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Misinformation abounds about USPS

BY FREDRIC ROLANDO — 09/18/15 09:00 AM EDT 40

THE VIEWS EXPRESSED BY CONTRIBUTORS ARE THEIR OWN AND NOT THE VIEW OF THE HILL

If the Postal Service focused on doing a better job on its core mission, it wouldn’t be losing so much money and wouldn’t need to try to make up for the losses by venturing into “side businesses” such as delivering packages for Amazon, the argument went.

As the piece unintentionally demonstrates, misinformation abounds about the Postal Service. That’s the case even though the Postal Service is based in the Constitution, delivers daily to 153 million homes and businesses while providing Americans the industrial world’s most-affordable delivery network, is the largest civilian employer of veterans and is annually rated the most trusted federal agency by the public.

Let’s look at the facts.

Postal Service operations are profitable, and increasingly so. Through the first three quarters of Fiscal Year 2015, earned revenue exceeds business expenses by $1.2 billion. (The Postal Service funds itself through the sale of stamps and other products, not through taxpayer dollars.)

That’s ahead of the figures at this point last year. The Postal Service ended fiscal 2014 with a $1.4 billion operating profit, which in turn was better than 2013.

Why the improving picture? After falling sharply during the worst recession in 80 years, mail revenue is stabilizing amid a gradually improving economy. Meanwhile, as folks in Virginia and Washington D.C. and elsewhere shop online, package revenue is skyrocketing, making the Internet a net positive and auguring well for the future.

I would be remiss if I did not note the statements of the past postmaster general and his successor that record worker productivity by letter carriers, postal clerks and mail handlers also has contributed to the growing operating profitability, with fewer employees providing mail services to a growing number of addresses.

There is red ink at the Postal Service, but it has nothing to do with the mail or the Internet. Rather, it stems from Washington politics. In 2006, a lame-duck Congress mandated that the Postal Service prefund future retiree health benefits. No other government agency or private company in the country has to prefund for even one year; the Postal Service must prefund 75 years into the future and pay for it all over a decade. That $5.6 billion annual charge is the red ink.

The notion that a focus on expanding services has distracted the Postal Service from carrying out its top priority – speedy delivery of the mail – and has caused red ink has it almost entirely backwards.

Rather, the political interference by Congress in the form of the onerous and unfair prefunding mandate, signed into law by President George W. Bush, created an artificial ‘crisis’ at the Postal Service.

That, in turn, led the recently departed postmaster general to make the short-sighted decision to try to “shrink to survive” – reducing hours or even closing post offices and mail-processing plants, which in turn slowed the mail.

The new postmaster general, however, realizes that it’s illogical to respond to the pre-funding problem by degrading increasingly profitable postal services when that hurts not only the public but the Postal Service itself by reducing revenue. Some critics, however, including some lawmakers, still seek to end six-day delivery or door-to-door delivery, which would send the Postal Service into a downward spiral.

Pre-funding is a political problem that lawmakers created – and that they can and should address. If and when it takes up postal legislation, Congress also should preserve and strengthen the now-profitable postal networks. Not only is the Postal Service critical to our economy and our recovery by facilitating commerce and offering businesses and residents universal and affordable service, it also is the centerpiece of a $1.3 trillion national mailing industry that employs 7.5 million Americans in the private sector.

As for new ventures for the Postal Service, now that we’ve explained the source of the red ink and the cause of the slowing of the mail, the path ahead is a matter of common sense. Proposals that would meet the needs of an evolving society, boost job-creating businesses and generate earnings for the Postal Service – i.e. be a win for all involved – should be seriously considered.

Trump Moves to Gut the Post Office

DAVID DAYEN

APRIL 16, 2018

His war on Amazon expands to include the right-wing’s campaign to abolish America’s oldest—and still successful—public service.

(John Rucosky/The Tribune-Democrat via AP)

United States Postal Service carrier Nate McKeever works his route in frigid temperatures in Johnstown, Pennsylvania, on December 29, 2017.
Image result for US Postal Service

Some may be inclined to think that Donald Trump’s executive order Thursday night establishing a task force to recommend reforms for the U.S. Postal Service reflects another salvo in the president’s war against Amazon. Trump’s attack on Amazon, a clear byproduct of Amazon CEO Jeff Bezos’s ownership of The Washington Post, included the suggestion that the online retailer was “ripping off the post office” by securing a special deal for the USPS to ship packages the last mile. By reviewing the finances of the post office, Trump’s task force could demand increases to that shipping contract, possibly costing Amazon billions of dollars.

