Saturday, October 23, 2021

Long Past Time to Fire Postmaster DeJoy

The U.S. Postal Service (USPS) used to be one of the best-run and most popular agencies in the American government. But under the leadership of Postmaster General Louis DeJoy, on-time delivery has plummeted, wreaking havoc on both individuals and businesses. 

Now, as of October 1, 2021, he has imposed additional sweeping changes with his 10-year USPS restructuring plan that further slows mail delivery while making it much more expensive to mail letters and packages. This is supposedly meant to address a substantial operating deficit, but it could very easily lead to a death spiral, as the worse service causes customers to flee to private shippers, cutting revenue further. That may even be intentional — as John Nichols argues at The Nation, it all smells like the start of a plan for privatizing the agency entirely.

Dejoy’s 10-year plan has drawn a complaint from 20 states’ attorneys general against the Postal Regulatory Commission (PRC), which argues that the Postal Service didn’t fully vet DeJoy’s 10-year plan: “The Plan will transform virtually every aspect of the Postal Service … rework how the Postal Service transports mail and other products; overhaul its processing and logistics network; enact slower service standards for First-Class Mail and Periodicals and First-Class Packages Services; reconfigure the location of places where customers can obtain postal products and services; and adjust rates,” the attorneys general said in a joint statement.

Privatizing the USPS would seem to benefit DeJoy's business interests, as well as the investment banking interests of Ron Bloom who currently serves as Chairman of the USPS Board of Governors.

Salon reports that according to documents newly obtained by Citizens for Responsibility and Ethics in Washington (CREW) via a Freedom of Information Act, Dejoy reportedly recused himself from agency decisions that might have affected the performance of his former freight transportation company XPO Logistics. However, the postmaster general opted out of divesting from the firm altogether, opening him up to a blatant conflict of interest.

In August 2021, CNN reported that, despite his role in heading the USPS, DeJoy's stake in XPO fell between $30 million and $75 million – an apparent conflict that came as a complete "shock" to many outside experts. XPO routinely carries out contracts with both the USPS and other government agencies, like the Defense Department. During the first two months of his tenure last year, XPO signed onto at least two new contracts with the USPS.

President Biden must get rid of DeJoy and replace him with someone who can undo the damage DeJoy has wrought on the USPS. The president, however, is not allowed to directly fire the postmaster general, who serves at the pleasure of the USPS board of governors.

The supposed bipartisan nine-member board of governors oversees the USPS’s expenditures and operations and appoints the postmasters general. Six of the current governors, including the board’s chairman, Ron Bloom, are Trump appointees; Biden has appointed three. 

Unless the president has cause to remove a governor, he can replace them only when their seven-year terms end or they step aside prematurely. Those rules are meant to protect the Postal Service from partisan meddling and generally make it hard for presidents to reshape it without waging political battles. Trump and former Treasury Secretary Steven Mnuchin briefly withheld federal pandemic funds from the USPS in an efort to force it to agree to greater presidential control. That move failed, but they found like-minded proxies in DeJoy and Bloom to accomplish the same end.

In the first months of his administration President Joe Biden filled three open seats on the U.S. Postal Service’s board of governors. Unfortunately, even with Biden's three appointees — Ron Stroman, a former deputy postmaster general; Amber McReynolds, the CEO of Vote at Home, an organization that promotes voting by mail; and Anton Hajjar, the former general counsel for the American Postal Workers Union — the majority of the board members, by a margin of two, support DeJoy's moves to lower USPS service levels and increase costs to mail letters and packages.

Fortunately, Pres. Biden has the opportunity to replace two conservative members of the board by the end of 2021. Board members Ron Bloom and John Barger — who side with other board members appointed by Pres. Donald Trump in supporting DeJoy — both reach the end of their appoint terms in December.

Ron A. Bloom, a conservative Wall Street Democrat, was nominated to the Postal Service Board of Governors by Pres. Trump, confirmed by the Senate and began his service Aug. 20, 2019. Bloom served the remainder of a then vacant seat seven-year term that expired Dec. 8, 2020, and is currently serving a one year holdover term. He was elected by his fellow Governors on Feb. 9, 2021, to serve as the 24th Chairman of the Board of Governors.

