The House of Representatives held a hearing recently titled “Legislative Proposals to Put the Postal Service on Sustainable Financial Footing.” Democrats proposed bailing out the United States Postal Service (USPS) and Republicans proposed reforms to stop the USPS from losing billions every year. Suffice it say that on Postal reform, Democrats and Republicans have vastly different solutions to fix the pervasive structural problems at the USPS.
Republicans want structural reform. The USPS business model has failed.
At the hearing, Rep. James Comer (R-KY) argued “the core issues that plague the Postal Service is relatively straightforward … demand for first class mail has plunged and costs have stayed the same.” Real-life companies operating in the real world would go bankrupt if they followed the USPS business model. Rep. Comer continued, “demand for packages has exploded and the Postal Service isn't equipped to deal with this massive demand increase.”
As a distraction from reform efforts, Rep. Jody Hice (R-GA) was forced to defend Postmaster General Louis DeJoy from the ludicrous conspiracy theories over the USPS fixing the 2020 election for former President Donald J. Trump. We’re still dealing with the insane, false narratives about the USPS removing mailboxes when we should be fixing the broken Postal Service. However, on reform, Rep. Hice was able to show how DeJoy “reduced overtime” in the wake of an Inspector General’s report documenting “rampant overtime use and abuse, the cost of which was … $1 billion in 2018 alone.”
Even with myriad deflections and distractions, Republicans did highlight the serious problems at the USPS – changes are needed in restructuring, pricing, and in dealing with labor costs.
The law of supply and demand dictates that when demand increases, prices increase, yet the USPS has kept its prices artificially low. In this current business environment, USPS competitors, like Amazon, are having a field day. Keep in mind, Amazon continues to use the Postal Service to guarantee its ‘last mile’ delivery. As a result, taxpayers are literally subsidizing billion-dollar Amazon to deliver its packages.
The USPS has had 14 consecutive years of losses in the billions of dollars, including $9.2 billion in 2020, $8.8 billion in 2019, and a staggering $15.9 billion in 2012. If the USPS were FedEx or UPS, they would have gone belly up years ago, yet the USPS has the benefit of being bailed out—year in, year out—by the U.S. taxpayer.
Democrats want more bailouts. The USPS is failing, yet the Dems want you to subsidize it.
Democrats loaded up the CARES Act, a bill intended to combat the coronavirus, with $10 billion in aid and they attempted to sneak in a $25 billion bailout in the House passed HEROES Act that stalled in the Senate. Mark Dimondstein, president of the American Postal Workers Union, called for “$15 billion to help stabilize the Postal Service during this (coronavirus) crisis” and relief from the funding of retirement benefits for employees during his testimony before the committee.
Republicans and Democrats have different approaches at Postal reform—obviously. However, there is agreement that the USPS has serious troubles.
On the root causes of mail delays, The Lexington Institute released a detailed report. The data showed that high package volumes are causing longer mail delays. “For the week ending December 26, 2020, only 64 percent of first-class mail was delivered on time,” yet “package delivery was at 95% on-time delivery” for that same week. Mail delivery is the USPS’ priority service – it has a monopoly. Here’s an idea: The Postal Service should do its primary job better. Deliver the mail on time.
Back to Amazon. In practical terms, the Postal Service is subsidizing Amazon, which really means that you are subsidizing billionaire Jeff Bezos. Amazon wants to leverage the Postal Service into a “delivery machine that competes with UPS and FedEx.” So, Amazon is leading a coalition dedicated to blocking Postal reform. Cronyism at its worst.
Amazon supported bailouts as an alternative to the USPS raising prices for packages. As The New York Times reported, “a coalition of online retailers backed by Amazon began a seven-figure advertising blitz … opposing President Trump’s demand that the beleaguered United States Postal Service ratchet up its package delivery rates to avoid bankruptcy.” In 2020, the Amazon-led coalition committed $2 million to block reform at the USPS. Cronyism is on the march and Amazon is at the head of the parade.
Republicans and Democrats will fight this out for the next few years, but with Democrats in control, significant reforms are unlikely. Taxpayers suffer through bad service and still get caught with the bill.
Jerry Rogers is the founder of Capitol Allies and the host of the ‘Jerry Rogers Show’ on WBAL NewsRadio.