Political Editors / December 6, 2018

Trump Goes Postal

The Postal Task Force delivers its report, and — surprise — it’s not good at all.

The task force created by President Donald Trump to find ways to turn around the U.S. Postal Service from 12 straight years of financial loss has issued its report, entitled “United States Postal Service: A Sustainable Path Forward.” After creating the task force back in April, Trump criticized Amazon, suggesting that the retail giant wasn’t paying enough for the services it received from the USPS. That’s just the tip of the iceberg.

The report, produced by Treasury Secretary Steven Mnuchin, notes that since 2007 the USPS has lost a net $69 billion, and if changes are not made to the current model, it’s expected to lose tens of billions more in the coming decade. The report asserts that the USPS is on an unsustainable financial path: “[Its] business model — including its governance, product pricing, cost allocation, and labor practices — was sustainable in an era where mail revenues and volumes grew alongside population and economic growth. However, as the USPS’s financial conduction continues to deteriorate, standalone proposals, such as forgiving the prefunding of post-employment benefits or renegotiating labor contracts, will be insufficient.”

In other words, the USPS is essentially operating as if it were still in the pre-Internet days, and, as a result, it has become financially unsustainable. The largest source of revenue for the USPS is the delivery of First-Class mail, which has declined in volume by 42% since 2007. That decline is, of course, due to a major communications shift to online technology. Meanwhile, even though the USPS’s package volume has increased to 40% of the overall market, that hasn’t been enough to make up the lost revenue from the steadily shrinking mail volume.

Prices need to rise to meet services rendered, the report asserts: “Although the USPS does have pricing flexibility within its package delivery segment, packages have not been priced with profitability in mind. The USPS should have the authority to charge market-based prices for both mail and package items that are not deemed ‘essential services.’” This is where Trump’s accusations against Amazon not paying fair market value to the USPS for its shipping services come into play.

The Package Coalition — a group of online retailers of which Amazon is the largest member — responded to the report with concern that “by raising prices and depriving Americans of affordable delivery services, the Postal Task Force’s package delivery recommendations would harm consumers, large and small businesses, and especially rural communities.”

Finally, one of the task force’s recommendations that has already raised the most vehement opposition is the call to essentially gut the USPS’s labor union. The report notes that the “USPS’ dual-labor model — combining private sector collective bargaining law with government employee compensation law — creates unsustainable labor costs. USPS employee rights should be more closely aligned with other federal employee rights by eliminating collective bargaining over compensation.” The report adds, “USPS employees should not be afforded protections and rights not enjoyed by other federal employees.”

One thing is clear: Americans will end up paying more for mail service either with higher mailing and shipping costs or through a government bailout paid by taxpayers.

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