Some USPS History and the Latest

Some history

While debating the original Post Office Act, Alexander Hamilton and others argued the post should support itself and make money for the rest of the government. Others, including George Washington and James Madison, didn’t seem to care whether it turned a profit. Jonathan Trumbull, the speaker of the House of Representatives in 1792, observed that having the post subsidize the circulation of periodicals would be “among the surest means of preventing the degeneracy of a free government.” In the end, Washington and Madison won the day. The government allowed printers to ship their newspapers and magazines at a very low cost: one cent to destinations within 100 miles, and one and a half cents to destinations more than 100 miles away. This set off what one researcher called “the greatest explosion of newspapers in history”—and with it an explosion in literacy.

The reason the postal service was losing money is because of a congressionally mandated retirement healthcare funding program no other government agency is required to observe. This creates a $6.5 billion annual shortfall that could easily be avoided.”

2005 Postal Accountability and Enhancement Act (PAEA)

In 2005, Senator Collins  sponsored and introduced legislation, namely the Postal Accountability and Enhancement Act (PAEA). The bill required the USPS to pre-pay the next 50 years’ worth of health and retirement benefits for all of its employees. Legislation or a rule no other federal agency was following. As chair of the Senate oversight panel at the time, she shepherded the bill’s passage. When Repubs and Dems were cooperating, then her House GOP counterpart Tom Davis, supported the bill during a lame-duck session of Congress. It passed by a voice vote without objections, a maneuver giving members little time to consider what they were doing.

To meet the mandate for prefunding USPS’s health and retirement benefits, the measure required the Postal Service to place roughly $5.5 billion into a pension fund every year between 2007 and 2016. This mandate was followed by sizable additional payments, making it impossible for the institution to run a profit. To make it harder for the USPS to make money, the law prohibited the agency from any new activities outside of delivering mail. In an essay for the Washington Monthly last year, New Jersey Congressman Bill Pascrell called the Postal Accountability and Enhancement Act (PAEA).

“It was a blunder, one of the worst pieces of legislation Congress has passed in a generation.”

Should the USPS be Profitable?

The National Academy of Public Administration has released a “Work-in-Progress” report entitled “Restructuring the U.S. Postal System: The Case for a Hybrid Public-Private Postal System.”  The Academy was embarking on a study of this proposal, which would privatize a large portion of the country’s postal system.

The Academy’s study is billed as an “Independent Review of a Thought Leader Proposal to Reform the U.S. Postal Service.”  Unfortunately, no study conducted by a four-man panel chaired by David M. Walker, the former President and CEO of the libertarian Peter G. Peterson Foundation, can seriously claim either the independence or non-partisan objectivity that the Academy itself boasts.

It has been my experience over the past 30 years that “hybrid public-private partnerships” are often little more than a sedative euphemism for the private sector taking the profits while the public bears the costs.  Such is the case with this “reform,” which will, as is so often claimed in such instances, “unleash the power of market forces” by transferring the USPS profit centers to the private sector while saddling the public with the cost for “the last mile.”  Meanwhile, the public is already being stripped of its assets in broad daylight while the media sleeps.

The proposal is predictably one-dimensional — as befits men who seemingly have little or no sense of the public service mission for which the Post Office was created 238 years ago under the direction of Benjamin Franklin. 

AB: Having been in supply chain for 40 years, I would suggest they know little about how to administer such complex warehouses of mail and the delivery of such pieces of mail.

“Its purpose, then as now, was democracy and equality, not efficiency or profit. Thus, the report omits much.”

The USPS goal is to deliver the mail and even to go as far as the last mile. Mark Jamison and also Steve Hutkins at Save the Post Office will tell you similar. Even so, in new developments, mail for a neighborhood goes to one location consisting of numerous mail boxes. The postal person places the mail in each recipient’s mailbox.

Since Louis DeJoy has taken over the US Post Office he has been blowing it up by ignoring what his real mission is for the USPS. The goal is certainly not profit. Given the circumstance it may never be profitable due to size and disbursement of postal utilities. Neither was it supposed to be corporatized into a business. Its mission is to deliver the mail to the extent of the last mile.

