Postal Service Reform: One Step Forward, Two Steps Back?

Where there is no vision, the people perish: but he that keepeth the law, happy is he.

– Proverbs 19:18

We are starting to see changes come the way of the US Postal Service (USPS). There is a bill from Rep. Peter DeFazio (D-OR) and a multitude of co-sponsors to eliminate the arbitrary requirement that the USPS prefund its workers’ retirement benefits, a burden not shared by most other federal employees. This bill is not new, but now with Democratic majorities in Congress, its chances of passage are more conceivable.

There is also a new plan from the USPS and its Board of Governors that has won grudging approval from one of the two principal postal workers unions – the National Association of Letter Carriers (NALC). However, the plan has received a more equivocal reaction from the American Postal Workers Union (APWU) and some activists. The NALC represents letter carriers, as the name suggests; the APWU represents workers in the vast mail sorting facilities.

The USPS plan cannot be celebrated for its vision, which as the Bible says, we sorely need, and the urgency of keeping the mail moving has given rise to some problematic compromises. Above I have linked to the union statements. Another source is the rank-and-file oriented Communities and Postal Workers United organization.

I cannot hope to adjudicate the disputes between the unions and some Democrats in Congress who support the USPS plan. What is safe to say is that the emerging deal continues to view the USPS mission narrowly, limited to delivering mail and packages, and reliant on its own revenues. As such, this framework going forward threatens further service cutbacks, reductions in USPS labor standards, and privatization of selected USPS operations, as I outlined in my USPS report for CEPR.

Presently the USPS is a free-standing organization led by a Board of Governors (BoG) nominated by the president and approved by the Senate. Its independent status is a double-edged sword, as far as its workers are concerned. That independence facilitates contract negotiations between the USPS and its unions, free of direct meddling from Congress. But it also tends to suggest that the service ought to be self-financing, “like a business.”

I criticized the latter nostrum at length in my report. Looking beyond the immediate future, the USPS ought to be all it can be. It should be more than a business since it provides public benefits far beyond its direct customer base. Besides establishing a solid basis for excellent mail and package delivery service, the service ought to be expanding its scope into other functions that would benefit the nation. This will require the abandonment of the self-financing constraint and regular appropriations from Congress. Mail service and new functions ought to be offered to customers at discounted prices that reflect the external benefits to the public, just as we subsidize solar energy and electric vehicles.

Top of the menu of such functions would be postal banking. Representatives Marcy Kaptur (D-OH) and Bill Pascrell (D-NJ), and Senators Kirsten Gillibrand (D-NY) and Bernie Sanders (I-VT) have a bill to this end.

Seeing postal services as part of a national communications infrastructure, it also makes sense for the USPS to be involved in the provision of basic Internet services. Besides broadband itself, we could benefit from public alternatives in web browsing, search engines, and social media that forego the predatory practices regarding labor relations, privacy, fake news, and intolerance attributable to the big tech monopolies. This sort of expansion depends on a more visionary Board of Governors than we have seen to date.

The Board of Governors still has a Republican majority since the Senate, under the leadership of Mitch McConnell, refused to approve any of President Obama’s nominees. In other words, McConnell packed the Board of Governors. President Biden has forwarded new nominees that, if approved, would create a nominal Democratic majority on the BoG. On April 28th, Biden’s nominees were approved by the Senate Homeland Security and Government Affairs Committee. Once approved in the full Senate, they will give Biden a majority on the Board.

The majority could be fragile because one Democrat on the Board appointed by Donald Trump is Donald Moak, a former leader of the Air Line Pilots Association, who has not proven especially helpful. The other Democrat is Ron Bloom, also appointed by Trump. He is a banker and private equity investor. Bloom played a role in rescuing the US auto industry as part of the Obama Administration. Now he is collaborating with the postmaster general, the odious Trump donor Louis DeJoy.

Getting rid of DeJoy would not be easy. First the BoG would have to be brought into line, possibly by removing some current members. Then the Board would have to fire DeJoy, although the current head of the Board, Bloom, is working with DeJoy.

It was widely feared that DeJoy would sabotage mail-in balloting last November, but for several reasons this did not come about. It did come to pass, however, that Christmas mail and package delivery was entirely disrupted, due to management misfeasance, inadequate resources, and the effects of the coronavirus on postal workers. There are also reports that mail delivery service under DeJoy’s stewardship has been on a long-term decline.

Bloom is in a difficult spot. Being stuck with DeJoy and still lacking a Democratic majority on his Board, he chose to work with DeJoy on the new USPS plan cited above. As such, he is invested in that plan, and in DeJoy himself. For its part, so far, the Biden Administration has shown little interest in the USPS, which should not be surprising in light of the numerous fires with which it has to contend. The upshot is that DeJoy’s position has been strengthened.

At a minimum, the priorities now are to secure the approval of Biden’s nominees, pass the DeFazio bill, and get the best plan possible going forward. Republican intransigence on these counts may not be as severe as suspected. The fact is that rural localities and red states have an important interest in a USPS with ample funding. DeFazio’s bill is co-sponsored by Sen. Steve Daines (R-MT).

Privatization measures in the USPS plan to replace APWU jobs with contract workers would set the stage for further such policies, likely eliminating six-day delivery, rural postal facilities, and affordable postal rates for those in relatively remote locations that are costly to serve.

For the long term, it is worth imagining that another postal service is possible. The USPS is the premier public enterprise of the United States, and we could do with more of it.

This column first appeared on CEPR.

Max B. Sawicky is an economist and writer in Virginia. He received his B.A. in English literature from Rutgers University, and his Masters and Ph.D. in economics at the University of Maryland/College Park. His principal areas of research and interest include the Federal budget, state and local finance, fiscal federalism, the economics of taxation, and privatization.

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