Bloom is a managing partner at Brookfield Asset Management (BAM), which takes a business interest in privatizing public assets. BAM embroiled in several controversies: from its treatment of low-income tenants in the middle of the COVID-19 pandemic to its extraordinary actions to save Jared Kushner from defaulting on a $1 billion plus loan on 666 Fifth Avenue, which is now the subject of Congressional inquiries.

Furthermore, Louis DeJoy recently invested $305,000 in BAM assets. The USPS said that the transactions cleared their ethics standard, but this is a clear conflict of interest, especially given that Bloom in his current role as chair of the postal board of governors is DeJoy’s supervisor.

Bloom has a history of working towards postal privatization. Bloom recently helped lead another huge investment banking firm, Lazard, during the period it helped privatize the UK Royal Mail. During the consulting contract, Lazard was also criticized for profiting from share prices it pitched low and sold high using insider information, netting an £8 million profit in hours. Furthermore, in 2011 Lazard helped issue a five-year USPS plan that recommended a “shrink to survive” plan — Bloom, then on contract with a postal union, said it was “doomed to fail”, but now he is a co-author of DeJoy’s ten-year plan that shrinks USPS even further than the 2011 plan.

Since being appointed by Trump to the Postal Board in 2019, Bloom has served as a reliable vote for both DeJoy and his agenda. Amidst the national outcry against DeJoy’s dismantling of mail-sorting machines last year, Bloom did not respond to press inquiries about his thoughts on DeJoy’s leadership. The subsequent chaos caused by DeJoy’s operational changes prompted New Jersey Congressman Bill Pascrell to call for the immediate firing of Bloom and the rest of the Board for their “silence and complicity in [a] deliberate campaign to subvert vote-by-mail elections and destroy the Post Office.” 

When asked by The Atlantic earlier this year about whether DeJoy’s operational changes had affected the election, Bloom offered a factually inaccurate response that such claims were “absolute BS” and called the agency’s handling of 2020 mail-in ballots “awesome and amazing”. Bloom’s response stands in contrast with data released by his own agency, detailing that absentee ballot mail delays arising from USPS operational changes were the worst in key battleground states like Michigan and North Carolina. Despite continued public outrage over DeJoy’s leadership, Bloom has asserted that DeJoy will “have my support until he doesn’t, and I have no particular reason to believe he will lose it.”

Bloom has also proudly proclaimed his support for DeJoy’s 10-year USPS restructuring plan — which would reduce service hours, extend delivery times, eliminate extra delivery trips, and raise postage rates — by coauthoring its introduction, pitching it to key stakeholders, and defending it alongside DeJoy himself in press interviews. He has reportedly also had a quiet but crucial role crafting DeJoy's plan.

Governor John Barger’s term is also set to expire in December of this year. Alongside Bloom’s replacement, Biden can and should nominate another progressive Democrat or Independent to take Barger’s soon-to-be-open seat and ensure that the board has an anti-DeJoy majority by 2022. Replacing Barger alongside Bloom will also neuter the power of the board’s other pro-DeJoy conservative Democrat, Donald Moak, whose term expires in December 2022.

A coalition of 77 public interest groups has urged President Joe Biden not to reappoint Ron Bloom to a second term on the United States Postal Service’s board of governors. In an Oct. 8 letter to Biden, the groups urged the president not to “reward this failed leadership with a new term.”

“Instead, please take this opportunity to correct the course of the Postal Service’s future by moving expeditiously to nominate a replacement for Mr. Bloom who will be forward-looking and more representative of the postal workforce, and will not rubber-stamp the disastrous policies of Mr. DeJoy, ” the group said.

The group appeared to be formed around the Save the Post Office Coalition, which includes more than 300 organizations. Among these are Public Citizen, MoveOn, the American Civil Liberties Union and the NAACP.

The White House has not said whether the president will reappoint any of the Trump postal board members.