Whether Amazon actually is getting a special deal on shipping is open to intense debate. The company also happens to enjoy a discount on stamps, which they then mark up to their own marketplace sellers, a pure arbitrage deal to earn profits from a publicly issued product.

But these issues have almost nothing to do with the Trump executive order. The Amazon spat is a cover for the formal unveiling of a long-wished right-wing project to destroy the post office and have private industry take over its infrastructure, which taxpayers funded long ago. All the executive order really does is create a report; it would take a willing Congress to deliver the final hammer blow. But that report, with a government imprimatur, will become part of that right-wing wish list, living on for decades in think tanks and private shipping company boardrooms as a fervent dream.

And sometimes dreams become reality.

Let’s look at the executive order, which is a bit deceptive in its intentions. The policy section manages to mention that the Postal Service routinely earns the highest public approval rating of any agency in the federal government. But then it layers on the bad news: the decline in first-class mail volume—$65 billion in losses since 2009, an “unsustainable fiscal path.”

Amazingly, the policy section alludes to the inability of the USPS to fund retiree health and pension benefit obligations, without stating that it has the impossibly high statutory burden of pre-funding those obligations 75 years out, effectively having to pay today for Image result for US Postal Service future workers who have not yet been born. No public agency or private company has any similar burden. It was placed on the Postal Service in the 2006 Postal Accountability and Enhancement Act to deliberately cripple the agency at the behest of UPS and FedEx, its two major competitors on package delivery.

There should be no confusion: Without this completely anomalous pre-funding mandate, the USPS would be a money-making operation, regardless of the rise of email.

But while alluding to “inflexible costs,” the executive order says that the USPS “must be restructured to prevent a taxpayer-funded bailout.” Yet, a true restructuring would require only one line of legislative text: “The 75-year pre-funding mandate is hereby repealed.” The fake crisis would be over. But that’s not what Donald Trump’s minders want.

The executive order establishes a task force, chaired by Treasury Secretary Steven Mnuchin, to “evaluate the operations and finances of the USPS.” Also on the task force are anti-government zealot and Office of Management and Budget Director Mick Mulvaney, former Booz Allen Hamilton lawyer and Office of Personnel Management Director Jeff Pon, and whomever else Mnuchin wants to throw in.

In reality, there’s already a “task force” empowered to evaluate the Postal Service. That’s the USPS Board of Governors, an 11-member panel that operates like the board of directors of a corporation, empowered to review all policies and practices and engage in long-range planning. But this board, which includes the postmaster general, their deputy, and nine presidential appointees, has not had a new member confirmed since the George W. Bush administration. It’s been operating without a quorum since 2015, and currently all nine appointee positions are vacant. The Trump administration took until October of last year to nominate three of the open nine governor seats; they’re only getting a confirmation hearing next week.

If Trump, or anyone in his administration, were actually concerned with Postal Service operations, he’d quickly stock its board. Instead, he’s formalizing a task force to look into undermining it. Here are some things the executive order wants the task force to look into:

“The USPS’ role in competitive markets,” specifically package delivery, where it competes with private shippers;
“Issues relating to government monopolies operating in the commercial marketplace”;
“The USPS monopoly over letter delivery and mailboxes”; and
“The definition of the ‘universal service obligation’ in light of changes in technology, e-commerce, marketing practices, and customer needs.”

I think the goal is clear. The task force is being prodded to open up the mailbox to any company, and degrade the centuries-old tradition that the post office deliver anywhere in the nation, through snow or rain or heat or gloom of night. After eliminating these public benefits, the task force might seek to bar the post office from competing in markets where the private sector operates, or to privatize the agency altogether, selling its infrastructure off for parts.

These have long been hard-right fantasies, which, if made real, would be a direct money funnel to UPS and FedEx’s corporate treasuries, to say nothing of Amazon, whose cash reserves could easily buy Postal Service infrastructure.In fact, the executive order says that the final report should take into account the views not only of postal workers and consumers, but also of “competitors in the marketplace.”

