has been the situation in the operations\nof the postal service? Federal fiscal year 1971 was\nthe last year under the \"pre-reform\" postal system,\nthe long existing system under which postal rates and\npostal expenditures were set by Congress. Fiscal year\n1972 was a period of transition. In fiscal year 1973,\nthe first year of full operation, the \"reform\" postal\nsystem generated a deficit of $13 million. In the\nfiscal year 1974, the deficit had swollen to $438\nmillion; in fiscal year 1975, which ended this summer,\nthe deficit was $825 million; and in the current fis-\ncal year which will end June 30, 1976, the Postmaster\nGeneral currently predicts the deficit will exceed\n$1.4 billion dollars -- and then only if another sub-\nstantial increase in postal rates, including a 13 cent\nfirst class letter rate, takes effect on December 28\nas scheduled. You are right, Mr. President. Such\narithmetic is quite comparable to the record in New\nYork.\nHowever, it is unfortunate that you proceed\nfrom that damaging conclusion to a further one which\nlabels appropriations to make up these deficits as\n\"subsidies\" to the mail users. For what has been\nresponsible for these soaring red figures? A number\nof elements have contributed, of course: questionable\nmanagement, an expensive capital equipment program,\noutdated and perhaps unnecessary services. But there\nis one factor that stands out above all: salary and\nbenefit escalation for the nation's approximately\n700,000 postal workers. While I do not want to pass\narbitrary judgment on the merits of the labor con-\ntracts negotiated in recent years by the Postal\nService, here are some important figures.\nSalaries and benefits now account for 85 per-\ncent of the postal budget. The basic wage of postal\nworkers nationwide is presently $13,400 a year. To\ncarry your analogy a little further, the average basic\nwage of New York policemen is $14,700; New York fire-\nmen, $14,700; New York teachers, $13,200.\nFORD\nOn a national basis the average police sal-\nary is $11,800; firemen, $11,200; teachers, $11,600.\nConsider also that assistant professors of four-year\nLIBRARY\ncolleges earn a national average of $12,600, while\npostal workers earn an average of $13,400. As you\nsurmised, only New York, the case you have cited as an\nexample of disastrous municipal mismanagement, can be\nsaid to have kept pace with the Postal Service in this\nregard.\n-3-\nBut this is not the end of the story. With\nthe pay hikes granted in this year's postal wage\nsettlement, the average pay of postal workers will\nprobably rise to around $16,500 by 1978 -- an addi-\ntional increase of more than 23% over present levels.\nThat will cost the Postal Service an additional $2\nbillion in wages alone.\nWhen you say that \"management and labor\" have\nto face up to reality \"here as well as in New York,\"\nyou may have the full agreement of almost everyone\nfamiliar with the problem. The question is: who is\nmanagement? The embattled Mayor Beame is easy to\nidentify. He is the duly elected, present incumbent\nat City Hall.\nIn the case of the Postal Service, management,\nby law, is in the hands of the Postmaster General and\na Board of Governors. Under the \"reform\" system there\nhave been three Postmasters General and a Board of\nGovernors, whose original and present members were\nappointed by your immediate predecessor, President\nNixon. In attempting to manage the overriding problem\nof dramatic wage escalation, the Postmaster General\nis subject to certain controls and restraints that\nare exercised by the White House itself.\nHis budgets must be approved by the Board\nappointed by the President and submitted to the\nOffice of Management and Budget. You have the auth-\nority to make recommendations to Congress in regard\nto that budget. More relevant, in the case of the\nrecent postal wage contract, the negotiations were\nultimately conducted through the Mediation and Con-\nciliation Service, an agency of the Federal govern-\nment, and the settlement, it is reliably reported,\nwas not only greater than the Postmaster General\nwould have accepted, left totally to his own devices,\nbut indeed was approved by the White House.\nIf then the postal service, is as you in-\ndicate, another New York, it is a New York that has\ndeveloped under Republican administrations and sub-\nject to Republican control and direction. You have\ntold us that you are going to \"put the screws on\nthem,\" by \"them\" indicating that you mean postal man-\nagement and labor. You have also told us that you\nintend to block the increased Federal appropriations\nCOOP\nnecessary to defray the costs of these ruinous wage\npolicies and uneconomic public services (such as\ndelivering mail to the bottom of the Grand Canyon and\nLIBRARY\nthe North Slope of Alaska). And you have told us\nthat your only other alternative to the deficit is\nto raise postal rates.