Friday, October 15, 2021

The U.S. Postal Service Was Never a Business. Stop Treating it Like One

When the Continental Congress appointed Benjamin Franklin as the first Postmaster General, our nation had not yet been founded. The Bill of Rights would not be drafted for another 16 years. Now, nearly two and a half centuries later, the United States Postal Service provides every person in America with a private, affordable, and reliable means to exchange information.

From its origins in the U.S. Constitution, it was intended to connect us to one another, so that we could live as one nation. That idea is even written into Title 39 of the U.S. Code:

The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities.

The Postal Service even serves as a baseline for the exercise of American constitutional rights through its conveyance of mail in election ballots.

Recent news that the Postal Service’s financial condition is being used as a pretext for degrading its service – including allowing mail to go undelivered for days and scaling back the hours of or closing post offices – threatens to degrade that constitutional baseline as well.

In an early response to novel coronavirus, Congress allocated $10 billion to help shore up the Postal Service’s finances, but the Treasury Department has held up those funds without explanation. Instead, Postmaster General Louis DeJoy is preparing to make dramatic service cuts,treating the USPS like a private business facing bankruptcy. This should draw universal condemnation.

The U.S. Postal Service was never a business. It is an essential government service guaranteed to the American people by the U.S. Constitution and it should be preserved accordingly.

To understand how the Postal Service became so central to America’s national identity and the actualization of our constitutional rights, one needs to examine its history.

In the earliest days of our nation, Americans were more likely to identify themselves as citizens of their home states than of the United States. For our nation’s first generation, the Postal Service was often the only reminder the U.S. had a federal government at all. As America expanded westward, the Postal Service enabled new states like California, which otherwise would have been isolated by America’s vast Western Territories, to forge its connection with the rest of the country. Ultimately, the roads, rail stations, and rural post offices that were built or subsidized by the Postal Service drove our nation’s physical unification.

Even more important were the nationwide communications the Postal Service enabled. Prior to the invention of the telegraph, the absence of a local post office made exchanging ideas with the rest of the country impossible. In America’s early decades, one of the most vital steps taken by newly established towns was to request a post office.

Recognizing that receiving information was as critical to our national unity as communicating it, Congress mandated the Postal Service deliver newspapers for free or at a minimal cost. As George Washington wrote in 1788, “I entertain a high idea of the utility of periodical publications … spread[ing] through every city, town and village in America. I consider such easy vehicles of knowledge, more happily calculated than any other, to preserve the liberty, stimulate the industry, and meliorate the morals of an enlightened and free People.” Low-cost newspaper delivery endured until the Congressional Postal Reorganization Act was adopted in 1970.

Prior to the 1850s, the delivery of free newspapers and of mail to isolated frontier towns caused the Postal Service to lose money. It likewise strained the Postal Service’s financial resources when, in the mid-19th century, it decided to charge the same price for all first-class letters sent within the U.S. regardless of their destination.

These choices were possible then because the Postal Service was not burdened with financial self-sufficiency. Its sole mandate was to enable everyone in America to communicate affordably. In that respect, the Postal Service’s public benefit mission is more akin to the Armed Forces’ than FedEx’s, and no one is suggesting the military should pay its own way or face bankruptcy.

Another important piece in the Postal Service’s preservation of civil liberties came in 1877, when the Supreme Court, in Ex Parte Jackson, ruled that “No law of Congress can place in the hands of officials connected with the postal service any authority to invade the secrecy of letters and such sealed packages in the mail.” As a result, the privacy of communications sent via the USPS is constitutionally guaranteed. Good luck getting that with Gmail.

The year 2020, perhaps more than any other in American history, illustrates why Postal Service’s centuries-old mission must be upheld.

The U.S. Census Bureau, racing to complete the 2020 census, relied on the Postal Service for much of its data collection. Government health agencies depends on the USPS to provide critical COVID-related health information and supplies. Elected officials are using the Postal Service for cost efficient and sometimes free communications with their constituents, including about support programs during the ongoing economic crisis. And state and local election boards rely more than ever on the USPS to conduct voting by mail, which is critical to guaranteeing the right to vote during the ongoing pandemic.

President Trump called the Postal Service “a joke,” but there is nothing funny about the steady degradation of an institution that breathes unimaginable life into our constitutional rights.

