A plan for full privatization of the USPS appears to have lost steam

Long time acquaintance Steve Hutkins had this Washington Post article (taken from the archives) on his site from late March. It is an update at to where the privatization of the USPS status is today. To sum it up? It may be, the USPS is too big to swallow.

Save The Post Office, Steve Hutkins

DOGE wants businesses to run government services ‘as much as possible’

Washington Post: Mail delivery. Real estate. Foreign aid grants. The Trump administration is moving to privatize a sweeping number of government functions and assets — a long-standing Republican goal that’s being catalyzed by billionaire Elon Musk.

The slash-and-burn approach of Musk’s U.S. DOGE Service is paving the way for a new shift to the private sector, reducing the size and power of the federal bureaucracy in a real-world test of the conservative theory — a version of which is also widely popular in Silicon Valley — that companies are better than government at saving money and responding to people’s needs.

Examples are popping up across Washington and in proposals from President Donald Trump’s allies, though the plans are various stages of development and, in some cases, have already encountered resistance.

At the DOGE-allied General Services Administration, officials are quietly moving ahead with a push to sell hundreds of publicly owned buildings to private companies — which can then lease them back to the government, theoretically saving maintenance and upkeep costs for taxpayers, according to two people briefed on internal deliberations who spoke on the condition of anonymity because they were not authorized to discuss them publicly.

At the Postal Service, whose leaders have tussled with DOGE representatives, a plan for full privatization appears to have lost steam after facing pushback and legal hurdles. But private firms are preparing for a piecemeal government effort to outsource mail and package handling and long-haul trucking routes, while off-loading leases for unprofitable post offices, according to six industry executives.

At the Interior Department, Secretary Doug Burgum has proposed allowing private developers to build on federal lands across the West. And in his first public address as treasury secretary, former hedge fund manager Scott Bessent vowed to “reprivatize the economy.”

Businesspeople and policymakers close to the administration are stepping up with additional proposals.

A Wall Street investor nominated to run the International Development Finance Corporation, a little-known foreign investment agency that works to align the private sector with U.S. foreign policy goals, has suggested redirecting a large portion of the $40 billion budget of the shuttered U.S. Agency for International Development to investors, start-ups and companies that work in developing countries. The proposal, which was posted on X by the nominee, Ben Black, and tech investor Joe Lonsdale, is under consideration within the White House, according to a person familiar with it, who also spoke on the condition of anonymity to describe private deliberations. Bloomberg first reported that the initiative was under consideration.

The military contractor Erik Prince has pushed to turn over defense and immigration enforcement functions to private security firms, at one point pitching U.S. officials on a plan to execute operations in Africa, according to three people with knowledge of the idea, who spoke on the condition of anonymity to reflect private conversations. CNN reported that Prince also has floated the use of private military contractors to carry out operations against Houthi rebels in Yemen.

And the Heritage Foundation’s Project 2025 strategy paper — which was spearheaded by Trump adviser Russell Vought before he returned to the White House as budget director — proposed to “fully commercialize” forecasting at the National Weather Service. Commerce Secretary Howard Lutnick has said he does not agree with Project 2025’s plan for the National Oceanic and Atmospheric Administration, which oversees the weather service. But he’s also said he hasn’t ruled out significant changes to make the agency more efficient, and DOGE has pushed it to shed workers.

“It’s been clear from the first days of the administration that one of their main longer-term objectives is privatization of many government assets,” said Joe Brusuelas, chief economist at RSM. “They’ve been very clear about their intent.”

Traditional Republicans have long argued that private companies can do a better job of managing government services than civil servants. But Musk and his Silicon Valley associates want to push the idea much further than the mainstream GOP. At a Morgan Stanley technology conference this month, Musk said the government should privatize “everything we possibly can.”

The tech crowd argues that entrenched corporations that historically have benefited from government largesse are as much a problem as government itself. They say “scrappy builders” from the tech industry — along with a leaner start-up mindset and superior technology — can rework government processes wholesale, rather than merely outsourcing the same work.

Large companies, including Oracle, Microsoft, IBM and ServiceNow hold billions of dollars in contracts to service software and programs DOGE is now axing. Those firms have seen share prices slide significantly, suggesting that the Trump administration’s privatization efforts could be a double-edged sword, helping some companies while hurting others and adding to stock market volatility.

“It’s peak uncertainty right now,” said an analyst familiar with private software companies who work with the government, who spoke on the condition of anonymity because he was not authorized to speak publicly. Public software companies “are trading way low because of the fear of exposure from DOGE — that all these contracts could be rightsized or canceled if DOGE is as successful as it wants to be.”

People in Musk’s orbit view companies that have historically done business with the government as “stagnant” and “monopolistic,” said a person familiar with the thinking of the Silicon Valley leaders who have joined the Trump administration, who spoke on the condition of anonymity to describe private conversations.

The Silicon Valley way of embracing privatization, the person said, would be to first make information public — as Musk has done by posting budget details on X — and have a more rigorous open bidding process for contracts, which prioritizes technological innovation.

“The Silicon Valley version of [privatization] is a technologized, transparent version — let’s compare everything out in the open — radical meritocracy,” the person said.

Not all of the projects under consideration will be realized. But together, these efforts show that a new way of doing things is well underway, said Bob Hockett, a Cornell University law professor and senior counsel at investment firm Westwood Capital.

