Harvey Gold
President Trump issued an unexpected and typically uninformed…well…stupid, executive order Thursday night creating a federal task force to investigate the U.S. Postal Service’s finances, including its pricing and workforce costs.
“The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout,” the executive order reads.
The Postal Service on Friday said it welcomed the task force and that changes to the legal requirements under which it operates are needed: “As we have repeatedly stressed, these business model problems are serious, but solvable, and the President’s executive order … provides an opportunity to further consider these important public policy issues.”
The new task force will be led by Treasury Secretary Steven Mnuchin or his designee, with help from the directors of the Office of Management and Budget and Office of Personnel Management. The group will be required to issue a report outlining proposed reforms within 120 days.
First and foremost, Trump’s bullshit about the Post Office serves only two purposes:
- To try and mess with Jeff Bezos, who just happens to own the Washington Post, one of the few remaining national newspapers with the resources and money to publish the truth about the corruption and blatant lies that flows from the current White House like the Mississippi River, and
- To show for the gazillionth time his abject lack of understanding how ANYTHING in real America works.
But here’s what else you need to know:
As I’ve previously stated on multiple occasions, ( A Postal Saving System: Saving the Post Office and Helping the Poor, March 24, 2014, Dismantling The Post Office and Americana: Corporatocracy, March 2, 2014, The GOP Bankrupted the Postal Service On Purpose, March 7, 2013) :
- Yes, the Postal Service is losing billions, but here’s just some of the reasons why:
In 2006, Congress mandated that the postal service prefund future health benefits for its retirees at a cost of about $5.6 billion a year over 10 years, a requirement that other federal agencies and private businesses do not face. There’s not a private business nor publicly-traded entity in the world that could make a profit under these requirements….nobody, “The prefunding requirement began as an effort to ensure Postal Service liabilities would not become a taxpayer burden if the Postal Service were to someday cease to exist,” a 2015 report by the Postal Service’s Office of Inspector General explained. The USPS has made some of those payments, exhausting its $15 billion statutory debt limit in the process. It defaulted on other prefunding payments, and its health care obligations still totaled $38 billion as of the end of the last fiscal year. “If that doesn’t meet the definition of insanity, I don’t know what does.” According to Bloomberg, “Without this obligation, the Post Office actually turns a profit.”
So yes, as the executive order points out, the Postal Service has lost more than $65 billion since 2007. It reported a net loss of $2.7 billion last year, its eleventh straight year of net losses.
- But it does not get any direct monetary taxpayer support:
The USPS is a quasi-government agency, but it is run as an independent business, meaning that your tax dollars don’t directly fund it. “The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations,” the USPS website says. Postal rates are overseen by an “independent commission” within the U.S. Government.
In fact, the USPS has been the model of responsible accounting. As of Feb. 2012, it had more than $326 billion in assets in its retirement fund, good for covering 91% of future pension and health-care liabilities. In fact, on its pensions, the USPS is more than 100% funded, compared to 42% at the government and 80% at the average Fortune 1000 company. In health-care pre-funding, the USPS stands at 49%, which doesn’t sound great until you understand that the government doesn’t pre-fund at all and that just 38% of Fortune 1000 companies do, at just a median 37% rate. The USPS does better than virtually every other big business in the country.
But that simply wasn’t good enough for the GOP. They wanted the Post Office to fund its pension and healthcare plans 75 years into the future! This was nothing more than a premeditated act of sabotage that is mandated to break the Postal Service. Where is the surplus cash going to come from, since it’s forbidden from making profits? In addition, this mandate forces USPS to cut investments in technology that would increase productivity, speed of delivery, upgrades of technology, and competitiveness, which would make USPS stronger and for longer. Even the GOP is not so stupid as not to see that its law creates an impossible conundrum.
Proper pricing is important for any business mandated to deliver everywhere from the big cities to a farm out in the middle of nowhere for a fixed price– a burden not faced by private services. Out of pure logistics, many locations, such as rural ones, lose money — that’s part of the price of having a national postal service. Private services can simply leave a location if it’s not profitable. In fact, UPS and FEDEX heavily rely on USPS to deliver to unprofitable locations for them already.
- The Postal Service has been the object of intense lobbying from FEDEX and UPS:
Ironically, the 2006 legislation lobbyists from Fedex, UPS and Pitney Bowes were all over the Postal Service, as well as corporate funded conservative groups and think tanks like ALEC, the Cato Institute, and the Heritage Foundation; all lobbying on behalf of their donors from the private sector wanting to control the huge delivery market in the U.S.
- The Trump executive order is about Amazon.com, not the Postal Service:
Trump’s long-running criticisms of Amazon, the online retail giant, which the president has accused of bilking the postal service by not paying appropriate postage rates for package delivery, is because Amazon’s owner, Jeff Bezos, also owns the Washington Post, which reports the actual truth about Trump…and that pisses him off. The plain fact is, the Postal Service is legally prohibited from charging Amazon and other shippers less than its delivery service costs, and regulators have repeatedly examined and approved the Amazon deal.
- But Amazon, along with Zappos, Wayfair, WalMart, EBay, etc., is helping, not killing, the USPS:
A Citigroup analysis last year said that Postal Service prices would have to be increased by $1.46 per package in 2017, $1.41 in 2018 and $1.31 in 2019 to reflect the true costs of delivery and close its revenue shortfall. But, according to analysts, the massive number of packages shipped by Amazon is helping USPS finances because the volume of first-class letter delivery and other types of mail continues to decline, mostly attributed to email. Amazon, like other major shippers, gets a bulk discount from the USPS, but the Postal Service isn’t losing money from the deal, even though the Postal Service should be charging Fedex and USPS higher rates to deliver those packages that are unprofitable for them to deliver themselves.
- The Postal Service’s package delivery business is growing BECAUSE of Amazon:
The post office’s fiscal report for 2017 shows that packages and shipping brought in $19.5 billion in revenue, or 28 percent of the total for the year. Revenue from packages grew by more than $2 billion from the prior year, by far the most of any service category.
- Without the Postal Service we would have no 911 service:
The Postal Service is responsible for providing the local, regional, and nationwide addresses provided and updated weekly to the entire 911 network for the entire country. You can thank this pissed-on, underappreciated, and legislatively abused system for Emergency Services throughout the country for every life saved because they created, maintain, and provide accurate addresses at NO EXPENSE TO TAXPAYERS.
So don’t kid yourself, Donald Trump doesn’t give two farts in a hurricane about the health of the Postal Service. “White House insiders describe the Amazon-U.S.P.S blowup as a thinly veiled attempt to retaliate against The Washington Post, which Amazon’s billionaire Bezos owns, for its frequently critical coverage of his administration,” as Vanity Fair’s Maya Kosoff writes.
According to Michael D. Shear in The New York Times, “Some parts of the order appear to hint at further privatization of the Postal Service, indicating that members of the task force should examine ‘the U.S.P.S. role in the U.S. economy and in rural areas, communities, and small towns.” If Fedex and UPS get the mail delivery system handed to them, and you think the price of stamps and postage are high now, wait until you see what you’ll pay under a privatized system.
~ Harvey Gold