This report of “administrative and legislative reforms” to the post office is due August 10. Legislative recommendations would obviously have to pass Congress, and that’s unlikely even today, given the important role the post office plays in rural communities.

But we’ve already seen bids to privatize and undermine the Postal Service administratively. In 2013, the Postal Service partnered with Staples to sell stamps and deliver mail and packages inside their stores, with their non-union workers. The American Postal Workers Union kicked off a long campaign to stop this, but the practice only stopped after a National Labor Relations Board judge ordered it. Trump’s NLRB might not have the same posture if the “Approved Shipper” program were restarted.

The USPS already gives competitors a sweet deal to participate in its own destruction. It ships the last mile for UPS, FedEx, and Amazon, delivering the packages that are unprofitable for those companies to deliver themselves. And the Postal Service’s leadership has repeatedly cut employee hours and eliminated routes, closing post offices and laying off tens of thousands of workers in the process. Having a government task force call for the death of the post office will build on these efforts at self-immolation.

The solutions here are obvious. The post office has the advantage of 30,000 locations, universal service, and a wider reach than for-profit companies could ever cast. Returning to the postal banking system we had from 1911 to 1967, which offers financial services to the unbanked with simple accounts and even small loans, would fit the agency’s mission of expanding commerce and save billions for vulnerable populations—all the while shoring up postal finances. The author of a 2014 white paper on postal banking, then-USPS Inspector General David Williams, is one of the nominees for the Board of Governors, and if allowed to do his job, Williams could fix up a system that would solve numerous problems at once.

This is one of a many ideas to maintain the Postal Service’s strong position at the center of American life, where it’s been since before the Constitution was written. Instead, Donald Trump, while claiming fake concern for the USPS getting “ripped off” by Amazon, wants to empower a gang of cretins bent on selling off the agency for parts.

This article has been updated.

http://prospect.org/article/trump-moves-gut-post-office

http://www.thefiscaltimes.com/2018/04/13/Truth-About-Trump-s-War-Amazon-and-US-Postal-Service

ECONOMY

The Truth About Trump’s War on Amazon and the US Postal Service

Getty Images/The Fiscal Times

President Trump issued an unexpected 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.

Here’s what else you need to know:

Yes, the Postal Service is losing billions: 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 direct taxpayer support: The USPS is a 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.

The executive order is about Amazon.com: Though the executive order does not mention Amazon by name, it was widely interpreted as an escalation of Trump’s long-running criticisms of the online retail giant, which the president has accused of bilking the postal service by not paying appropriate postage rates for package delivery. The USPS says that it is legally prohibited from charging Amazon and other shippers less than its delivery service costs, and that regulators have repeatedly examined and approved the Amazon deal.

But Amazon is probably helping, not killing, the USPS: A Citigroup analysis last year reportedly 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 most analysts say that the massive number of packages shipped by Amazon is helping USPS finances as the volume of first-class letter delivery and other types of mail continues to decline. And the Citigroup analyst who wrote the original report clarified recently that Amazon’s business could indeed be profitable for the USPS. Amazon likely gets a volume discounton its packages, but the Postal Service isn’t losing money from the deal. However, the task force might suggest that USPS charge Amazon and other companies more for parcel delivery.

At the same time, the Postal Service’s package delivery business is growing: 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. “Although we continue to win customers and grow our package business, these gains are not sufficient to offset continuing declines in our mail business, which is our main source of revenue and contribution,” Postmaster General and CEO Megan Brennan said in February.

Trump’s ire may really be about Jeff Bezos and The Washington Post: “White House insiders describe the Amazon-U.S.P.S blowup as a thinly veiled attempt to retaliate against The Washington Post, which Bezos owns, for its frequently critical coverage of his administration,” Vanity Fair’s Maya Kosoff writes.

The executive order might open to door to more privatization: “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,’” writes Michael D. Shear in The New York Times.

The Postal Service does have another big financial problem, though: 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. “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 prefunding 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,” Bloomberg’s Barry Ritholtz wrote recently. “Without this obligation, the Post Office actually turns a profit.”

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