“They are rapidly turning the government into something more like a shareholder-controlled corporation,” he said.

He added: “What people like Elon Musk and Donald Trump don’t seem to realize is that the whole point of the public sector is to provide essential human goods without being constrained by shareholder profit demand.”

With his background in dealmaking, Trump has long praised the skills of business leaders, arguing that wealthy people are good for society. He has flaunted his relationships with some of the nation’s richest and most powerful executives in a manner that has broken norms, calling Musk a “genius” and hosting a parade of CEOs at his Mar-a-Lago mansion.

On the first day of his second term, Trump gave Musk’s DOGE sweeping powers to change federal agencies, programs and staff. Trump personally announced major data center deals involving big technology companies and foreign players — including an Emirati company that had previously done business with Trump. He floated the idea of turning a demolished Gaza over to private developers, wants access to minerals in Ukraine and orchestrated an infomercial for Musk’s Tesla on the White House lawn.

Trump and Musk’s efforts reflect a long-standing desire by GOP policymakers to privatize a greater share of government functions. In the 1980s, President Ronald Reagan launched a push to identify government programs and enterprises that should be shifted to the private sector. President George W. Bush proposed to privatize parts of the Social Security system, but abandoned it amid strenuous bipartisan opposition. Federal spending is up from roughly 21 percent of the nation’s economy in the 1980s to roughly 23 percent today, according to government statistics.

Meanwhile, Amtrak, the Postal Service, Fannie Mae and Freddie Mac have long been on privatization lists, with conservatives claiming private companies can provide better service at lower cost.

Such efforts have largely failed in the United States in part because of opposition in Congress. But even some liberal economists say privatization is not inherently counterproductive. Most Western countries have privatized rail and postal services, leaving the United States as one of the few nations where both are publicly owned, said Ernie Tedeschi, director of economics at the budget lab at Yale University.

“These are not categorically dumb ideas,” said Tedeschi, who served as a senior economist for President Joe Biden.

Tedeschi warned, however, that privatization could open the door to corruption and mismanagement. Other experts said it stands to enrich a handful of owners while hurting services that millions of Americans depend on. In many Western nations, policymakers have decided the market cannot be trusted to fulfill important public services, choosing to run utility companies, telecommunications networks, hospitals and even airlines as state-owned enterprises.

The only way private entities save money is by “shedding the social-purpose elements of those companies,” said Matt Bruenig, founder of the People’s Policy Project, a left-leaning think tank.

While shifting some services to the private sector could improve efficiency, it would not necessarily produce big reductions in the overall cost of the U.S. government, which spends primarily on the military, health care and payments to individuals, such as Social Security.

“In some cases, it might improve government efficiency; in some cases, it might weaken government efficiency,” said Jason Furman, a Harvard professor who served as a top economist in the Obama administration. The difference, however, wouldn’t do much to change either government spending or the growth of the economy, according to Furman. “But from a macroeconomic perspective, there’s really nothing to see here. You take 50,000 government workers and you replace them with 50,000 private contractors, and it’s mostly a rounding error that won’t change much.”

Agencies where privatization is on the table might only shed some, not all, of their functions.

Postal Service leaders, for instance, have signaled plans to make the agency leaner and inclined toward outsourcing. Postmaster General Louis DeJoy abruptly resigned Monday after a spat with DOGE representatives at the agency. But before that, he’d already asked Congress to off-load some activities, like a long-standing subsidy for freight and groceries to remote parts of Alaska, and free mail for the blind. He also asked DOGE representatives to review leases of nearly 31,000 retail post office locations.

The administration is also laying the groundwork to sell potentially hundreds of federal buildings to private companies, who can then lease them back to the government.

An initial list of buildings “not core to government operations” accounted for 80 million square feet of office space nationwide — and included sites like the D.C. headquarters of the Justice Department and the Department of Housing and Urban Development. The list was later taken down amid confusion and backlash.

But GSA political appointees are pushing leaseback plans as the best immediate method of disposing of federal real estate, according to two people briefed on internal deliberations, who spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.

Obstacles include a 1990 law that requires that federal buildings put up for sale first be offered for use as homeless shelters. A White House accounting rule that has caused previous administrations to scrap similar plans could make leasebacks prohibitively expensive, too, unless Trump’s budget office doesn’t enforce it.

The drive is taking aback some career staffers, the people said. Employees worry that political appointees are trying to circumvent rules that guide the sale of federal real estate and that government buildings may be sold to real estate companies owned by Trump allies or friends, the people said. Listing hundreds of federal spaces at once could flood the market so each building sells well below its true value, the people said.

A GSA spokesperson said in a statement that “at no time has there been any consideration of selling properties at a discount or outside of GSA’s normal process,” and that any disposal strategies would follow the law.

The push for privatization underpins much of DOGE’s work, said the person familiar with the thinking of Silicon Valley leaders in the Trump administration. The group’s immediate focus has been cutting — and trying to remake — government processes so they’re more efficient and transparent. But the ultimate goal is to limit the scope of government and privatize what is left.

“I think everyone — and certainly the leadership of DOGE — believes the private sector would do a more effective job,” said the person. “DOGE is sort of fundamentally libertarian and free market. It’s undeniable that this is the thrust of it.”