Trump forms task force to study Postal Service operations, finances – By Carolyn McAtee Cerbin (usatoday.com) / April 13 2018
President Trump has formed a task force to study the finances and operations of the U.S. Postal Service, just 10 days after he blasted online retailer Amazon for making the USPS its “Delivery Boy.”
“The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout,” the executive order released Thursday night reads.
Citing $65 billion of cumulative losses since the 2007-2009 recession and the Postal Service’s inability to make payments required by law for its retiree health benefits, the executive order says “prompt, reliable and efficient universal mail services” are at risk.
Treasury Secretary Steven Mnuchin will head the new panel with help from the directors of the Office of Management and Budget and Office of Personnel Management.
Number one on the list of task force items to look into is the expansion and pricing of the package delivery market.
Trump recently lobbed multiple Twitter attacks against Amazon, claiming the online retail giant pays “little or no” state and local taxes and costs U.S. taxpayers “many billions of dollars” through cheaper Postal Service shipping rates.
Trump’s Twitter threats against the company have been viewed in some quarters as a proxy battle in his war against The Washington Post, owned by Amazon CEO Jeff Bezos.
I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy. 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?)!
— Donald J. Trump (@realDonaldTrump) April 3, 2018
Brick-and-mortar stores have closed by the hundreds, as retail chains struggle to compete with the convenience of online shopping, a transformation led and dominated by Amazon.
The U.S. Postal Service has been roiled by the same gale-force technology winds, as Americans abandoned mail for email and other electronic communication. But the post office has benefited, more than suffered, from Amazon, financial analysts say.
Along with UPS and FedEx, the Postal Service helps deliver packages in the “last mile” of their Amazon journey.
That’s translated to more packages and package-related revenue, in part thanks to Amazon.
In the October-December 2017 quarter, the service handled 7% more packages than in the same period a year before, while mail declined about 5%.
“Although we continue to win customers and grow our package business, these gains are not sufficient to offset continuing declines in our mail business, which is our main source of revenue and contribution,” Postmaster General and CEO Megan Brennan said in February.
The service has a decade-long string of fiscal net losses, which has led to more than $120 billion in unfunded liabilities, mostly retirement health and pension benefits. In 2006, Congress mandated that the postal service prepay benefits, a special requirement other agencies do not face.
“We’re trying to pass reform legislation that will allow USPS to compete without the multi-billion dollar burden imposed on it by Congress in 2006,” Rep. Gerry Connolly, D-Va., a member of the House Oversight Committee, said in a statement to USA TODAY. “Singling out favorite Trump villains like Amazon is a distraction from our bipartisan effort.”
Amazon has a negotiated contract with USPS for competitive parcel shipping services, but it is not publicly available. However, federal law requires USPS to charge enough to cover the cost of delivering packages for companies like Amazon.
Under the Postal Accountability and Enhancement Act of 2006, the Postal Service’s so-called “competitive products” must “cover attributable costs and contribute to institutional costs.” (The law classifies USPS products into two categories; market-dominant products, such as regular mail service; and competitive products, such as the packages that it delivers in competition with UPS, FedEx and other delivery companies.)
In response to an op-ed that appeared in the Wall Street Journal last year, USPS Chief Financial Officer Joseph Corbett wrote that it is “inaccurate” to say that the Postal Service delivers packages “below cost.”
“By law our competitive package products, including those that we deliver for Amazon, must cover their costs. Our regulator, the Postal Regulatory Commission (PRC), looks carefully at this question every year and has determined that they do,” Corbett wrote. “The PRC has also noted that competitive products help fund the infrastructure of the Postal Service. It is that infrastructure that enables us to fulfill our universal service obligation to deliver to each and every address in the United States at an affordable rate.”
According to FactCheck.org, Trump’s claim that every time Amazon delivers a package it “loses one dollar and 47 cents” is not accurate.
Trump also has said Amazon’s shipping rates are “not fair to our taxpayers,” claiming taxpayers are “subsidizing” Amazon’s delivery costs. But the USPS does not receive money from the federal government for its operating costs, as Trump’s statement may have suggested.
A page on the USPS website listing “The Top 10 Things You Should Know About the U.S. Postal Service” says, “The Postal Service receives NO tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.”
That’s been the case since 1982, according to its most recent 10-K form.