\n-4-\nYou are then, in reality, proposing to\n\"put the screws on\" the users of the postal system\neven though the record is clear that many users who\ndepend heavily on the postal system cannot survive\nmuch more escalation of rates.\nYou are, I believe, aware that continuation\non this course will vitally affect a major medium of\nthe communication of ideas in America, the many diverse\nmagazines and smaller newspapers. But even if this\nwere acceptable to you -- and I am not prepared to be-\nlieve upon reflection that it will be -- consider the\ncomments of the present Postmaster General, Mr. Bailar,\nwho indeed is struggling earnestly to cope with the\nimpossible conditions thrust upon him by law and by\ncircumstances not entirely under his control:\n\"The last thing we want is a constant round\nof postage increases because we recognize that not\nonly would this hamper the free flow of commerce and\nideas through the mails, but it would also reduce our\nvolume and hence our revenue, thus compounding our\nfinancial problems.\"\nThe danger is real, of course. Mail volume\ndecreased last year for the first time in years.\nParcel Post is down. Electronic transfer of funds\nwill increasingly affect First Class mail, and the\nvolume of magazines and newspapers will dwindle as\nmajor magazines including those we publish and major\nnewspapers such as The Wall Street Journal, flee the\nmails in the urban centers, where they now generate\na very favorable positive cash flow for the Postal\nService.\nThe present course of action, suggested by\nThe White House meeting with publishers, can have\nonly one end: bankruptcy of the Postal Service --\na bankruptcy that in the process will go a long way\ntoward making the medium of print too expensive for\nmillions of Americans.\nThe Founding Fathers' intention was that the\npostal system should encourage the free flow of in-\nformation in our nation. It was their conviction\nthat the postal system was a necessary service of\ngovernment and not a business. George Washington\nstated in 1782 that a postal service was needed to\n\"bind these people to us with a chain that can never\nbe broken.\" History shows that our first President\nwas right. For nearly 200 years, Congress and the\nGERALD\nOF\nLIBRARA\n-5-\nAmerican people have recognized the democratic and\neducational values of magazines and newspapers.\nToday, magazines and newspapers are jeopardized by\nan ineffective and misguided postal system.\nI hope you will forgive these blunt words,\nMr. President, but I cannot imagine that these re-\nsults are your desire. I believe there are altern-\native ways of meeting the problems which the Postal\nService faces. These problems are not quickly re-\nsolved. But I suggest that the national interest\nwill be better served if your Administration would\nsupport proposals to meet the fiscal deficits of the\nPostal Service for a period of time that is sufficient\nto examine and evolve solutions to these problems.\nTo label this assistance a subsidy for the users or\nto expect the users to provide such resources them-\nselves would be a gross misplacement of responsi-\nbility.\nThank you for hearing me out.\nSincerely,\nHudrey Andrew Heiskell\nblushell\nThe President\nThe White House\nWashington, D.C.\nFORD is GERALD LIBRARY\nTHE WHITE HOUSE\nCTION MEMORANDUM\nWASHINGTON\nLOG NO.:\nDate:\nApril 1, 1976\nTime:\nFOR ACTION:\nCC (for information):\nPhil Buchen\nJim Cannon\nJack Marsh\nMax Friedersdorf\nBill Seidman\nFROM THE STAFF SECRETARY\nDUE: Date:\nFriday, April 2\nTime:\n3 P.M.\nSUBJECT:\nProposed Letter to James H. Rademacher\nPresident of National fAssociation of Letter\nCarriers\nACTION REQUESTED:\nX\nFor Necessary Action\nFor Your Recommendations\nPrepare Agenda and Brief\nDraft Reply\nX For Your Comments\nDraft Remarks\nREMARKS:\nThe principal point made by the President's letter is the necessity\nof a reasoned consideration of the principal issue in this area, i.e.\nthe advisability of Federal subsidies to the Postal Service. However,\ncertain portions of the draft letter appear to be conclusory in nature\nand to the effect that any subsidies would be inappropriate. Accordingly,\nI suggest that you consider the possibility of deleting the first\nparagraph on page 2 and adding the words \"I do note that \" at the\nbeginning of the second paragraph on that page.\nKen Lazarus 4/2/76\nPLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.\nIf you have any questions or if you anticipate\ndelay in submitting the required material, please Jim Connor\ntelephone the Staff Secretary immediately.\nFor the Pres."
}