How Long Will Biden Keep DeJoy at the Postal Service?
(Bloomberg Opinion) -- Postmaster General Louis DeJoy didn’t mince words when asked during a congressional hearing six months ago how long he planned to keep his job.
“A long time. Get used to me,” he said. “As far as my commitment to see our plan through, I’m here until I can see it tangibly produce the results we intended to.”
DeJoy’s blueprint for overhauling the U.S. Postal Service, “Delivering for America,” was unveiled in March and has a 10-year timeline — so the controversial executive could conceivably stay put for a decade.
It’s hard to imagine that DeJoy really likes his job that much. But it was also hard to imagine that a Donald Trump loyalist criticized for trying to sabotage mail-in balloting by gutting the Postal Service shortly before the 2020 presidential election would survive the early months of President Joe Biden’s administration.
Other clouds hang over DeJoy. The Federal Bureau of Investigation is investigating him for possible campaign finance violations, and ethics watchdogs recently raised alarms about a $120 million contract the Postal Service awarded to his former employer, XPO Logistics Inc. DeJoy’s spokesmen have denied any wrongdoing related to the FBI probe and said that DeJoy played no role in the XPO contract. (DeJoy’s family divested its XPO stock — worth as much as $155 million — after he became postmaster general, but it still leases office space to the company.)
Biden has been busy battling the Covid-19 pandemic and trying to push a bold legislative package through Congress, so DeJoy and the Postal Service’s future may have escaped his attention. But the service is an indispensable delivery arm for many businesses, operates a massive domestic retail network, employs almost 500,000 people, touches millions of Americans a day and has been trapped in an existential crisis for years. The Postal Service’s future deserves Biden’s attention, regardless of how busy he is. If Biden leaves DeJoy in place, it will be because he either shares DeJoy’s vision for the service’s future or has no vision of his own to prioritize.
For all his bravado, DeJoy still runs the Postal Service because he maintains the backing of its board of governors. This bipartisan, nine-member body oversees the service’s expenditures and operations and appoints postmasters general — and decides how long their tenures last. Six of the governors, including the board’s chairman, Ron Bloom, are Trump appointees; Biden has appointed three.
Unless Biden wants to try removing governors for cause, he can replace them only when their seven-year terms end or they step aside prematurely. Those rules are meant to protect the Postal Service from partisan meddling and generally make it hard for presidents to reshape it without waging political battles. Trump and former Treasury Secretary Steven Mnuchin briefly withheld federal pandemic funds from the beleaguered service to force it to agree to greater presidential control. That move failed, but they found a like-minded proxy in DeJoy. If Biden decides not to play hardball himself, then DeJoy’s plans for reshaping the service are likely to take root.
Bloom is a Democrat but has repeatedly said he supports DeJoy. Bloom is also a veteran financier and a managing partner at Brookfield Asset Management. DeJoy, according to financial disclosures, has invested in a relatively modest portfolio of Brookfield bonds. A spokesman told the Washington Post that an adviser purchased the bonds and that no conflict exists because the Postal Service doesn’t do business with Brookfield. Bloom oversees private equity operations at Brookfield, not bond sales.
“The board of governors believes that the postmaster general in very difficult circumstances is doing a good job,” Bloom told federal legislators earlier this year.
The Postal Service loses billions of dollars annually, and DeJoy’s master plan calls for shoring up its finances by cutting back post office hours and raising rates. He wants Congress to allow postal workers to enroll in Medicare, which would ease pre-funding mandates the service must meet for employees’ health-care coverage. And he wants a review of pre-funding requirements for workers’ pensions, another cause of longstanding financial pain for the service.
DeJoy thinks that email and other technological advances have made first-class letters, once the postal service’s meal ticket, redundant. He wants the service to invest in and become more competitive around one of its remaining strong suits: package deliveries.
DeJoy’s master plan has been fodder for recent disagreements among the service’s board members. Earlier this month, in the first meeting in more than a decade attended by all nine members, one governor argued that service cutbacks wouldn’t actually save much money, would alienate the public and would undermine the service’s mission to work for all Americans. The Postal Regulatory Commission, which also oversees the service, has agreed with some of those criticisms and said that DeJoy’s plan is based on false assumptions, inadequate testing and too little concern for its impact on customers.
Despite those critiques, both Bloom and DeJoy said in this month’s meeting that they are going to push ahead with DeJoy’s plan. It’s still unclear how the White House feels about that and how it would undertake the Postal Service’s much-needed reinvention. But Bloom’s term ends in December, and if Biden has his own thoughts about the Postal Service’s future, he should replace Bloom with an ally and begin looking for his own postmaster general.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.
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