At this critical time, Congress should do everything in its power to ensure the USPS remains vibrant and strong. Every member of Congress and every American, regardless of political party or philosophy, should be grateful that for 245 years “neither snow, nor rain, nor heat, nor gloom of night stays the [Postal Service’s] couriers from the swift completion of their appointed rounds.” We should ensure that “nor politically-motived cost savings” is added to that list.

Originally published at aclu.org — written by Chad Marlow, ACLU Senior Policy Counsel

Tuesday, October 12, 2021

Republicans Setup USPS for Financial Failure

The USPS has been struggling financially fin the 21st century, in part because email has reduced letter mail volume and revenue, but also because of an extraordinary requirement the Republican controlled Congress and President George W. Bush imposed on it in 2006. Unlike any other government agency or private company, the USPS is required to prepay health benefits for retirees 75 years into the future. This means that the Postal Service must have funds in reserve to pay for future workers who have not been born yet. This requirement has been an albatross around the neck of the USPS ever since it was implemented, costing billions of dollars every year and making up nearly all of its operating losses, which totaled $8.8 billion in fiscal year 2019.

As explained in The Week: The Postal Accountability and Enhancement Act (PAEA) of 2006, passed by a Republican-led Congress and signed into law by President George W. Bush, gave the Postal Service new accounting and funding rules for its retiree pension and health benefits.

Up until 2006, the USPS funded those obligations on a pay-as-you-go-basis, pulling out of its pension fund and adding to it as retirees' costs came in. But the PAEA required the Postal Service to calculate all of its likely pension costs over the next 75 years, and then sock away enough money between 2007 and 2016 to cover most of them. This is one of those ideas that sounds responsible on the surface but is actually pretty nuts.

Consider your average 30-year mortgage. What if you had to set aside a few hundred thousand dollars right now, enough to pay the whole thing, even if you were still going to make payments over 30 years? No one would ever take out a mortgage. That's the whole point: the costs only come in over time, and the income you use to pay them comes in over time as well. It works exactly the same for retiree pensions and benefit funds. Which is why, as economist Dean Baker pointed out to Congress, pretty much no one else does what the PAEA demanded of the Postal Service.

Meeting Congress' arbitrary mandate required putting away an extra $5.6 billion per year. "It is equivalent to imposing a tax of 8 percent on the Postal Service's revenue," Baker said. "There are few businesses that would be able to survive if they were suddenly required to pay an 8 percent tax from which their competitors were exempted."

Eventually, the burden became too great, and the USPS began defaulting on the PAEA payments in 2012. But the damage was done. The Postal Service lost $62.4 billion between 2007 and 2016, and its own Inspector General attributed $54.8 billion of that to prefunding retiree benefits. Without the PAEA, the Postal Service wouldn't be doing stellar. (Though you could plausibly blame many of its remaining struggles on the Great Recession.) But it probably would've spent at least part of the last decade making comfortable profits.

"The Postal Service's $15 billion debt is a direct result of the mandate," the Inspector General wrote in 2015. "This requirement has deprived the Postal Service of the opportunity to invest in capital projects and research and development."

In fact, it gets worse. The PAEA also required the Postal Service to invest its retiree funds exclusively in government bonds. Once again, this is a rather unusual practice. While it mitigates risk, it's also a great way to earn really low returns. Then the USPS has to set aside even more money to achieve the same benefit level. Baker calculated that just getting rid of this requirement could make the Postal Service profitable again.

Now, in a sane world, the USPS would be treated as a universal public good: Everyone would understand that it provides the bedrock delivery service to poorer and farflung areas that private carriers won't bother with because doing so isn't profitable. Instead, the Postal Service is expected to compete with the private market, and fund all of its costs out of its own revenue, without subsidies from the rest of government.

That's bad enough. But it's downright perverse to add extra handicaps that a private competitor like FedEx would never impose on itself.

Maybe that was just dumb politics. But it looks an awful lot like deliberate sabotage of a perfectly good public institution. It turns out Trump's task force will include Treasury Secretary Steven Mnuchin and White House budget director Mick Mulvaney. The latter in particular is a conservative small-government ideologue. It doesn't seem too crazy to think they'll recommend privatizing the USPS and selling it off for parts. And that they'll justify this recommendation by claiming the Postal Service just can't seem to compete.

