Sunday, April 14, 2024

USPS still in big trouble under Biden

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Celebrities have tweeted about it, politicians have campaigned there, friends on Instagram have posted about it, and some have even worn it on t-shirts. It was the rallying cry of late 2020: #SaveThePostOffice.

But as the initial chaos surrounding the presidential election begins to dissipate, President Donald Trump’s electoral fraud prosecutions are thrown out of court and President-elect Joe Biden’s transition team picks up the news cycle, this public fervor for the fallen United States Postal Service.

It makes sense. Biden, who has raised funds for his campaign as part of his plan to prevent the post office from going private and provide it with adequate funding, will soon be in office.

The problem, in the eyes of many Americans, is solved. Mission accomplished, right?

“I see the comments on the USPS reporting,” said Mark Diamondstein, president of the American Postal Workers Union. “They’re all exploding with disinformation. The public thinks that the Postmaster General [Louis DeJoy] will disappear when Trump does because they are so closely related.

But, said Diamondstein, “common wisdom is wrong.”

In reality, Biden doesn’t have the option of appointing or firing the Postmaster General – it depends on the USPS Board of Governors, the majority of which is Republican.

It’s easy to understand the confusion because the inner workings of the Postal Service are just that: confusing.

It is a semi-government agency that operates like a business but operates as a public service. It’s politicized but meant to be apolitical, and there have been a number of major post office restructurings over the past 50 years. Until 1970, the Postmaster General was a cabinet post, appointed by the President, but power moved away from the White House as part of Nixon’s Postal Reorganization Act in an attempt to depoliticize work.

And so DeJoy, who has told Congress he would like to privatize parts of the USPS and who made changes with the intention of slowing mail delivery, will remain as the post office head for the foreseeable future.

Ahead of the election, DeJoy introduced changes to eliminate the distribution and sorting of overtime, which led to unprecedented slowdowns in mail and parcel delivery.

Data obtained by the American Postal Workers Union, which represents approximately 200,000 postal workers, shows that nearly 20% of all work for material handlers, urban carriers and postal drivers is done overtime. There were no plans to hire more staff to make up for the reduction in hours. After significant public and political pressure, DeJoy said he would suspend the slowdown until the election is over, but not permanently.

Without the attention that was paid to the USPS in the run-up to the election, union officials fear it may make changes again, but this time they will go under the radar.

“The post office needs to have enough staff and hire enough workers to serve the people. If you don’t have enough staff and working hours to provide fast service, it puts us on a downward spiral, ”said Diamondstein.

It’s not just slowdowns. A lack of business-class mail and the quarantine of thousands of postal workers due to COVID-19 has resulted in a significant loss of revenue for the already struggling postal service. In the fourth quarter, USPS reported losing $ 9 billion for the full year, despite an increase in the volume of packages. Sales increased $ 73.1 billion from $ 71.1 billion in 2019, but first-class mail and marketing mail sales fell to $ 37.7 billion from $ 40.8 billion of dollars last year.

The gap between reported income and losses was also the result of expenses the U.S. government imposes on the Postal Service that other businesses do not face, such as pre-funding retiree health pensions in the future.

The law, passed in 2006 with the support of the George W. Bush administration, required USPS to pre-fund retiree health benefits years into the future. Typically, companies that pay pensions do so as the cost increases and are not required to put money aside up front. No other federal agency bears this burden, and critics call the law “draconian,” claiming it was created with the intention of driving the postal service towards privatization. Funding for pensions accounted for about 80% to 90% of the agency’s losses before the pandemic, officials said.

Still, DeJoy blamed the Postal Service’s business model for the loss and called for future cuts. “The postal service has had a systemic imbalance between revenue and costs for over a decade,” he said.

Diamondstein sees a way forward without future cuts or privatization, but it is a slow road and forces the Postal Service to retain the political capital and popularity it currently enjoys.

Congress could overturn parts of the 2006 Postal Liability and Improvement Act that require pre-funding of pensions.

Earlier this year, Congress passed a bill that did just that along relatively bipartisan lines, but got stuck in the Republican-controlled Senate. At the end of this session of Congress, so does the unsuccessful bill. But Diamondstein is hopeful that it will be reintroduced next year and the Senate will be nicer this time around.

And while Biden may not be able to choose a post general manager, he can appoint the nine governors who sit on the USPS board for seven-year terms. There are currently only five members in office, which means Biden can appoint four new governors immediately. The other five members will see their terms of office expire during his administration, thus freeing up more room for his candidates. Council members are authorized to choose a new Postmaster General.

The Postal Service is still hoping Congress will include emergency funding for the agency in its next stimulus package. He’s asking for $ 25 billion.

Previously, DeJoy had agreed to take out a $ 10 billion loan from the US Treasury in lieu of a bailout. In return for the loan, the Postal Service agreed to hand over proprietary information on 10 of its most lucrative contracts with third-party shippers like Amazon, FedEx, and UPS. The Postal Service works with these senders to deliver “last mile” deliveries, sometimes at slightly discounted rates, a practice Trump has long derided, especially when it comes to Amazon.

The loan also requires the USPS to provide the Treasury with monthly and quarterly financial and volume reports. The Treasury also attempted to use loan negotiations to gain control over staff decisions, third-party contract approvals, package pricing and union bargaining strategies, but ultimately agreed to receive proprietary information.

Janet Yellen’s Treasury is unlikely to attach these warnings to future loans.

The USPS is the country’s most popular government agency, according to Pew, with a 91% favorability rating. Another poll found that 92% of American voters said they supported direct financial assistance to the USPS as part of the upcoming coronavirus relief bill.

The USPS is the only universal provider of courier services and has been a low-cost anchor for the courier industry, helping to keep prices for private courier services low. A recent analysis by the Institute for Policy Studies found that without the USPS, 70 million more Americans should pay significant surcharges for deliveries.

“Look, I wish Congress had dealt head-on last March when they had the chance, but instead the box was sent back on the road,” Diamondstein said. “We are certainly worried. We don’t want the public to take their eyes off the award, and we will continue to try to be as public and strong as possible in our opinions so that they don’t.

More political cover of Fortune:


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