President Trump has been antagonistic to the United States Postal Service since the early days of his administration. In his plan for government reorganization, he called for the privatization of the post office. He has tweeted that the post office should charge Amazon more to deliver packages. Most recently, he has threatened to veto COVID-19 emergency funding if it contains direct funding for the post office.
Ultimately, change is needed with regard to the postal service. However, that change needs to be an expansion in the role of the post office in public life rather than a diminution of its functions. Because the postal service has a universal service obligation to provide all aspects of service at an affordable price to all communities in the United States, it already represents a vital service to thousands of Americans who are not perceived as “profitable” to serve by private companies. Leveraging that power by expanding the role of the postal service can be a powerful boon to democracy and an agent of financial inclusion for underserved communities. Pending legislative proposals exist to address these concerns, and urgent action is needed. These proposed expansions to the role of the postal service require an additional legislative intervention to support its financial viability. To increase access, facilitate participation, and promote strong and healthy communities, three key legislative reforms to the post office are urgently needed.
The first potential legislative reform is the reintroduction of postal banking. Prior to 1967, the post office served an important role in providing basic financial services to thousands of Americans in rural and underbanked communities. Because the post office is a universal service, ensuring access to reliable mail service everywhere in the country, it was uniquely situated to ensure access to financial services like access to small loans, checking and savings accounts, and basic transactional services to communities not deemed profitable for traditional financial institutions to serve.
In 2017, 6.5% of households in the United States, or nearly 8.5 million households, were unbanked – meaning they had no formal bank account—and an additional 24.2 million were underbanked. These individuals are therefore forced to fringe or informal financial institutions, which often more costly to them because of high interest rates and lack the federal protection and oversight of traditional financial service providers. Re-establishing postal banking would create a formal institution to serve the basic financial needs of these communities, allowing them a greater degree of financial inclusion and economic participation without resorting to check cashers, payday lenders, or other informal actors.
Postal banking is a popular proposal with a historical precedent that can be reenacted to improve economic and financial inclusion for marginalized communities. Senator Gillibrand introduced legislation in 2018 to allow the postal service to conduct limited financial activities, but the bill was never heard in committee. Passing legislation similar to Senator Gillibrand’s bill would represent a key step toward improving access to financial services, and therefore financial inclusion and economic participation, for marginalized communities.
The next key legislative reform to the postal service must be a federal move to facilitate national vote-by-mail. Election law is a largely a matter of state law, as states are empowered to set the particulars of elections within their jurisdiction subject only to minimal Constitutional requirements. States can and have taken the lead on expanding vote-by-mail; according to the National Council on State Legislatures, five states conduct all elections entirely by mail, and another three states allow counties to opt into vote-by-mail for all elections. In total, 21 states allow vote-by-mail elections in some capacity. However, the crisis of the novel coronavirus outbreak has underscored the need to take federal action as evidenced by the Supreme Court’s refusal to extend the deadline for absentee ballots in Wisconsin’s April election and the at least 36 resulting cases.
Senator Klobuchar introduced legislation that, among other things, would allow for expanded absentee vote-by-mail in every state during emergency conditions. While the legislation represents a good first step towards federal action on uniform access to vote-by-mail, it is limited to declared emergencies and therefore does not go far enough. In order to manifest the full benefits of vote-by-mail – most notably increased ease of and access to voting, therefore increasing turnout and civic participation – a more comprehensive bill is needed. The Universal Right to Vote by Mail Act of 2009, which would have made it easier to vote by mail by prohibiting states from imposing additional requirements on vote-by-mail eligibility, represents the kind of sweeping, permanent reform that is necessary to facilitate broad access to voting, and therefore civic and democratic participation, among all communities in a safe and healthy manner.
Removing the Pension Prefunding Requirement
For the benefits of these reforms to fully manifest, it is crucial that the post office is financially viable. This requires a final legislative reform – removing the pension prefunding requirement imposed on the postal service in the Postal Accountability and Enhancement Act of 2006 (PAEA).
While advocates of privatization claim that the post office is losing money, those claims fail to capture the full context of the legal predicament faced by the office. PAEA requires the postal service to prefund employee pensions until 2056, a requirement imposed on no other federal agency. Removing this requirement and allowing the post office to adopt the pay-as-you-go model used by the private sector and other federal agencies would result in over $5 billion in additional cash flow to the service. In order to support the other changes to the role of the postal service, this prefunding requirement must be lifted. This would allow the postal service to remain financially viable in its greater capacity without requiring service price increases.
These reforms have champions, including Senator Gillibrand who continues to speak out vociferously in support of the postal service and its potential to facilitate civic and economic participation and to improve access and inclusion for communities across the country. The trio of reforms described here would raise the profile of the postal service and increase its role in the lives of thousands of people across the country. With the reintroduction of postal banking and expansion of voting by mail, a financially bolstered United States Postal Service can support strong communities in a way that private industry has been unwilling or unable to do. Decades of financial exclusion and disinvestment in rural and low-income neighborhoods and the global crisis of the coronavirus have demonstrated that we, as a country, cannot wait to act. Reinvigorating the postal service and its role in society are of urgent national concern.