Read Louis DeJoy’s argument about the USPS being profitable.

Postmaster General Louis DeJoy Admits Major USPS Mistakes: ‘We Blew It,’, Kali Coleman

The U.S. Postal Service (USPS) is struggling—but that’s nothing new. When Louis DeJoy took over as Postmaster General in 2020, he made it clear that his main goal was to turn things around, and he’s certainly made moves to do so. In March 2021, DeJoy unveiled his Delivering for America (DFA) initiative, with the intention of transforming the USPS “from an organization in financial and operational crisis to one that is self-sustaining and high performing” over the course of a decade. But in a new interview with Federal News Network, DeJoy is admitting to some of the USPS mistakes that have occurred over the last three years—and before he took over.

The Postal Service is supposed to be financially self-sufficient, which means it “should cover its expenses through the sale of its products and services, not taxpayer money,” according to the U.S. Government Accountability Office (GAO). But the agency’s revenue hasn’t actually been able to cover its expenses and debt since 2006—which was the last year the USPS was profitable. And was not paying into a retirement fund or healthcare.

“We have violated the law. For the last 15 years, the law was to break even. In order to do that, you have to evolve your service . . . That’s what we’re in the process of doing,” DeJoy told Federal News Network. “It should have been us 15 years ago. We had this in the bag, and we blew it.”

It’s taking longer than DeJoy initially expected to dig the USPS out of the hole it fell into almost two decades ago. Under his DFA plan, the agency was projected to break even in fiscal year 2023 and start turning a profit in 2024. Instead, the agency ended the 2023 fiscal year with a $6.5 billion net loss, and a total operating revenue decrease of $321 million.

“We fumbled a couple of things in a couple of areas, which is unfortunate. So, the journey is longer than I wanted it to be,” DeJoy told Federal News Network. “Our problems are bigger, and more programmed into our systems on how we do things. So, it’s taking time. We’ve had a lot of adverse headwinds.”

The Postmaster General admitted that because there are so many moving parts to his 10-year DFA plan, it doesn’t always go exactly to plan. For instance, the USPS in-sourced its logistics work from third-party contractors at several Surface Transfer Centers last quarter, which DeJoy said brought 1,000 jobs into the agency that it had previously contracted out.

But during the height of peak shopping season last December, the USPS was forced to shut down a Surface Transportation facility in St. Louis for nearly two weeks because of a hazardous mercury leak from an illegally shipped package, according to Federal News Network.

“There were mistakes and there were events, and there is positive action, and there are things that could go faster. I don’t run away from that,” DeJoy said.

Still, the Postmaster General believes that continuing to move fast and make big changes is better than the “status quo” of an agency that loses money—even if there is the occasional setback. And when mistakes do happen, he said they’re also addressed and corrected with the same expediency.

“This is about saving the Postal Service for the next 50, 60, 100 years,” DeJoy told the news outlet.

Despite past mistakes, it’s clear that DeJoy has no plans to slow down his reform plans. Right now, much of his focus is centered around capturing a bigger piece of the package business for the USPS from private-sector companies like UPS, FedEx, and Amazon.

The agency has recently been making several investments to exponentially increase its capacity to process and ship packages—but they can’t take their time with these changes if they want to stay alive and come out on top, according to the Postmaster General.

“Our competitors are reacting to us out there, and we will get better faster,” DeJoy told Federal News Network. “I’m very confident in that—that we’ll get better faster. My issue right now is to get it done fast enough, before we run out of cash.”

According to the most recent Treasury Department data, the USPS had $17.4 billion left in cash at the end of Jan. 2024.

“I’m into us being as self-contained as we possibly can, but we got to do it. We’ve got to do it like the other guys do,” DeJoy concluded. “Which is really, really good. Or we’ll be really, really gone.”

Read Steve Hutkins @ Save the Post Office