It’s strange to even mention “losses” when we’re talking about the government. Other federal agencies are not expected to fund their own operations. Nobody asks why the Department of Agriculture didn’t turn a profit last year. The fact that the USPS can come close to profitability while charging only 55 cents to mail a letter across the country is nothing short of astounding. Mail volume has declined in recent years, but the USPS still delivered 142 billion pieces of mail in 2019, around 460 pieces for every one of the over 300 million residential and business addresses it serves.

Libertarians say “FedEx and UPS make profits, so why can’t the Postal Service?” but they fail to explain that those companies make profits by charging you not 55 cents, but around $25 to send a letter coast-to-coast. And unlike the USPS, FedEx and UPS do not have a universal service requirement to deliver to all addresses throughout the country; if it isn’t profitable, the private shippers won’t deliver there. So what does FedEx do if you ask them to send a package to a remote address in the Upper Peninsula of Michigan? They take your money, bring the package to the post office, have the USPS deliver it at a much lower rate, and pocket the difference.

The USPS may lose money delivering that package, just as they do operating thousands of post offices in rural areas. They do it because they have a mandate to serve every American, no matter who they are or where they live.

Then came the coronavirus in 2020. While USPS package delivery was more vital than ever, there has been a precipitous drop in mail volume (in particular junk mail and advertising, which have been largely suspended while companies conserve cash), further cutting into postal revenues.

So when the time came to put together a $2.2 trillion rescue package for the American economy, Democrats attempted to add $25 billion to shore up the USPS—less than the $29 billion in grants the airlines ended up getting. Then President Trump stepped in.

“We told them very clearly President Trump was not going to sign the bill if [money for the Postal Service] was in it,” an administration official told The Washington Post. Negotiators eventually decided to allow the USPS to borrow $10 billion from the Treasury Department, but it would have to be paid back. “A committee aide said [Treasury Secretary Steven] Mnuchin told lawmakers during negotiations: ‘You can have a loan, or you can have nothing at all.’”

Some Republicans have been supportive of the USPS in the past, as well they should: In rural America, where the GOP has some of its strongest support, the USPS provides services that no private company would at such a low cost. And when you talk to actual people, you find that the Postal Service is absolutely beloved; according to the Pew Research Center, 90 percent of Americans have a favorable view of the USPS, more than for any other federal agency.

But the Trump administration pushed for privatization of the Postal Service through Trump's appointees to the USPS Board of Governors. Why did Trump have it in for the USPS? As far as we can tell, his determination to undermine it is driven mostly by animus for Amazon CEO Jeff Bezos, who as the world’s richest man inspires Trump to manic heights of jealousy and insecurity. From early in his term, Trump has complained that the Postal Service doesn’t charge Amazon enough money for shipping packages (in fact, package delivery is one area where the USPS makes a profit). The pandemic offered the president his first opportunity to truly threaten the agency he calls Amazon’s “delivery boy.” Destroying the USPS would only bolster private companies that ship packages—such as Amazon—but that presumably hasn’t entered into Trump’s thinking.

There may be other reasons Trump despises the Postal Service. For years it has been a vehicle for African Americans to get a toehold in the middle class with good pay and benefits (not to mention union representation), and that may not sit well with Trump. Plus, with expectations of an enormous increase in demand for mail ballots, the Postal Service will be absolutely vital if we’re to have anything resembling a fair election in November. That’s the last thing Trump wants, and it might be playing into his calculations.

Whatever the full explanation, in this instance, the good of the entire country—liberal and conservative, blue states and red, urban and rural, all of us who get mail, in short all of us—must be sacrificed to whatever mixture of infantile jealousy and cynicism is swimming around in Donald Trump’s head.

Relieved of its preposterous retiree prepayment requirement the Postal Service its 31,000 retail locations can, with a Postmaster and Board of Governors dedicated to the Postal Service’s 250 year long mission, continue to serve Americans’ needs, particularly those across rural America.

Source: The Prospect.