Trump and the Post Office: Amazon Isn't the Problem
(Bloomberg View) -- So President Donald Trump wants to reform the U.S. Postal Service. Shall we welcome him to the club?
Let’s put aside for a moment the real (and futile) purpose of Thursday’s executive order calling for postal reforms: He wants to put the hurt on one of the USPS’s biggest customers, Amazon.com Inc., whose chief executive, Jeff Bezos, owns the Washington Post.
The post office does indeed need to be reformed. And do you know who the leading voices for reform are? The people who run the place. If a Trump-appointed task force conducts a serious investigation into postal practices, they’ll find plenty of problems, virtually none of them the fault of the post office itself.
Let’s go back in time, to 1971. That year, the department that had long been known as the Post Office became the Postal Service, an independent agency that was expected to be financially self-sufficient—while continuing to provide mail service to all Americans at a uniform price. The idea was that the Postal Service would operate more efficiently if it was more like a business and less like a bureaucracy. The postmaster general was dropped from the president’s cabinet.
From that point on, the president — and I hope you’re listening, President Trump — could influence postal policy in the same limited way he could influence policy at other non-cabinet agencies, like the Securities and Exchange Commission or the Federal Trade Commission. He could appoint the Board of Governors that oversees the post office, as well as the six members of the Postal Regulatory Commission, which sets the price of stamps, among other things.
Congress, however, continued to wield authority over the Postal Service — and that’s been the big problem. With the rise of the internet in the early 2000s, the use of first class mail began to decline. One way the Postal Service hoped to save money was by ending Saturday delivery. Congress said no. At a time when it was losing billions in 2011 and 2012, it proposed closing rural post offices and moving mail delivery to local stores. Congress said no.
A few years ago, the Postal Service suggested offering banking services, especially to people of moderate means. (Senator Bernie Sanders liked this idea.) Congress said no. It suggested a series of other proposals to move into other lines of business. This is something postal services in Europe have done with great success. Congress said no.
And one more thing: In 2006, Congress imposed an insane mandate on the Postal Service: it was required by law to prepay, over 10 years, all future expected retiree health-care benefits. That has cost the Postal Service somewhere on the order of $50 billion. It also guaranteed that the postal service would lose billions.
Which it has. In 2006, the postal service had a $900 million surplus. Every year since, it has lost billions, including a staggering $15.9 billion in 2012. Last year, it lost $2.7 billion, an improvement from the $5.5 billion loss in 2016. And you wonder why the Postal Service is pleading for reform?
Though the president won’t like to hear this, Amazon has played a big role in helping the USPS cut its losses. The Postal Service’s package business grew in both volume and revenue by over 11 percent, while its mail volume fell by 3.6 percent. A task force that looked seriously at the Postal Service’s problems is far more likely to recommend that it raise the price of a first class stamp than charge more in its fastest growing segment.
As I mentioned earlier, the president really doesn’t have much say in how the Postal Service operates. For Trump to demand that the post office charge Amazon a higher shipping price would be as inappropriate as demanding that the S.E.C. investigate Bezos for securities fraud. It just shouldn’t be done.
But he does have the ability to nominate governors and postal regulatory commissioners. And circumstance has given him an extraordinary opportunity. Right now, the board is empty except for the postmaster general, Megan Brennan, and her deputy, Ronald Stroman. The Postal Regulatory Commission has two openings as well. If Trump was serious about reforming the Postal Service, he could stack the board with allies. And he could skew the regulatory commission as well.
But doing that requires more than an executive order and a few angry tweets. It requires paying attention to how the federal government operates. Which, as we’ve all learned by now, is well beyond this president’s abilities — and why “postal reform” is likely to wind up as one more missed opportunity.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Joe Nocera is a Bloomberg View columnist. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. He is the co-author of "Indentured: The Inside Story of the Rebellion Against the NCAA."
To contact the author of this story: Joe Nocera at jnocera3@bloomberg.net.
To contact the editor responsible for this story: Jonathan Landman at jlandman4@bloomberg.net.
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