During the Spring, President Trump has brought to the spotlight a little-discussed, quite unsexy policy dilemma: how to save the U.S. Postal Service.
In a series of Tweets, the President accused Amazon of unfairly taking advantage of the U.S. Postal Service. The first of these Tweets appeared on his Twitter feed on March 29th, and seemingly accused Amazon of shirking its tax responsibilities and free-loading from the government delivery service:
“I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”
President Trump also seemingly accused the Washington Post, which is owned by progressive billionaire Jeff Bezos, of engaging in secret lobbying. Although it is not entirely clear to which type of lobbying President Trump was referring in his March 31st Tweets, he seems to imply that the Washington Post is Amazon’s lobbying arm or propaganda machine that is helping Amazon to rip off the post office:
“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars. The Failing N.Y. Times reports that “the size of the company’s lobbying staff has ballooned,” and that...
“…does not include the Fake Washington Post, which is used as a “lobbyist” and should so REGISTER. If the P.O. “increased its parcel rates, Amazon’s shipping costs would rise by $2.6 Billion.” This Post Office scam must stop. Amazon must pay real costs (and taxes) now!”
After several news outlets, including the New York Times, published articles rebutting his statement that Amazon is not paying taxes (Amazon paid $957 million in income taxes in 2017) and is costing the U.S. Post Office billions of dollars per year, President Trump again asserted that he was correct, tweeting in part, “Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed.”
A few days later, he again tweeted that, “Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!” However, if one thing is clear, it is that the U.S. Post Office is not funded through taxpayer dollars, but through its own revenue. Still, the President is correct that the post office is losing money every year, specifically $2.7 billion in fiscal year 2017. However, it is unlikely that the bulk of that loss was incurred by conducting business with Amazon.
According to the U.S. Postal Service’s annual report for fiscal year 2017, its biggest losses came from fluctuating forces outside of its control. “The controllable loss for the year was $814 million, a change of $1.4 billion, driven by the $775 million decline in operating revenue before the 2016 change in accounting estimate, along with the increases in compensation and benefits and transportation expenses of $667 million and $246 million, respectively.” Mail volumes declined by 3.6%, while employee benefits and transportation costs have increased. On the other hand, the report indicated that package mail is up by 11.4%, providing “some help to the financial picture of the Postal Service as revenue increased $2.1 billion.” However, that growth has not been able offset other losses.
In other words, package companies like Amazon may actually be helping the U.S. Postal Service, even if they are receiving discounted shipping rates. By law, the Postal Regulatory Commission ensures that all items sent through the U.S. mail are profitable. Therefore, even if the U.S. Postal Service gives a discount to Amazon, those shipments will still be profitable to some degree. Whether the U.S. Postal Service should charge higher rates is a separate issue.
Postmaster General and CEO Megan J. Brennan described the report’s findings as “serious though solvable.” So, how can the government hope to save an agency that has not had a net surplus since 2006? The U.S. Postal Service is hopeful that H.R. 756, which was introduced to the House of Representatives by Rep. Chaffetz in 2017, and is being sponsored by Rep. Garrett in 2018, will pass and provide some relief by reforming postal service benefits, operations, personnel, and contracting. In addition, the Postal Regulatory Commission must adopt a new pricing system to generate additional revenue.
U.S. Senator Bernie Sanders has also pitched some ideas in the past, which are now catching the public’s eye in light of the President’s recent Tweets. Senator Sanders recently told Vice News that the post office should expand its services to generate more revenue. For example, the U.S. Postal Service could offer gift-wrapping services to capitalize on package shipments around the holidays. Additionally, "[t]he postal service could make billions of dollars a year by establishing basic banking services so lower-income people have access not to these payday lenders but to someplace where they can be treated with respect."
This idea is not new. In fact, until 1966, many U.S. post offices did offer simple banking services. Moreover, other countries such as Japan, the United Kingdom, France, and Italy currently use similar systems of postal banking with success. Senator Sanders emphasized that the post office must survive or else Americans living in rural areas, where it is not profitable to deliver mail, will face a decrease or elimination of mail services.
One former postmaster added that “[a]bsent a public infrastructure like the postal service network, it’s likely that both of these private sector firms (Fedex and UPS) would either refuse to serve many areas of the country or they would use their powers as an oligopoly to control prices.” In other words, if the U.S. Postal Service goes out of business, other mail carriers may be unable to fill the gap, or may only do so at inflated rates.
With so much at stake, it is daunting to imagine America without the U.S. Postal Service. We can only hope that Congress will step in and make the necessary reforms before it is too late.